An expository presentation, pre-trial conference and evidentiary hearing was conducted last January 28, 2011 on the Joint Application for the Approval of the Sale of Various Sub-Transmission Lines/Assets of National Transmission orporation (TRANSCO) to Peninsula Electric Cooperative, Inc. (PENELCO), as covered by an amended Lease Purchase Agreement, dated February 2, 2009, docketed as ERC Case No. 2010-104 RC at the Leadership Hall of PENELCO’s Main Offi ce, Roman Super Highway Tuyo, Balanga City, Bataan.

Upon approval by Energy Regulatory Commission (ERC) of this instant application, the Sale and Transfer of the Sub-Transmission Asset, TRANSCO shall facilitate the orderly transfer of the operation and maintenance of the Sub-Transmission assets to the Cooperative and this shall pave the way for the att ainment of a reformed electricity industry under Rule 6, Section 8 of R.A. 9136

The Assets covered by the Lease Purchase Agreement are as follows:

1. Hermosa - Balanga 69 kV Line
2. Balanga - BTPP 69 kV Line
3. Alas-Asin Tap CHI-Exemplar 69 kV Line
4. PNPP-Napot-BAgac 69 kV Line
5. PNPP-Morong-Napot 69 kV Line
6. Remotely Controlled Disconnect Switch

The Sub-Transmission Assets were evaluated and valued by Sinclair Knight Merz (SKM) at Sixty One Million Nine Hundred Nineteen Th ousand Three Hundred Fift y Seven and 98/100, (Php 61,919,357.98) and is payable for Twenty (20) years at an interest rate of 8.5%.

Hearing Offi cer, Att y. Maria Floreselda A. Sampaga of Energy Regulatory Commission presided the hearing with Transco and PENELCO’s Legal Atty. Soledad T. De La Vega-Cabangis off er the Compliance with Jurisdictional Requirements to the Honorable Court for Transco and Penelco and witnesses; Mr. Renato B. Apilado, Corporate Staff Offi cer of Transco and Engr. Antonio L. Paguio, PSSD Manager of Penelco presented and expository presentation and testify on the cooperative’s capability to purchase the sub-transmission line assets for the application’s approval, respectively.

Th e witnesses take oath on the cooperatives technical and fi nancial capability of the electric cooperative to purchase the said sub-transmission assets and on other related questions. Th ey witness and stressed (on technical capability) that the ooperative: 1) has over a year of experience in the operation and maintenance of the line with a voltage level equivalent to that of sub-transmission asset, 2) has a reasonable level of inventory of material 3) has a qualifi ed personnel in the peration and maintenance of substation facilities, and 4) has complied with the ERC Statement of Compliance on Philippine Grid and Distribution Code, and (on financial capability), that the cooperative, 1) is current to all fi nancial obligations related to contracts with supplier and to outstanding debt, 2) that it conforms on the quick ratio and debt ratio and 3) has a positive net margin.