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PHILIPPINE ELECTRICITY
MARKET CORPORATION
(PEMC), OOCKUXIlD
Applicant. Date:.D.g~...9. ..1~.
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DECISION
1 See also Rule 9, Section 9 (a) of the Implementing Rules and Regulations (IRR) of the EPIRA
3 PEMC also prayed for the recovery of the remainder (80%) of the proposed Year 1 budget for
the Forwards Market and MRDP Projects in its "Motion for Reconsideration" dated January 25,
2013 and "Manifestation and Omnibus Motion" dated May 27, 2013, both filed in connection
with its CY 2012 MTF application. Said "Motion for Reconsideration" and "Manifestation and
Omnibus Motion" are pending resolution by the Commission
ERC CASE NO. 2013-137 RC
DECISION/October 15, 2014
Page 3 of 35
4 See January 30, 2008 and June 22,2006 Decisions of the Commission in PEMC's CY 2007 and
CY 2006 MF Applications, docketed as ERC Case Nos. 2007-124 RC and 2005-048 RC,
respectively
ERC CASE NO. 2013-137 RC
DECISION/October 15, 2014
Page 4 of 35
5 December 3,2012 Decision, PEMC's CY 2012 MTF application, ERC Case No. 2011-111 RC
ERC CASE NO. 2013-137 RC
DECISION/October 15, 2014
Page 5 of 35
14. Its proposed budget for the Forwards Market and MRDP
projects are spread across its various MTF applications,
to wit:
Year 1 CYs
2010 - 2011 Year 2 CY Year 3 CY Total
Project MTF 2012 MTF 2013 MTF Project
A Iications 6
Ap lication A plication7 Cost
MRDP 14.400 9.200 6.000 29.600
Forwards 8.731 8.731
Market
Table 2 - Project Cost, in PhP Million
Required
Project Year 1 Year 1 Additional
Bud et A roval Fundin
MRDP 14.400 2.880 11.520
Forwards Market 8.731 1.746 6.985
Total 18.505
Table 3 - Required Additional Funding, in PhP Million
8 See Footnote 3
ERC CASE NO. 2013-137 RC
DECISION/October 15, 2014
Page 6 of 35
25. It prayed that after due hearing, its proposed MTF for CY
2014 in the amount of PhP814.529 Million be approved,
without prejudice to the resolution of its NMMS and MMS
Loan MTF applications.
During the August 20, 2013 initial hearing for the Visayas
stakeholders, only PEMC appeared. No intervenor/oppositor
appeared nor was there any intervention/opposition registered.
During the August 22, 2013 hearing for the Luzon stakeholders,
PEMC, MERALCO and Engr. Mallillin appeared.
various documents, within fifteen (15) days from said date of hearing,
and its formal offer of evidence (FOE), within ten (10) days from the
submission of the required documents. Relative thereto, MERALCO
and Engr. Mallillin were given a period of ten (10) days from receipt of
PEMC's FOE within which to file their respective comments thereon,
if they so desire.
DISCUSSION
On the other hand, the proposed budget for Years 2 and 3 was
approved by the Commission in its Decisions dated December 3,
2012 in ERC Case No. 2011-111 RC (MF Application for CY 2012)
and July 8,2013 in ERC Case No. 2012-084 RC (MF Application for
CY 2013), respectively.
Table 1
Table 2
Commission-
PEMC's Approved
Proposed Budget Variance
Particulars Budget (PhP) (PhP) (PhP)
On the other hand, for the other cost items Rental, Repairs and
Maintenance, Contracted Services and Market Audit, PEMC
proposed an increase of ten percent (10%) from its previous year's
approved budget since the contracts it entered into with the service
providers provide for an annual increase of ten percent (100/0)from
the previous rate.
1. HONORARIUM
2. RENTAL
4. CONTRACTED SERVICES
5. MARKET AUDIT
6. UTILITIES
7. CONFERENCE
10. TRAININGS
11. SUBSCRIPTIONS
13. INSURANCE
PEMC's Commission-
Proposed Approved
Budget Budget Variance
Particulars (PhP) (PhP) (PhP)
Honorarium 34,216,000 28,065,250 6,150,750
Rental 38,812,000 34,107,400 4,704,600
Utilities 32,828,000 26,965,400 5,862,600
Repairs and Maintenance 33,632,000 29,533,900 4,098,100
Contracted Services 32,505,000 32,505,000 -
Conference 9,709,000 9,709,000 -
Insurance 11,228,000 9,731,440 1,496,560
Participants Development Cost 5,000,000 5,000,000 -
Advertising and Promotions 6,902,000 - 6,902,000
Taxes and Dues 9,835,000 6,403,510 3,431,490
Travel and Transportation 15,701,000 14,438,540 1,262,460
TraininQs 9,965,000 5,017,100 4,947,900
Materials and Supplies 8,824,000 8,824,000 -
Subscriptions 6,023,000 1,063,990 4,959,010
Research and Development 6,066,000 - 6,066,000
Market Audit 48,117,000 37,653,000 10,464,000
Total MOOE 309,363,000 249,017,530 49,881,470
ERC CASE NO. 2013-137 RC
DECISION/October 15, 2014
Page 25 of 35
550,000.00
2,940,000.00
1,139,000.00
8,731,000.00
1,746,000.00
6,985,000.00
Given this scenario, the Commission believes that the full cost
of this project is not commensurate to its expected output since the
proposed subsequent activities will depend on the applicability of the
project based on the resulting outcome of the consultant's study.
With regard to the carrying charges that accrued from the time
the Commission approved the budget for MRDP and Forwards
Market in the CYs 2010-2011 MF Application until the approval of the
CY 2013 MF Application, the Commission deems it appropriate to
deduct the said carrying charges from the herein approved budget for
the MRDP and Forwards Market Projects it appearing that the funds,
although collected, have not been utilized.
ERC CASE NO. 2013-137 RC
DECISION/October 15, 2014
Page 31 of 35
4,626,000.00
1,313,689.80
3,312,310.20
xxx
Commission-
Approved Budget
PhP
380,450,736.00
249,017,530.00
61,077,000.00
3,312,310.00
13,877,152.00
707,734,728.00
SO ORDERED.
tb .Ar~
NAIDA G. CRUZ-DUCUT
Chairperson
. MAGPALE-ASIRIT
ERC CASE NO. 2013-137 RC
DECISION/October 15, 2014
Page 35 of 35
Copy Furnished:
7. President
Philippine Chamber of Commerce and Industry (PCCI)
3rd Floor, ECC Building,
355 Gil Puyat Ave., Makati City