Trail of Power Mess Leads to Ramos

Name of Plant :	140 MW Casecnan Multipurpose Project and Manablon Powerhouse (A25)
Name of IPP :	National Irrigation Administration through BOT with California Energy-Casecnan Water and Energy Company, Inc. (CEWEC)
Contract Type :	Build-Operate-Transfer/Power Purchase Agreement (PPA)/Unsolicited Project
Status of Plant :	Operational
Cooperation Period :	20 years (April 5, 2002 - April 5, 2022)

Nature of Issue	Issue	Recommendation
High energy rates	Casecnan's cost (levelized, PhP/KWh) is the highest among IPP contracts. Reasons can be: 1) Short payback period 2) Subsidizing added revenues to Pantabangan and Masiway	PSALM to work out arrangement for lower fees
Hydrology risk	The contract places the minimum water off-take of Casecnan at 801.9 million cubic meters of water per year. During ICC review the Secretariat had reservations about the ability Of Casecnan to deliver 801.9 million cubic meters of water.	DPWH and NEDA in consultation with technical hydrology experts must to conduct further studies to ascertain a just guaranteed Capacity for water delivery.
	Because of this provision, NIA has to pay Casecnan the equivalent of 801.9 million cubic meters of water whether or not the Casecnan and Denip Rivers can provide such amount.
High tax payable	In a related contract, Casecnan's complex tax structure results in a tax payable of approximately $850 million for NIA.	Currently, a Cabinet Committee is looking into the issue.