RURAL ELECTRIFICATION PROGRAM

RURAL ELECTRIFICATION PROGRAM

5 October 2005Honesty, Efficiency and Solidarity Auditorium

REPUBLIC ACT 6038REPUBLIC ACT 6038(1969)(1969)

Created NEA as Created NEA as thethe Primary Agency to Primary Agency to implement the implement the RURAL ELECTRIFICATION RURAL ELECTRIFICATION PROGRAM (REP)PROGRAM (REP)

Provided for the organization & supervision by Provided for the organization & supervision by NEA of NEA of ELECTRIC COOPERATIVES (ECs)ELECTRIC COOPERATIVES (ECs) nationwidenationwide

Characteristics of Rural Electrification Characteristics of Rural Electrification During the Early Years of During the Early Years of

ImplementationImplementation

Electrification was made possible by using Electrification was made possible by using small generating units of 30 to 60 kwsmall generating units of 30 to 60 kw

Service was only available in municipal Service was only available in municipal centerscenters

Low voltage of electricity suitable only for Low voltage of electricity suitable only for lightinglighting

Service was available for 3 to 6 hours Service was available for 3 to 6 hours usually in the eveningusually in the evening

STATUS OF RE PROGRAMJune 1969

Northern Nueva EcijaElectric Service Cooperative

Porac Electric Service

Six Mexican BarriosElectric Service Cooperative

Sapang Palay Rural Electric Service Cooperative

Infanta Light & PowerService Cooperative

Cabatuan CommunityElectric Coop Assoc, Inc.

Misamis Oriental Rural Electric Service

Victorias Electric Service Cooperative

Southern Farmers Cooperative

Lubang Electric Service Cooperative

Source:EA Annual Report 1968-1969

MERALCO

Dagupan Elect Corp

Cabanatuan Elect Corp

AEC & SFELAPCOAEC & SFELAPCO

VECO & MECOVECO & MECO

BOHOL Provincial Elect System

PECO

CEPALCO

Davao Light & Power Co., Inc..

COLIGHT

ILPI

PRESIDENTIAL DECREE 269PRESIDENTIAL DECREE 269(1973)(1973)

TRANSFORMED NEA INTO ATRANSFORMED NEA INTO A GOVERNMENT CORPORATION GOVERNMENT CORPORATION

ANDAND DECLARING AS A DECLARING AS A NATIONAL POLICY OBJECTIVE NATIONAL POLICY OBJECTIVE THE TOTAL ELECTRIFICATION THE TOTAL ELECTRIFICATION

OF THE PHILIPPINESOF THE PHILIPPINES

OVER-ALL STATUSOVER-ALL STATUS THEN AND NOW THEN AND NOW

FIRST YEAR (1969)FIRST YEAR (1969)

Status of EnergizationStatus of Energization

Municipalities/Cities (52%)Municipalities/Cities (52%)

PotentialPotential 1,422 1,422

EnergizedEnergized 739 739

Connections (19%)Connections (19%)

PotentialPotential6.210M6.210M

EnergizedEnergized 1.217M1.217M

20052005

Status of EnergizationStatus of Energization

Municipalities/Cities

(100% energized) 1,609

Barangays

Coverage 41,930

Energized 38,978

% Energization 93%

Connections

Potential 17.04M

Served 12.28M

% Energization 72%

Population Served 73M

(Approximate)

ElectricDistribution

Utilities Coverage Energized % Coverage Energized % Potential Served %

Electric Cooperatives 1,451 1,451 100 36,003 33,165 93 11,141,200 6,939,953 62

MERALCO 111 111 100 4,317 4,243 98 4,416,000 4,173,508 95

PIOUs/LGUs/Others 47 47 100 1,610 1,570 98 1,486,000 1,165,363 78

TOTAL PHILIPPINES 1,609 1,609 100 41,930 38,978 93 17,043,200 12,278,824 72

Municipalities/Cities Barangays Connections

PERFORMANCE BY UTILITYAs of July 31, 2005

PERCENT ENERGIZED

90 - 100% - 96 ECs

80 - 89% - 9 ECs

60 - 69% - 4 ECs

PIOUs / LGUs - 26

70 - 79% - 6 ECs

59 & Below - 4 ECs

STATUS OF BARANGAY STATUS OF BARANGAY ENERGIZATIONENERGIZATIONAs of July 2005

BASCO

DMPCD-1/12/05

2000 2001 2002 2003 2004

A+ 42 47 40 45 59

A 18 16 16 16 13

B 12 15 21 15 19

C 11 7 2 10 6

D 14 13 13 13 5

E 22 21 27 20 17

… 1st GOCC to be ISO 9001

Note: Savings due to the restructuring amounts to approximatelyP161 M or 49% reduction in operating expenditures.

