LIST OF TOPICS

TOPIC 1 - RA 7920 - The New Electrical Engineering Law of 1995

TOPIC 2 - RA 7832 - Anti-Electricity Pilferage Act of 1994

TOPIC 3 - RA9136 - EPIRA Law of 2001

TOPIC 4 - Code of Ethics of Electrical Engineers

TOPIC 5 - Magna Carta for Residential Electricity Consumer

TOPIC 6 - Warranties, Liabilities, Patents, Bids and Insurance

TOPIC 7 - Philippine Grid Code

TOPIC 8 - Philippine Distribution Code

TOPIC 9 - National Building Code

TOPIC 10 - Philippine Fire Protection Code

TOPIC 11 - Energy Regulatory Commission

TOPIC 12 - Wholesale Electricity Spot Market Rules

TOPIC 13 - Performance Base Rate (PBR)

TOPIC 14 - Power Supply Agreement

TOPIC 15 - Feed in Tariff (FIT)

TOPIC 16 - Guidelines for energy conserving design of buildings and

utility systems
TOPIC 1 RA 7920 TOPIC 3 EPIRA Law
Article 1-Title & def of terms Chapter 1-Title and policy
Article 2-Board of EE Chapter 2-org & operation of industry
Article 3-Exam and registration
Chapter 3-Role of Dept of energy
Article 4- Sundry provision
Chapter 4-regulation of elect power
Article 5-Transitory provisions
Chapter 5-privatization of npc
Article 6-FINAL prov, issue, ra184
Chapter 6-power sector management
TOPIC 2 Anti-Electricity Pilferage
Chapter 7-rural electrification
Section 1-short title
Chapter 8-general provision
Section 2-illegal use
Chapter 9-final provisions
Section 3-theft of power trans
TOPIC 4- Code of Ethics
Section 4-prima facie
Article 1-professional life
Section 5-incentives
Article 2-relation client employer
Section 6-disconnection
Article 3-relation fellow engr.
Section 7-penalties
Article 4-penal provision
Section 8-impose violation.
TOPIC 5 Magna Carta
Section 9-restriction
Chapter 1-General provisions
Section 10-rationalization
Chapter 2-Consumers rights
Section 11-area of coverage
Chapter 3-Consumer obligation
Section 12-recovery losses
Chapter 4-Final provisions
Section 13-Informatio dissemination
Section 14-Rules and regulation
Section 15-Separability causes
Section 16-Repealing causes
Section 17-Effectivity clauses
TOPIC 6
-Warranties
-Liabilities
-Patents
-Bids
-Insurance
TOPIC 7 Grid Code
Chapter 1-general conditions
Chapter 2-grid management
Chapter 3-connection req
Chapter 4-grid planning
Chapter 5-grid operations
Chapter 6-scheduling dispatch
Chapter 7-revenue metering req
Chapter 8-transitory provision
Chapter 9-revenue metering req
Chapter 10-transitory provision
TOPIC 8 Distribution Code
Chapter 1-general conditions
Chapter 2-distribution management
Chapter 3-distribution supply
Chapter 4-connection req
Chapter 5-connection req
Chapter 6-distribution operations
Chapter 8- distribution operations
Chapter 9-transitory provision
TOPIC 9 Building Code
Chapter 1-general provisions
Chapter 2-
Chapter 3-permits and inspection.
Chapter 4-types of construction
Chapter 5-requirement fire zone
Chapter 6-fire resistive req
Chapter 7-general requirement
Chapter 8-light and ventilation
Chapter 9-sanitation
Chapter 10-building over public street.
Chapter 11-
Chapter 12-general design
Chapter 13-electrical regulation
TOPIC 10 Fire Protection Code
Section 1-title
Section 2-declaration of policies
Section 3-def of terms
Section 4-applicability of code
Section 5-grace period
Section 6-enforcement code
Section 7-technical staff
Section 8-prohibited acts
Section 9-violation, penalties of fire hazard
Section 10-Enforcement of the lien
Section 11-Penalties
Section 12-Application and source of income
Section 13-Taxes, fees and fines
Section 14-
Section 15-
Section 16-
Section 17-
TOPIC 11 ERC TOPIC 14 Power Supply Agreement
Article 1
Article 2
Article 3
Article 4
Article 5
Article 6

TOPIC 15 Feed in Tariff (FIT)

TOPIC 12 Spot Market Rules Article 1
Chapter 1-Introduction
Article 2
Chapter 2-Registration

Chapter 3-The market

Article 3
Chapter 4-Metering Article 4
Chapter 5-market information and confidentiality
Article 5
Chapter 6-intervention and suspension
Article 6
Chapter 7-enforcement and disputes

Chapter 8-rule change TOPIC 16 Guidelines for energy

Chapter 9-interpretation conserving
Chapter 10-transistory provisions
Article 1
TOPIC 13 PBR
Article 2
Article 1
Article 3
Article 2
Article 4
Article 3
Article 5
Article 4
Article 6
Article 5
Article 6
 NEW
ELECTRICAL
ENGINEERING
LAW
WMSU Republic Act No. 7920 of 1995

Cuña, Christian Fred Lawrence

Garcia, Marck Dannielle
Herrera, Gester Mark
1
History in the electrical
engineering law
The time after the World War II, the first electrical engineering
law of the Republic known as RA 184 was enacted in 1947.

What is RA 184?

“An Act to Regulate the Practice of Electrical Engineering in the

Philippines, to Provide for the Licensing and Registration of
Electrical Engineers and Electricians and for Other Purposes”

2
RA 184
❖ Its purpose, was the assembling, synthesizing and licensing of the scattered but

qualified individuals whether:

• Electrical Engineering graduates from a handful colleges or universities at the time or

• Non-graduates but skilled experts whose competence were derived from

mentors during the then American regime.

❖ 4 grades of EE profession: Professional electrical engineer (PEE), Associate

electrical engineer (AssoEE), Assistant electrical engineer (AsstEE), and Master
electrician (ME)

❖ It is focused on the factors of “maturity” & “experience” in practice of “responsible

character”.

❖ It lasted for 2 generations, for 48 years before it was repealed by RA 7920 of 1995.

3
REPUBLIC ACT NO. 7920

AN ACT PROVIDING FOR A MORE RESPONSIVE

AND COMPREHENSIVE REGULATION FOR THE
PRACTICE, LICENSING, AND REGISTRATION OF
ELECTRICAL ENGINEERS AND ELECTRICIANS.

4
 On February 24, 1995, Republic Act 7920,
otherwise known as the "New Electrical Engineering
Law," was enacted and repealed RA 184. The new law
provides for the composition, powers and functions of the
Board of Electrical Engineering, examination and
registration of professionals, and the prohibitions in the
practice of the electrical engineering profession.

5
 Article I
Title and Definition of Terms
SEC 1. Title. – This Act shall be known as the “New Electrical Engineering
Law.”
SEC 2. Definition of Terms. – As used in this Act, the following terms shall
mean:
a) “Practice of electrical engineering” a person is deemed to be in the practice of
electrical engineering when he renders or offers to render professional
electrical engineering service.
b) “Electric supply equipment” is any equipment which produces, modifies,
regulates, or controls the supply of electric energy.
c) “Electric plant” is an establishment or a system for the production and
modification of electric energy.
d) “Power plant design” refers to planning, specifying, coordinating lay outing of
electrical equipment in power plants, substations.

6
 Article II
Board of Electrical Engineering
SEC. 3. Composition of the Board. – The Board of Electrical Engineering,
hereinafter referred to as the Board, shall be created as a collegial body under the
general supervision and administrative control of the Professional Regulations
Commission
SEC. 4. Powers and Duties of the Board. – The Board shall exercise
executive/administrative or quasi-legislative (rule-making) or quasi-judicial
(investigative) powers in carrying out the provisions of this Act.
SEC. 5. Qualifications of Board Members. – Each Board member must, at the time
of his appointment:
a) Be a natural born Filipino citizen and a resident of the Philippines for at least
five (5) consecutive years;
b) Be at least thirty-five (35) years of age, of proven integrity with high moral
values in his personal as well as his professional conduct;
c) Be a person with no final conviction by the court of an offense involving moral
turpitude;

7
• SEC. 6. Term of Office. – The members of the Board shall hold office for a term
of three (3) years from the date of appointment or until their successors shall
have been appointed and qualified.

• SEC. 7. Removal of Board Members. – Any member of the Board may be

removed by the President of the Philippines.

• SEC. 8. Compensation of Chairman and the Board Members. – The chairman

and members of the Board shall receive a monthly compensation of no less than
twelve thousand pesos (P12,000.00): Provided, That the chairman shall receive a
monthly compensation of ten percent (10%) more

• SEC. 9. Executive Officer of the Board. – The Commissioner shall be the

executive officer of the Board and shall conduct the examination given by the
Board

8
Article III
Examination and Registration
SEC. 10. Examination Required. – All applicants for registration for the practice of
electrical engineering in the Philippines shall be required to pass a technical
examination as hereafter provided.

SEC. 11. Registration and License Required. – A valid certificate of registration and a
valid professional license from the Commission are required before any person is
allowed to practice electrical engineering in the Philippines.

SEC. 12. Examination Fees. – All applicants for oral examinations for professional
electrical engineer and written examinations for registered electrical engineer and
registered master electrician shall be subject to payment of fees.

SEC. 13. Registration Fees, License Fees and Fines. – All applicants for registration
and license to practice as professional electrical engineer, and registered master
electrician, shall be subject to the payment of registration fees, license fees, and
fines in case of violation of the pertinent rules and regulations. 9
SEC. 14. Exemption from Examination and Registration. –

Examination and registration shall not be required of foreign electrical

engineers, erection/commissioning/guarantee engineers employed as technical
consultants by the Philippine government or by private firms.

SEC. 15. Holding of Examinations. – Examinations for the practice of electrical

engineering in the Philippines should be given twice a year in the City of Manila and
other places on dates that the Board may recommend for determination of
scheduling.

10
SEC. 16. Qualifications of Applicant for Registration as Professional Electrical Engineer. – Any
person applying for registration as professional electrical engineer shall establish to the
satisfaction of the Board that on or before the date of registration, he possesses the following
qualifications:

(a) He is a citizen of the Philippines;

(b) He is of good reputation with high moral values;

(c) He has not been finally convicted by the court of an offense involving moral turpitude;

(d) He is a holder of the degree of Bachelor of Science in Electric Engineering (BSEE) from a
university, school, college, academy or institute duly constituted, recognized and accredited by the
Philippine government; and

(e) He is a registered electrical engineer with valid certificate of registration and professional
license and with four (4) years or more of active practice reckoned from the date of his registration
as a registered electrical engineer.

11
SEC. 17. Qualifications of Applicants for Registered Electrical Engineer Examination. –
Any person applying for admission to the registered electrical engineering
examination, as herein provided, shall establish to the satisfaction of the Board that,
on or before the date of the examination, he possesses the following qualifications:

(a) He is a citizen of the Philippines;

(b) He is at least twenty-one (21) years of age;

(c) He is of good reputation with high moral values;

(d) He has not been finally convicted by the court of an offense involving moral
turpitude; and

(e) He is a holder of the degree of Bachelor of Science in Electrical Engineering

(BSEE) from a university, school, college, academy or institute duly constituted,
recognized and accredited by the Philippine government.
12
SEC. 18. Qualifications of Applicants for Registered Master Electrician Examination. –

Any person applying for admission to the registered master electrician examinations, as
herein provided, shall establish to the satisfaction of the Board that, on or before the date
of the examination, he possesses the following qualifications:

(a) He is a citizen of the Philippines;

(b) He is at least eighteen (18) years of age;

(c) He is of good reputation with high moral values;

(d) He has not been finally convicted by the court of an offense involving moral turpitude;
and

(e) He has any of the following technical backgrounds:

13
SEC. 19. Scope of Examination. – As a prerequisite for registration as professional
electrical engineer, registered electrical engineer and registered master electrician, the
applicant shall comply with the following requirements:

(a) Professional electrical engineer:

For the purpose of confirming the service record and clarifying the technical report
submitted by the applicant for registration as a professional electrical engineer, an oral
examination or interview.

(b) Registered electrical engineer:

The applicant shall pass a written examination on different subjects or group of
subjects: Mathematics, Engineering sciences and allied subjects, and Electrical
engineering professional subjects

(c) Registered master electrician:

The applicant shall pass a written examination on the different subjects or group of
subjects; Technical subjects and Philippine Electrical Code, Parts 1 and 2.

14
SEC. 20. Report of Ratings. – The Board of Electrical Engineering shall, within one
hundred fifty (150) days after the date of completion of the examinations, report the
ratings obtained by each candidate to the Commission.

SEC. 21. Reexamination of Failed Subjects. – An applicant shall be allowed to retake, any
number of times, only the subject/s in which he has obtained a grade below fifty percent
(50%). When he shall obtained an average grade of seventy percent (70%) in the
subject/s repeated, he shall be considered to have passed his licensure examination.

SEC. 22. Oath. – All successful candidates in the examination shall be required to take a
professional oath before the Board or any government official authorized to administer
oaths prior to entering upon the practice of professional electrical engineer, registered
electrical engineer, and registered master electrician.
15
SEC. 23. Issuance of Certificates of Registration and Professional
Licenses. – The registration of professional electrical engineer,
registered electrical engineer or registered master electrician
commences from the date his name is entered in the roll of
registrants or licensees for his profession.
SEC. 24. Continuing Professional Education Program. – The CPE
guidelines shall be prescribed and promulgated by the Board subject
to the approval of the Commission, after consultation with the
integrated and accredited electrical engineering associations, other
associations of the electrical engineering profession, and other
concerned sectors.
16
SEC. 25. Integration of the Electrical Engineering Professions. –

The electrical engineering professions shall be integrated into one national organization which shall be
recognized by the Board as the one and only integrated and accredited association of professional
electrical engineers, registered electrical engineers and registered master electricians.

SEC. 26. Seal of Professional Electrical Engineer. –

All licensed professional electrical engineers may obtain a seal of a design prescribed by
the Board bearing the registrant’s name, the certificate number and the legend “Professional Electrical
Engineer.” Plans, specifications, reports and other professional documents prepared by or executed
under the immediate supervision of and issued by a licensee, shall be stamped on every sheet with
said seal when filed with government authorities or when submitted or used professionally

SEC. 27. Indication of Registration/Professional License Number. –

The professional electrical engineer, registered electrical engineer, or registered master

electrician shall be required to indicate his registration/professional license number, the date
registered, and the date of its expiry in the documents he signs, uses or issues in connection with the
practice of his profession.

17
SEC. 28. Refusal to Issue Certificates. – The Board of electrical engineering shall not issue a
certificate of registration to any person convicted by the court of any criminal offense
involving moral turpitude or to any person guilty of immoral or dishonorable conduct or to any
person of unsound mind. In the event of refusal to issue certificates for any reason, the Board
shall give the applicant a written statement setting forth the reasons for such action, which
statement shall be incorporated in the records of the Board.

SEC. 29. Revocation of Certificates of Registration and Suspension from the Practice of the
Profession. – The Board shall have the power, upon proper notice and hearing, to revoke any
certificate of registration of any registrant, to suspend him from the practice of his profession
or to reprimand him for any cause specified in the preceding section, or for the use of,
perpetration of any fraud or deceit in obtaining a certificate of registration, or for gross
negligence or incompetence or for unprofessional or dishonorable conduct; for violation of
this Act, the rules and regulations and other policies of the Board and the Code of
Professional Ethics.
18
SEC. 30. Re-issuance of Revoked Certificates and Replacement of
Lost Certificates. –
Subject to the approval of the Commission, the Board may,
after the expiration of one (1) year from the date of revocation of a
certificate, for reasons it may deem sufficient, entertain an
application for a new certificate in the same manner as application
for an original one. A new certificate of registration to replace any
certificate that has been lost, destroyed or mutilated may be issued,
subject to the rules of the Board.

19
Article IV
Sundry Provision Relative to the Practice of Electrical Engineering

SEC. 31. Field of Practice. – The field of practice for professional electrical engineers, registered electrical
engineers, and registered master electricians shall be as follows:

(a) A professional electrical engineer’s field of practice includes the sole authority to seal electrical
plans, etc., and to practice electrical engineering in its full scope as defined in this Act;

(b) A registered electrical engineer’s field of practice includes charge or supervision of operation and
maintenance of electrical equipment teaching of electrical subjects; and sale and distribution of
electrical equipment and systems requiring engineering circulations or application of engineering
data

(c) A registered master electrician’s field of practice includes the installation, wiring, operation,
maintenance and repair of electrical machinery, equipment and devices. If the installation or the
machinery is rated in excess of five hundred kilovolt-amperes (500 Kva), or in excess of six hundred
volts (600 V) the work shall be under the supervision of a professional electrical engineer or a
registered electrical engineer.
20
SEC. 32. Prohibition in the Practice of Electrical Engineering. – No person shall:

(a) Practice or offer to practice electrical engineering in the Philippines without having
previously obtained a certificate of registration and a professional license from the
Board of Electrical Engineering except as provided for in Section 14 hereof;

(b) Use, or attempt to use as his own, certificate of registration, professional license or
the seal of another;

(c) Give false or forged evidence of any kind to the Board or to any member thereof in
obtaining a certificate of registration or professional license;
21
SEC. 33. Personnel Required. –

Every electric plant, industrial plant or factory, commercial establishment, institutional

building, watercraft, electric locomotive or in any other installation where persons and properties are

exposed to electrical hazards shall not have less than the following complement of professional

electrical engineer, registered electrical engineer, and registered electrical engineer, and registered

master electricians

SEC. 34. Preparation of Plans, Supervision of Installation, Application of the Philippine Electrical Code. –

It shall be unlawful for any person not authorized under this Act to prepare plans, electrical

valuations or specifications for any electrical wiring, equipment or system; and no installation thereof

shall be undertaken unless the plans, designs, valuations and specifications have been prepared by or

under the responsible charge of, and signed and sealed by a professional electrical engineer; it should

be executed under the responsible charge or supervision of a professional electrical engineer, a

registered electrical engineer, or a registered master electrician.

22
SEC. 35. Practice Not Allowed for Firms and Corporations. –

No firm or corporations may be registered or licensed as such for the practice

of electrical engineering. However, persons properly qualified and licensed as
professional electrical engineers may, among themselves, form a partnership or
association and collectively render electrical engineering service. Individual members of
such partnerships or associations shall be responsible for their own respective acts.

SEC. 36. Posting of Certificates. –

The owner, manager or the person in charge of an electric plant, industrial plant
or factory, commercial establishment, institutional building, watercraft, or electric
locomotive shall post or cause to be posted in a conspicuous place within such plant or
establishment the certificate of registration of the engineers or electricians employed in
such plant or establishment, in a frame protected by transparent glass or equivalent.
23
SEC. 37. Certificate of Specialty. –
Certificates of specialty shall be issued by the Board, subject to the
approval of the Commission, to professional electrical engineers who have
been screened and recommended by the integrated and accredited electrical
engineering association. These are for specific fields in which the applicants
have specialized knowledge, training and experience and have demonstrated
their competence and expertise.
SEC. 38. Foreign Reciprocity. –
No foreign engineer shall be admitted to take a board examination, be
given a certificate of registration, or be entitled to any of the rights and
privileges under this Act unless the country of which he is a subject or citizen
specifically permits Filipino engineers to practice within its territorial limits on
the same basis as the subjects or citizens of such country. 24
SEC. 39. Enforcement of the Act by Officers of the Law. –

It shall be the duty of all constituted officers of the law of the national government, or

any provincial, city or municipal government or of any political subdivision thereof to prosecute

any person violating the provisions of this Act. The Secretary of Justice or his assistant shall act

as legal adviser of the Board and render such legal assistance as may be necessary in carrying

out the provisions of this Act.

SEC. 40. Penalty Clause. –

Any person who shall violate any of the provisions of this Act shall be guilty of

misdemeanor and shall, upon conviction, be sentenced to a fine of not less than Ten thousand

pesos (P10,000.00) nor more than Fifty thousand pesos (P50,000.00) or imprisonment for a

period not less than six (6) months nor more than five (5) years or both at the discretion of the

court.
25
Article V
Transitory Provisions

SEC. 41. Terms of Office of Board Members. – Upon approval of this Act, the incumbent chairman and two (2)

members of the Board shall continue to serve until their terms of office expire or until their replacements have

been appointed by the President and shall have been duly qualified.

SEC. 42. New Certificates of Registration and Professional Licenses. –

(a) Associate electrical engineers and assistant electrical engineers with valid certificates of registration and

professional license issued under Republic Act No. 184 shall register within two (2) years from the effectivity

of this Act and be issued new certificates of registration and new professional license as registered electrical

engineers under this Act to replace their original ones. Their serial numbers shall be provided by the

registration division of the Commission.

(b) Master electricians with valid certificates of registration and professional licenses under Republic Act No.

184 shall register within two (2) years from the effectivity of this Act and be issued new certificates of

registration and new professional licenses as registered master electricians with the same serial numbers as

their old ones to replace their original certificates and licenses. 26

Article VI
Final Provisions
SEC. 43. Repealing Clause. – Republic Act No. 184 and existing
provisions of provincial, city or municipal ordinances or regulations
pertaining to examinations for electrical contractors, electrical
inspectors, or electricians, and all other laws, part of laws, orders,
ordinances or regulations in conflict with this Act are hereby repealed or
amended accordingly.

SEC. 44. Separability Clause. – If any part of this Act or the application
of such provision or circumstance is declared unconstitutional, the
remainder of this Act or the application of such provision to other
persons or circumstances shall not be affected by such declaration.

SEC. 45. Effectivity Clause. – This Act shall take effect after thirty (30)
days following its full publication in the Official Gazette or newspaper of
general circulation.
27
 RA 7920 brought the licensing of electrical
engineers limiting only to persons who have
completed Bachelor of Science Degree in
Electrical Engineering, it was appropriate for the
time because a good number of electrical
engineering graduates had already become
available for the board examinations, along with
the original non-graduates who were conferred
licenses as electrical practitioners of RA 184.

