Ey f? Approved for) Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City Posting oo wwe, RESOLUTION NO. _» __, SERIES OF 2006 ADOPTING THE RULES FOR SETTING DISTRIBUTION WHEELING RATES (RDWR) FOR PRIVATELY OWNED DISTRIBUTION UTILITIES ENTERING PERFORMANCE BASED REGULATION (FIRST ENTRY POINT) WHEREAS, on December 10, 2004 the Commission adopted Resolution No. 12-02, Series of 2004 entitled “Adopting a Methodology for Setting Distribution Wheeling Rates” thereby promulgating the Distribution Wheeling Rates Guidelines (DWRG), WHEREAS, the DWRG provides for a new methodology for setting the distribution rates of private distribution utilities (DUs) denominated as Performance Based Regulation (PBR); WHEREAS, the DWRG provided five (5) entry groups for privately owned distribution utilities (PUs) to be subject to PBR with a limit of five (5) PUs for each group, to wit Group Reset Process Second Regulatory Period ‘A__| January, 2006 — June 30, 2007 | July 1, 2007 — June 30, 2071 _B | April 1, 2007 - September 30, 2008 c January 1, 2008 ~ June 09 = June 30, 2013" D ie [April 1, 2008 - September 30, 2010 | October 1, 2010 - September 30, 2014 January 1, 2010 ~ June 30,2011 _| July 1, 2011 — June 30, 2015 WHEREAS, for Group A, entry to the PBR was made optional by the Commission on a first come — first in basis; WHEREAS, the Manila Electric Company (MERALCO), Dagupan Electric Corporation (DECORP) and Cagayan Electric Power & Light Company, Inc. (CEPALCO) were qualified to enter the PBR and were deemed as those belonging to Group A being the first entrants to the said methodology; gaResolution No. , Series of 2006 Adopting The Rules For Setting Distribution Wheeling Rates (ROWR) For Privately Owned Distribution Utilities Entering Performance Based Regulation (First Entry Point) Page 2 of 3 WHEREAS, the draft of the Rules For Setting Distribution Wheeling Rates (RDWR) For Privately Owned Distribution Utilities Entering Pertormance Based Regulation (First Entry Point) was published on May 3, 2006 and June 30, 2006 for the first (1") and second (2™') drafts, respectively, and subjected to several public consultations; WHEREAS, the RDWR is an update of the DWRG, and takes into account changes in the rules following the publication of and consultation on the Issues Paper in September 2005, the Position Paper in December 2005 and subsequent amendments to some calculations for determining the maximum annual price cap for PUs subject to PBR; WHEREAS, consultation on the draft RDWR was conducted on June 13, 2006 and for which final comments were received, WHEREAS, after consideration of the comments made and clarifications sought, the Commission now finds the final version of the RDWR as appropriate reference in the PBR process for Group A or the First Entry Group; NOW, THEREFORE, be it RESOLVED, as the Commission hereby RESOLVES, 1, to APPROVE and ADOPT, as it hereby APPROVES and ADOPTS, the “RULES FOR SETTING DISTRIBUTION WHEELING RATES (RDWR) FOR PRIVATELY OWNED DISTRIBUTION UTILITIES ENTERING PERFORMANCE BASED REGULATION” hereto attached as Annex “A” and made an integral part of this Resolution 2. to REQUIRE entrants to Group A (First Entry Point), namely, the Manila Electric Company (MERALCO), Dagupan Electric Corporation (DECORP) and Cagayan Electric Power & Light Company, Inc. (CEPALCO) to use the said RDWR for reference in the PBR processResolution No. . Series of 2006 Adopting The Rules For Setting Distribution Wheeling Rates (RDWR) For Privately Owned Distribution Utilities Entering Performance Based Regulation (First Entry Point) Page 3 of 3 This Resolution shall take effect immediately. This resolution is hereby ordered to be posted on the website, filed with the University of the Philippines Law Center Office of the National Administrative Register (ONAR) and published in a newspaper of general circulation Pasig City, July 26, 2006. Se ROBOLFO 5 ALBANO, JR. Chairman man theless IN Commissioner ‘Commissioner .R, CASTANEDA Comhissioner RELIC My Oocunents RAL 2006.0WRERESO Adopting ROWR doc