Trail of Power Mess Leads to Ramos

Name of Plant :	304 MW San Pascual Cogeneration Production Facility (A29)
Name of IPP :	San Pascual Cogeneration Co. (Texaco, Inc., Edison Mission Energy, SPCC International B. V. Netherlands and SPCC Philippines)
Contract Type :	Build-Operate-Own/Power Purchase Agreement/Unsolicited
Status of Plant :	Pre-Construction Stage
Cooperation Period :	25 years (January 2001 - January 20216)

Nature of Issue	Issue	Recommendation
Termination of the PPA	PSALM and SPCC have agreed to pre-terminate the Power Purchase Agreement. Both parties are negotiating for the Termination Agreement.	We concur with PSALM regarding its decision to terminate the PPA. In the long-term, it would be more advantageous to NPC to reimburse the development costs of SPCC rather than pay for capital recovery fees, fixed operating and maintenance fees, energy fees and fuel costs during the 25-year cooperation period.
Termination (Settlement) Agreement	The final Termination Agreement between PSALM and SPCC is yet to be concluded including the return all the Development Bond and development costs incurred by SPCC with regard to the project.	PSALM should review closely the Termination Agreement.

	Other significant and material items are yet to be agreed upon before the PPA will be officially terminated.