28
Issues on RA 7920
• In RA 7920, fresh and young or heavily
experienced Registered Electrical Engineer can
practice the whole scope of the profession
except “sealing‟.
• The only difference between the PEE and the
REE is “Sealing Plans & Designs”.
• RA 7920 has no mention about capacity levels
nor voltage limitations, the scope of the REE
except for “signing & sealing” appears to be
limitless.
29
RA 184 vs RA 7920
RA 184
Non-BSEE graduates
can become AssoEE
or PEE.
A fresh AsstEE can
only be licensed at
23 years of age.
No provision for kVA scope or limitation,
only on voltage specific for Master
Electricians & the AsstEE’s
PEE: to practice without any voltage or
capacity limitation the full scope of the
profession with the sole authority to
design, “sign & seal” plans
RA 7920
Not allowed
Except for “sealing”, the fresh REE at 21
years old is licensed to practice the full
scope of the profession even w/o any
orientation & responsible experience.
The REE can practice in all areas with no kVA or
Voltage limitations. In effect, the PEE is no
longer needed in industries & commercial
complexes.
PEE: to practice w/o voltage or capacity
limitation the full scope of the profession
with the sole authority to “seal” plans.
REE‟s may design plans but must be
reviewed and sealed by the PEE‟s.
30
RA 184 vs RA 7920
RA 184 RA 7920
AssoEE: to take charge of or supervise
The REE can practice the full scope of the
w/o voltage limitations, any electrical
profession without limits as to voltage &
construction or installation, or the
capacity including designing; except
operation, tending and maintenance of
“sealing”. The scopes of both the AssoEE
any electric generating plant; or to take
& the AsstEE are fully given to the REE to
charge of the sale or distribution of any
include a large part of the PEE scope.
electric supply or utilization equipment
Except for “sealing”, the fresh REE at 21
A fresh AsstEE can
years old is licensed to practice the full
only be licensed at
scope of the profession even w/o any
23 years of age.
orientation & responsible experience.
AsstEE: To take charge of or supervise the
operation, tending and maintenance of
any electric generating plant or to take
The AsstEE is no longer applicable in RA 7920.
charge of or supervise any electric wiring
or installation of utilization equipment
employing voltages up to 4,800 volts 31
Repealing the RA 7920?
The Institute of Integrated Electrical Engineers of the Philippines
(IIEE) on 2017 proposed a new electrical engineering law that
will repeal the RA 7920 called as “THE ELECTRICAL
ENGINEERING ACT OF 2017”

“The new EE Law seeks to be responsive, motivating and shall

be more compelling to achieve growth in the profession.”

32
 Highlights on the new EE law
proposed by the IIEE
1. A Declaration of Policy

2. Wider Definition of Terms Used as Reference in Regulating the Practice of

the Electrical Profession.

3. More Substantive Provisions for the Field of Practice of Responsible

Character of Electrical Practitioners.

4. Clearer Mandate on “Who are Authorized to Practice‟ Electrical

Technology & Electrical Engineering Profession.

5. Clearer Mandate on “Who Are Authorized to Teach” Electrical Engineering

Courses in Colleges & Universities

33
References
• https://thecorpusjuris.com/legislative/repub
lic-acts/ra-no-184.php
• https://www.officialgazette.gov.ph/1995/02/
24/republic-act-no-7920/
• https://iiee.org.ph:89/uploads/files/831.pdf

34
 REPUBLIC
ACT NO.
7832
WMSU JOHN FERNAN B. ARELLANO
BOBBY DIONISIO

1
AN ACT PENALIZING THE PILFERAGE OF
ELECTRICITY AND THEFT OF ELECTRIC
POWER TRANSMISSION LINES/MATERIALS,
RATIONALIZING SYSTEM LOSSES BY
PHASING OUT PILFERAGE LOSSES AS A
COMPONENT THEREOF AND FOR OTHER
PURPOSES.

2
SECTION 1: SHORT TITLE
• THIS ACT SHALL BE REFERRED TO
A THE “ANTI-ELECTRICITY AND
ELECTRIC TRANSMISSION
LINES/MATERIALS PILFERAGE ACT
OF 1994”

3
SECTION 2: ILLEGAL USE OF
ELECTRICTY
• IT IS HEREBY DECLARED UNLAWFUL FOR ANY
PERSON, WHETHER NATURAL OR JURIDICIAL,
PUBLIC OR PRIVATE, TO:
1. TAP, MAKE OR CAUSE TO BE MADE ANY
CONNECTION WITH OVERHEAD LINES, SERVICE
DROPS, OR OTHER ELECTRIC SERVICE WIRESM
WITHOUT PREVIOUS AUTHORITY OR CONSENT OF
THE PRIVATE ELECTRIC UTILITY OR RURAL ELECTRIC
COOPERATIVE CONCERNED;

4
SECTION 3: THEFT OF ELECTRIC
POWER TRANSMISSION LINES AND
MATERIALS
• CUT,SAW, SLICE, SEPARATE, SPLIT,
SEVERE, SMELT, OR REMOVE ANY
ELECTRIC POWER TRANSMISSION
LINE/MATERIAL OR METER FROM A
TOWER.

5
SECTION 4: PRIMA FACIE EVIDENCE
• THE PRESENCE OF ANY OF • 1. THE IMMEDIATE
THE FOLLOWING DISCONNECTION BY THE
CIRCUMSTANCES SHALL ELECTRIC UTILITY TO
SUCH PERSON AFTER
CONSTITUTE PRIMA FACIE DUE NOTICE
EVIDENCE OF ILLEGAL USE • 2. THE HOLDING OF
OF ELECTRICITY AS PRELIMINARY
DEFINED IN THIS ACT, BY INVESTIGATION BY THE
THE PERSON BENEFITED PROSECUTOR AND THE
THEREBY, AND SHALL BE SUBSEQUENT FILING IN
TE BASIS FOR: COURT OF THE
PERTINENT
INFORMATION.

6
SECTION 5: INCENTIVES
• AN INCENTIVE SCHEMES BY WAY OF A
MONETARY REWARD IN THE MINIMUM
AMOUNT OF P5,000 SHALL BE GIVEN
TO ANY PERSON WHO SHALL REPORT
TO THE NPC OR POLICE AUTHORITIES
ANY ACT WHICH MAY CONSTITUTE A
VIOLATION OF SECTION 3 HEREOF.

7
SECTION 6: DISCONNECTION OF
ELECTRIC SERVICE
• THE PRIVATE ELECTRIC UTILITY OR RURAL
ELECTRIC COOPERATIVE CONCERNED
SHALL HAVE THE RIGHT AND AUTHORITY
TO DISCONNECT IMMEDIATELY THE
ELECTRIC SERVICE AFTERSERVINF WRITTEN
NOTICE OR WARNING TO THE EFFECT,
WITHOUT THE NEED OF A COURT OR
ADMINISTRATIVE ORDER.

8
SECTION 7: PENALTIES
• A. VIOLATION OF SECTION 2, THE PENALTY OF PRISON
MAYOR OR A FINE RANGING FROM P10,000 TO P20,000.
• B. VIOLATION OF SECTION 3, THE PENALTY OF
RECLUSION TEMPORAL OR A FINE RANGING P50,000
TO P100,000.
• C. PROVISION COMMON TO VIOLATIONS OF SECTION 2
AND 3, IF THE OFFENSE IS COMMITTED OR IN
COVINANCE WITH THE OFFICER EMPLOYEE, WILL BE
PUNISHED WITH A PENALTY ONE DEGREE HIGHER
THAN THE PENALTY PROVIDED HEREIN.

9
SECTION 8: AUTHORITY TO IMPOSE
VIOLATION OF CONSTRUCT
SURCHARGES
• A PRIVATE ELECTRIC UTILITY OR RURAL
ELECTRIC COOP. MAY IMPOSE SURCHARGES, IN
ADDITON TO THE VALUE OF ELECTRIC
PILFERED.
• (a) First apprehension. - Twenty five percent (25%) of the
current bill as surcharge;
• (b) Second apprehension. - Fifty percent (50%) of the
current bill as surcharge; and
• (c) Third and subsequent apprehensions. - One hundred
percent (100%) of the current bill as surcharge.
10
SECTION 9: Restriction on the Issuance of
Restraining Orders or Writs of Injunction.
• No writ of injunction or restraining order shall
be used by any court against any private
electric utility or rural electric cooperative
exercising the right and authority to disconnect
electric service as provided in this Act, unless
there is prima facie evidence that the
disconnection was made with evident bad faith
or grave abuse of authority.

11
SECTION 10: Rationalization of System
Losses by Phasing out Pilferage Losses as a
Component Thereof
• a) For private electric utilities:
• (i) Fourteen and a half percent (14 1/2%) at
the end of the first year following the
effectivity of this Act;
• (ii) Thirteen and one-fourth percent (13
1/4%) at the end of the second year following
the effectivity of this Act;
• (iii) Eleven and three-fourths (11 3/4%) at the
end of the third year following the effectivity
of this Act; and
• (iv) Nine and a half-percent (9 1/2%) at the
end of the fourth year following the effectivity
of this Act.
• (b) For rural electric cooperatives:
• (i) Twenty-two percent (22%) at the end of the
first year following the effectivity of this Act;
• (ii) Twenty percent (20%) at the end of the
second year following the effectivity of this Act;
• (iii) Eighteen percent (18%) at the end of the
third year following the effectivity of this Act;
• (iv) Sixteen percent (16%) at the end at the
fourth year following the effectivity of this Act;
and
• (v) Fourteen percent (14%) at the end of the fifth
year following the effectivity of this Act.
12
SECTION 11: Area of Coverage.
• The caps provided in Section 10 of this Act
shall apply only to the area of coverage of
private electric utilities and rural electric
cooperatives as of the date of the
effectivity of this Act.

13
Section 12: Recovery of Pilferage Losses.
• Any private electric utility or rural
electric cooperative which recovers
any amount of pilferage losses shall,
within thirty (30) days from said
recovery, report in writing and under
oath to the ERB

14
SECTION 13: Information Dissemination.
• The private electric utilities, the rural electric
cooperatives, the NPC, and the National Electrification
Administration (NEA) shall, in cooperation with each
other, undertake a vigorous campaign to inform their
consumers of the provisions of this Act especially
Sections 2, 3, 4, 5, 6, 7, and 8 hereof, within sixty (60)
days from the effectivity of this Act and at least once a
year thereafter, and to incorporate a faithful
condensation of said provisions in the contracts with
new consumers.
15
Section 14: Rules and Regulations
• The ERB shall, within thirty (30) working days after
the conduct of due hearings which must commence
within thirty (30) working days upon the effectivity of
this Act, issue the rules and regulations as may be
necessary to ensure the efficient and effective
implementation of the provisions of this Act, to
include but not limited to, the development of
methodologies for computing the amount of electricity
illegally used and the amount of payment or deposit
contemplated in Section 7 hereof, as a result of the
presence of the prima facie evidence discovered.

16
Section 15: Separability Clause
• Any portion or provision of this Act which
may be declared unconstitutional or
invalid shall not have the effect of
nullifying other portions or provisions
hereof.

17
Section 16: Repealing Clauses
• The provisions in Presidential Decree No.
401, as amended by Batas Pambansa Blg.
876, penalizing the unauthorized
installation of electrical connections,
tampering and/or knowing use of
tampered electrical meters or other
devices, and the theft of electricity are
hereby expressly repealed.
18
Section 17: Effectivity Clause
• This Act shall take effect thirty (30) days after
its publication in the Official Gazette or in any
two (2) national newspapers of general
circulation.
• Approved: December 8, 1994.

19
 Electric
Power
Industry
Reform
Act of 2001
(EPIRA)
WMSU Republic Act No. 9163
John Osmeña

1
REPUBLIC ACT NO. 9163
AN ACT ORDAINING REFORMS IN THE
ELECTRIC POWER INDUSTRY, AMENDING
FOR THE PURPOSE CERTAIN LAWS AND
FOR OTHER PURPOSES .
IN 2001, the Electric Power Industry Reform Act
(EPIRA) was enacted with the promise of delivering
affordable and reliable electricity to country.

2
CHAPTERS:
• Chapter I : TITLE AND • Chapter VI :POWER
DECLARATION OF POLICY
SECTOR ASSETS AND
• Chapter II : ORGANIZATION LIABILITIES MANAGEMENT
AND OPERATION OF THE ELECTRIC
POWER INDUSTRY • Chapter VII :PROMOTION
• Chapter III : ROLE OF THE OF RURAL ELECTRIFICATION
DEPARTMENT OF ENERGY
• Chapter V III:GENERAL
• Chapter IV :REGULATION PROVISIONS
OF THE ELECTRIC POWER
INDUSTRY • Chapter IX :FINAL
• Chapter V :PRIVATIZATION PROVISIONS
OF THE ASSETS OF THE
NATIONAL POWER
CORPORATION

3
Chapter I
Title and Declaration of Policy
• SECTION 1. Short Title. – This Act shall be known as the “Electric
Power Industry Reform Act of 2001”. It shall hereinafter be referred
to as the Act.
• SECTION 2. Declaration of Policy. – It is hereby declared the
policy of the State:
– (a) To ensure and accelerate the total electrification of the country;
– (b) To ensure the quality, reliability, security and affordability of the supply of
electric power;
– (c) To ensure transparent and reasonable prices of electricity in a regime of free
and fair competition and full public accountability to achieve greater operational
and economic efficiency and enhance the competitiveness of Philippine products
in the global market;
– (d) To enhance the inflow of private capital and broaden the ownership base of
the power generation, transmission and distribution sectors;

4
– (e) To ensure fair and non-discriminatory treatment of public and private sector
entities in the process of restructuring the electric power industry;
– (f) To protect the public interest as it is affected by the rates and services of
electric utilities and other providers of electric power;
– (g) To assure socially and environmentally compatible energy sources and
infrastructure;
– (h) To promote the utilization of indigenous and new and renewable energy
resources in power generation in order to reduce dependence on imported
energy;
– (i) To provide for an orderly and transparent privatization of the assets and
liabilities of the National Power Corporation (NPC);
– (j) To establish a strong and purely independent regulatory body and system to
ensure consumer protection and enhance the competitive operation of the
electricity market; and
– (k) To encourage the efficient use of energy and other modalities of demand side
management.

5
• SEC. 3. Scope. – This Act shall
provide a framework for the
restructuring of the electric power
industry, including the privatization
of the assets of NPC, the transition
to the desired competitive structure,
and the definition of the
responsibilities of the various
government agencies and private
entities.
• SEC. 4. Definition of Terms. –
a. “Aggregator”
b. “Ancillary Services”
c. “Captive Market”
d. “Central Dispatch”
e. “Co-Generation Facility
f. “Commission”
g. “Concession Contract”
h. “Contestable Market”
i. “Customer Service Charge”
j. “Demand Slight Management”
k. “Department of Energy” or “DOE”
l. “Department of Finance” or “DOF”
m. “Distribution Code”
n. “Distribution of Electricity”
o. “Distribution of Electricity”
p. “Distribution Wheeling Charge”
q. “Distribution Utility”
r. “Electric Cooperative”
s. “Electric Power Industry Participant”
t. ““End-user”
““Energy Regulatory Board” or “ERB”
u.
v. ““Energy Regulatory Commission” or
“ERC”
w. ““Franchise Area”
x. “Generation Company”
y. “Generation of Electricity”
z. “Grid”
aa. “Grid Code”
bb. “Independent Power Producer” or “IPP”
cc. “Inter-Class Cross Subsidy”
dd. “Inter-Regional Grid Cross Subsidy”
6
ee. “Intra- Regional Grid Cross Subsidy” distribution utility”
ff. “IPP Administrator” vv.“Stranded Debts of NPC”
gg. “Isolated Distribution System” ww. “Subtransmission Assets”
hh.“Lifeline Rate” xx.“Supplier”
ii. “National Electrification Administration “ yy.“Supplier’s Charge”
or “NEA” zz.“Supply of Electricity”
jj. “National Power Corporation” or “NPC” aaa. “Transmission Charge”
kk.“National Transmission Corporation or bbb.“Transmission Development Plan” or
“TRANSCO” “TDP”
ll. “Open Access” ccc.“Transmission of Electricity”
mm.“Philippine Energy Plan” or “PEP” ddd.“Universal Charge”
nn.“Power Development Program” or “PDP”
oo. “Power Sector Assets and Liabilities
Management Corporation” or “PSALM
Corp.”
pp.“Privatization”
qq. “Renewable Energy Resources”
rr. “Restructuring”
ss.“Retail Rate”
tt. “Small Power Utilities Group” or “SPUG”
uu. “Stranded contract costs of NPC or

7
Chapter II
ORGANIZATION AND OPERATION OF THE ELECTRIC POWER
INDUSTRY
• SEC. 5. Organization. – The electric power industry shall be divided
into four (4) sectors, namely: generation, transmission, distribution and
supply.
• SEC. 6. Generation Sector. – Generation of electric power, a
business affected with public interest, shall be competitive and open.
• SEC. 7 Transmission Sector.- The transmission of electric power
shall be regulated common electricity carries business, subject to
the ratemaking powers of the ERC.
• SEC. 8. Creation of the National Transmission Company.- There is
hereby created a National Transmission Corporation, hereinafter referred to
as TRANSCO, which shall assume the electrical transmission function of
the National Power Corporation (NPC), and have the powers and functions
hereinafter granted. The TRANSCO shall assume the authority and
responsibility of NPC for the planning, construction and centralized
operation and maintenance of its high voltage transmission facilities,
including grid interconnections and ancillary services.

8
• SEC. 9. Functions and Responsibilities. – Upon the effectivity of this
Act, the TRANSCO shall have the following functions and responsibilities:
• SEC. 10. Corporate Powers of the TANSCO. – As a corporate entity,
TRANSCO shall have the following corporate powers:
• SEC. 11. TRANSCO Board of Directors. – All the powers of the
TRANSCO shall be vested in and exercised by a Board of Directors. The
Board shall be composed of a Chairman and six (6) members. The
Secretary of the Department of Finance (DOF) shall be the ex officio
Chairman of the Board. The other members of the TRANSCO Board shall
include the Secretary of the Department of Energy (DOE), the Secretary of
the Department of Environment and Natural Resources (DENR), the
President of TRANSCO, and three (3) members to be appointed by the
President, each representing Luzon, Visayas and Mindanao.
• SEC. 12. Powers and Duties of the Board. – The following are the
powers of the Board:

9
• SEC. 13. Board Meetings. – The Board shall meet as often as may be
necessary upon the call of the Chairman of the Board or by a majority of the
Board members.
• SEC. 14. Board Per Diems and Allowances. – The members of the
Board shall receive per diem for each regular or special meeting of the
board actually attended by them, and, upon approval of the Secretary of the
Department of Finance, such other allowances as the Board may prescribe.
• SEC. 15. Quorum. – The presence of at least four (4) members of the
Board shall constitute a quorum, which shall be necessary for the
transaction of any business. The affirmative vote of a majority of the
members present in a quorum shall be adequate for the approval of any
resolution, decision or order, except when the Board shall otherwise agree
that a greater vote is required.
• SEC. 16. Powers of the President of TRANSCO. – The President of
TRANSCO shall be appointed by the President of the Philippines. In the
absence of the Chairman, the President shall preside over board meetings.

10
• SEC. 17. Exemption from the Salary Standardization Law. – The salaries and
benefits of employees in the TRANSCO shall be exempt from Republic Act. No. 6758
and shall be fixed by the TRANSCO Board.

• SEC. 18. Profits. – The net profit, if any, of TRANSCO shall be remitted to the
PSALM Corp. not later than ninety (90) days after the immediately preceding quarter.

• SEC. 19. Transmission Charges. – The transmission charges of the

TRANSCO shall be filed with and approved by the ERC pursuant to Paragraph (f) of
Section 43 hereof.

• SEC. 20. TRANSCO Related Businesses. – TRANSCO may engage in

any related business which maximizes utilization of its assets: Provided, That a
portion of the net income derived from such undertaking utilizing assets which form
part of the rate base shall be used to reduce transmission wheeling rates as
determined by the ERC. Such portion of net income used to reduce the transmission
wheeling rates shall not exceed fifty percent (50%) of the net income derived from
such undertaking.

11
• SEC. 21. TRANSCO Privatization. – Within six (6) months from the
effectivity of this Act, the PSALM Corp. shall submit a plan for the endorsement
by the Joint Power Commission and the approval of the President of the
Philippines. The President of the Philippines thereafter shall direct PSALM Corp.
to award in open competitive bidding, the transmission facilities, including grid
interconnections and ancillary services to a qualified party either through an
outright sale or a concession contract. The buyer/concessionaire shall be
responsible for the improvement, expansion, operation, and/or maintenance of
its transmission assets and the operation of any related business. The award
shall result in maximum present value of proceeds to the national government.
In case a concession contract is awarded, the concessionaire shall have a
contract period of twenty-five (25) years, subject to review and renewal for a
maximum period of another twenty-five (25) years.
• SEC. 22. Distribution Sector. – The distribution of electricity to end-users shall
be a regulated common carrier business requiring a national franchise. Distribution of
electric power to all end-users may be undertaken by private distribution utilities,
cooperatives, local government units presently undertaking this function and other
duly authorized entities, subject to regulation by the ERC.

12
• SEC. 21. TRANSCO Privatization. – Within six (6) months from the
effectivity of this Act, the PSALM Corp. shall submit a plan for the endorsement
by the Joint Power Commission and the approval of the President of the
Philippines. The President of the Philippines thereafter shall direct PSALM Corp.
to award in open competitive bidding, the transmission facilities, including grid
interconnections and ancillary services to a qualified party either through an
outright sale or a concession contract. The buyer/concessionaire shall be
responsible for the improvement, expansion, operation, and/or maintenance of
its transmission assets and the operation of any related business. The award
shall result in maximum present value of proceeds to the national government.
In case a concession contract is awarded, the concessionaire shall have a
contract period of twenty-five (25) years, subject to review and renewal for a
maximum period of another twenty-five (25) years.
• SEC. 22. Distribution Sector. – The distribution of electricity to end-users shall
be a regulated common carrier business requiring a national franchise. Distribution of
electric power to all end-users may be undertaken by private distribution utilities,
cooperatives, local government units presently undertaking this function and other
duly authorized entities, subject to regulation by the ERC.

13
• SEC. 23. Functions of Distribution Utilities. – A distribution utility shall have
the obligation to provide distribution services and connections to its system for any
end-user within its franchise area consistent with the distribution code. Any entity
engaged therein shall provide open and non-discriminatory access to its distribution
system to all users.
• SEC. 24. Distribution Wheeling Charge. – The distribution wheeling charges
of distribution utilities shall be filed with and approved by the ERC pursuant to
Paragraph (f) of Section 43 hereof.
• SEC.25. Retail Rate. – The retail rates charged by distribution utilities for the
supply of electricity in their captive market shall be subject to regulation by the ERC
based on the principle of full recovery of prudent and reasonable economic costs
incurred, or such other principles that will promote efficiency as may be determined
by the ERC.
• SEC. 26. Distribution Related Businesses. – Distribution utilities may, directly
or indirectly, engage in any related business undertaking which maximizes the
utilization of their assets: Provided, That a portion of the net income derived from
such undertaking utilizing assets which form part of the rate base shall be used to
reduce its distribution wheeling charges as determined by the ERC. Provided, further,
That such portion of net income used to reduce their distribution wheeling charges
shall not exceed fifty percent (50%) of the net income derived from such undertaking:
Provided, finally, That separate accounts are maintained for each business
undertaking to ensure that the distribution business shall neither subsidize in any way
such business undertaking nor encumber its distribution assets in any way to support
such business.

