I.

NGCP

(National Grid Corporation of the Philippines)

Stronger transmission for a stronger nation. This is the commitment the

National Grid Corporation of the Philippines (NGCP) has undertaken to fulfill since its
incorporation in 2008 when it assumed the crucial task of delivering safe and reliable
electricity throughout the archipelago, a responsibility formerly held by the National
Transmission Corporation or TransCo. A fully private corporation, NGCP won the
franchise to operate and maintain the country’s transmission network in the biggest
government auction conducted in efforts to reform the local power sector. This fifty-
year franchise provides NGCP with the right to operate, maintain, expand and further
strengthen the country’s power transmission system which, as of end-2009, involved
19,425 circuit kilometers of transmission lines and 23,853 MVA of substation
capacity. As the system operator of the power grid, NGCP balances the demand and
supply of electricity to serve efficiently all of its customers—generators, private
distribution utilities, electric cooperatives, government-owned utilities, ecozones,
industries, as well as directly connected companies. It is responsible for putting online
the right mix of power plants that generate the high-voltage electricity and
transmitting this to the various distribution utilities which, in turn, deliver the
electricity at a lower voltage rating to households and other end-users. Equipped with
technical expertise, a sound financial portfolio and impressive track record, NGCP is
poised to successfully deliver the electricity needed to fuel the growth of the economy
and thereby empower the Filipino people and the country’s business sector,
strengthening the nation as a whole.

Our Vision

To build the strongest power grid and maintain the best power utility practice in
Southeast Asia, with the collective efforts of a world-class professional work force.

Mission

To contribute to the nation’s social and economic development and satisfying our
stakeholders’ needs by efficiently developing and adequately operating the power grid
to provide reliable electricity transmission service.
Our Objectives

To upgrade, expand and strengthen our transmission facilities with cutting-edge

technology. We shall also keep improving our operations and maintenance practice
with global knowledge sharing, thus guaranteeing the safety and security of our power
system and employees. By building the strongest power grid, we will be rewarded with
continuous improvement in the quality and reliability of power as well as in the
efficiency of our operation. This in turn shall enhance the lives of all—our customers
to be rewarded with energy cost savings, our investors to be provided with fair return,
our employees to share in the benefits of exceptional financial performance, and
society in general to enjoy a sustainable environment-friendly energy system. With
enhanced sharing of knowledge from all over the world, we will develop our workforce
into the most respected and competent professionals, helping them achieve their
personal goals and realize self-fulfillment. This is important because for all our
objectives to be completed, we will need our people’s strong determination to the
pursuit of excellence and perfection.

Core Values

Integrity. We abide by a high level of professionalism, sincerity, positivity, and

brotherly compassion to serve.

Competence. We uphold a strong heritage, which continues to inspire us to perform

to our utmost.

Passion. We maintain an unmatched passion to serve, and a passion for excellence in

all we do.

Armed with strong hearts and strong minds, NGCP is capable of delivering on its
promise to develop the stronger transmission system necessary to build a stronger
future for our nation.
History:
The National Grid Corporation of the Philippines (NGCP) holds the franchise to
operate and maintain the Philippines’ electricity transmission network.

As the system operator of the power grid, NGCP balances the demand and supply of
electricity to efficiently serve all of its customers which are generators, private
distribution utilities, electric cooperatives, government-owned utilities, ecozones,
industries, and directly connected companies.

As the only transmission utility firm in the country, NGCP performs a significant role
in nation building by providing the necessary infrastructure to deliver electricity where
it is needed --whether in far flung communities or in urban centers.
II. Where NGCP operate
Luzon

The region is the largest grid in NGCP’s network, composed of Metro Manila, Northern
Luzon, and Southern Luzon. It is the country’s main industrial and commercial
region, hosting a population of 49.8 million*. The region accounts for 77% of the
country’s total power demand in 2008.