%CY 2003 CY 2004 Reduction

965 plantilla positions 422 56

730 warm bodies 314 57

16 departments 10 37

49 divisions 23 53

RESTRUCTURINGRESTRUCTURING

SEC.58. Additional Mandate of the National

Electrification (NEA). – NEA shall develop

and implement programs:

a) To prepare electric cooperatives in

operating and competing under the

deregulated electricity market within five

(5) years from the effectivity of this Act,

specifically in an environment of open

access and retail wheeling;

b) To strengthen the technical capability and

financial viability of rural electric

cooperatives; and

c) To review and upgrade regulatory policies

with a view to enhancing the viability of

rural electric cooperatives as electric

utilities.

Short Term Credit FacilityShort Term Credit Facility aims to aims to finance the ECs’ monthly shortfall on the finance the ECs’ monthly shortfall on the settlement of power accounts with the settlement of power accounts with the NAPOCOR and TRANSCO. Funds NAPOCOR and TRANSCO. Funds allocated for this purpose amounts to allocated for this purpose amounts to P300M.P300M.

Equity Financing SchemeEquity Financing Scheme was was introduced to assist ECs in complying introduced to assist ECs in complying with the Distribution and Grid Code. NEA with the Distribution and Grid Code. NEA will finance the actual equity will finance the actual equity requirement or up to 20% of the total requirement or up to 20% of the total purchase price of the distribution purchase price of the distribution equipment being procured through equipment being procured through financing but not to exceed P8M. The financing but not to exceed P8M. The initial funding allocation is initial funding allocation is P100M.P100M.

FINANCIAL PROGRAMSTECHNICAL PROGRAMS

INSTITUTIONAL PROGRAMS

Single Digit System Loss ProgramSingle Digit System Loss Program for the for the reduction of the national system loss reduction of the national system loss average by at least 1% annually starting average by at least 1% annually starting 2004 to attain the single digit level before 2004 to attain the single digit level before

2010. The amount of 2010. The amount of P300MP300M was was allocated for this program.allocated for this program.

Enhancement of ECs’ Capital ResourcesEnhancement of ECs’ Capital Resources through the adoption of a policy allowing through the adoption of a policy allowing ECs to secure loans (collateral-sharing) ECs to secure loans (collateral-sharing) outside of NEA to finance their upgrading outside of NEA to finance their upgrading and rehabilitation projects. and rehabilitation projects.



Credit Facility for EC Power Accounts with Credit Facility for EC Power Accounts with GENCOs and Market Operator (WESM) GENCOs and Market Operator (WESM) provides Stand-By Credit Facility for ECs provides Stand-By Credit Facility for ECs which fail to meet the credit worthiness which fail to meet the credit worthiness indicators set in their contracts with the indicators set in their contracts with the GENCOs, and/or to avoid suspension in the GENCOs, and/or to avoid suspension in the WESM and the claim of the security provided WESM and the claim of the security provided to the Market Operator due to default in to the Market Operator due to default in

payment. Initial funding allocation is payment. Initial funding allocation is P500 P500 M.M.

Credit Facility for the Acquisition of Sub-Credit Facility for the Acquisition of Sub-transmission Facilites (69 kv lines) from transmission Facilites (69 kv lines) from TRANSCO TRANSCO aims to finance the ECs’ equity aims to finance the ECs’ equity requirement of up to 20% of the total requirement of up to 20% of the total acquisition cost of the NAPOCOR/TRANSCO acquisition cost of the NAPOCOR/TRANSCO sub-transmission facilities. initial funding sub-transmission facilities. initial funding

allocation of allocation of P100MP100M was established. was established.