14
• SEC. 27. Franchising Power in the Electric Power Sector. – The power
to grant franchises to persons engaged in the transmission and distribution of
electricity shall be vested exclusively in the Congress of the Philippines and all
laws inconsistent with this Act particularly, but not limited to, Section 43 of PD
269, otherwise known as the “National Electrification Decree”, are hereby
deemed repealed or modified accordingly: Provided, That all existing franchises
shall be allowed to their full term: Provided, further, That in the case of electric
cooperatives, renewals and cancellations shall remain with the National
Electrification Commission under the National Electrification Administration for
five (5) more years after the enactment of this Act.
• SEC. 28. De-Monopolization and Shareholding Dispersal. – In
compliance with the constitutional mandate for dispersal of ownership and de-
monopolization of public utilities, the holdings of persons, natural or juridical,
including directors, officers, stockholders and related interests, in a distribution
utility and their respective holding companies shall not exceed twenty-five (25%)
percent of the voting shares of stock unless the utility or the company holding
the shares or its controlling stockholders are already listed in the Philippine
Stock Exchange (PSE): Provided, That controlling stockholders of small
distribution utilities are hereby required to list in the PSE within five (5) years
from the enactment of this Act if they already own the stocks. New controlling
stockholders shall undertake such listing within five (5) years from the time they
acquire ownership and control. A small distribution company is one whose peak
demand is equal to or less than Ten megawatts (10MW).

15
• SEC. 29. Supply Sector. – The supply sector is a business affected with public interest.
Except for distribution utilities and electric cooperatives with respect to their existing franchise
areas, all suppliers of electricity to the contestable market shall require a license from the ERC.
• SEC. 30. Wholesale Electricity Spot Market. – Within one (1) year from the
effectivity of this Act, the DOE shall establish a wholesale electricity spot market composed of the
wholesale electricity spot market participants. The market shall provide the mechanism for
identifying and setting the price of actual variations from the quantities transacted under contracts
between sellers and purchasers of electricity.
• SEC. 31. Retail Competition and Open Access. – Any law to the contrary
notwithstanding, retail competition and open access on distribution wires shall be implemented not
later than three (3) years upon the effectivity of this Act, subject to the following conditions:
• SEC. 32. NPC Stranded Debt and Contract Cost Recovery. – Stranded
debt of NPC shall refer to any unpaid financial obligations of NPC.
• SEC. 33. Distribution Utilities Stranded Contract Costs Recovery. –
Stranded contract costs of distribution utilities shall refer to the excess of the contracted cost of
electricity under eligible contracts of such utilities over the actual selling price of such contracts in
the market. Such contracts shall have been approved by the ERB as of December 31, 2000.
• SEC. 34. Universal Charge. – Within one (1) year from the effectivity of this Act, a
universal charge to be determined, fixed and approved by the ERC., shall be imposed on all
electricity end-users for the following purposes:

16
• SEC. 35. Royalties, Returns and Tax Rates for Indigenous Energy
Resources. – The provisions of Section 79 of Commonwealth Act No. 137 (C.A.
No. 137) and any law to the contrary notwithstanding, the President of the Philippines
shall reduce the royalties, returns and taxes collected for the exploitation of all
indigenous sources of energy, including but not limited to, natural gas and geothermal
steam, so as to effect parity of tax treatment with the existing rates for imported coal,
cru
• SEC. 36. Unbundling of Rates and Functions. – Within six (6) months from
the effectivity of this Act, NPC shall file with the ERC its revised rates. The rates of
NPC shall be unbundled between transmission and generation rates and the rates
shall reflect the respective costs of providing each service. Inter-grid and intra-grid
cross subsidies for both the transmission and the generation rates shall be removed
in accordance with this Act.de oil, bunker fuel and other imported fuels.

17
Chapter III
ROLE OF THE DEPARTMENT OF ENERGY

• SEC. 37. Powers and Functions of the DOE.- In addition to its existing
powers and functions, the DOE is hereby mandated to supervise the restructuring of
the electricity industry. In pursuance thereof, Section 5 of RA 7638 otherwise known
as “The Department of Energy Act of 1992” is hereby amended to read as follows:

18
Chapter IV
REGULATION OF THE ELECTRIC POWER INDUSTRY
• SEC. 38. Creation of the Energy Regulatory Commission. There is
hereby created an independent, quasi-judicial regulatory body to be named the Energy Regulatory
Commissions (ERC). For this purpose, the existing Energy Regulatory Board (ERB) created under
Executive Order No. 172, as amended, is hereby abolished.
• SEC. 39. Compensation and Other Emoluments for ERC Personnel.
– The compensation and other emoluments for the Chairman and members of the Commission
and the ERC personnel shall be exempted from the coverage of Republic Act No. 6758, otherwise
known as the “Salary Standardization Act”. For this purpose, the schedule of compensation of the
ERC personnel, except for the initial salaries and compensation of the Chairman and members of
the Commission, shall be submitted for approval by the President of the Philippines. The new
schedule of compensation shall be implemented within six (6) months from the effectivity of this
Act and may be upgraded by the President of the Philippines as the need arises: Provided, That in
no case shall the rate be upgraded more than once a year.
• SEC. 40. Enhancement of Technical Competence. – The ERC shall
establish rigorous training programs for its staff for the purpose of enhancing the technical
competence of the ERC in the following areas: evaluation of technical performance and
monitoring of compliance with service and performance standards, performance-based rate-
setting reform, environmental standards and such other areas as will enable the ERC to
adequately perform its duties and functions.

19
• SEC. 41. Promotion of Consumer Interests. – The ERC shall handle
consumer complaints and ensure the adequate promotion of consumer interests.
• SEC. 42. Budget of the ERC. – The amount of One hundred fifty million pesos
(P150,000,000.00) is hereby allocated from the existing budget of the ERB for the initial operation
of the ERC. Any balance shall initially be sourced from the Office of the President of the
Philippines. Thereafter, the annual budget of the ERC shall be included in the regular or special
appropriations.
• SEC. 43. Functions of the ERC. –The ERC shall promote competition, encourage
market development, ensure customer choice and penalize abuse of market power in the
restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and
desist order after due notice and hearing. Towards this end, it shall be responsible for the following
key functions in the restuctured industry:
• SEC. 44. Transfer of Powers and Functions. – The powers and functions of the
Energy Regulatory Board not inconsistent with the provisions of this Act are hereby transferred to
the ERC. The foregoing transfer of powers and functions shall include all applicable funds and
appropriations, records, equipment, property and personnel as may be necessary.
• SEC. 45. Cross Ownership, Market Power Abuse and Anti-
Competitive Behavior. – No participant in the electricity industry or any other person may
engage in any anti-competitive behavior including, but not limited to, cross-subsidization, price or
market manipulation, or other unfair trade practices detrimental to the encouragement and
protection of contestable markets.

20
• SEC. 46. Fines and Penalties. – The fines and penalties that shall be imposed
by the ERC for any violation of or non-compliance with this Act or the IRR shall range
from a minimum of fifty thousand pesos (P50,000.00) to a maximum of Fifty million
pesos (P50,000,000.00).

21
Chapter V
PRIVATIZATION OF THE ASSETS OF
THE NATIONAL POWER CORPORATION
• SEC. 47. NPC Privatization. – Except for the assets of SPUG, the generation assets,
real estate, and other disposable assets as well as IPP contracts of NPC shall be privatized in
accordance with this Act. Within six (6) months from the effectivity of this Act, the PSALM Corp
shall submit a plan for the endorsement by the Joint Congressional Power Commission and the
approval of the President of the Philippines, on the total privatization of the generation assets, real
estate, other disposable assets as well as existing IPP contracts of NPC and thereafter,
implement the same, in accordance with the following guidelines, except as provided for in
Paragraph (f) herein:
• SEC. 48. National Power Board of Directors. – Upon the passage of this Act,
Section 6 of R.A. 6395, as amended, and Section 13 of RA 7638, as amended, referring to the
composition of the National Power Board of Directors, are hereby repealed and a new Board shall
be immediately organized. The new Board shall be composed of the Secretary of Finance as
Chairman, with the following as members: the Secretary of Energy, the Secretary of Budget and
Management, the Secretary of Agriculture, the DirectorGeneral of the National Economic and
Development Authority, the Secretary of Environment and Natural Resources, the Secretary of
Interior and Local Government, the Secretary of the Department of Trade and Industry, and the
President of the National Power Corporation.

22
Chapter VI
POWER SECTOR ASSETS AND LIABILITIES
MANAGEMENT

• SEC. 49. Creation of Power Sector Assets and Liabilities

Management Corporation. – There is hereby created a government-owned and -
controlled corporation to be known as the “Power Sector Assets and Liabilities Management
Corporation”, hereinafter referred to as the “PSALM Corp.”, which shall take ownership of all
existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable
assets. All outstanding obligations of the NPC arising from loans, issuances of bonds, securities
and other instruments of indebtedness shall be transferred to and assumed by the PSALM Corp.
within one hundred eighty (180) days from the approval of this Act.
• SEC. 50. Purpose and Objective, Domicile and Term of Existence. –
The principal purpose of the PSALM Corp. is to manage the orderly sale, disposition, and
privatization of NPC generation assets, real estate and other disposable assets, and IPP contracts
with the objective of liquidating all NPC financial obligations and stranded contract costs in an
optimal manner.
• SEC. 51. Powers. – The Corporation shall, in the performance of its functions and for the
attainment of its objective, have the following powers:

23
• SEC. 52. Power Sector Assets and Liabilities Management
Corporation, Meetings, Quorum and Voting. – The Corporation shall be
administered, and its powers and functions exercised, by a Board of Directors which shall be
composed of the Secretary of Finance as the Chairman, the Secretary of Budget and
Management, the Secretary of the Department of Energy, the Director-General of the National
Economic and Development Authority, the Secretary of the Department of Justice, the Secretary
of the Department of Trade and Industry and the President of the PSALM Corp. as ex officio
members thereof.
• SEC. 53. Powers of the President of PSALM Corp. – The President of
PSALM Corp. shall be appointed by the President of the Philippines. In the absence of the
Chairman, the President shall preside over Board meetings.
• SEC. 54. Exemption from the Salary Standardization Law. – The salaries
and benefits of employees in the PSALM Corp. shall be exempt from Republic Act No. 6758 and
shall be fixed by the PSALM Corp. Board.
• SEC. 55. Property of the PSALM Corp. – The following funds, assets,
contributions and other property shall constitute the property of the PSALM Corp.:
• SEC. 56. Claims Against the PSALM Corp. – The following shall constitute the
claims against the PSALM Corp

24
Chapter VII
PROMOTION OF RURAL ELECTRIFICATION
• SEC. 57. Conversion of Electric Cooperatives. –Electric cooperatives are
hereby given the option to convert into either stock cooperative under the
Cooperatives Development Act or stock corporation under the Corporation Code.
Nothing contained in this Act shall deprive electric cooperatives of any privilege or
right granted to them under Presidential Decree No. 269, as amended, and other
existing laws.
• SEC. 58. Additional Mandate of the National Electrification
Administration (NEA). – NEA shall develop and implement programs:
• SEC. 59. Alternative Electric Service for Isolated Villages. – The
provision of electric service in remote and unviable villages that the franchised utility
is unable to service for any reason shall be opened to other qualified third parties.

25
• SEC. 60. Debts of Electric Cooperatives. – Upon the effectivity
of this Act, all outstanding financial obligations of electric cooperatives to NEA and
other government agencies incurred for the purpose of financing the rural
electrification program shall be assumed by the PSALM Corp. in accordance with the
program approved by the President of the Philippines within one (1) year from the
effectivity of this Act which shall be implemented and completed within three (3) years
from the effectivity of this Act. The ERC shall ensure a reduction in the rates of
electric cooperatives commensurate with the resulting savings due to the removal of
the amortization payments of their loans. Within five (5) years from the condonation
of debt, any electric cooperative which shall transfer ownership or control of its
assets, franchise or operations thereof shall repay PSALM Corp. the total debts
including accrued interests thereon.

26
Chapter VIII
GENERAL PROVISIONS
• SEC. 61. Reportorial Requirements. –The DOE shall take the necessary measures to
ensure that the provisions of this Act are properly implemented, and shall submit to the Power
Commission a semiannual report on the implementation of this Act, on or before the last week of April
and October of each year.
• SEC. 62. Joint Congressional Power Commission. – Upon the effectivity of this
Act, a congressional commission, hereinafter referred to as the “Power Commission”, is hereby
constituted. The Power Commission shall be composed of fourteen (14) members with the chairmen of
the Committee on Energy of the Senate and the House of Representatives and six (6) additional
members from each House, to be designated by the Senate President and the Speaker of the House of
Representatives, respectively. The minority shall be entitled to pro rata representation but shall have at
least one (1) representative in the Power Commission.
• SEC. 63. Separation Benefits of Officials and Employees of Affected
Agencies. – National government employees displaced or separated from the service as a
result of the restructuring of the electricity industry and privatization of NPC assets pursuant to this
Act, shall be entitled to either a separation pay and other benefits in accordance with existing
laws, rules or regulations or be entitled to avail of the privileges provided under a separation plan
which shall be one and one-half month salary for every year of service in the government:
Provided, however, That those who avail of such privilege shall start their government service
anew if absorbed by any government-owned successor company. In no case shall there be any
diminution of benefits under the separation plan until the full implementation of the restructuring
and privatization.

27
• SEC. 64. Fiscal Prudence. – To promote the prudent management of
government resources, the creation of new positions and the levels of or increase in
salaries and all other emoluments and benefits of TRANSCO and PSALM Corp.
personnel shall be subject to the approval of the President of the Philippines. The
compensation and all other emoluments and benefits of the officials and members of
the Board of the TRANSCO and PSALM Corp. shall be subject to the approval of the
President of the Philippines.
• SEC. 65. Environmental Protection. – Participants in the generation,
distribution and transmission sub-sectors of the industry shall comply with all
environmental laws, rules, regulations and standards promulgated by the Department
of Environment and Natural Resources including, in appropriate cases, the
establishment of an environmental guarantee fund.
• SEC. 66. Benefits to Host Communities. – The obligations of generation
companies and energy resource developers to communities hosting energy
generating facilities and/or energy resource developers as defined under Chapter II,
Sections 289 to 294 of the Local Government Code and Section 5(i) of Republic Act
No. 7638 and their implementing rules and regulations and applicable orders and
circulars consistent with this Act shall continue: Provided, That the obligations
mandated under Chapter II, Section 291 of Republic Act No. 7160, shall apply to
privately-owned corporations or entities utilizing the national wealth of the locality.

28
• SEC. 67. NPC Offer of Transition Supply Contracts. – Within six (6) months
from the effectivity of this Act, NPC shall file with the ERC for its approval a transition supply
contract duly negotiated with the distribution utilities containing the terms and conditions of supply
and a corresponding schedule of rates, consistent with the provisions hereof, including
adjustments and/or indexation formulas which shall apply to the term of such contracts. The term
of the transition supply contracts shall not extend beyond one (1) year from the introduction of
open access. Such contracts shall be based on the projected demand of such utilities less any of
their currently committed quantities under eligible IPP contracts as defined in Section 33 hereof:
Provided, That the total generation capacity of such signed transition supply contracts shall not
exceed the level of NPC owned, controlled or committed capacity as of the effectivity of this Act.
Such transition supply contracts shall be assignable to the NPC successor generating companies.

• SEC. 68. Review of IPP Contracts – An inter-agency committee chaired

by the Secretary of Finance, with the Secretary of the Department of Justice and the
Director General of the National Economic Development Authority as members
thereof is hereby created upon the effectivity of this Act. The Committee shall
immediately undertake a thorough review of all IPP contracts. In cases where such
contracts are found to have provisions which are grossly disadvantageous, or
onerous to the Government, the Committee shall cause the appropriate government
agency to file an action under the arbitration clauses provided in said contracts or
initiate any appropriate action under Philippine laws. The PSALM Corporation shall
diligently seek to reduce stranded costs, if any.

29
• SEC. 69. Renegotiation of Power Purchase and Energy
Conversion Agreements between Government Entities. – Within
three (3) months from the effectivity of this Act, all power purchase and energy conversion
agreements between the PNOC-Energy Development Corporation (PNOC-EDC) and NPC,
including but not limited to the Palimpinon, Tongonan and Mt. Apo Geothermal complexes, shall
be reviewed by the ERC and the terms thereof amended to remove any hidden costs or
extraordinary mark-ups in the cost of power or steam above their true costs. All amended
contracts shall be submitted to the Joint Congressional Power Commission for approval. The ERC
shall ensure that all savings realized from the reduction of said mark-ups shall be passed on to all
end-users.
• SEC. 70. Missionary Electrification. – Notwithstanding the divestment and/or
privatization of NPC assets, IPP contracts and spun-off corporations, NPC shall remain as a
National Government-owned and -controlled corporation to perform the missionary electrification
function through the Small Power Utilities Group (SPUG) and shall be responsible for providing
power generation and its associated power delivery systems in areas that are not connected to
the transmission system. The missionary electrification function shall be funded from the revenues
from sales in missionary areas and from the universal charge to be collected from all electricity
end-users as determined by the ERC.
• SEC. 71. Electric Power Crisis Provision – Upon the determination by the
President of the Philippines of an imminent shortage of the supply of electricity, Congress may
authorize, through a joint resolution, the establishment of additional generating capacity under
such terms and conditions as it may approve.

30
• SEC. 72. Mandated Rate Reduction. – Upon the effectivity of this Act,
residential end-users shall be granted a rate reduction from NPC rates of thirty
centavos per kilowatt-hour (P0.30/kWh). Such reduction shall be reflected as a
separate item in the consumer billing statement.
• Sec. 73. Lifeline Rate – A socialized pricing mechanism called a lifeline rate for
the marginalized end-users shall be set by the ERC, which shall be exempted from
the cross subsidy phase-out under this Act for a period often (10) years, unless
extended by law. The level of consumption and the rate shall be determined by the
ERC after due notice and hearing.
• Sec. 74. Cross Subsidies – Cross subsidies within a grid between grids and /
or classes of customers shall be phased out in a period not exceeding three (3) years
from the establishment by the ERC of a universal charge which shall be collected
form all electricity end-users. Such level of cross subsidies shall be made transparent
and identified separately in the billing statements provided to end-users by the
suppliers

31
Chapter IX
FINAL PROVISIONS
• SEC. 75. Statutory Construction – This Act shall, unless the context indicates
otherwise, be construed in favor of the establishment, promotion, preservation of
competition and people empowerment so that the widest participation of the people,
whether directly or indirectly, is ensured. With respect to NPC’s debts and IPP and
related contracts, nothing in this Act shall be construed as: (1) an implied waiver of
any right, action or claim, against any person or entity, of NPC or the Philippine
Government arising from or relating to any such contracts; or (2) a conferment of new
or better rights to creditors and IPP contractors in addition to subsisting rights granted
by the NPC or the Philippine Government under existing contracts.
• SEC. 76. Education and Protection of End Users.- End-users shall be
educated about the implementation of retail access and its impact on end-users and
on the proper use of electric power. Such education shall include, but not limited to,
the existence of competitive electricity suppliers, choice of competitive electricity
services, regulated transmission and distribution services, systems reliability,
aggregation, market, itemized billing, stranded cost, uniform disclosure requirements,
low-income bill payment, energy conservation and safety measures.

32
• SEC. 77. Implementing Rules and Regulations. – The DOE shall, in
consultation with relevant government agencies, the electric power industry
participants, non-government organization and end-users, promulgate the
Implementing Rules and Regulation (IRR) of the Act within six (6) months from the
effectivity of this Act, subject to the approval by the Power Commission.
• SEC. 78. Injunction and Restraining Order. – The implementation of the
provisions of the Act shall not be restrained or enjoined except by an order issued by
the Supreme Court of the Philippines.
• SEC. 79. Separability Clause – If for any reason, any provision of this act is
declared unconstitutional or invalid, the other parts or provisions hereof which are not
affected thereby shall continue to be in full force and effect.
• SEC. 80. Applicability and Repealing Clause – The applicability provisions
of Commonwealth Act No. 146, as amended, otherwise known as the “Public Service
Act”; Republic Act 6395, as amended, revising the charter of NPC; Presidential
Decree 269, as amended, referred to as the National Electrification Decree; Republic
Act 7638, otherwise known as the “Department of Energy Act of 1992”; Executive
Order 172, as amended, creating the ERB; Republic Act 7832 otherwise known as
the “Anti-Electricity and Electric Transmission Lines / Materials Pilferage Act of 1994”,
shall continue to have full force and effect except insofar as they are inconsistent with
this Act.

33
• SEC. 81. Effectivity Clause .- This Act shall take effect on the fifteenth day
following its publication in at least two (2) national paper of general circulation.

34
 CODE OF
ETHICS FOR
ELECTRICAL
ENGINEERS

WMSU Presented by:

Mae H. Dungog
Mel Rose L. Gadunan
Myrvierealyn M. Paden

BSEE - 3 1
Code of Ethics
Board of Electrical Engineering

Pursuant to Section 9 of Republic Act No. 184, known

as the Electrical Engineering Law, and Section 6 of P.D.
223, the Board hereby adopts the CODE OF ETHICS for
Electrical Engineers.

2
FOREWORD
Ethics is a set of moral principles or values to govern
the conduct of an individual belonging to a group or
profession on the basis of honesty, fairness, and justice.
An Electrical Engineer should observe a System of
moral principles and values, not in passive recognition,
but as a set of dynamic standards to guide his conduct
and way of life. It is his duty to practice his profession
according to this Code of Ethics. The keystone of
professional conduct is integrity.

3
 Article I
PROFESSIONAL LIFE

4
Section 1. An Electrical Engineer should discharge his duties
with absolute fidelity to his clients and employers, and to act at
all times, with fairness and impartiality to all, having due regard
to public interest and welfare.

Section 2. An Electrical Engineer should uphold the honor and

dignity of his profession and, therefore, should avoid association
with any person or enterprises of known questionable character.

Section 3. An Electrical Engineer should strive to upgrade his

skill and knowledge in electrical engineering in order to give the
best possible service to the public which could be attained by
interchanging information and experiences with other engineers,
and by unselfishly contributing to the mission of engineering
societies, institutes, schools and engineering and scientific
media, and other public institutions.

Section 4. An Electrical Engineer should only advertise his work

or merit in a simple manner and avoid any practice that will
discredit or do injury to the dignity and honor of his profession. 5
Section 5. An Electrical Engineer should endeavor to extend
public knowledge of engineering and shall discourage spreading
the untrue, unfair, and exaggerated statements regarding
engineering.

Section 6. An Electrical Engineer, should have due regard at all

times for the safety of the life and health of his employees, other
workers, as well as of the general public and for the protection of
property that may be affected by the work this responsibility.

Section 7. An Electrical Engineer should express an opinion on

engineering subject, whether publicly or privately, only when
such opinion is called for, his opinion must be founded on
adequate knowledge and information of the relevant issues and
facts based upon his honest convictions.

Section 8. An Electrical Engineer should not issue statements,

criticisms, opinions, arguments or other views on matters except
where public interest is affected.
6
 Article II
RELATION WITH CLIENT AND
EMPLOYER

7
Section 1. An Electrical Engineer should be fair, impartial and reasonable in
rendering professional service to his clients, employers and contractors
regarding contracts or other agreements.

Section 2. An Electrical Engineer should, before undertaking any engagement

or entering into any contracts which calls for his professional service that will
require or need the use of apparatus, other equipment or things in which he
has financial interest, have such situation clarified in the contract or agreement
to avoid conflict of interests.

Section 3. An Electrical Engineer should be vigilant in guarding against

conditions that may be dangerous or threatening to life, health, or property on
work for which he is responsible, or otherwise bring such conditions to the
attention of those responsible.