NORTH LUZON

DISTRICT AREA SERVICE AREA

ILOCOS NORTE, ILOCOS SUR, ABRA, LA

1 ILOCOS
UNION

2 MOUNTAIN PROVINCE MT. PROVINCE, BENGUET

3 CENTRAL PLAIN EAST AND WEST PANGASINAN

NUEVA VIZCAYA, QUIRINO, IFUGAO,

4 CAGAYAN VALLEY
ISABELA, CAGAYAN, KALINGA, APAYAO

WESTERN CENTRAL
5 BATAAN, ZAMBALES
PLAIN

6 SOUTH CENTRAL PLAIN PAMPANGA, TARLAC

BULACAN, RIZAL, NORTH OF METRO

7 NORTHERN TAGALOG
MANILA

SOUTH LUZON

DISTRICT AREA SERVICE AREA

 SOUTH WESTERN BATANGAS, CAVITE, SOUTH OF METRO
1
TAGALOG MANILA

SOUTH EASTERN
2 LAGUNA, QUEZON
TAGALOG

CAMARINES NORTE, CAMARINES SUR,

3 BICOL
ALBAY, SORSOGON

VISAYAS

The region is composed of separate but interconnected island grids of Cebu, Negros,
Panay, Leyte, Samar, and Bohol. It is also home to the country’s premier tourist
destination, the island of Boracay. The region has a population of 17.2 million* and
accounts for 12% of the country’s power demand.

VISAYAS

DISTRICT AREA SERVICE AREA

1 WESTERN NORTH PANAY, SOUTH PANAY

2 CENTRAL CEBU, BOHOL

3 EASTERN SAMAR, LEYTE

4 NEGROS NEGROS OCCIDENTAL, NEGROS ORIENTAL

MINDANAO

Situated in the southernmost section of the Philippine archipelago, Mindanao is the

second largest island group in the Philippines. It is strategically located within the
East ASEAN region, almost equidistant to the eastern sections of Indonesia, Malaysia
and Brunei Darussalam. This key geographic location underscores its potential to be a
major transshipment point and center of trade. The region has a population of 21.6
million* and accounts for 11% of total power demand in the country.

MINDANAO

DISTRICT AREA SERVICE AREA

NORTH ZAMBOANGA DEL NORTE, ZAMBOANGA DEL SUR,

1
WESTERN MISAMIS OCCIDENTAL

2 LANAO LANAO DEL NORTE, LANAO DEL SUR

NORTH
3 BUKIDNON, MISAMIS ORIENTAL
CENTRAL

NORTH AGUSAN DEL NORTE, AGUSAN DEL SUR, SURIGAO

4
EASTERN DEL NORTE, SURIGAO DEL SUR

SOUTH DAVAO, DAVAO DEL NORTE, DAVAO DEL SUR,

5
EASTERN COMPOSTELLA VALLEY, DAVAO ORIENTAL

SOUTH NORTH COTABATO, SOUTH COTABATO, SULTAN

6
WESTERN KUDARAT, MAGUINDANAO, SARANGANI
III. About NGCP

Organization/Operation

NGCP’s functions as the Transmission Service Provider involve the transmission of

electricity in response to system and market demands:

1. From generator connection points to distribution network connection points and the
direct connection points of a number of large end-users.

2. Between the three major regions of the Philippines, namely: Luzon, Visayas and
Mindanao, thereby increasing reliability and reducing the overall cost of generation
nationally.

In order to undertake the above services, NGCP operates a substantial control and
delivery network, the key elements of which include:

1. High-voltage transmission network including submarine cable, equipped with

protection system;

2. The Supervisory Control and Data Acquisition system (SCADA);

3. Regional control centers;

4. Numerous substations and depots, each of which is linked back to the central
system;

5. Converter stations (HVAC - HVDC); and

6. A comprehensive metering system at substations, and direct customer delivery

points.

For business management purposes, NGCP’s obligations can be grouped into six (6)
key service areas described as follows:

1. System operations: managing the national power grid, dispatching generation and
managing the system, including the arrangement for ancillary services.
2. Network reliability: providing the appropriate levels of network reliability in
accordance with the reliability requirements set forth in the Grid Code.

3. Connection service: NGCP’s obligations, primarily to customers and prospective

customers (e.g. generators, distributors and large end users) to provide effective,
timely and efficient connection services, including metering and relevant services.