BASCO

SYSTEM LOSSSYSTEM LOSSAs of June 2005

SINGLE DIGIT - 8 ECs

10% to 14% - 42 ECs

ABOVE 20% - 16 ECs

15% to 20% - 52 ECs

NO DATA AVAILABLE - 1 EC

24

Macro Engineering Assistance Program Macro Engineering Assistance Program (MEAP)(MEAP) was designed to ensure the was designed to ensure the attainment of single digit systems loss attainment of single digit systems loss before 2010, improve the level of power before 2010, improve the level of power reliability and ensure the ECs’ compliance reliability and ensure the ECs’ compliance to the Grid and Distribution Codes.to the Grid and Distribution Codes.

Systems Loss Segregation ProgramSystems Loss Segregation Program complements the MEAP which aims to complements the MEAP which aims to guide the ECs quantify and segregate the guide the ECs quantify and segregate the technical, non-technical and administrative technical, non-technical and administrative loss. Through this, the ECs shall be able to loss. Through this, the ECs shall be able to determine which priority activities should determine which priority activities should be implemented immediately to maximize be implemented immediately to maximize beneficial effects.beneficial effects.

FINANCIAL PROGRAMS

TECHNICAL PROGRAMSINSTITUTIONAL PROGRAMS

Management Academy for Rural Management Academy for Rural ElectrificationElectrification was established primarily to serve as was established primarily to serve as learning venue for the best practices of successful ECs. learning venue for the best practices of successful ECs.

People Development AcademyPeople Development Academy (Toledo City) (Toledo City) teaches leadership and corporate values to EC leaders teaches leadership and corporate values to EC leaders and employees. To date, a total of 1,408 pax have and employees. To date, a total of 1,408 pax have undergone trainings in 12 multi-disciplines seminars.undergone trainings in 12 multi-disciplines seminars.

Integrated Strategic Planning Seminar-Integrated Strategic Planning Seminar-WorkshopsWorkshops were conducted for 114 ECs to assist were conducted for 114 ECs to assist them in formulating their 5-year operational plans them in formulating their 5-year operational plans (2005-2009). An in-house-developed computerized (2005-2009). An in-house-developed computerized model (ICPM) was designed to harmonize the data for model (ICPM) was designed to harmonize the data for all plans currently existing. It also serves as the basis all plans currently existing. It also serves as the basis for the Distribution Development Plans of 2005-2009.for the Distribution Development Plans of 2005-2009.

FINANCIAL PROGRAMS

TECHNICAL PROGRAMS


A total of 121 pax from 41 ECs A total of 121 pax from 41 ECs underwent various WESM-related underwent various WESM-related trainings including a WESM Operations trainings including a WESM Operations Seminar with PEMC Officials as Seminar with PEMC Officials as resource persons were attended by resource persons were attended by ALL Luzon Main Grid-Connected ECs ALL Luzon Main Grid-Connected ECs

Competency Training and Certificate Competency Training and Certificate Programs on Electric Distribution Programs on Electric Distribution System Power Engineering through a System Power Engineering through a MOA between NEA and UP Diliman. To MOA between NEA and UP Diliman. To date, a total of 46 participants from date, a total of 46 participants from 35 ECs have been able to complete 35 ECs have been able to complete the program.the program.

FINANCIAL PROGRAMS

TECHNICAL PROGRAMS


Management Academy for Rural Management Academy for Rural ElectrificationElectrification was established primarily to serve as was established primarily to serve as learning venue for the best practices of successful ECs. learning venue for the best practices of successful ECs.

People Development AcademyPeople Development Academy (Toledo City) (Toledo City) teaches leadership and corporate values to EC leaders teaches leadership and corporate values to EC leaders and employees. To date, a total of 1,408 pax have and employees. To date, a total of 1,408 pax have undergone trainings in 12 multi-disciplines seminars.undergone trainings in 12 multi-disciplines seminars.

Integrated Strategic Planning Seminar-Integrated Strategic Planning Seminar-WorkshopsWorkshops were conducted for 114 ECs to assist were conducted for 114 ECs to assist them in formulating their 5-year operational plans them in formulating their 5-year operational plans (2005-2009). An in-house-developed computerized (2005-2009). An in-house-developed computerized model (ICPM) was designed to harmonize the data for model (ICPM) was designed to harmonize the data for all plans currently existing. It also serves as the basis all plans currently existing. It also serves as the basis for the Distribution Development Plans of 2005-2009.for the Distribution Development Plans of 2005-2009.