Section 4. An Electrical Engineer should present clearly the known possible

consequences or limitations of the work for which he will be responsible.

Section 5. An Electrical Engineer should honestly advise his clients or

employer to engage the services of other experts and specialists, and should
cooperate with them in the interests of his client or employer.

8
Section 6. An Electrical Engineer should not accept compensation from
more than one interested party for the same professional service
pertaining to the same work, without the consent of all affected parties.

Section 7. An Electrical Engineer should not divulge confidential

matters or information which has come to his knowledge concerning
affairs of his client or employers, without their consent.

Section 8. An Electrical Engineer should not be financially interested in

the bids of a contractor on competitive work for which he has been or
expects to be employed as an engineer, unless he has the consent of
his client of employer.

Section 9. An Electrical Engineer should promptly disclose to his client

or employer and interest which he may have in a business that may
conflict with or affect his decision regarding engineering work for which
he is employed or which he may be called upon to perform.

9
 Article III
RELATIONS WITH FELLOW
ENGINEERS

10
Section 1. An Electrical Engineer should endeavor at all times to
protect the engineering profession collectively and individually against
misrepresentation, distortion, misunderstanding or unfair criticism.

Section 2. An Electrical Engineer should give credit for the engineering

work to the person whom the credit is legally due.

Section 3. An Electrical Engineer should live up to the standards of

professional practice for electrical engineering.

Section 4. An Electrical Engineer should not directly or indirectly injure

the professional reputation, prospects, or practice of his fellow
engineers. Whenever he finds an Engineer violating the rules of
unethical or unprofessional practices, he should not hesitate to bring
the matter to the proper forum for disciplinary or for other appropriate
action.

Section 5. An Electrical Engineer should not compete with another

Engineer on the basis of compensation for particular work by means of
underbidding, after the results of a public bidding are announced.
11
 Article IV
PENAL PROVISIONS

12
Section 1. Violation of any provision of this Code shall
constitute unethical, unprofessional and dishonorable
conduct and the violator shall be subjected to disciplinary
action by the Board of Electrical Engineering.

13
EFFECTIVITY
This Code shall take effect upon approval by
the Commission and after fifteen (15) days
following its publication in the Official
Gazette.

Adopted in the City of Manila, this 9th of

May, 1988.

14
 MAGNA CARTA FOR
RESIDENTIAL
ELECTRICITY
CONSUMERS

PRESENTED BY:
JERIC CESAR A. ENRIQUEZ
RYAN T. MENTOC

WMSU LANRICK I. PEREZ

1
Pursuant to the provisions of
Section 41 of Republic Act no.
9136, otherwise known as the
Electric Power Industry Reform
Act, the Energy Regulatory
Commission hereby promulgates
the Magna Carta for Residential
Electricity Consumers as adopted
in a Resolution by the Commission
on the June 9, 2004.
2
 CHAPTER I.
GENERAL PROVISIONS

3
CHAPTER I. GENERAL PROVISIONS

Article 1. Title- this Resolution shall be

known as the Magna Carta for Residential
Electricity Consumers.

4
CHAPTER I. GENERAL PROVISIONS

Article 2. Definition of Terms-

• Bill Deposit
• Billing Adjustment
• Connection Point
• Consumer or customer or End-user
• Distribution Utility
• Differential Billing
• Energy Regulatory Commission or Commission or ERC
• Month
• Officer of the Law
• Registered Customer
• Residential Consumer

5
CHAPTER I. GENERAL PROVISIONS
• Article 3. Applicability – This Magna Carta
shall only apply to residential consumers.
• Article 4. Basic Rights – All consumers
shall be entitled to the following basic rights:
• (a)To have quality, reliable, affordable, safe,
and regular supply of electric power;
• (b)To be accorded courteous, prompt and
non-discriminatory service by the electric
service provider;
• (c)To be given a transparent, non-
discriminatory and reasonable price of
electricity consistent with the provisions of RA
9136;

6
CHAPTER I. GENERAL PROVISIONS
• (d)To be an informed electric consumer and given
adequate access to information on matters
affecting and electric service of the consumer
concerned;
• (e)To be accorded prompt and speed resolution of
complaints by both the distribution utility and/or the
ERC;
• (f)To know and choose the electric service retailer
upon the implementation of Retail Competition;
and
• (g)To organize themselves as a consumer
organization in the franchise area where they
belong and where they are served by the
distribution utility or as a network of organizations.

7
CHAPTER I. GENERAL PROVISIONS
• Article 5. Basic Obligations – Every consumer
must comply with the following obligations and
responsibilities:
• (a)To observe the terms of his contract including,
among other things, paying monthly electricity bills
promptly and honestly;
• (b)To allow the faithful and accurate recording of
consumption to be reflected in the appropriate
device;
• (c)To allow the utility’s employees/representatives
entry/access to his premises for the purposes
provided for in Article 29 hereof;

8
CHAPTER I. GENERAL PROVISIONS
• (d)To take proper care of metering or other
equipment that the electric utility has
installed in hi premises;
• (e)To inform the distribution utility and/or
proper authorities of any theft or pilferade
of electricity or any damage cause by any
person to the electric meter and
equipment appurtenant thereto; and
• (f)To cooperate with and support programs
on the wise and efficient use of electricity.

9
 CHAPTER II
CONSUMER RIGHTS

10
CHAPTER II. CONSUMER RIGHTS

• Article 6. Right to Electric Service- A consumer has

the right to be connected to a distribution utility for
electric power service after the consumer’s full
compliance with the distribution utility’s and local
government unit’s (LGU) requirements.
• If the said consumer is not the owner of the premises
sought to be energized, he shall be required to submit
an undertaking from the owner of the premises that
the said owner shall be jointly and severally liable with
the applicant for any unpaid regular monthly bills
incurred by the applicant after leaving the premises, in
the absence of or insufficiency of the bill deposit.

11
CHAPTER II. CONSUMER RIGHTS

• Article 7. Right to a Refund of Bill Deposits. — The

bill deposit provided for under Article 28 hereof shall
be refunded within one month from the termination of
service provided all bills have been paid.
• A customer who has paid his electric bills on or before
its due date for three (3) consecutive years may,
however, demand for the full refund of the deposit
even prior to the termination of his service. An
application for this purpose shall be filed with the
concerned distribution utility which must refund the
deposit within one month from receipt of such
application.

12
CHAPTER II. CONSUMER RIGHTS

• Article 8. Exemption from Payment of Meter

Deposits. — All consumers shall be exempt from
payment of meter deposits since private distribution
utilities have incorporated the cost of these electric
watthour meters in their rate base. Electric
cooperatives shall use their respective Reinvestment
Funds to procure electric watthour meters for their
consumers.
• In cases of loss and/or damage to the electric meter
due to the fault of the customer, he shall bear the
replacement cost of the meter.

13
CHAPTER II. CONSUMER RIGHTS

Article 9. Right to an Accurate Electric Watthour

Meter; Determination of Average Error. - No meter,
including instrument transformers, shall be installed or
placed in service unless it has been tested, certified and
sealed by the ERC. All watt-hour meters regardless of
make and type before being placed in service must be
adjusted to as close as possible to the condition of zero
error.

14
CHAPTER II. CONSUMER RIGHTS

• Article 10. Right to a Refund of Overbillings. — The

customer has the right to a refund in cases of
overbilling by the distribution utility arising from a
meter testing showing that the said meter was fast
without any evidence of tampering. In the event that a
meter in service is found to have an average error of
more than the tolerance of plus two percent, the
customer is entitled to a refund, for a maximum period
of six (6) months prior to the date of discovery, to be
applied to the customers future billings.

15
CHAPTER II. CONSUMER RIGHTS

• Article 11. Right to a Properly Installed Meter. —

The customer has the right to a meter installed in a
clean place free of vibration and where it will be easily
accessible and visible for reading and testing by both
the distribution utility and the consumer. Under no
condition should meters be located behind doors or
where they can be easily broken or jarred by moving
furnitures or equipment. Meters shall be located on the
outside wall of the building or private pole and shall
not be more than three (3) meters nor less than 1.52
meters mounting height from the surface on which one
would stand to repair or inspect the meter.
16
CHAPTER II. CONSUMER RIGHTS

• Article 12. Right to a Meter Testing by Electric

Utility and/or ERC.- A customer has the right to
require the distribution utility to test, once every two (2)
years, free of charge. the accuracy of the meter
installed in his premises making use of a meter
standard duly tested and sealed by the ERC. If the
customer requests for meter testing more than once
every two years and the meter being tested is found to
be within the tolerable limit as provided for in Article 9
hereof, the utility may assess the customer a testing
fee based on the testing fee charged by ERC. A
written report showing the result of such test shall be
furnished the customer.
17
CHAPTER II. CONSUMER RIGHTS

• Article 13. Right to a Prompt Investigation of

Complaints; Customer Dealings, — Distribution
utilities shall record and promptly investigate all
complaints referred to them concerning their services.

• The distribution utility must furnish the complainant a

report of the action/s taken thereon within the period
stated in the distribution utility's Compliance Plan as
provided for in the Philippine Distribution Code. In the
absence of such plan, the report must be made within
fifteen (15) days from receipt of the complaint.

18
CHAPTER II. CONSUMER RIGHTS

• Article 14. Right to Extension of Lines and

Facilities. — A consumer located within thirty (30)
meters from the distribution utilities' existing secondary
low voltage lines. has the right to an extension of lines
or installation of additional facilities, other than a
service drop, at the expense of the utility in as much
as said assets will eventually form part of the rate
base of the private distribution utilities. or will be
sourced from the reinvestment funds of the electric
cooperatives. However, if a prospective customer is
beyond the said distance. or his demand load requires
that the utility extend lines and facilities, the customer
may initially fund the necessary expenditures.
19
CHAPTER II. CONSUMER RIGHTS
• To recover his aforementioned expenditures, the
customer may either demand the issuance of a notes
payable from the distribution utility or refund at the rate
of twenty-five (25) percent of the gross distribution
revenue derived for the calendar year, or, if available.
the purchase of preferred shares.
• Revenue derived from additional customers tapped
directly to the poles and facilities so extended shall be
considered in determining the revenues derived from
the extension of facilities.
• When a developer initially paid the cost of the
extension of lines to provide electric service to a
specific property and incorporated these expenses in
the cost thereof, and that property was purchased and
transferred in the name of the registered customer, the
latter shall be entitled to the refund of the cost of the
extension of lines, and exercise the options for refund
provided in this article. 20
CHAPTER II. CONSUMER RIGHTS

• Article 15. Right to Information; Scheduled Power

Interruptions. — In order to increase consumer
awareness, all offices of distribution utilities must
provide a Consumer Bulletin Board where major
announcements/documents issued affecting
consumers will be posted. Furthermore, they must
establish communications facilities, including but not
limited to a customer hotline and Short Messaging
Service (SMS), to cater exclusively to their customers.

21
CHAPTER II. CONSUMER RIGHTS

• Major announcements/documents shall include. but

not be limited to, rate schedules and any changes
thereon: other service charges; terms and conditions
of service; standard rules and regulations governing
the operation of distribution utilities; general
information on metering, including but not limited to
the manner in which meters are read and description
of method used in reading; decisions and orders of the
ERC.

22
CHAPTER II. CONSUMER RIGHTS
• When there are two or more authorized schedules of
rates applicable to a customer, the distribution utility
should accordingly advise said customer in writing and
apply the rates which are most beneficial to the
customer.
• At least two (2) days before a scheduled power
interruption, a distribution utility must announce the
same to its customers through print, or other mass or
interactive media. In remote areas where such media
are inaccessible, the distribution utility must set up a
Bulletin Board where announcements of scheduled
power interruptions will be posted in an area that could
easily be seen by its customers. preferably along
roadsides or in front of the entrance to the
City/Municipal Hall or Public Market. 23
CHAPTER II. CONSUMER RIGHTS

• Article 16. Right to a Transparent Billing. - Bills to

service customers shall conform with the format as
approved by the ERC. The current formats approved
by the Commission are shown in Annexes A and B of
this Magna Carta.

24
CHAPTER II. CONSUMER RIGHTS

25
CHAPTER II. CONSUMER RIGHTS

26
CHAPTER II. CONSUMER RIGHTS
• Article 17. Right to a Monthly Electricity Bill. -Bills
shall be delivered monthly to the customer by the
distribution utility in accordance with the applicable rate
schedule. Said bills shall be payable to authorized
collectors, the collection office, authorized agents/entities
or at its authorized banks.

27
CHAPTER II. CONSUMER RIGHTS
• Article 18. Right to Due Process Prior to
Disconnection of Electric Service. - No consumer
shall be deprived of electric service without due process
of law.

28
CHAPTER II. CONSUMER RIGHTS
• Article 19. Right to a Notice Prior to Disconnection. -
For disconnections due to non-payment of electric bills, a
written notice must have been served to the customer
forty eight (48)-hours before such disconnection. The
distribution utility may discontinue the service
notwithstanding the existence of the customer’s bill
deposit with the distribution utility which will serve as
guarantee for the payment of future bill(s) after service is
reconnected.

29
CHAPTER II. CONSUMER RIGHTS
• Article 20. Right to Suspension of Disconnection. —
Notwithstanding the service of notice but subject to the
provisions of RA 7832, disconnections of service shall
not be made on any week day beyond three o'clock
(3:00 P.M.) in the afternoon, Saturdays, Sundays and
official holidays.

30
CHAPTER II. CONSUMER RIGHTS
• Article 21. Right to Tender Payment at the Point of
Disconnection; Deposit Representing the Differential
Billing. If at the time the disconnection to be made, the
customer tenders payment of the unpaid bill to the agent
or employee of the distribution utility who is to effect the
disconnection, the saw agent, or employee of the
distribution utility shall desist from disconnecting the
service to allow the customer to pay his bills within
twenty-four (24) hours; Provided however. That the
customer can only invoke this provision once for the
same unpaid bill.

31
CHAPTER II. CONSUMER RIGHTS
• Article 22. Right to Electric Service Despite
Arrearages of Previous Tenant. — Without prejudice to
enforcing the provisions of the second paragraph of
Article 6 hereof, a distribution utility shall not refuse or
discontinue service to an applicant or customer, who is
not in arrears to the distribution utility. even though there
are unpaid bills or charges due from the premises
occupied by the applicant. or customer. on account of an
unpaid bill of a prior tenant, unless there is evidence of
conspiracy to defraud the distribution utility.

32
CHAPTER II. CONSUMER RIGHTS
• Article 23. Right to Reconnection of Electric Service.
- Whenever the electric service is disconnected due to
non-payment of electric bills. the utility must immediately
reconnect the same within the period provided in the
utility's Compliance Plan as approved by the
Commission in accordance with the Philippine
Distribution Code, but in no case shall exceed twenty-
four (24) hours from payment of the said arrearages by
the customer. The 24-hour period may be extended only
tor justifiable reasons.

33
CHAPTER II. CONSUMER RIGHTS
• Article 24. Right to Witness Apprehension. — Subject
to the provisions of RA 7832, all apprehensions for illegal
use of electricity must be personally witnessed by the
customer or occupant or someone of suitable age and
discretion residing therein and acting in behalf of the
owner or occupant of the premises, and by an officer of
the law or by an ERC representative.

34
CHAPTER II. CONSUMER RIGHTS
• Article 25. Right to ERC Testing of Apprehended
Meter. - In case the apprehension is witnessed by an
officer of the law and not by an ERC authorized
representative, the electric meter subject of the offense
must be placed in a suitable container. properly identified
and sealed, and shall be opened only for testing by the
ERC's duly authorized representative-
• Upon removal, the apprehended meter shall be
immediately replaced by the distribution utility with an
accurate electric watthour meter. However, no
disconnection of electric service shall be effected until
the ERC issues a meter test report showing that the
meter was indeed tampered.

35
CHAPTER II. CONSUMER RIGHTS
• Article 26. Right to Payment Under Protest. In cases
of regular electric bills or billing adjustments due to the
stoppage or failure of the meter to register the full and
correct amount of energy consumed. or for differential
billing due to alleged illegal use of electricity, the
consumer shall have the right to pay under protest for
purposes of continuous supply of electricity by the utility
without prejudice to a complaint to be filed by such
customer against the imposition of the bill or billing
adjustment or differential billing. Such payment shall not
be construed as an admission by the consumer of the
allegations or claims of the distribution utility or of any
violation of law or of the contract with the distribution
utility.

36
CHAPTER II. CONSUMER RIGHTS
• Article 27. Right to File Complaints before ERC-
Every consumer has the right to file a complaint before
the ERC for violation of ERC laws, rules, regulations,
guidelines and policies. including but not limited to RA
9136 and its Implementing Rules and Regulations. RA
7832 and its Implementing Rules and Regulations and
ERB Resolution No. 95-21. as amended; Provided, That
the complainant has previously discussed/consulted the
issue with the Consumer Welfare Desk (CWO) Officer or
representative of the concerned distribution utility and no
settlement has been reached.

37
 CHAPTER III
CONSUMER OBLIGATIONS

38
CHAPTER III CONSUMER OBLIGATIONS

• Article 28. Obligation to Pay Bill Deposit. A bill

deposit from all residential customers to guarantee
payment of bills shall be required of new and/or
additional service. The amount of the bill deposit shall
be equivalent to the estimated billing for one month.
Provided that after (1) year and every year thereafter,
when the actual average monthly bills are more or less
than the initial bill deposit, such deposit shall be
correspondingly increased/decreased to approximate
said billing.

39
CHAPTER III CONSUMER OBLIGATIONS
• Distribution utilities shall pay interest on bill deposits equivalent to
the interest incorporated in the calculation of their Weighted Average
Cost of Capital (WACC), otherwise the bill deposit shall earn an
interest per annum in accordance with the prevailing interest rate for
savings deposit as approved by the Bangko Sentral ng Pilipinas
(BSP). The interests shall be credited yearly to the bills of the
registered customer.
• In cases where the customer has previously received the refund of
his bill deposit pursuant to Article 7, and later defaults in the
payment of his monthly bills, the customer shall be required to post
another bill deposit with the distribution utility and lose his right to
avail of the right to refund his bill deposit in the future until
termination of service.
• Failure to pay the required bill deposit shall be a ground for
disconnection of electric service.

40
CHAPTER III CONSUMER OBLIGATIONS
• Article 29. Obligation to Allow Inspection, Installation &
Removal of Electricity Apparatus - Customers shall allow the
employees and/or representatives of the distribution utility to enter
their premises tor the purpose of inspecting, installing, reading,
testing, repairing, maintaining, removing, replacing, or otherwise
disposing of its apparatus and property. and/or removing the
distribution utility's entire property in the event of the termination of
the electricity service contract; and for disconnection of service for
nonpayment of bills or violation of contract (VOC).
• Provided, however, that only authorized employees and/or
representatives of the distribution utility with proper identification
cards shall be allowed to make any external adjustments of any
meter or any internal or external adjustments of any other pieces of
apparatus owned by the distribution utility.

41
CHAPTER III CONSUMER OBLIGATIONS

• Article 30. Obligation to Allow the Construction of

Poles, Lines & Circuits- Consumers shall allow the
distribution utility, if necessary, to construct its poles,
lines and circuits and to place its transformers,
apparatus on their property or within the buildings of the
consumer, at a point or points convenient for such
purpose, The customer shall allow the distribution utility
to use a suitable space for the installation of necessary
metering equipment in order that such equipment will be
protected from damage by the elements. or through the
negligence or deliberate acts of any person or persons.

42
CHAPTER III CONSUMER OBLIGATIONS

• Article 31. Obligation to Receive Monthly Bills. —

Consumers must accept their electric bills, without
prejudice to the exercise of their right to pay under
protest pursuant to Article 26 of this Magna Carta in
order to contest the same.
• Article 32. Obligation to Pay Monthly Electric Bills. -
Consumers must pay their bills not later than nine (9)
days after receipt of the monthly bill.

43
 CHAPTER III CONSUMER OBLIGATIONS
• Article 33. Obligation to Pay Billing Adjustments. - A
consumer may be compelled to pay a billing adjustment
in case there is a stoppage or failure by the customer's
meter to register the full amount of energy consumed
without any fault on the part of the customer.

44
 CHAPTER III CONSUMER OBLIGATIONS
• In the event that a meter in service is found to have an average error
of more than the tolerance of minus two percent (2%) without any
evidence of tampering by the customer, the utility may ask for
payment of a billing adjustment from its customers of the
unregistered consumption. If the said electric meter was merely
found to be defective and has not completely stopped, and such
defect could not be easily detected by the concerned customer. the
distribution utility may only be allowed to recover the unregistered
consumption for a maximum period of six (6) months prior to the
discovery of the defect. In cases where there is actual stoppage or
any conspicuous defect of the said meter, the distribution utility may
only be allowed to recover the unregistered consumption for a
maximum period of three (3) months prior to such discovery of the
stoppage.

45
CHAPTER III. CONSUMER OBLIGATIONS
• Article 34. Obligation not to Commit Illegal Use of
Electricity. - No consumer is allowed to perform acts
constituting illegal use of electricity. The following
circumstances constitute prima facie evidence of illegal use of
electricity:

• (a) The presence of a bored hole on the glass cover of the

electric meter, or at the back or any part of said meter;
• (b) The presence inside the electric meter of salt, sugar and
other elements that could result in the inaccurate registration
of the meter’s internal parts to prevent its accurate registration
of consumption of electricity;
• (c) The existence of any wiring connection which affects the
normal operation or registration of the electric meter;
• (d) The presence of a tampered, broken, or fake seal on the
meter, or mutilated. altered or tampered meter recording chart
or graph or computerized Chan, graph or log;

46
CHAPTER III. CONSUMER OBLIGATIONS
• (e) The presence in any part of a building or its premises
which is subject to the control of the consumer. or on the
electric meter, of a current reversing transformer, jumper,
shorting and/or shunting wire. and/or loop connection or any
other similar device;
• (f) The mutilation, alteration, reconnection, disconnection
bypassing or tampering of instruments. transformers and
accessories;
• (g) The destrucitong of. or attempt to destroy. any integral
accessory of the metering device box which encases an
electric meter, or its metering accessories.
• (h) The acceptance of money and/or other valuable
consideration by any officer or employee of the electric utility
concerned or the making of such an offer to any such officer
or employee for not reporting the presence of any of the
circumstances enumerated in subparagraphs (a), (b), (c), (d),
(e). (f). or (g) hereof.

47
CHAPTER III. CONSUMER OBLIGATIONS
• Article 35. Obligation to Pay Differential Billing. — A
consumer who is discovered to have committed the
offense of illegal use of electricity shall, in addition to the
imposition of appropriate penal sanction, be required to
pay a differential billing to the electric distribution utility to
be computed in accordance with existing taws. rules and
regulations.

48
 CHAPTER IV.
FINAL PROVISIONS

49
CHAPTER IV. FINAL PROVISIONS

• Article 36. Implementation, — Implementation of

Articles 7. 8 and 28 shall be subject to Guidelines to be
promulgated and approved by the Commission.