4. Safety: NGCP’s obligations, primarily to its stakeholders (e.g. staff, other electricity
industry employees and the community) to deliver its services with appropriate priority
given to human safety.

5. Environmental: NGCP’s obligations, primarily to its stakeholders (e.g. the

community and government) to deliver services in an environmentally responsible
manner.

6. Wholesale Electricity Spot Market: NGCP’s obligations in relation to the operation

and development of the electricity market, by way of the provision of efficient and
effective transmission services.

In addition, NGCP continues to operate a significant set of sub-transmission services

from high voltage delivery points to end users. These sub-transmission assets have
been offered for sale to the distribution utilities in compliance with the requirement of
the Republic Act No. 9136 (Electric Power Industry Reform Act of 2001), or EPIRA.

Pursuant to ERC Resolution No. 18 series of 2009, those sub-transmission assets

which have not been sold or disposed of by 31 December 2010 shall remain as NGCP’s
assets which shall be included into the regulatory asset base.

NGCP as a Regulated Entity

With the enactment of the EPIRA into a law, generation, transmission,

distribution and supply are distinguished as different business activities within the
Philippine electricity industry. Among these activities, transmission and distribution
exhibit natural monopoly characteristics which make regulation on them appropriate.
Generation and retail sale of electricity, on the other hand, can be efficient in the
competitive environment as a result of the reforms introduced by the EPIRA.
 As the sole transmission service provider, NGCP is regulated under the
performance-based ratemaking (PBR). The PBR is a form of utility regulation that
strengthens the financial incentives to lower rates or lower costs. The PBR
methodology is outlined in the Rules for Setting Transmission Wheeling Rates or
RTWR.

Features of the Transmission System

Luzon

In Luzon Grid, the bulk generation sources are located in the northern and southern
parts of the Luzon Island while the load center is in Metro Manila which accounts for
about 70% of the total Luzon load. Because of this system configuration, the
transmission backbone must have capability to transfer large amount of power from
both the north and south.

Visayas

The Visayas transmission system can be divided into four different sub-system or sub-
grids.

First is the Eastern Visayas Area (District 1), which is composed of the islands of Leyte
and Samar. Leyte is the site of 610 MW geothermal resources that comprise the 42%
of the total generation capacity in the Visayas. It has two transmission corridors which
separately serve Samar and Bohol, both of which rely on power generated by Leyte’s
steam fields.

Second is the Central Visayas Area (District 2), which is composed of the islands of
Cebu and Bohol. Cebu can be well considered as the load center of the Visayas grid. In
2009, it has a coincident peak load of 559 MW which accounted for 45% of the grid’s
total demand. Bohol, on the other hand, had the lowest peak load for the grid with 56
MW (4.5%).

Third is the island of Negros (District 3). The load center is located in Bacolod City in
the northern part, while the bulk of generation is in the southern part. The 10 MW
Northern Negros Geothermal Plant provides the only source of voltage regulation in the
north.
Finally, the Western Visayas Area (District 4) is the Panay island. The likely entry of
the 164 MW PEDC coal-fired plant in La Paz, Iloilo will provide the island sufficient
generation capacity up to at least year 2025, assuming that the diesel plants will not
be retired.

Mindanao

The 663MW(dependable capacity based on DOE data) Agus Hydro Complex located in
Lanao accounts for about 39% of Mindanao’s total dependable capacity. Much of the
generated output of the complex must be transmitted to the load centers located in
southern part of the island. The load centers are located in southeast (Davao
provinces) and southwest (SOCCSKSARGEN). As of end of 2009, these two areas
account for about 50% of the island’s total demand: Davao area, 464 MW (35%) and
SOCCSKSARGEN, 199 MW (15%).

Given this characteristic and considering the 225 MW Pulangi hydro plant located in
north central area, the load flow generally is from north to south. Much of the power
flow passes through Balo-i-Tagoloan-Maramag-Kibawe 138 kV corridor. This is being
reinforced by the ongoing Balo-i-Villanueva-Maramag-Bunawan backbone that is
designed at 230 kV, the Maramag-Bunawan segment of which was energized in
October 2010.