FINANCIAL PROGRAMS

TECHNICAL PROGRAMS


A total of 121 pax from 41 ECs A total of 121 pax from 41 ECs underwent various WESM-related underwent various WESM-related trainings including a WESM Operations trainings including a WESM Operations Seminar with PEMC Officials as Seminar with PEMC Officials as resource persons were attended by resource persons were attended by ALL Luzon Main Grid-Connected ECs ALL Luzon Main Grid-Connected ECs

Competency Training and Certificate Competency Training and Certificate Programs on Electric Distribution Programs on Electric Distribution System Power Engineering through a System Power Engineering through a MOA between NEA and UP Diliman. To MOA between NEA and UP Diliman. To date, a total of 46 participants from date, a total of 46 participants from 35 ECs have been able to complete 35 ECs have been able to complete the program.the program.

FINANCIAL PROGRAMS

TECHNICAL PROGRAMS


Medium-Term Development Plan (2005-2009)

ICPM Summary

Corplan, Engineering, Accounts Management & Guarantee, Finance, Institutional Development, Management Assistance

OUTPUTS

DDP INSTITUTIONAL PROGRAMS FINANCIAL PROJECTIONS 2005 WORKPLAN

BSEP LTDP LF GCP/PIP/REP

Updated, Harmonized, Distinctive

B S E P - BEP - SEP

LTDP LF

GCP/PIP/ REP

factors to consider:

WESM

OPEN ACCESS

DIST. CODE

GRID CODE

ERC COMPLIANCES

MAGNA CARTA

TIME-OF-USE

E.O. 119

DEMAND & SUPPLY

INST’L

ICPM

BARANGAYS TO BE ENERGIZEDTO BE ENERGIZED

(2005 – 2008)(2005 – 2008)

1,594 (51%)

599 (20%)

875 (29%)

Luzon Visayas Mindanao

778 (25%)

455 (15%)

1835 (60%)

Off-Grid Main Grid Waived

EC with most number of unenergized barangays:

LASURECO - 363Waived: 778

3,068 BARANGAYS3,068 BARANGAYS

2005 – 221 2007 - 200

2006 – 200 2008 - 200

NUMBER OF NUMBER OF SITIOS TO BE ENERGIZED

SITIOS = 2,423SITIOS = 2,423

2005 = 8212005 = 821

2006 = 5222006 = 522

2007 = 4402007 = 440

2008 = 3352008 = 335

2009 = 3052009 = 3051422 (58%)

498 (21%)

503 (21%)

Luzon Visayas Mindanao

EC with most number of identified Sitios for energization:

MARELCO - 123

Sitios Electrified from

Jan.03-June 05: 2,559

CONSUMER CONNECTIONS

1,876,000 (91%)

174,621 (9%)

New Add-Ons

YearYear No.No.

20052005 375,575375,575

20062006 367,217367,217

20072007 391,969391,969

20082008 413,518413,518

20092009 502,337502,337

TotalTotal 2,050,6162,050,616

EC with most number of consumers to be connected:NEW – BENECO (11,035)ADD-ONS – ALECO (64,819)

SUBSTATION REQUIREMENT(Additional)(Additional)

155

215

315

100

124

173

8550

145

5050

150

8540

170

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009

LUZON

VISAYAS

MINDANAO

685685

397397

280280250250

295295

TMVATMVA

TOTAL No. of Units

5 MVA – 92

10 MVA – 96

20 MVA – 13

OTHERS * – 112

EC with greatest S/S capacity requirement: PENELCO – 85 MVA

* 2.5, 3.75, 15, 30 MVA* 2.5, 3.75, 15, 30 MVA

SUBSTATION REQUIREMENT(Rehab/Upgrading)(Rehab/Upgrading)

TOTAL No. of Units

5 MVA – 35

10 MVA – 30

20 MVA – 3

OTHERS * – 1

30

35

135

15

49

75

10

80

25

20

55

2010

50

0

50

100

150

200

2005 2006 2007 2008 2009

LUZON

VISAYAS

MINDANAO

TMVA

TMVA

8080100100

9090

139139

200200

EC with greatest S/S capacity for Rehab:

ISELCO II – 120 MVA

* 2.5, 3.75, 15, 30 MVA* 2.5, 3.75, 15, 30 MVA

Distribution Transformers

10 KVA – 4,37310 KVA – 4,373 50 KVA – 6,32050 KVA – 6,320

15 KVA – 6,88215 KVA – 6,882 75 KVA – 37975 KVA – 379

25 KVA – 12,58925 KVA – 12,589 100 KVA – 674100 KVA – 674

37.5 KVA – 3,87537.5 KVA – 3,875 167 KVA 167 KVA –– 267 267

TOTAL NO. OF UNITS: 35,359

EC with biggest number of dx transformer requirement:

CAGELCO II – 1,365

Kilowatt Hour Meters

1 Phase1 Phase – 1,556,427 – 1,556,427

3 Phase – 5,9213 Phase – 5,921

TOTAL NO. OF UNITS: 1,562,348

EC with greatest number of kwh-mtr requirement:

AKELCO – 120,075

Distribution Facilities

Kilometers of LinesKilometers of Lines

EXPANSIONEXPANSION REHAB/REVAMPREHAB/REVAMP

DC – 39.250DC – 39.250 DC – 0 DC – 0 3Ø – 290.1393Ø – 290.139 3Ø – 615.570 3Ø – 615.570 2Ø – 466.777 2Ø – 466.777 2Ø – 169.510 2Ø – 169.510 1Ø – 5,687.9171Ø – 5,687.917 1Ø – 884.050 1Ø – 884.050 UB – 4,534.618UB – 4,534.618 UB – 1,213.830 UB – 1,213.830 OS – 1,776.087OS – 1,776.087 OS – 665.780 OS – 665.780

EC with longest dx lines for expansion:ZANECO – 690.7 ckt.kms.

EC with longest dx lines for rehab/revamp: ZAMECO II – 360.3 ckt.kms.

SUBTRANSMISSION FACILITIES and

VOLTAGES other than 13.2 kv

EXPANSIONEXPANSION REHABREHAB

69 KV OTHERS2005 584.83 522006 297.26 02007 398.52 02008 117.30 142009 234.95 0TOTAL 1,632.86 66

69 KV OTHERS2005 0 02006 40 02007 0 02008 0 02009 0 0TOTAL 40 0

CENECO is the only EC with subtransmission line for rehab.

EC with longest subtransmission line for expansion:

COTELCO – 110.5 kms.

POLES

25’ 25’ – – 19,83819,838

30’ 30’ – – 62,91862,918

35’ 35’ – – 56,03056,030

40’ 40’ – – 26,10526,105

45’45’ – – 13,12513,125

OTHERS*– OTHERS*– 15,78715,787

GRAND TOTAL: 193,803

* Includes concrete, steel and above 45 footers

EC with most number of Pole Requirements:

ISECO – 12,750

FUNDING FUNDING REQUIREMENT REQUIREMENT (P ‘000)(P ‘000)

2005 – 8,338,5322005 – 8,338,532

2006 – 7,056,2592006 – 7,056,259

2007 – 6,400,6672007 – 6,400,667

2008 – 6,039,0582008 – 6,039,058

2009 – 5,982,4772009 – 5,982,477

GRAND TOTAL: 33,816,993

EC with largest funding requirement:

BATELEC II – 1,175,437

Operational Efficiency

Subsidies and Loans

Rate Adjustments

DOE’s Energy Regulations No. 1-94, as amended

50% of P0.01 per kwh financial benefits Local Government Code of

1991(Chapter II, Sections 289 to 294) 80% of the proceeds maybe used to

construct distribution lines and lower the cost of electricity

Missionary Electrification-Universal Charge

Subsidy to QTPs (alternative service providers)

Government General Appropriations Act (GAA) for DOE,NEA/ECs and SPUG (if any)

WB-GEF under DOE’s Rural Power Project

Available for household and community applications (US$ per Wp)

sources

I. Consumer Connections

2004 2009

6,702,789 8,753,405

Growth Rate = 23%

II. Energy Sales (MWH)

2004 2005 - 2009

9,546,390 Annual Ave: 12,390,656

III. Revenues (P)

2004 2009

47B Annual Ave = 73B

Growth Rate = 36%

Growth Rate = 23%

VOLUME OF BUSINESSVOLUME OF BUSINESS

next steps…

100% Barangay Energization by CY 2008

Single Digit System Loss by CY 2010

90% Energization Rate for Residential Consumers by CY 2017

end of presentation

Documents

RURAL ELECTRIFICATION PROGRAM