• Article 37. Violation. — A violation of any provision of

this Magna Carta shall be subject to penalty which the
Commission, after giving the electric utility or consumer
the opportunity to be heard, may impose in accordance
with law.

50
CHAPTER IV. FINAL PROVISIONS
• Article 38. Separability Clause. — If any provision of
this Code is declared unconstitutional or invalid, the
other provisions not affected thereby shall remain in
force and effect.

• Article 39. Repealing Clause. — Provisions of ERB

Res. No. 95-21 as amended, rules, regulations.
guidelines and other issuances not expressly revised by
this Magna Carta shall remain in force and effect.

• Article 40. Effectivity — This Code shall take effect

fifteen (15) days after its publication in a newspaper of
general circulation in the country.

51
52
 Warranties,
Liabilities,
Patents, Bids and
Insurance
EEL 132: EE Laws, Codes and Professional Ethics
WMSU

1
WARRANTIES

2
Warranty
assurance, guarantee
“a usually written guarantee of the integrity of a product and
of the maker's responsibility for the repair or replacement of
defective parts”

is merely another form of “contract” which binds a party to

perform in a specified way, either in terms of providing a
product that accomplishes a specified task or in delivering
a service that provides certain minimal benefits.

by issuing a WARRANTY, a seller says the product will

function as claimed, and if not, the seller will repair or
replace defective parts.
3
Warranties vs Guarantees

4
Types of Warranties
1) Implied Warranty
2) Expressed Warranty
3) Extended Warranty

1) IMPLIED WARRANTY
is a presumed assurance in product sales. The
assurance is treated as a warranty whether or not
the product seller has given assurances of the
same either in writing or even orally.

5
Implied Warranty
a) Warranty of Merchantability
This type of warranty is implied unless the phrase
‘with all faults’ or ‘as is’ has been used in the
identification of the sale. The warranty is also
implied unless a disclaimer by its name has been
issued in an express manner. For goods to be
considered ‘merchantable’, they must conform in a
reasonable manner to the expectations of an
ordinary consumer.

6
Implied Warranty
b) Warranty of Fitness For A Particular Purpose
This type of warranty is implied when the buyer is
relied upon by the buyer to select products or goods
that will fit a particular request. For instance, if a
motorist requests a mechanic for tyres that are safe
for use in snowy conditions and the mechanic
provides tyres that are unsafe for use in such
conditions then this warranty will have been
breached.

7
Implied Warranty
c) Warranty of Title
This type of implied warranty is used to imply that a
person selling products has the right to do so, that
is, the goods are legitimate. This saves the
customer from ‘double payment’ if by any chance
the products are confiscated (in the event that the
goods are illegitimate), if the seller can easily be
found then he/she can make restitution.

8
Implied Warranty
d) Warranty Of Habitability
This warranty is used to imply that by purchasing a
property that is residential, the seller of the property
is guaranteeing that it is suitable and safe to be
occupied. If water, electricity and other amenities
are unavailable on the property then the warranty is
considered to have been violated and hence a legal
remedy can be sort.

9
Express Warranty
indicates the exact terms, date, and time of
warranty (example: January 2011). The implied
warranty has a generic time frame of warranty
(example: 6 months warranty).

The basic warranty as stated by Philippine law is set

to a minimum time frame of six months and a
maximum time frame of one year.

10
Extended Warranty
Also called service agreement, an extended warranty is
usually offered to customers on top of the standard
warranty that is issued on new products (vehicles). It is
also known as Vehicle Service Contract. It can be
offered by a retailer, manufacturer or warranty
administrator.

This type of warranty is prolonged in nature and is a bit

more costly. From time to time, multiple years extended
warranties have it in in writing that for the duration of the
first year of the warranty, in the event that a product is
defective, customers must deal with the producer and not
the seller. 11
 R.A. No. 7394
THE CONSUMER ACT OF THE PHILIPPINES
Title III
Protection Against Deceptive, Unfair and Unconscionable
Sales Acts or Practices

Chapter III
CONSUMER PRODUCT AND SERVICE WARRANTIES

Article 66. Implementing Agency – Department of Trade of

Industry (DTI)
Article 67. Applicable Law on Warranties – provisions of the
Civil Code shall govern all contracts of sale 12
R.A. No. 7394
Article 68. Additional Provisions on Warranties –

a.) Terms of Express Warranty

1.) terms of warranty in clear and readily understandable
language and identify himself as the warrantor
2.) identify the party to whom the warranty is extended
3.) products or parts covered
4.) what the warrantor will do in the event of a defect
5.) what the consumer must do to avail the rights
6.) stipulate the period

13
R.A. No. 7394
Article 68. Additional Provisions on Warranties –

b.) Express Warranty

1. Sales Report
2. Failure to make or send report
3. Retail
4. Enforcement of warranty or guarantee
5. Record of purchases
6. Contrary Stipulations

14
R.A. No. 7394
Article 68. Additional Provisions on Warranties –
c.) Designation of Warranties
1. Full Warranty – meets minimum requirements
2. Limited Warranty – does not meet the minimum
requirements

d.) Minimum standards for warranties

1. Remedy such consumer product within a reasonable
time
2. Permit the consumer to elect whether to ask for a
refund or replacement without charge
15
R.A. No. 7394
Article 68. Additional Provisions on Warranties –
d.) Minimum standards for warranties
The warrantor will not be required to perform the above
duties if he can show that the defect, malfunction or
failure to conform to a written warranty was caused by
damage due to unreasonable use thereof.

e.) Duration of Warranty

seller and consumer may stipulate the period within which
the express warranty shall be enforeable

16
 R.A. No. 7394
Article 68. Additional Provisions on Warranties –
f.) Breach of Warranties
1. Breach of expressed warranty, the consumer may elect to
have the goods repaired or its purchase price refunded by
the warrantor.
2. Breach of Implied warranty, the consumer may retain in the
goods and recover damages, or reject the goods, cancel and
contract and recover from the seller so much of the purchase
price as has been paid, including damages.

Article 69. Warranties in Supply of Services – existence of

implied warranty that the service will be rendered with due care
and skill 17
R.A. No. 7394
Article 70. Professional Services – not apply to
professional services

Article 71. Guaranty of Service Firms – guarantee

workmanship and replacement of spare parts for a period
of not less than ninety (90) days

Article 72. Prohibited acts –

a.) Refusal without any valid legal cause
b.) unreasonable delay
c.) removal by any person of a product’s warranty
d.) any false representation in an advertisement 18
R.A. No. 7394
Article 73. Penalties –
a.) Violations under Article 67
b.) Illegal acts provided in chapter III except with respect to
Article 67

19
Availing a Warranty
1. What the warrantor will do in the event of a defect,
malfunction or failure to conform to the written warranty and at
whose expense
2. What the consumer must do to avail of the rights which
accrue to the warranty
3. Designation of warranties, whether full warranty or limited
warranty
4. Duration of warranty
5. Business name and address of the warrantor
6. Name and address of the person to whom the warranty is
extended, if the warranty is not transferable
7. Consumer products or parts thereof, or consumer service
covered by the warranty. 20
LIABILITIES

21
Liabilities
accountability, responsibility
In law, liable means "responsible or answerable in law;
legally obligated".

In accounting, liabilities are legal obligations or debt owed

to another person or company.

Liability is the result of a violation of the law. If anybody

violates the legal right of another, he is said to have
committed a wrong. If there is a wrong there is a liability.

22
Types of Liabilities (Finances):
1.) Current liabilities (short-term liabilities)
are liabilities that are due and payable within one
year.
2.) Non-current liabilities (long-term liabilities)
are liabilities that are due after a year or more.

3.) Contingent liabilities

are liabilities that may or may not arise, depending
on a certain event.
23
Types of Liabilities (Finances):
1.) Current liabilities (short-term liabilities)
also known as short-term liabilities, are debts or
obligations that need to be paid within a year.

Ex. Bills, Accounts Payable, Short – term loans

2.) Non-current liabilities (long-term liabilities)

also known as long-term liabilities, are debts or
obligations due in over a year’s time.

Ex. Bonds payable, Long – term loans, debentures24

Types of Liabilities (Finances):
3.) Contingent liabilities
are liabilities that may occur, depending on the
outcome of a future event.

Ex. Lawsuits, Product Warranties

25
Forms of Legal Liabilities
a.) Civil Liability
b.) Criminal Liability

Civil Liability
If you intentionally or even mistakenly injure
someone or damage someone's property, you could
end up being responsible for paying for the other
person's losses.

26
Civil vs. Criminal
A civil action is a lawsuit filed by a private person
(not the government) against another private person.
By contrast, criminal action is a prosecution by the
government (usually the state) of an individual for
violating a provision of the criminal code.
Types of Actions (Civil Liability)
a.) Lower Burden of Proof
b.) Breach of Contract: Breaking a Promise
c.) Intentional Torts: Purposeful Acts
d.) Negligence Liability: Accidents
27
Civil Damages
• reimbursement of monies the plaintiff lost due to the
defendant’s actions
• compensation for property damage caused by the defendant
• reimbursement of monies due to the plaintiff for the
defendant’s breach of a contract
• reimbursement of medical expenses for injuries caused by
the defendant
• compensation for pain and suffering (also called “emotional
distress damages”)
• in some intentional tort cases (such as employment
discrimination), punitive damages to punish the defendant
and deter others, or
• payment of the winning party's attorneys' fees.
28
Types of Liability (Legal):
a.) Strict Liability
In certain cases, a plaintiff will win if she proves that
the defendant simply engaged in a particular act,
regardless of any actual fault or even negligence.
Product liability lawsuits involving defective products
are often subject to a strict liability standard. In such
cases, a manufacturer places a product in the
market knowing that consumers will use it “without
inspection for defects” and is held strictly liable for
any injuries that result from defects in the product.
29
Types of Liability (Legal):
b.) Vicarious Liability
At times, the law imposes responsibility for civil
wrongs on people or entities other than those
actually engaging in the conduct that led to injury or
damage. This is called vicarious liability. For
example, an employer may be held vicariously liable
for an employee’s sexual harassment of another
employee, if the employer knew about the
harassment and failed to address it effectively.

30
 ACT No. 3815
THE REVISED PENAL CODE
Title One: FELONIES AND CIRCUMSTANCES WHICH AFFECT
CRIMINAL LIABILITY
Chapter One: Felonies

Article 4: Criminal Liability - Criminal liability shall be incurred:

1. By any person committing a felony (delito) although the
wrongful act done be different from that which he intended.
2. By any person performing an act which would be an offense
against persons or property, were it not for the inherent
impossibility of its accomplishment or an account of the
employment of inadequate or ineffectual means.
31
 ACT No. 3815
Chapter Two: JUSTIFYING CIRCUMSTANCES AND CIRCUMSTANCES
WHICH EXEMPT FROM CRIMINAL LIABILITY
Article 12. Circumstances which exempt from criminal liability. - the
following are exempt from criminal liability:
1. An imbecile or an insane person
2. A person under nine years of age.
3. A person over nine years of age and under fifteen,
4. Any person who, while performing a lawful act with due care, causes an
injury by mere accident without fault or intention of causing it.
5. Any person who act under the compulsion of irresistible force.
6. Any person who acts under the impulse of an uncontrollable fear of an
equal or greater injury.
7. Any person who fails to perform an act required by law, when prevented by
some lawful insuperable cause.
32
 ACT No. 3815
Title Five: Civil Liability
Chapter Two: What Civil Liability Includes

Article 104. What is included in civil liability. - The civil liability

established in Articles 100, 101, 102, and 103 of this Code
includes:
1. Restitution;
2. Reparation of the damage caused;
3. Indemnification for consequential damages.

33
Errors & Omissions (E&O) Insurance
cover lawsuits incurred resulting from your
professional wrongdoing
Examples:
a.) Design errors
b.) bad recommendation in design
c.) poorly written software program which made the
program vulnerable

34
Dispute Resolutions Options
• Adjudicative processes, such as
litigation or arbitration, in which a judge,
jury or arbitrator determines the outcome.

• Consensual processes, such as

collaborative law, mediation, conciliation,
or negotiation (settlement), in which the
parties attempt to reach agreement.
35
PATENTS
The Law on Patents
Part II of R.A. 8293

36
PATENT
title, right
A patent is a right given to an inventor by the government
that permits the inventor to exclude others from making,
selling or using the invention for a period of time.

KINDS OF PATENTS:
1. Utility Patents
The most common type of patent, these are granted to
new machines, chemicals, and processes.

37
KINDS OF PATENTS:
2. Design Patents: Granted to protect the unique appearance
or design of manufactured objects, such as the surface
ornamentation or overall design of the object.

3. Plant Patents: Granted for the invention and asexual

reproduction of new and distinct plant varieties, including
hybrids (asexual reproduction means the plant is reproduced
by means other than from seeds, such as by grafting or rooting
of cuttings).

38
REPUBLIC ACT NO. 8293
PART I
The Intellectual Property Office

SECTION 1. Title. — This Act shall be known as the "Intellectual

Property Code of the Philippines.“

SECTION 2. Declaration of State Policy. — The State recognizes that

an effective intellectual and industrial property system is vital to the
development of domestic and creative activity, facilitates transfer of
technology, attracts foreign investments, and ensures market access
for our products. It shall protect and secure the exclusive rights of
scientists, inventors, artists and other gifted citizens to their intellectual
property and creations, particularly when beneficial to the people, for
such periods as provided in this Act.

39
THE LAW ON PATENTS
CHAPTER II
Patentability
SECTION 21. Patentable Inventions. — Any technical solution of a
problem in any field of human activity which is new, involves an inventive
step and is industrially applicable shall be patentable. It may be, or may
relate to, a product, or process, or an improvement of any of the foregoing.

SECTION 22. Non-Patentable Inventions. — The following shall be

excluded from patent protection:
22.1. Discoveries, scientific theories and mathematical methods;
22.2. Schemes, rules and methods of performing mental acts, playing
games or doing business, and programs for computers;
22.3. Methods for treatment of the human or animal body by surgery or
therapy and diagnostic methods practiced on the human or animal body.
This provision shall not apply to products and composition for use in any of
these methods;
40
THE LAW ON PATENTS
22.4. Plant varieties or animal breeds or essentially biological process
for the production of plants or animals. This provision shall not apply to
microorganisms and non-biological and microbiological processes.
Provisions under this subsection shall not preclude Congress to
consider the enactment of a law providing sui generis protection of
plant varieties and animal breeds and a system of community
intellectual rights protection:
22.5. Aesthetic creations; and
22.6. Anything which is contrary to public order or morality

SECTION 23. Novelty. — An invention shall not be considered new if it

forms part of a prior art.

SECTION 24. Prior Art. — Prior art shall consist of:

24.1. Everything which has been made available to the public
anywhere in the world, before the filing date or the priority date of the
application claiming the invention; and
41
THE LAW ON PATENTS
24.2. The whole contents of an application for a patent, utility model, or
industrial design registration, published in accordance with this Act,
filed or effective in the Philippines, with a filing or priority date that is
earlier than the filing or priority date of the application.

SECTION 26. Inventive Step. — An invention involves an inventive

step if, having regard to prior art, it is not obvious to a person skilled in
the art at the time of the filing date or priority date of the application
claiming the invention.

CHAPTER III
Right to a Patent

SECTION 27. Industrial Applicability. — An invention that can be

produced and used in any industry shall be industrially applicable.
42
THE LAW ON PATENTS
SECTION 29. First to File Rule. — If two (2) or more persons have made
the invention separately and independently of each other, the right to the
patent shall belong to the person who filed an application for such
invention, or where two or more applications are filed for the same
invention, to the applicant who has the earliest filing date or, the earliest
priority date.

SECTION 30. Inventions Created Pursuant to a Commission. —

30.1. The person who commissions the work shall own the patent, unless
otherwise provided in the contract.
30.2. In case the employee made the invention in the course of his
employment contract, the patent shall belong to:
a. The employee, if the inventive activity is not a part of his regular duties
even if the employee uses the time, facilities and materials of the employer.
b. The employer, if the invention is the result of the performance of his
regularly-assigned duties, unless there is an agreement, express or
implied, to the contrary.
43
THE LAW ON PATENTS
SECTION 31. Right of Priority. — An application for patent filed by
any person who has previously applied for the same invention in
another country which by treaty, convention, or law affords similar
privileges to Filipino citizens, shall be considered as filed as of the date
of filing the foreign application: Provided, That:
a. the local application expressly claims priority;
b. it is filed within twelve (12) months from the date the earliest foreign
application was filed; and
c. a certified copy of the foreign application together with an English
translation is filed within six (6) months from the date of filing in the
Philippines.

CHAPTER IV
Patent Application
SECTION 32. The Application. —
32.1. The patent application shall be in Filipino or English and shall
contain the following: 44
THE LAW ON PATENTS
a. A request for the grant of a patent;
b. A description of the invention;
c. Drawings necessary for the understanding of the invention;
d. One or more claims; and
e. An abstract.

SECTION 38. Unity of Invention. —

38.1. The application shall relate to one invention only or to a group of
inventions forming a single general inventive concept.
38.2. If several independent inventions which do not form a single
general inventive concept are claimed in one application, the Director
may require that the application be restricted to a single invention.
38.3. The fact that a patent has been granted on an application that did
not comply with the requirement of unity of invention shall not be a
ground to cancel the patent.

45
THE LAW ON PATENTS
CHAPTER VIII
Rights of Patentees and Infringements of Patents

SECTION 71. Rights Conferred by Patent. —

71.1. A patent shall confer on its owner the following exclusive rights:
a. Where the subject matter of a patent is a product, to restrain, prohibit
and prevent any unauthorized person or entity from making, using, offering
for sale, selling or importing that product;
b. Where the subject matter of a patent is a process, to restrain, prevent or
prohibit any unauthorized person or entity from using the process, and
from manufacturing, dealing in, using, selling or offering for sale, or
importing any product obtained directly or indirectly from such process.
71.2. Patent owners shall also have the right to assign, or transfer by
succession the patent, and to conclude licensing contracts for the same.
46
THE LAW ON PATENTS
SECTION 72. Limitations of Patent Rights. — The owner of a patent has
no right to prevent third parties from performing, without his authorization,
the acts referred to in Section 71 hereof in the following circumstances:
72.1. Using a patented product which has been put on the market in the
Philippines by the owner of the product, or with his express consent,
insofar as such use is performed after that product has been so put on the
said market;
72.2. Where the act is done privately and on a non-commercial scale or for
a non-commercial purpose: Provided, That it does not significantly
prejudice the economic interests of the owner of the patent;
72.3. Where the act consists of making or using exclusively for the purpose
of experiments that relate to the subject matter of the patented invention;
72.4. Where the act consists of the preparation for individual cases, in a
pharmacy or by a medical professional, of a medicine in accordance with a
medical prescription or acts concerning the medicine so prepared
47
THE LAW ON PATENTS
SECTION 76. Civil Action for Infringement. —
76.1. The making, using, offering for sale, selling, or importing a
patented product or a product obtained directly or indirectly from a
patented process, or the use of a patented process without the
authorization of the patentee constitutes patent infringement.
76.2. Any patentee, or anyone possessing any right, title or interest in
and to the patented invention, whose rights have been infringed, may
bring a civil action before a court of competent jurisdiction, to recover
from the infringer such damages sustained thereby, plus attorney’s fees
and other expenses of litigation, and to secure an injunction for the
protection of his rights.
76.3. If the damages are inadequate or cannot be readily ascertained
with reasonable certainty, the court may award by way of damages a
sum equivalent to reasonable royalty.

48
 BIDS
R.A. 9184
Government Procurement
Reform Act

49
BIDS
an offer of a price, especially at an auction.

Competitive bidding is a form of solicitation that is used in the

procurement of goods and services. It is used by companies and
government agencies that require the delivery of products or services on a
large-scale basis.

Goods refer to all items, supplies, materials and general support services,
except Consulting Services and infrastructure projects, which may be
needed in the transaction of public businesses or in the pursuit of any
government undertaking, project or activity.

This includes non-personal or contractual services, such as, the repair

and maintenance of equipment and furniture, as well as trucking, hauling,
janitorial, security, and related or analogous services, as well as
procurement of materials and supplies provided by the Procuring Entity for
such services

50
BIDS
ARTICLE V
BIDS AND AWARDS COMMITTEE
SEC. 11. The BAC and its Composition. - Each procuring entity shall
establish a single BAC for its procurement. The BAC shall have at least
five (5) members, but not more than seven (7) members.
SEC. 12. Functions of the BAC. - The BAC shall have the following
functions: advertise and/or post the invitation to bid, conduct pre-
procurement and pre-bid conferences, determine the eligibility of
prospective bidders, receive bids, conduct the evaluation of bids,
undertake post-qualification proceedings, recommend award of contracts
to the Head of the Procuring Entity or his duly authorized representative:
SEC. 13. Observers. – To enhance the transparency of the process, the
BAC shall, in all stages of the procurement process, invite, in addition to
the representative of the Commission on Audit, at least two (2) observers
to sit in its proceedings, one (1) from a duly recognized private group in a
sector or discipline relevant to the procurement at hand, and the other from
a nongovernment organization
51
BIDS
SEC. 14. BAC Secretariat. - To assist the BAC in the conduct of its
functions, the Head of the Procuring Entity shall create a Secretariat
that will serve as the main support unit of the BAC.

SEC. 15. Honoraria of BAC Members. – The Procuring Entity may

grant payment of honoraria to the BAC members in an amount not to
exceed twenty five percent (25%) of their respective basic monthly
salary subject to availability of funds.

ARTICLE VI
PREPARATION OF BIDDING DOCUMENTS

SEC. 17. Form and Contents of Bidding Documents. - The Bidding

Documents shall be prepared by the Procuring Entity following the
standard forms and manuals prescribed by the GPPB. The Bidding
Documents shall include the following:
52
BIDS
(a) Approved Budget for the Contract;
(b) Instructions to Bidders, including criteria for eligibility, bid evaluation
and post-qualification, as well as the date, time and place of the pre-bid
Conference (where applicable), submission of bids and opening of bids;
(c) Terms of Reference;
(d) Eligibility Requirements;
(e) Plans and Technical Specifications;
(f) Form of Bid, Price Form, and List of Goods or Bill of Quantities;
(g) Delivery Time or Completion Schedule;
(h) Form and Amount of Bid Security;
(i) Form and Amount of Performance Security and Warranty; and,
(j) Form of Contract, and General and Special Conditions of Contract.

The Procuring Entity may require additional document requirements or

specifications necessary to complete the information required for the
bidders to prepare and submit their respective bids.
53
BIDS
ARTICLE VII
INVITATION TO BID
SEC. 20. Pre-Procurement Conference. - Prior to the issuance of the
Invitation to Bid, the BAC is mandated to hold a pre-procurement
conference on each and every procurement, except those contracts below
a certain level or amount specified in the IRR, in which case, the holding of
the same is optional.
SEC. 21. Advertising and Contents of the Invitation to Bid. - In line with
the principle of transparency and competitiveness, all Invitations to Bid for
contracts under competitive bidding shall be advertised by the Procuring
Entity in such manner and for such length of time as may be necessary
under the circumstances, in order to ensure the widest possible
dissemination.
SEC. 22. Pre-bid Conference. - At least one pre-bid conference shall be
conducted for each procurement, unless otherwise provided in the IRR.
Subject to the approval of the BAC, a pre-bid conference may also be
conducted upon the written request of any prospective bidder.
54
BIDS
ARTICLE VIII
RECEIPT AND OPENING OF BIDS

SEC. 23. Eligibility Requirements for the Procurement of Goods and

Infrastructure Projects. - The BAC or, under special circumstances
specified in the IRR, its duly designated organic office shall determine the
eligibility of prospective bidders for the procurement of Goods and
Infrastructure Projects, based on the bidders’ compliance with the eligibility
requirements within the period set forth in the Invitation to Bid.

