ORIGINAL copy Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City IN THE MATTER OF THE APPLICATION FOR APPROVAL OF THE POWER SUPPLY AGREEMENT (PSA) BETWEEN MANILA ELECTRIC COMPANY (MERALCO) AND MONTALBAN METHANE POWER CORPORATION (MMPC), WITH PRAYER FOR PROVISIONAL AUTHORITY ci 201¢-n76 ERC CASE NO. Rc MANILA ELECTRIC COMPANY (MERALCO), Applicant. — x APPLICATION Applicant MANILA ELECTRIC COMPANY (MERALCO), by undersigned counsel, and to this Honorable Commission, most respectfully states: 1. Applicant MERALCO is a private corporation existing under the laws of the Republic of the Philippines, with principal Office located at Lopez Building, Meralco Center, Ortigas Avenue, Pasig City. It may be served with notices and other processes of this Honorable Commission at its Principal office address or through its counsel at the address indicated herein. 2. | MERALCO has a legislative franchise to Operate and maintain a distribution system in the cities/municipalities of Metro Manila, Bulacan, Cavite and Rizal and certain cities/municipalities/barangays in Batangas, Laguna, Quezon and Pampanga, pursuant to Republic Act No. 9209, and is authorized to charge all its customers for their electric consumption at the rates approved by the Honorable Commission. 3, Montalban Methane Power Corporation (MMPC) is a corporation duly organized and existing under the laws of the Philippines. It owns and operates the Montalban Methane Power Plant (“Power Plant”), powered by the methane extracted from the Montalban Landfill, located at Montalban, Rizal and it offered tosupply and sell to MERALCO its electric capacity and energy produced from said Power Plant 4, MERALCO, in support of the development of renewable energy in the country, accepted the offer of MMPC. Thus, on 16 April 2014, MERALCO executed a Power Supply Agreement (PSA) with MMPC for the purchase of electric capacity and energy from the Power Plant for up to 8,190 kW. The Contract Price under Section 2.3 of the PSA is as follows: “2.3. Contract Price. The Contract Price is P5.50 per kWh, plus any governmental charges stipulated in Section 6.2. Provided, that, the Franchise and Benefits to Host Communities (FBHC) charge shall not form part and are excluded from the computation of the Contract Price. Any violation of this Section shall be a ground for termination of this Agreement upon prior notice.” 5. __ As previously determined by the Honorable Commission in its 03 December 2012 Decision in ERC Case No. 2009 — 027 RC‘ for the approval of the Contract for the Supply of Electricity between MMPC and MERALCO dated 3 April 2009, which shall terminate upon approval of the PSA, MMPC’s true cost of generation is PHP6.3779 per kWh. It should be noted that the Contract Price under the PSA is PHP5.50, which is lower than said true cost of generation of PHP6.3779 6. The PSA between MERALCO and MMPC, a copy of which is attached as ANNEX “B” and made an integral part hereof, contains the following salient features: “2, OBLIGATIONS, DELIVERIES & CONTRACT PRICE 2.2. Take and Pay Contract. Subject to Section 2.5 hereof, Meralco shall accept all energy deliveries by Power Supplier and Meralco shall pay for such energy (in kWh) delivered by Power Supplier as measured by Meralco’s Billing Meter based on the Contract Price. 2x Entitled ‘in the Matter of the Application for Approval of the Contract for the Supply of Electricity Between Montalban Methane Power Corporation (MMPC) and Manila Electric Company (MERALCO), with Prayer for Provisional Authority.” 22.6. Regulatory Approvals. After signing, Meralco shall file an application with the ERC for the approval of this Agreement. However, both parties shall cooperate in this undertaking and Power Supplier shall provide all the necessary support including the submission of all the documents required to expedite the approval of the Agreement. This Agreement shall not become effective unless the terms and conditions hereof, including the complete pass-through of the Agreement Price and all other charges and taxes stipulated herein, have been approved, provisional or otherwise, by the ERC (‘Effective Date’). Any disallowance of the Contract Price, or any of its components for recovery from end-users shall be for the sole account of the Power Supplier and shall not prejudice Meralco. 3. CONTRACT DURATION 3.1. Term of Agreement. After Effective Date, this Agreement shall remain in full force and effect for a period of TWO (2) YEARS from the Delivery Period Commencement Date unless earlier terminated under Sections 9.1 and 9.2. 3.2. Extension. This Agreement may be extended by agreement of both parties. 4 BILLING AND PAYMENT XXX 4.2. Timeliness and Manner of Payment. All invoices under this Agreement shall be paid on due date by Meralco unless the same is disputed due to manifest error, apparent invalidity and not in accordance with the terms of this Agreement. Any undisputed amounts which is not paid by due date will be deemed delinquent and will accrue interest under Section 4.10 hereof. XX 4.7 Disputed bills, other than manifest error, apparent invalidity and not in accordance with the terms of this Agreement, shall be paid by Meralco without deductions or offsets and shall not be an excuse or ground for Meralco to delay payment of succeeding billings or to unilaterally deduct any amount therefrom, provided, however, that Power