Republic of the Philippines ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City BUSINESS SEPARATION GUIDELINES, As AmendedRepublic of the Philippines ENERGY REGULATORY COMMISSION ‘Sau Miguel Avenue, Pasig City BUSINESS SEPARATION GUIDELINES, As Amended Pursuant to Section 36 of Republic Act No.9136 known as the Electric Power Industry Reform Act of 2001 and Rule 10.1 of the Implementing Rules and Regulations issued pursuant to that Act, the Energy Regulatory Commission hereby promulgates. the following Guidelines for business separation and structural and functional unbundling of s of Electric Power Industry Pattivipants,BUSINESS SEPARATION GUIDELINES TABLE OF CONTENTS ARTICLE Ls anaes 6 GENERAL PROVISIONS LL Purpose: 12 Content oF THE GUIDELANES. 13 Denininions 4 Business Si#RATION AND LINBUNDIING PLAN ARTICLE GENERAL PRINCIPLES FOR ACCOUNTING SEPARATION ooo 2 2.0 GENERAL ACCOLNEING POLICWS, wl 22 DOCUMENTAIION OF ACCOUNTING FOLICIES USED. nuns : : 2 23. SURSTANCE 0 PREVAIL OVER LEGAL FORM. B 24 Maritantcry, : 14 2.5 INFORMATION MUST HL VERIFIABLE ee ae near enn 2.6 MANAGEMENT RESPONSIMILITY STATEMENT “4 2.7 RECORDS ANI AUDIT TRAILS SUPPORTING ACCOUNIING SEPARATION STATEMENTS rsccnsnae]4 2.8 AUDIT REQUIREMENE 29° RePoRTING CYCLE 2.10 GENERAL INFORMATION SHEET 2.11 COMPLIANCE REPORT 2.12 DOCUMENTS TO BE DELIVERED TO THE ERC 2.13. ADDITIONAL INFORMATION 2.14 CoNFIDENTIALITY ARTICLE 1, INFORMATION REQUIREM 3.1 FINANCIAL STATEMENTS. 3.2 FORMAT AND CONTENT OF ACCOUNTING SEPARATION STATEMENTS... 3.3. COST BASIS AND COST ALLOCATION STANDARD. 344 PRINCIPLES OF REVENUE AND COST ALLOCATION 3.5. CAPITALIZATION POLICY .. 3.6 INTER-SROMENTAL TRANSACTIONS AND TRANSFER PRICING PRINCIPLES ARTICLE 1V. ‘TS KOR ACCOUNTING SEPARATION BUSINESS SEGMENTS... 4.1 IntRODUCTION 4.2. GeNFRATION BUSINESS SEGMENTS.. 7 4.3. TRANSMISSION AND RELATED ACTIVITIES BUSINESS SEGMENTS 44 DISTRIBUTION AND RELATED ACTIVITIES BUSINESS SEGMENTS... 4S. SUPPLY BUSINESS SEGMENTS sooo 4.6 WHOLESALE AGGREGATION BUSINESS SEGMENT...