SEC. 25. Submission and Receipt of Bids. - A bid shall have two (2)
components, namely the technical and financial components which should
be in separate sealed envelopes, and which shall be submitted
simultaneously. The bids shall be received by the BAC on such date, time
and place specified in the invitation to bid.

SEC. 26 Modification and Withdrawal of Bids. - A bidder may modify his

bid, provided that this is done before the deadline for the receipt of bids.
55
BIDS
The modification shall be submitted in a sealed envelope duly identified
as a modification of the original bid and stamped received by the BAC.

SEC. 27. Bid Security. – All Bids shall be accompanied by a Bid

security, which shall serve as a guarantee that, after receipt of the
Notice of Award, the winning bidder shall enter into contract with the
Procuring Entity within the stipulated time and furnish the required
performance security.

SEC. 28. Bid Validity. – Bids and Bid securities shall be valid for such
reasonable period of time indicated in the Bidding Documents. The
duration for each undertaking shall take into account the time involved
in the process of Bid evaluation and award of contract.

SEC. 29. Bid Opening. - The BAC shall publicly open all bids at the
time, date, and place specified in the bidding documents. The minutes
of the bid opening shall be made available to the public upon written
request and payment of a specified fee.
56
BIDS
ARTICLE IX
BID EVALUATION

SEC. 30. Preliminary Examination of Bids. - Prior to Bid evaluation,

the BAC shall examine first the technical components of the bids using
"pass/fail" criteria to determine whether all required documents are
present.

SEC. 31. Ceiling for Bid Prices. - The ABC shall be the upper limit or
ceiling for the Bid prices. Bid prices that exceed this ceiling shall be
disqualified outright from further participating in the bidding.

SEC. 32. Bid for the Procurement of Goods and Infrastructure

Projects. - For the procurement of Goods and Infrastructure Projects,
the BAC shall evaluate the financial component of the bids. The bids
that passed the preliminary examination shall be ranked from lowest to
highest in terms of their corresponding calculated prices.
57
BIDS
SEC. 33. Bid Evaluation of Short Listed Bidders for Consulting
Services. - For the Procurement of Consulting Services, the Bids of the
short listed bidders shall be evaluated and ranked using numerical
ratings in accordance with the evaluation criteria stated in the Bidding
Documents, which shall include factors such as, but not limited to,
experience, performance, quality of personnel, price and methodology.

ARTICLE X
POST QUALIFICATION

SEC. 34. Objective and Process of Post-qualification. – Post

qualification is the stage where the bidder with the Lowest Calculated
Bid, in the case of Goods and Infrastructure Projects, or the Highest
Rated Bid, in the case of Consulting Services, undergoes verification
and validation whether he has passed all the requirements and
conditions as specified in the Bidding Documents.
58
BIDS
SEC. 35. Failure of Bidding. – There shall be a failure of bidding if:
(a) No bids are received;
(b) No bid qualifies as the Lowest Calculated Responsive Bid or
Highest Rated Responsive Bid; or,
(c) Whenever the bidder with the highest rated/lowest calculated
responsive bid refuses, without justifiable cause to accept the award of
contract, as the case may be.

SEC. 36. Single Calculated/Rated and Responsive Bid

Submission. - A single calculated/rated and responsive bid shall be
considered for award if it falls under any of the following circumstances:
(a) If after advertisement, only one prospective bidder submits a Letter
of Intent and/or applies for eligibility check, and meets the eligibility
requirements or criteria, after which it submits a bid, which is found to
be responsive to the bidding requirements;

59
BIDS
(b) If after the advertisement, more than one prospective bider applies for
eligibility check, but only one bidder meets the eligibility requirements or
criteria, after which it submits a bid which is found to be responsive to the
bidding requirements; or
(c) If after the eligibility check, more than one bidder meets the eligibility
requirements, but only one bidder submits a bid, and its bid is found to be
responsive to the bidding requirements.

ARTICLE XI
AWARD, IMPLEMENTATION AND TERMINATION OF THE
CONTRACT
SEC. 37. Notice and Execution of Award. – Within a period not
exceeding fifteen (15) calendar days from the determination and
declaration by the BAC of the Lowest Calculated Responsive Bid or
Highest Rated Responsive Bid, and the recommendation of the award,
the Head of the Procuring Entity or his duly authorized representative
shall approve or disapprove the said recommendation. Within ten (10)
calendar days from receipt of the Notice of Award, the winning bidder
shall formally enter into contract with the Procuring Entity.
60
BIDS
SEC. 38. Period of Action on Procurement Activities. – The
procurement process from the opening of bids up to the award of contract
shall not exceed three (3) months, or a shorter period to be determined by
the procuring entity concerned.
SEC. 39. Performance Security. – Prior to the signing of the contract, the
winning bidder shall, as a measure of guarantee for the faithful
performance of and compliance with his obligations under the contract
prepared in accordance with the Bidding Documents, be required to post a
performance security in such form and amount as specified in the Bidding
Documents.
SEC. 40. Failure to Enter into Contract and Post Performance
Security. – If, for justifiable causes, the bidder with the Lowest Calculated
Responsive Bid or Highest Rated Responsive Bid fails, refuses or is
otherwise unable to enter into contract with the Procuring Entity, or if the
bidder fails to post the required performance security within the period
stipulated in the Bidding Documents, the BAC shall disqualify the said
bidder and shall undertake post-qualification for the next-ranked Lowest
Calculated Bid or Highest Rated Bid.
61
BIDS
SEC. 41. Reservation Clause. - The Head of the Agency reserves the
right to reject any and all Bids, declare a failure of bidding, or not award the
contract in the following situations:
(a) If there is prima facie evidence of collusion between appropriate public
officers or employees of the Procuring Entity, or between the BAC and any
of the bidders, or if the collusion is between or among the bidders
themselves, or between a bidder and a third party, including any act which
restricts, suppresses or nullifies or tends to restrict, suppress or nullify
competition;
(b) If the BAC is found to have failed in following the prescribed bidding
procedures; or
(c) For any justifiable and reasonable ground where the award of the
contract will not redound to the benefit of the government as defined in the
IRR.
SEC. 42. Contract Implementation and Termination. – The rules and
guidelines for the implementation and termination of contracts awarded
pursuant to the provisions of this Act shall be prescribed in the IRR. The
rules and guidelines shall include standard general and special conditions
for contracts.
62
INSURANCE

63
INSURANCE GENERAL
DEFINITON/TERMS
Insurance is a means of protection from financial
loss. It is a form of risk management, primarily
used to hedge against the risk of a contingent or
uncertain loss.

An entity which provides insurance is known as an

insurer, an insurance company. A person or
entity who buys insurance is known as an insured
or as a policyholder.

64
INSURANCE GENERAL
DEFINITON/TERMS
The insured receives a contract, called the
insurance policy, which details the conditions
and circumstances under which the insurer will
compensate the insured. The amount of money
charged by the insurer to the policyholder for the
coverage set forth in the insurance policy is called
the premium.

65
IN SIMPLE EXPLANATION

It is something people buy to protect themselves

from losing money.

If something bad happens to the person or thing

that is insured, the company that sold
the insurance will pay the money back.

66
INSURANCE IS NOT A CHARITY

Charity is given without consideration, but

insurance is not possible without premium.

It provides security and safety to an individual

and to the society although it is a kind of
business because in consideration of premium it
guarantees the payment of loss.

It is a profession because it provides adequate

sources at the time of disasters only by charging
a nominal premium for the service.

67
GENERAL EXAMPLE 1
Imagine you’re driving your car and you hit an utility pole.
which damages your car. If you have the right kind of
Auto insurance policy, the insurance company will pay
the costs of the car repairs

68
GENERAL EXAMPLE 2
Now, imagine a water pipe bursts in your bathroom, ruining everything
in that room and in the bedroom next to it. Typically, if you have
homeowner’s or renter’s insurance, the insurance company will
pay to replace some or all of the damaged property,

69
What should you consider when buying
an insurance policy?
A useful rule to live by is to do your homework
before you buy insurance.

Research any insurance company you’re

thinking about buying from to be sure that the
company is financially sound and provides
good service.

Find out what factors matter so that you can

get the coverage you need at the best price.
70
INSURANCE COMPANY IN THE
PHILIPPINES

SSS is a social insurance program

that aims to provide protection to its
members and beneficiaries, while GSIS serves
as the counterpart social insurance program
for those who work in government.

The Philippine Health Insurance

Corporation (PhilHealth) was created in 1995
to implement universal health coverage in the
Philippines
71
Is GSIS and SSS the same?
• SSS is a social insurance program that
aims to provide protection to its members
and beneficiaries, while GSIS serves as
the counterpart social insurance program
for those who work in
government. SSS members can avail of
maternity, sickness, disability, retirement,
funeral and death benefits.

72
73
74
2 key insurance policies you should
consider
HEALTH INSURANCE - is a type of insurance
coverage that typically pays for medical, surgical,
prescription drug and sometimes dental expenses
incurred by the insured.

LIFE INSURANCE – is defined as a contract

between the policy holder and
the insurance company, where the life
insurance company pays a specific sum to
the insured individual's family upon his death.
75
What type of insurance should
an Electrical
Practitioner/Engineer/Contrac
tor have?

76
For Electrical Practitioner/Engineer/Contractor:

General liability insurance

Professional indemnity (PI) insurance

Commercial General Liability Insurance

Workers Compensation Insurance

Errors and Omissions Insurance (E&O)

77
EXAMPLE 3
Say a customer drops a heavy piece of
merchandise on their foot. As a result, four
toes are broken and they need surgery.
They then sue you $50,000 for the medical
costs. Your general liability insurance
can help cover the costs associated.

78
EXAMPLE 4
• A plumber fits a new mains shower system in a
customer’s home. However, due to a faulty fitting,
a pipe becomes loose and ends up flooding the
bathroom, causing damage to the floor and ceiling
below. Not only that, but house is semi-detached
so water leaks into a neighbors house as well. The
customer claims against the plumber for the
damage and their neighbor also makes a claim.
The plumber’s public liability
insurance covers the cost of the claim, including
legal expenses and the compensation which is
finally awarded.

79
EXAMPLE 5
One of the employees of your electrical
company visits a home for an electrical
wiring job and accidentally causes a fire in
the customer's home. Then Commercial
General Liability Insurance covered this
situation

80
EXAMPLE 6

If your employees get hurt or sick from their

job, you’ll need a workers’ compensation
insurance policy to help them recover and
return to work.

81
REPUBLIC ACT NO. 10607

AN ACT STRENGTHENING THE

INSURANCE INDUSTRY, FURTHER
AMENDING PRESIDENTIAL DECREE NO.
612, OTHERWISE KNOWN AS "THE
INSURANCE CODE", AS AMENDED BY
PRESIDENTIAL DECREE NOS. 1141, 1280,
1455, 1460, 1814 AND 1981, AND BATAS
PAMBANSA BLG. 874, AND FOR OTHER
PURPOSES

82
REPUBLIC ACT NO. 10607
"TITLE 6
"THE POLICY

"Section 51. A policy of insurance must specify:

"(a) The parties between whom the contract is made;
"(b) The amount to be insured except in the cases of open or running
policies;
"(c) The premium, or if the insurance is of a character where the exact
premium is only determinable upon the termination of the contract, a
statement of the basis and rates upon which the final premium is to be
determined;
"(d) The property or life insured;
"(e) The interest of the insured in property insured, if he is not the
absolute owner thereof; "(f) The risks insured against; and
"(g) The period during which the insurance is to continue.

83
REPUBLIC ACT NO. 10607
"TITLE 10
"NOTICE OF LOSS

"Section 90. In case of loss upon an insurance

against fire, an insurer is exonerated, if written
notice thereof be not given to him by an
insured, or some person entitled to the benefit
of the insurance, without unnecessary delay.
For other non-life insurance, the Commissioner
may specify the period for the submission of
the notice of loss.
84
REPUBLIC ACT NO. 10607
"TITLE 2
"FIRE INSURANCE
"Section 169. As used in this Code, the
term fire insurance shall include insurance
against loss by fire, lightning, windstorm,
tornado or earthquake and other allied risks,
when such risks are covered by extension to
fire insurance policies or under separate
policies.

85
REPUBLIC ACT NO. 10607
"TITLE 3
"CASUALTY INSURANCE

Section 176. Casualty insurance is insurance covering loss or

liability arising from accident or mishap, excluding certain types
of loss which by law or custom are considered as falling
exclusively within the scope of other types of insurance such as
fire or marine. It includes, but is not limited to, employer’s
liability insurance, motor vehicle liability insurance, plate glass
insurance, burglary and theft insurance, personal accident and
health insurance as written by non-life insurance companies, and
other substantially similar kinds of insurance.

86
In conclusion, it’s important to
read a policy carefully before
you buy it, so you’ll know
exactly what’s covered.

87
 Philippine
Grid Code

WMSU Remigio H. Mondoyo Jr.

Alexander Gringo P. Halasan

1
 Philippine Grid Code
Chapter 1. Grid Code General Conditions
Chapter 2. Grid Management
Chapter 3. Grid Connection Requirements
Chapter 4. Grid Planning
Chapter 5. Grid Operations
Chapter 6. Scheduling and Dispatch
Chapter 7. Grid Revenue Metering Requirements
Chapter 8. Grid Code Transitory Provisions
Chapter 9. Grid Revenue Metering Requirements
Chapter 10. Grid Code Transitory Provisions
2
CHAPTER 1 : GRID CODE GENERAL CONDITIONS

3
1.2 AUTHORITY AND APPLICABILITY
1.2.1Authority
The Act provides the Energy Regulatory Commission (ERC) the authority to promulgate
the Philippine Grid Code.
1.2.2 Applicability
The Philippine Grid Code applies to the three national Grids, which consist of the Luzon,
Visayas, and Mindanao Grids.
1.3 ENFORCEMENT AND SUSPENSION OF PROVISION
1.3.1 Enforcement
The Act assigns to the ERC the responsibility of enforcing the Grid Code
The ERC shall establish the Grid Management Committee (GMC) to monitor Grid Code
compliance at the operations level and to submit regular and special reports pertaining to
Grid operations.
1.3.2 Suspension of Provisions
Any provision of the Grid Code may be suspended, in whole or in part, when the Grid is
not operating in the Normal State or pursuant to any directive given by the ERC or the
appropriate government agency.

4
1.4 DATA, NOTICES, AND CONFIDENTIALITY

1.4.1 Data and Notices

The submission of any data under the Grid Code shall be done through
electronic format or any suitable format agreed upon by the concerned
parties.
Written notices under the Grid Code shall be served either by hand
delivery, registered first-class mail, or facsimile transfer.

1.4.2 Confidentiality
All data submitted by any Grid User to the Grid Owner, System Operator
or Market Operator in compliance with the data requirements of the Grid
Code, shall be treated by the Grid Owner, System Operator, or Market
Operator as confidential. These include data requirements for connection
to the Grid and those that are required in the planning, operation, and 5
CHAPTER 2: GRID MANAGEMENT

6
2.2 GRID MANAGEMENT COMMITTEE
2.2.1 Functions of the Grid Management Committee
There shall be established a Grid Management Committee (GMC), which shall carry
out the following functions:
(a) Monitor the implementation of the Grid Code;

(b) Monitor, evaluate, and make recommendations on Grid operations;

(c) Review and recommend standards, procedures, and requirements for Grid connection,

operation, maintenance, and development;

(d) Coordinate Grid Code dispute resolution and make appropriate

recommendations to the ERC;

(e) Initiate the Grid Code enforcement process and make recommendations to the ERC;

(f) Initiate and coordinate revisions of the Grid Code and make recommendations to the

ERC; and
(g) Prepare regular and special reports for submission to the ERC, or asrequired by the

appropriate government agency, or when requested by a Grid User.

7
2.2.2 Membership of the GMC
The GMC shall be composed of the following members who shall be
appointed by the ERC:
(a) One (1) member nominated by the System Operator;

(b) One (1) member nominated by the Grid Owner;

(c) One (1) member nominated by the Market Operator;

(d) Three (3) members nominated by Large Generators;

(e) One (1) member nominated by Small Generators;

(f) Three (3) members nominated by private and local

government Distributors;
(g) Three (3) members nominated by Electric Cooperatives,

one (1) each from Luzon, Visayas, and Mindanao;

(h) One (1) member nominated by Suppliers; and

(i) One (1) member nominated by Large Customers.

8
2.2.3 Terms of Office of the GMC Members
1. Three years and only 1 re-appointment for all members of the GMC

2. For the first appointees; Chairman – 3 years, seven(7) members – 2 years,

and 1 year for the remaining members.

2.2.4 GMC Rules and Procedures
1. The GMC shall establish and publish its own rules and procedures relating to
the conduct of its business. These include:
(a) Administration and operation of the Committee;

(b) Establishment and operation of GMC subcommittees;

(c) Evaluation of Grid operations reports;

(d) Coordination of dispute resolution process;

(e) Monitoring of Grid Code enforcement;

(f) Revision of Grid Code provisions;

(g) Review of the Transmission Development Plan;

(h) Review of major Grid reinforcement and expansion projects; and

(i) Coordination with the Philippine Electricity Management Board.

9
2.3 Grid Management Subcommittees

• Grid Planning Subcommittee

• Grid Operation Subcommittee
• Grid Reliability and Protection Subcommittee

2.4 Grid Code Dispute Resolution

• Grid Code Disputes
• Grid Code Dispute Resolution Process
• Grid Code Dispute Resolution Panel

10
2.5 GRID MANAGEMENT REPORTS
1. Quarterly and Annual Reports
1. The GMC shall submit to the ERC four (4) quarterly reports before the end of

the month immediately following the quarter.

2. The GMC shall submit to the ERC an annual report for the previous year by

the end of March of the current year.

2. Significant Incident Reports
1. Within one (1) week following a Significant Incident in the Grid or a User
System, the System Operator shall submit to the GMC and the ERC a report
detailing the sequence of events and other relevant information pertaining to
the incident. The report shall describe the cause of the Significant Incident and
the amount and duration of the resulting power interruptions.
2. Within one (1) month following the receipt of the System Operator’s report on

the Significant Incident, the GMC shall validate the report and make
recommendations to the ERC. In cases where any User has violated any
provision of the Grid Code, the GMC may recommend to the ERC sanctions as
part of the Significant Incident report.
11
CHAPTER 3: PERFORMANCE STANDARDS FOR
TRANSMISSION

12
3.2 POWER QUALITY STANDARDS
3.2.1 Power Quality Problems
1. For the purpose of this Article, Power Quality shall be
defined as the quality of the voltage, including its
frequency and the resulting current, that are measured
in the Grid during normal conditions.
2. A Power Quality problem exists when at least one of
the following conditions is present and significantly
affects the normal operation of the System:
1. The System Frequency has deviated from the nominal value
of 60 Hz;
2. Voltage magnitudes are outside their allowable range of
variation;
13
3. Harmonic Frequencies are present in the System
3.2.2 Frequency Variations
The nominal fundamental frequency shall be 60 Hz. The control of System frequency shall be the
responsibility of the System Operator. The System Operator shall maintain the fundamental
frequency within the limits of 59.7 Hz and 60.3 Hz during normal conditions.
3.2.3 Voltage Variations
For the purpose of this Section, Voltage Variation shall be defined as the deviation of the root-
mean-square (RMS) value of the voltage from its nominal value, expressed in percent. Voltage
Variation will either be of short duration or long duration.
A Short Duration Voltage Variation shall be defined as a variation of the RMS value of the voltage
from nominal voltage for a time greater than one- half cycle of the power frequency but not
exceeding one minute. A Short Duration Voltage Variation is a Voltage Swell if the RMS value of
the voltage increases to between 110 percent and 180 percent of the nominal value. A Short
Duration Voltage Variation is a Voltage Sag (or Voltage Dip) if the RMS value of the voltage
decreases to between 10 percent and 90 percent of the nominal value.
A Long Duration Voltage Variation shall be defined as a variation of the RMS value of
the voltage from nominal voltage for a time greater than one minute. A Long Duration
Voltage Variation is an Undervoltage if the RMS value of the voltage is less than or equal
to 90 percent of the nominal voltage. A Long Duration Voltage Variation is an
Overvoltage if the RMS value of the voltage is greater than or equal to 110 percent of the
nominal value.
The Grid Owner and the System Operator shall ensure that the Long Duration Voltage
Variations result in RMS values of the voltages that are greater than 95 percent but less
than 105 percent of the nominal voltage at any Connection Point during normal
14
conditions.
3.2.4 Harmonics
1. For the purpose of this Section, Harmonics shall be defined as sinusoidal voltages and
currents having frequencies that are integral multiples of the fundamental frequency.
2. The Total Harmonic Distortion (THD) shall be defined as the ratio of the RMS value
of the harmonic content to the RMS value of the fundamental quantity, expressed in
percent.
3. The Total Demand Distortion (TDD) shall be defined as the ratio of the RMS value
of the harmonic content to the RMS value of the rated or maximum fundamental
quantity, expressed in percent.
4. The Total Harmonic Distortion of the voltage and the Total Demand Distortion of
the current at any Connection Point shall not exceed the limits given in Tables 3.1
and 3.2, respectively.
TABLE 3.1 TABLE 3.2

MAXIMUM HARMONIC VOLTAGE DISTORTION FACTORS MAXIMUM HARMONIC CURRENT DISTORTION FACTORS
Harmonic Voltage Distortion Harmonic Current Distortion

Individual Individual
Voltage Level THD* Voltage Level TDD*
Odd Even Odd Even

500kV 1.5% 1.0% 0.5% 500kV 1.5% 1.0% 0.5%

115kV–230kV 2.5% 1.5% 1.0% 115kV–230kV 2.5% 2.0% 0.5%
69kV 3.0% 2.0% 1.0% 69kV 5.0% 4.0% 1.0%
15
•Total Harmonic Distortion
16
3.3 RELIABILITY STANDARDS
3.3.1 Criteria for Establishing Transmission Reliability Standards
1. The ERC shall impose a uniform system of recording and reporting of Grid reliability
performance.
2. The same reliability indices shall be imposed on all Grids. However, the numerical
levels of performance (or targets) shall be unique to each Grid and shall be based initially
on the particular Grid’s historical performance.
3. Each Grid shall be evaluated annually to compare its actual performance with the targets.
3.3.2 Transmission Reliability Indices
1. The ERC shall prescribe a reliability index that will measure the total number of
sustained power interruptions in the Grid.
2. The ERC shall prescribe a reliability index that will measure the total duration of
sustained power interruptions in the Grid.
3. After due notice and hearing, the ERC may impose other indices that will monitor the
reliability performance of the Grid.

17
3.3.4 Submission of Transmission Reliability
Reports and Performance Targets
The Grid Owner and the System Operator shall
submit every three (3) months the monthly
Interruption reports for each Grid using the
standard format prescribed by the ERC.

The ERC shall set the performance targets for

each Grid after due notice and hearing.

18
3.4 SYSTEM LOSS STANDARDS
3.4.1 System Loss Classifications
1. System Loss shall be classified into three categories: Technical
Loss, Non-Technical Loss, and Administrative Loss.
2. The Technical Loss shall be the aggregate of conductor loss, the
core loss in transformers, and any loss due to technical metering
error.
3. The Non-Technical Loss shall be the aggregate of the Energy loss
due to meter-reading errors and meter tampering.
4. The Administrative Loss shall include the Energy that is required
for the proper operation of the Grid.
3.4.2 System Loss Cap
1. The ERC shall, after due notice and hearing, prescribe a cap on the
System Loss that can be passed on by the Grid Owner to the Grid
Users. The cap shall be applied to the aggregate of the Technical
and Non-Technical Losses.
2. The Grid Owner shall submit to ERC an application for the approval
of its Administrative Loss. The allowance for Administrative Loss
shall be approved by the ERC, after due notice and hearing, based
on connected essential load. 19
3.5 SAFETY STANDARDS
3.5.1 Adoption of PEC and OSHS
1. The Grid Owner and the System Operator shall develop, operate, and
maintain the Grid in a safe manner and shall always ensure a safe
work environment for their employees. In this regard, the ERC adopts
the Philippine Electrical Code (PEC) Part 1 and Part 2 set by the
Professional Regulations Commission and the Occupational Safety
and Health Standards (OSHS) set by the Bureau of Working
Conditions of the Department of Labor and Employment.
2. The Philippine Electrical Code (PEC) Parts 1 and 2 govern the safety
requirements for electrical installation, operation, and maintenance.
Part 1 of the PEC pertains to the wiring System in the premises of
End Users. Part 2 covers electrical Equipment and associated work
practices employed by the electric utility. Compliance with these
Codes is mandatory. Hence, the Grid Owner and the System Operator
shall at all times ensure that all provisions of these safety codes are
not violated.
3. The OSHS aims to protect every workingman against the dangers
of injury, sickness, or death through safe and healthful working
conditions.
20
 3.5.2 Measurement of Performance for Personnel Safety
•Rule 1056 of the OSHS specifies the rules for the measurement of performance
for personnel safety that shall be applied to the Grid Owner and the System
Operator. The pertinent portions of this rule are reproduced as follows:
(a) Exposure to work injuries shall be measured by the total number of hours of employment of all
employees in each establishment or reportingunit.
(b) Employee-hours of exposure for calculating work injury rates are intended to be the actual hours
worked. When actual hours are not available, estimated hours may be used.
(c) The Disabling Injury/Illness Frequency Rate shall be based upon the total number of deaths, permanent
total, permanent partial, and temporary total disabilities, which occur during the period covered by the
rate. The rate relates those injuries/illnesses to the employee-hours worked during the period and
expresses the number of such injuries in terms of a million man-hourunits.
(d) The Disabling Injury/Illness Severity Rate shall be based on the total of all scheduled charges for all
deaths, permanent total, and permanent partial disabilities, plus the total actual days of the disabilities of
all temporary total disabilities, which occur during the period covered by the rate. The rate relates these
days to the total employee-hours worked during the period and expresses the loss in terms of million
man-hour units.
3.5.3 Submission of Safety Records and Reports
•The Grid Owner and System Operator shall submit to ERC copies of records and
reports required by OSHS as amended. These shall include the measurement of
performance specified in Section 3.5.2. 21
 CHAPTER 4:FINANCIAL STANDARDS FOR
GENERATION AND TRANSMISSION

4.2 FINANCIAL STANDARDS FOR GENERATORS

4.2.1 Financial Ratios
•The following Financial Ratios shall be used to evaluate the Financial
Capability of Generators:
(a) Leverage Ratios;

(b) Liquidity Ratio;

(c) Financial Efficiency Ratio; and

(d) Profitability Ratio.

22
4.2.2 Leverage Ratios
1. Leverage Ratios for the Generators shall include the following:
(a) Debt Ratio;

(b) Debt-Equity Ratio; and

(c) Interest Cover.

2. The Debt Ratio shall measure the degree of indebtedness of the Generator. The Debt
Ratio shall be calculated as the ratio of total liabilities to total assets.
3. The Debt Ratio shall be used to measure the proportion of assets financed by creditors.
The risk addressed by the Debt Ratio is the possibility that the Generator cannot pay off
interest and principal.
4. The Debt Ratio can also be calculated as the ratio of Long-Term Debt plus Value of
Leases to Long-Term Debt plus Value of Leases plus Equity. Equity is the sum of
Outstanding Capital Stock, Retained Earnings, and Revaluation Increment.
5. The Debt-Equity Ratio shall indicate the relationship between long-term funds
provided by creditors and those provided by the Generators. The Debt- Equity Ratio shall
be calculated as the ratio of the sum of Long-Term Debt plus Value of Leases to Equity.
Equity shall be the sum of Outstanding Capital Stock, Retained Earnings, and
Revaluation Increment. 23
6. The Debt-Equity Ratio shall be used to compare the
financial commitments of creditors relative to those of the
Generators.
7. The Debt-Equity Ratio shall be used as a measure of the
degree of financial leverage of the Generator.
8. The Interest Cover shall measure the ability of the Generator to
service its debts. The Interest Cover shall be computed as the ratio
of Earnings Before Interest and Taxes (EBIT) plus Depreciation to
Interest plus Principal Payments.
9. The Interest Cover shall also be used as a measure of financial
leverage for the Generator that focuses on the extent to which
contractual interest and principal payments are covered by earnings
before interest and taxes plus depreciation. The Interest Cover is
identical to Debt Service Capability Ratio because principal
payments due during the year are included in the denominator of
24
the ratio.
4.2.3 Liquidity Ratios
1. Liquidity Ratios shall include the following:

(a) Financial Current Ratio; and

(b) Quick Ratio.

2. The Financial Current Ratio shall measure the ability of the Generator
to meet short-term obligations. The Financial Current Ratio shall be
calculated as the ratio of Current Assets to Current Liabilities. Current
Assets shall consist of cash and assets that can readily be turned into
cash by the Generator. Current Liabilities shall consist of payments that
the Generator is expected to make in the near future.
3. The Financial Current Ratio shall be used as a measure of the margin
of liquidity of the Generator.
4. The Quick Ratio shall measure the ability of the Generator to satisfy
its short-term obligations as they become due. The Quick Ratio shall
be calculated as the ratio of the sum of Cash, Marketable Securities,
and Receivables to the Current Liabilities.
5. The Quick Ratio shall be used to measure the safety margin for the
payment of current debt of the Generator if there is shrinkage in the value
of cash and receivables. 25
4.2.4 Financial Efficiency Ratios
1. Financial Efficiency Ratios shall include the following:
(a) Sales-to-Assets Ratio; and

(b) Average Collection Period.

2. The Sales-to-Assets Ratio shall measure the efficiency with which the Generator uses
all its assets to generate sales. The Sales-to-Assets Ratio shall be calculated as the
ratio of Sales to Average Total Assets. The Average Total Assets shall be determined
using the average of the assets at the beginning and end of the year. The higher the
Sales-to-Assets Ratio, the more efficiently the Generator’s assets have been used.
3. The Average Collection Period (ACP) shall measure how quickly other entities pay
their bills to the Generator. The Average Collection Period shall be calculated as the
ratio of Average Receivables to Daily Sales. The Average Receivables shall be
determined using the average of the receivables at the beginning and end of the year.
Daily Sales shall be computed by dividing Sales by 365 days.
4. The Average Collection Period shall be used to evaluate the credit and collection
policies of the Generator.
5. Two computations of the Average Collection Period shall be made:
(a) ACP with government accounts and accounts under litigation; and
26
(b) ACP without government accounts and accounts under litigation.
4.2.5 Profitability Ratios
1. Profitability Ratios shall include the following:
(a) Net Profit Margin; and
(b) Return on Assets.

2. The Net Profit Margin shall measure the productivity of sales effort. The Net Profit Margin
shall be calculated as the ratio of Net Profits After Taxes to Sales. The Net Profits After Taxes
shall be computed as Earnings Before Interest and Taxes minus Tax (EBIT – Tax).
3. The Net Profit Margin shall be used to measure the percentage of each peso of Generator
sales that remain after all costs and expenses have been deducted.
4. The Return on Assets shall measure the overall effectiveness of the Generator in generating
profits from its available assets. The Return on Assets shall be calculated as the ratio of
Earnings Before Interest and Taxes minus. Tax to the Average Total Assets. The Average Total
Assets shall be computed as the average of the assets at the beginning and end of the year.
4.2.6 Submission and Evaluation
1. Generators shall submit to the ERC true copies of audited balance sheet and financial
statement for the preceding year on or before May 15 of the current year.
2. Generators shall submit to the ERC the average power consumption for each class of
customers for the preceding year. This requirement is due on or before May 15 of the
current year.
3. Failure to submit to the ERC the requirements shall serve as grounds for the imposition of
appropriate sanctions, fines, penalties, or adverse evaluation.
27
4. All submissions are to be certified under oath by a duly authorized officer.
 4.3 FINANCIAL STANDARDS FOR THE GRID OWNER AND THE SYSTEM
OPERATOR
4.3.1 Financial Ratios
•The following Financial Ratios shall be used to evaluate the Financial Capability of the Grid Owner
and System Operator:
(a) LeverageRatios;
(b) Liquidity Ratios;
(c) FinancialEfficiencyRatios; and
(d) Profitability Ratios.

4.3.2 Leverage Ratios

1. Leverage Ratios for the Grid Owner and System Operator shall include the following:
(a) Debt Ratio;
(b) Debt-Equity Ratio; and
(c) Interest Cover.
2. The Debt Ratio shall measure the degree of indebtedness or financial leverage of the
Grid Owner and System Operator. The Debt Ratio shall be calculated as the ratio of
Total Liabilities to Total Assets.
3. The Debt Ratio shall be used to measure the proportion of assets financed by creditors.
The risk addressed by the Debt Ratio is the possibility that the Grid Owner and System
Operator cannot pay off interest and principal.
4. The Debt Ratio can also be calculated as the ratio of Long-Term Debt plus Value of
Leases to Long-Term Debt plus Value of Leases plus Equity. Equity shall be the sum of
Outstanding Capital Stock, Retained Earnings, and Revaluation Increment.
28
5. The Debt-Equity Ratio shall indicate the relationship between long-term
funds provided by creditors and those provided by the Grid Owner and
System Operator. The Debt-Equity Ratio shall be calculated as the ratio of the
sum of Long-Term Debt plus Value of Leases to Equity. The Equity shall be
the sum of Outstanding Capital Stock, Retained Earnings, and Revaluation
Increment.
6. The Debt-Equity Ratio shall be used to compare the financial
commitments of creditors relative to those of the Grid Owner and System
Operator.
7. The Debt-Equity Ratio shall be used as a measure of the degree of
financial leverage of the Grid Owner and System Operator.
8. The Interest Cover shall measure the ability of the Grid Owner and System
Operator to service their debts. The Interest Cover shall be computed as the
ratio of Earnings Before Interest and Taxes (EBIT) plus Depreciation to
Interest plus Principal Payments.
9. The Interest Cover shall also be used as a measure of financial leverage for
the Grid Owner and System Operator that focuses on the extent to which
contractual interest and principal payments are covered by earnings before
interest and taxes plus depreciation. The Interest Cover is identical to Debt
Service Capability Ratio because principal payments due during the year are
included in the denominator of the ratio. 29
4.3.3 Liquidity Ratios
1. Liquidity Ratios shall include the following:
1. Financial Current Ratio; and
2. Quick Ratio.
2. The Financial Current Ratio shall measure the ability of the Grid Owner and System
Operator to meet their short-term obligations. The Financial Current Ratio shall be
calculated as the ratio of Current Assets to Current Liabilities. The Current Assets
shall consist of cash and assets that can readily be turned into cash by the Grid
Owner and System Operator. The Current Liabilities shall consist of payments that
the Grid Owner and System Operator are expected to make in the near future.
3. The Financial Current Ratio shall be used as a measure of the margin of liquidity of
the Grid Owner and System Operator.
4. The Quick Ratio shall measure the ability of the Grid Owner and System Operator
to satisfy their short-term obligations as they become due. The Quick Ratio shall be
calculated as the ratio of the sum of Cash, Marketable Securities, and Receivables to
the Current Liabilities.
5. The Quick Ratio shall be used to measure the safety margin for the payment of
current debt of the Grid Owner and System Operator if there is shrinkage in the
value of cash and receivables. 30
4.3.4 Financial Efficiency Ratios
1. Financial Efficiency Ratios shall include the following:
1. Sales-to-Assets Ratio; and
2. Average Collection Period.

2. The Sales-to-Assets Ratio shall measure the efficiency with which the Grid Owner and
System Operator use all their assets to generate sales. The Sales-to-Assets Ratio shall be
calculated as the ratio of Sales to Average Total Assets. The Average Total Assets shall be
determined using the average of the assets at the beginning and end of the year. The
higher the Sales-to-Assets Ratio, the more efficiently the assets of the Grid Owner and
System Operator have been used.
3. The Average Collection Period (ACP) shall measure how quickly other entities pay
their bills to the Grid Owner and System Operator. The Average Collection Period shall
be calculated as the ratio of Average Receivables to Daily Sales. The Average
Receivables shall be determined using the average of the receivables at the beginning
and end of the year. Daily Sales shall be computed by dividing Sales by 365 days.
4. The Average Collection Period shall be used to evaluate the credit and collection
policies of the Grid Owner and System Operator.
5. Two computations of the Average Collection Period shall be made:
1. ACP with government accounts and accounts under litigation; and
2. ACP without government accounts and accounts under litigation.
31
4.3.5 Profitability Ratios
1. Profitability Ratios shall include the following:
1. Net Profit Margin; and
2. Return on Assets.
2. The Net Profit Margin shall measure the productivity of sales effort. The
Net Profit Margin shall be calculated as the ratio of Net Profits After Taxes
to Sales. The Net Profits After Taxes shall be computed as Earnings Before
Interest and Taxes minus Tax (EBIT – Tax). The Average Total Assets shall
be computed as the average of the assets at the beginning and end of the
year.
3. The Net Profit Margin shall be used to measure the percentage of each
peso of sales of the Grid Owner and System Operator that remains after
all costs and expenses have been deducted.
4. The Return on Assets (ROA) shall measure the overall effectiveness of the
Grid Owner and System Operator in generating profits from their available
assets. The Return on Assets shall be calculated as the ratio of Earnings
Before Interest and Taxes minus Tax to the Average Total Assets. The
Average Total Assets shall be computed as the average of the assets at the
beginning and end of the year.

5. The Return on Assets shall be used to measure the overall effectiveness of the
Grid Owner and System Operator in generating profits from their available
assets. 32
4.3.6 Submission and Evaluation
1. The Grid Owner and System Operator shall submit to the

ERC true copies of audited balance sheet and financial

statement for the preceding year on or before May 15 of
the current year.
2. The Grid Owner and System Operator shall submit to the

ERC a profile of customers, indicating the average power

consumption for each class of customers for the
preceding year. This requirement is due on or before May
15 of the current year.
3. Failure to submit to the ERC the requirements shall serve

as grounds for the imposition of appropriate sanctions,

fines, penalties, or adverse evaluation.
4. All submissions are to be certified under oath by a duly

authorized officer. 33
 CHAPTER 5: GRID CONNECTION
REQUIREMENTS

5.2.1 Power Quality Standards

1. The Grid Owner and System Operator shall ensure that at any

Connection Point in the Grid, the Power Quality standards

specified in Article 3.2 are complied with.
2. Users seeking connection to the Grid or modification of an

existing connection shall ensure that their Equipment can operate

reliably and safely within the limits specified in Article 3.2 during
normal conditions, and can withstand the limits specified in this
Article.

34
5.2.2 Frequency Variations
1. During normal operating conditions, the Grid Frequency shall be within the limits
specified in Section 3.2.2.
5.2.3. Voltage Variations
1. The Long Duration Voltage Variations at any Connection Point during normal
conditions shall be within the limits specified in Section 3.2.3.
2. During Single Outage Contingencies, the RMS values of the voltages shall not
result in an Undervoltage or Overvoltage at any Connection Point.
5.2.4. Harmonics
1. The Total Harmonic Distortion of the voltage and the Total Demand Distortion of
the current, at any Connection Point, shall not exceed the limits prescribed in
Section 3.2.4.
2. Users shall ensure that their System shall not cause the harmonics in the Grid to
exceed the limits specified in Section 3.2.4.

35
5.2.5 Voltage Unbalance
1. The maximum Negative Sequence Unbalance Factor at any Connection Point in the
Grid shall not exceed the limits specified in Section 3.2.5 during normal operating
conditions.
2. The maximum Zero Sequence Unbalance Factor at any Connection Point in the Grid
shall not exceed the limits specified in Section 3.2.5 during normal operating
conditions.
5.2.6. Voltage Fluctuation and Flicker Severity
1. The Voltage Fluctuation at any Connection Point with a fluctuating Demand
shall not exceed the limits specified in Section 3.2.6.
2. The Flicker Severity at any Connection Point in the Grid shall not exceed the limits
specified in Section 3.2.6.
5.2.7 Transient Voltage Variations
1. The Grid and the User System shall be designed and operated to include devices that
will mitigate the effects of transient Overvoltages on the Grid and the User System.
2. The Grid Owner and the User shall take into account the effect of electrical
transients when specifying the insulation of their electrical Equipment.
3. Infrequent short-duration peaks may be permitted subject to the conditions
specified in Section 3.2.7. 36
5.2.8 Grounding Requirements
1. At nominal voltages of 115 kV and above, the Grid shall be effectively

grounded with an Earth Fault Factor of less than 1.4.

2. At nominal voltages below 115 kV, the Grid Owner shall specify the

grounding requirements and the applicable Earth Fault Factor at the

Connection Point.
5.2.9 Equipment Standards
1. All Equipment at the Connection Point shall comply with the requirements of

the IEC Standards or their equivalent national standards.

2. All Equipment at the Connection Point shall be designed, manufactured, and

tested in accordance with the quality assurance requirements of the ISO 9000
series.

37
5.2.10 Maintenance Standards
1. All Equipment at the Connection Point shall be operated and maintained in
accordance with Good Industry Practice and in a manner that shall not pose a threat
to the safety of any personnel or cause damage to the Equipment of the Grid Owner
or the User.
2. The User shall maintain a log containing the test results and maintenance records
relating to its Equipment at the Connection Point and shall make this log available
when requested by the Grid Owner.

5.3 PROCEDURES FOR GRID CONNECTION OR MODIFICATION

5.3.1 Connection Agreement
1. Any User seeking a new connection to the Grid shall secure the required
Connection Agreement with the Grid Owner prior to the actual connection to the
Grid.
2. The Connection Agreement shall include provisions for the submission of
information and reports, Safety Rules, Test and Commissioning programs, Electrical
Diagrams, statement of readiness to connect, certificate of approval to connect, and
other requirements prescribed by the ERC.
38
5.3.2 Amended Connection Agreement
1. Any User seeking a modification of an existing connection to the Grid shall secure
the required Amended Connection Agreement with the Grid Owner prior to the
actual modification of the existing connection to the Grid.
2. The Amended Connection Agreement shall include provisions for the submission
of additional information and reports required by the Grid Owner and other
requirements prescribed by the ERC.
5.3.3 Grid Impact Studies
1. The Grid Owner shall develop and maintain a set of required technical
planning studies for evaluating the impact on the Grid of any proposed
connection or modification to an existing connection. These planning studies
shall be completed within the period prescribed by the ERC. The Grid Owner
shall treat this period as the maximum acceptable planning study duration.
2. Any User applying for connection or a modification of an existing connection
to the Grid shall take all necessary measures to ensure that the proposed User
Development will not result in the Degradation of the Grid. The Grid Owner
may disapprove an application for connection or a modification to an existing
connection, if the Grid Impact Studies show that the proposed User
Development will result in the Degradation of the Grid. 39
5.3.5 Processing of Application
1. The Grid Owner shall process the application for connection or modification to an
existing connection within 30 days from the submission of the completed application
form.
2. After evaluating the application submitted by the User, the Grid Owner shall inform the
User whether the proposed User Development is acceptable or not.
3. If the application of the User is acceptable, the Grid Owner and the User shall sign a
Connection Agreement or an Amended Connection Agreement, as the case may be.
4. If the application of the User is not acceptable, the Grid Owner shall notify the User
why its application is not acceptable. The Grid Owner shall include in its notification a
proposal on how the User’s application will be acceptable to the Grid Owner.
5. The User shall accept the proposal of the Grid Owner within 30 days, or a longer period
specified in the Grid Owner’s proposal, after which the proposal automatically lapses.
6. The acceptance by the User of the Grid Owner’s proposal shall lead to the signing of a
Connection Agreement or an Amended Connection Agreement.
7. If the Grid Owner and the User cannot reach agreement on the proposed connection or
modification to an existing connection, the Grid Owner or the User may bring the
matter before the ERC for resolution.
8. If a Connection Agreement or an Amended Connection Agreement is signed, the User
shall submit to the Grid Owner, within 30 days from signing or a longer period agreed to
by the Grid Owner and the User, the Detailed Planning Data pertaining to the proposed 40
User Development, as specified in Article 6.5.
5.4 REQUIREMENTS FOR LARGE GENERATORS
5.4.1 Requirements Relating to the Connection Point
1. The Generator’s Equipment shall be connected to the Grid at the voltage level(s) agreed
to by the Grid Owner and the Generator based on Grid Impact Studies.
2. The Connection Point shall be controlled by a circuit breaker that is capable of
interrupting the maximum short circuit current at the point of connection.
3. Disconnect switches shall also be provided and arranged to isolate the circuit breaker for
maintenance purposes.
5.4.2 Generating Unit Power Output
1. The Generating Unit shall be capable of continuously supplying its Active Power output, as
specified in the Generator’s Declared Data, within the System Frequency range of 59.7 to 60.3
Hz.
2. The Generating Unit shall be capable of supplying its Active Power and Reactive Power
outputs, as specified in the Generator’s Declared Data, within the voltage variations specified
in Section 5.2.3 during normal operating conditions.
3. The Generating Unit shall be capable of supplying its Active Power output, as specified in the
Generator’s Declared Data, within the limits of 0.85 Power Factor lagging and 0.90 Power
Factor leading at the Generating Unit’s terminals, in accordance with its Reactive Power
Capability Curve.

41
5.4.3 Frequency Withstand Capability
1. If the System frequency momentarily rises to 62.4 Hz or falls to 57.6 Hz, all

Generating Unit shall remain in synchronism with the Grid for at least five(5)
seconds, as specified in Section 5.2.2.
2. The Generator shall be responsible for protecting its Generating Units against

damage for frequency excursions outside the range of 57.6 Hz and 62.4 Hz.
The Generator shall decide whether or not to disconnect its Generating Unit
from the Grid.
5.4.4 Unbalance Loading Withstand Capability
1. The Generating Unit shall meet the requirements for Voltage Unbalance as

specified in Section 5.2.5.

2. The Generating Unit shall also be required to withstand without tripping, the

unbalance loading during clearance by the Backup Protection of a close-up

phase-to-phase fault on the Grid or, in the case of an Embedded Generating
Unit, on the User System.

42
5.4.6 Excitation Control System
1. The Generating Unit shall be capable of contributing to Voltage Control by
continuous regulation of the Reactive Power supplied to the Grid or, in the case
of Embedded Generating Unit, to the User System.
2. The Generating Unit shall be fitted with a continuously acting automatic
excitation control System to control the terminal voltage without instability
over the entire operating range of the Generating Unit.
5.4.7 Black Start Capability
1. The Grid shall have Black Start capability at a number of strategically
located Generating Plants.
2. The Generator shall specify in its application for a Connection Agreement or
Amended Connection Agreement if its Generating Unit has a Black Start
capability.
5.4.8 Fast Start Capability
1. The Generator shall specify in its application for a Connection Agreement or
Amended Connection Agreement if its Generating Unit has a Fast Start
capability.
2. The Generating Unit shall automatically Start-Up in response to
frequency-level relays with settings in the range of 57.6 Hz to 62.4 Hz.
43
5.4.10 Transformer Connection and Grounding
1. If the Generator’s Equipment are connected to the Grid at a voltage that is equal to or greater than
115 kV, the high-voltage side of the transformer shall be connected in Wye, with the neutral
available for connection to ground.
2. The Grid Owner shall specify the connection and grounding requirements for the low-voltage side
of the transformer, in accordance with the provisions of Section 5.2.8.

5.5 REQUIREMENTS FOR DISTRIBUTORS AND OTHER GRID USERS

5.5.1 Requirements Relating to the Connection Point
1. The Distributor’s or other Grid User’s Equipment shall be connected to the Grid at voltage level(s)
agreed to by the Grid Owner and the Distributor (or other Grid User) based on Grid Impact
Studies.
2. The Connection Point shall be controlled by a circuit breaker that is capable of interrupting the
maximum short circuit current at the point of connection.
3. Disconnect switches shall also be provided and arranged to isolate the circuit breaker for
maintenance purposes.
5.5.2 Transformer Connection and Grounding
1. If the Distributor’s or other Grid User’s Equipment are connected to the Grid at a voltage that is
equal to or greater than 115 kV, the high-voltage side of the transformer shall be connected in Wye,
with the neutral available for connection to ground.
2. The Grid Owner shall specify the connection and grounding requirements for the low-voltage side
of the transformer, in accordance with the provisions of Section 5.2.8.
44
5.6 COMMUNICATION AND SCADA EQUIPMENT REQUIREMENTS
5.6.1 Communication System for Monitoring and Control
1. A communication System shall be established so that the Grid Owner, the System Operator and the
Users can communicate with one another, as well as exchange data signals for monitoring and
controlling the Grid during normal and emergency conditions.
2. The Grid Owner shall provide the complete communication Equipment required for the
monitoring and control of the Connection Point and the Generating Units.
3. The Grid Owner may use a combination of communication media such as digital/analog Power
Line Carrier (PLC), digital/analog microwave radio, and fiber optics to link the User System
with the Grid Owner’s System. Backup communication may be referred to as UHF/VHF half-
duplex, hand-held or base radios, and mobile (cellular) phones, if applicable.
5.6.2 SCADA System for Monitoring and Control
1. The Grid Owner shall provide a Remote Terminal Unit (RTU) for interconnection with the
System Operator’s Control Center, to serve as telemetry Equipment for monitoring real-time
information and controlling the Equipment at the User System.
2. The RTU shall be compatible with the Master Station protocol requirements and modem
specifications of the System Operator. In the event that the Master Station is changed, the Grid
Owner shall be responsible for any change needed for the RTU to match the new
requirements.
3. The Grid Owner shall also provide, if applicable, other related Equipment such as transducers,
cables, modems, etc. for interconnection with the SCADA System of the Grid.

45
CHAPTER 6: GRID PLANNING

46
6.2 GRID PLANNING RESPONSIBILITIES AND PROCEDURES
6.2.1 Grid Planning Responsibilities
1. The Grid Owner shall have lead responsibility for Grid planning,
including:
1. Analyzing the impact of the connection of new facilities such as Generating Plants,
Loads, transmission lines, or substations;
2. Planning the expansion of the Grid to ensure its adequacy to meet forecasted Demand and
the connection of new Generating Plants; and
3. Identifying congestion problems that may result in increased Outages or raise the cost of
service significantly.
2. The System Operator shall be responsible in planning the expansion of
communications and SCADA facilities.
3. The System Operator, Market Operator, and other Users shall cooperate with
the Grid Owner in maintaining a Grid planning data bank, reviewingplanning
proposals as necessary, and advising the Grid Planning Subcommittee on
improved Grid planning procedures.
4. The Grid Planning Subcommittee shall be responsible for:
1. Evaluating and making recommendations on the Transmission Development
Plan to the Grid Management Committee;
2. Evaluating and recommending actions on proposed major Grid reinforcement
and expansion projects; and
3. Periodically reviewing and recommending changes in planning procedures and standards.
 6.2.2 Evaluation of Grid Expansion Project
1. The Grid Owner shall conduct Grid Impact Studies to assess the effect of any

proposed Grid expansion project on the Grid and the System of other Users.
2. The Grid Owner shall notify the User of any planned development in the Grid

that may have an impact on the User System.

6.2.3 Evaluation of Proposed User Development
1. The Grid Owner shall conduct Grid Impact Studies to assess the effect of any
proposed User Development on the Grid and the System of other Users.
2. The Grid Owner shall notify the applicant User of the results of the Grid
Impact Studies.
•

48
6.3 GRID PLANNING STUDIES
6.3.1 Grid Planning Studies to be Conducted
1. The Grid Owner shall conduct Grid planning studies to ensure the safety, Reliability, Security,
and Stability of the Grid .
2. The Grid planning studies shall be conducted to assess the impact on the Grid or to
any User System of any Demand Forecast or any proposed addition or change of Equipment
or facilities in the Grid or the User System and to identify corrective measures to eliminate the
deficiencies in the Grid or the User System.
3. The Grid planning studies shall be conducted periodically to assess:
1. The behavior of the Grid during normal and Outage-contingency conditions; and
2. The behavior of the Grid during the electromechanical or electromagnetic transient
induced by disturbances or switching operations.
6.3.2 Load Flow Studies
1. Load flow studies shall be performed to evaluate the behavior of the Grid for the existing
and planned Grid facilities under forecasted maximum and minimum Load conditions
and to study the impact on the Grid of the connection of new Generating Plants, Loads,
or transmission lines.
2. For new transmission lines, the Load condition that produces the maximum power flows
through the existing and new lines shall be identified and evaluated.

49
6.3.3 Short Circuit Studies
1. Short circuit studies shall be performed to evaluate the effect on Grid Equipment of the connection of new
Generating Plants, transmission lines, and other facilities that will result in increased fault duties for Grid
Equipment.
2. Three-phase short-circuit studies shall be performed for all nodes of the Grid for different feasible
generation, Load, and system circuit configurations. Single-phase short-circuit studies shall also be
performed for critical Grid nodes. These studies shall identify the most severe conditions that the Grid
Equipment may be exposed to.
3. Alternative Grid circuit configurations shall be studied to reduce the short circuit currents within the limits
of existing Equipment.
4. The results shall be considered satisfactory when the short-circuit currents are within the design limits of
Equipment and the proposed Grid configurations are suitable for flexible and safe operation.
6.3.4 Transient Stability Studies
1. Transient Stability studies shall be performed to verify the impact of the connection of new Generating Plants,
transmission lines, and substations and changes in Grid circuit configurations on the ability of the Grid to seek a
stable operating point following a transient disturbance. Transient Stability studies shall simulate the outages of
critical Grid facilities such as major 500 kV transmission lines and large Generating Units. The studies shall
demonstrate that the Grid performance is satisfactory if:
1. The Grid remains stable after any Single Outage Contingency for all forecasted Load conditions; and
2. The Grid remains controllable after a Multiple Outage Contingency. In the case of Grid separation, no total
blackout should occur in any Island Grid.
2. Transient Stability studies shall be conducted for all new 500 kV transmission lines or substations and for the
connection of new Generating Units equal to or larger than 300 MW at 500 kV, 150 MW at 230 kV, and 75 MW
at 115 kV. In other cases, the Grid Owner shall determine the need of performing transient Stability studies.
3. Studies shall be conducted to determine the possibility that Transient Instability problems may occur in the
Grid.

50
CHAPTER 7: GRID OPERATIONS

51
7.2 Grid Operating States
1. The Grid shall be considered to be in the Normal State when:
1. The Operating Margin is sufficient;
2. The Grid Frequency is within the limits of 59.7 and 60.3 Hz, as specified in Section 3.2.2;
3. The voltages at all Connection Points are within the limits of 0.95 and 1.05 of the nominal
value, as specified in Section 3.2.3;
4. The loading levels of all transmission lines and substation Equipment are below 90% of their
continuous ratings; and
5. The Grid configuration is such that any potential fault current can be interrupted and the
faulted Equipment can be isolated from the Grid.
2. The Grid shall be considered to be in the Alert State when any one of the
following conditions exists:
1. The Grid Contingency Reserve is less than the capability of the largest Synchronized
Generating Unit or the power import from a single Grid interconnection, whichever is
higher;
2. The voltages at the Connection Points are outside the limits of 0.95 and 1.05 but within the limits of
0.90 and 1.10 of the nominal value;
3. There is Critical Loading or Imminent Overloading of transmission lines or substation
Equipment;
4. A weather disturbance has entered the Philippine area of responsibility, which may affect
Grid operations; or
5. Peace and order problems exist, which may pose a threat to Grid operations. 52
7.3 Operational Responsibilities of the System Operator
1. The System Operator is responsible for Operating and maintaining Power Quality in the Grid
during normal conditions, in accordance with the provision of Article 3.2, and in proposing
solutions to Power Quality problems.
2. The System Operator shall be responsible for determining, acquiring, and dispatching the
capacity needed to supply the required Grid Ancillary Services and for developing and
proposing Wheeling Charges and Ancillary Service tariffs to the ERC.
3. The System Operator is responsible for ensuring that load-generation balance is
maintained during emergency conditions and for directing Grid recovery efforts
following these emergency conditions.
4. The System Operator is responsible for controlling Grid Voltage Variations during
emergency conditions through a combination of direct control and timely instructions
to Generators and other Grid Users.
5. When separation into Island Grids occurs, the System Operator is responsible for
maintaining normal Frequency in the resulting Island Grids and for ensuring that
resynchronization can quickly commence and be safely and successfully accomplished.
6. The System Operator is responsible for preparing, together with the Grid Owner, the Grid
Operating and Maintenance Program.
7. The System Operator is responsible for performing all necessary studies to determine the
safe operating limits that will protect the Grid against any instability problems, including
those due to Multiple Outage Contingencies. 53
 7.4 FREQUENCY CONTROL AND VOLTAGE CONTROL
1. The Grid Frequency shall be controlled by the timely use of Frequency Regulating Reserve,
Contingency Reserve, and Demand Control.
2. The Frequency Regulating (or load following) Reserve shall include the following:
1. Primary Response of Generating Units; and
2. Secondary Response of Generating Units.
3. The Contingency Reserve shall include the following:
1. Spinning Reserve (or hot standby reserve); and
2. Backup Reserve (or cold standby reserve).
4. Demand Control to reduce the Demand of the Grid shall be implemented when the System
Operator has issued a Red Alert notice due to generation deficiency or when a Multiple
Outage Contingency resulted in Island Grid operation. The Demand Control shall include the
following:
1. Automatic Load Dropping;
2. Manual Load Dropping;
3. Demand reduction on instruction by the System Operator;
4. Demand Disconnection initiated by Users;
5. Customer Demand Management; and
6. Voluntary Load Curtailment.
5. The control of voltage can be achieved by managing the Reactive Power supply in the Grid. These
include the operation of the following Equipment:
1. Synchronous Generating Units;
2. Synchronous condensers;
3. Static VAR compensators;
4. Shunt capacitors and reactors; and
5. On-Load tap changing transformers 54
7.5 SITE AND EQUIPMENT IDENTIFICATION
1. Site and Equipment Identification Requirements
1. The Grid Owner shall develop and establish a standard system for Site and
Equipment Identification to be used in identifying any Site or Equipment in all
Electrical Diagrams, Connection Point Drawings, Grid operations instructions,
notices, and other documents.
2. The identification for the Site shall include a unique identifier for each
substation and switchyard where a Connection Point is located.
3. The identification for Equipment shall be unique for each transformer,
transmission line, transmission tower or pole, bus, circuit breaker, disconnect
switch, grounding switch, capacitor bank, reactor, lightning arrester, CCPD, and
other HV and EHV Equipment at the Connection Point.
2. Site and Equipment Identification Label
1. The Grid Owner shall develop and establish a standard labeling system, which
specifies the dimension, sizes of characters, and colors of labels, to identify the
Sites and Equipment.
2. The Grid Owner or the User shall be responsible for the provision and
installation of a clear and unambiguous label showing the Site and Equipment
Identification at their respective System.
55
CHAPTER 8: SCHEDULING AND
DISPATCH

56
8.2 SCHEDULING AND DISPATCH RESPONSIBILITIES
8.2.1 Responsibilities of the Market Operator
The Market Operator shall be responsible for the preparation of the Generation
Schedule, in accordance with the Market Rules and the procedure described in Article
8.4. The Market Operator shall be responsible for the issuance of the final Generation
Schedule.
8.2.2 Responsibilities of the System Operator
The System Operator shall be responsible in providing Central Dispatch for the
Scheduled Generating Units, following the procedures specified in Article 8.5,
and the Generation Schedule prepared by the Market Operator.
The System Operator is responsible for ensuring that a number of strategically
located Generating Units are available for Ancillary Services, including the
provision of Frequency Regulating Reserve and Contingency Reserve.
The System Operator shall be responsible in issuing Dispatch Instructions for
the Scheduled Generating Units and the Generating Units providing Ancillary
Services.
57
8.2.3 Responsibilities of the Grid Owner
The Grid Owner is responsible for providing the System Operator and the Market Operator with
data on the availability and operating status of Grid facilities and Equipment to be used in
determining the constraints of the Grid for Scheduling and Dispatch.
The Grid Owner is responsible for the Grid operations necessary to implement the Dispatch
Instructions of the System Operator.
8.2.4 Responsibilities of Generators
The Generator is responsible for submitting the Capability and Availability Declaration,
Generation Scheduling and Dispatch Parameters, and other data for its Scheduled Generating
Units.
The Generator with a Scheduled Generating Unit shall be responsible for ensuring that all
Dispatch Instructions from the System Operator are implemented.
The Generator providing Ancillary Services shall be responsible in ensuring that its Generating
Units can provide the necessary support when instructed by the System Operator to do so.
8.2.4 Responsibilities of Distributors and Other Users
Distributors and other Users are responsible for submitting their Demand data for the Grid
Operating Program to be used in Scheduling and Dispatch.
Distributors and other Users are responsible for implementing all Dispatch Instructions
pertaining to Demand Control during an emergency situation.
58
8.3 SCHEDULING AND DISPATCH PRINCIPLES
8.3.1 Grid Operating Margin
The Operating Margin of the Grid shall include the generating capacity
for the Frequency Regulating Reserve, which is required to respond to
changes in Demand during normal conditions and the Contingency
Reserve needed to respond to a sudden reduction in generation during
emergency conditions, in accordance with the Grid operating criteria
specified in Section 7.2.2
The System Operator shall allocate the Frequency Regulating Reserve to
strategically located Generating Plants in order to achieve the required
levels of Primary Response and Secondary Response to Frequency
changes in the Grid.
The System Operator shall allocate the Contingency Reserve to
strategically located Generating Plants to cover against uncertainties in
Generating Plant availability.
59
8.3.2 Scheduling and Dispatch Criteria
1. The Market Operator and the System Operator shall take into account the following
operational criteria in Scheduling and Dispatch:
1. The Synchronized generating capacity shall be sufficient to match, at all times, the forecasted Grid Demand
and the required Frequency Regulating Reserve and Contingency Reserve to ensure the Security and
Reliability of the Grid;
2. The availability of Generating Units at strategic locations so that the Grid will continue to operate in
Normal State even with the loss of the largest Generating Unit or the power import from a single
interconnection, whichever is larger;
3. The technical and operational constraints of the Grid and the Generating Units; and
4. The Security and Stability of the Grid.

2. The Market Operator shall take into account the following factors in preparing the
Generation Schedule:
1. The registered parameters of the Scheduled Generating Units;
2. The requirements for voltage control and Reactive Power;
3. The need to provide an Operating Margin for Frequency Control;
4. Availability of Ancillary Services; and
5. Bilateral contracts between Generators and Users.

3. The System Operator shall take into account the following factors in dispatching Generating
Units and in satisfying needs for imbalance Energy in real time:
1. The Generation Schedule;
2. The Demand requirements of the Users;
3. Grid congestion problems; 60
8.4.GENERATION SCHEDULING PROCEDURE
8.4.1 Preparation of the Generation Schedule
1. The System Operator shall prepare a cohesive forecast of hourly Grid Demand, which shall include
the System Loss in the Grid.
2. The Market Operator shall prepare a Merit Order Table considering the Generation Scheduling and
Dispatch Parameters and Generation Price Data of the Scheduled Generating Units.
3. Scheduled Generating Units shall be committed, following the Merit Order Table, until the Grid
Demand and System Loss are fully covered. Additional Generating Units shall be committed to meet
the Operating Margin required by of the Grid.
4. Scheduled Generating Units that are not included in the Generation Schedule shall be set aside for
possible inclusion in the latter stage of the Generation Scheduling process.
8.4.2 Capability and Availability Declaration
1. The Generator shall provide the Market Operator the Capability and Availability Declaration of its
Generating Units for the next Schedule Day within the deadline prescribed by the Market Rules.
2.
If the Generating Unit Capability and Availability Declaration for the next Schedule Day have not
been submitted within the prescribed deadline, the Generating Unit shall be excluded in the next
Schedule Day. If this leads to inadequate Operating Margin, the Market Operator shall make best
efforts to obtain increased Capability from the available Generators. If necessary, the Market Operator
may treat the excluded Generating Unit as the last priority in the Merit Order Table.
61
8.4.3 Redeclaration of Capability and Availability
1. If a Scheduled Generating Unit becomes available at a different capacity,

the Generator shall provide the Market Operator, within the prescribed
deadline, a revised Capability and Availability Declaration and any revision
to the data listed in Section 8.4.2.
2. If the revised Capability and Availability Declaration is submitted within

the prescribed deadline, the Market Operator shall take the revised
Capability and Availability Declaration into account in the preparation of
the final day- ahead Generation Schedule.
8.4.4 Merit Order Table
1. Using the Price Data specified in Section 8.4.2, The Market Operator shall
prepare a Merit Order Table based on ascending prices. The Scheduled
Generating Unit that has the lowest price per kWh shall be at the top of
the Merit Order Table.
2. Once prepared, the Merit Order Table shall be used in determining which

Generating Unit will be committed for the day-ahead Generation Schedule.

62
8.5 CENTRAL DISPATCH PROCEDURE
8.5.1 Dispatch Instructions
The Dispatch Instruction shall contain the following:
The specific Generating Unit to which the instruction applies;
The MW and MVAR output required;
Target time of Scheduled Generating Units Ramp-up and Ramp-down rates;
Start and synchronizing time of Scheduled Generating Units; and
The Dispatch Instruction issuance time.

In addition to instructions relating to the dispatch of Active Power, the Dispatch Instruction may also
include:
Details of the type of reserves to be carried out by each unit, including specifications of the duration in
which that reserve may be dispatched;
An instruction for Generating Units to provide operational requirements and Ancillary Service;
Target voltage levels at instructed generating capacity level or the individual Reactive Power output at
the Bus or at the Connection Point;
Requirement to change to the other Frequency Control mode;
Instructions relating to abnormal conditions, such as an Adverse Weather Condition or high/low Grid
voltage;
An instruction for hydroelectric Generating Units to operate in the synchronous condenser operating
mode; and Mode changes for Pumped Storage Plants. 63
CHAPTER 9: GRID REVENUE METERING
REQUIREMENTS*

64
9.2 METERING REQUIREMENTS
9.2.1 Metering Equipment
•The metering equipment at the Connection Point shall consist of:
(a) Instrument transformers;
(b) Lightning protection;
(c) Revenue class meters;
(d) Integrating pulse recorder(s) and time source; and
(e) All interconnecting cables, wires, and associated devices, i.e., test blocks, pulse repeaters, loading
resistors, etc.
9.2.2 Metering Responsibility
1. The Meter Operator shall supply, install, connect, test, adjust, place in service,
operate, check, and maintain the primary revenue metering System. Consistent with
the Market Rules, all primary revenue meters shall be owned and maintained by the
Meter Operator.
2. Prior to the grant of permission to participate in the WESM, each market
participant shall register with the Market Operator the metering Equipment at each
Connection Point. The registration shall be done in accordance with the Market
Rules of the WESM. It shall be the responsibility of the market participant to
demonstrate that its metering equipment meets all the technical requirements and
standards set forth in this Chapter. The Market Operator shall accept a meter
registration only if all the relevant requirements of the Grid Code and Market Rules
have been met. 65
9.3 METERING EQUIPMENT STANDARDS
9.3.1 Voltage Transformers
1. The voltage transformers shall comprise three (3) units for a three-phase set, each of
which complies with the IEC Standard or its equivalent national standard for
metering, and is of the 0.3 accuracy class. These voltage transformers shall be
connected Wye-Wye with both star points grounded to a grounding Grid of
acceptable resistance and shall provide a four-wire secondary connection.
2. The voltage drop in each phase of the voltage transformer connections of the same
accuracy and class shall not exceed 0.2 V. It shall be connected only to a billing
meter with a burden that shall not affect the accuracy of measurement.
9.3.2 Current Transformers
1. The current transformers shall comprise three units for a three-phase set, each of
which complies with the IEC Standard or its equivalent national standard for
metering, and is of 0.3 accuracy class. It is preferred that two (2) current
transformer cores with corresponding number of secondary coils per phase be
provided between the connection box and the terminal of the metering element on
the meter so that the current transformer connections for checking meter pulses can
be completely separated from those provided for the revenue meters of this Chapter.
2. Provisions shall be made for another secondary winding if a check metering current
supply is requested by the User. The current transformer’s rated secondary current
shall be either 1 or 5 amperes. The neutral conductor shall be effectively grounded
at a single point and shall be connected only to a billing meter with a burden that
shall not affect the accuracy of measurement. 66
9.3.3 Meters
1. Meters shall be of the three-element type rated for the required site, comply
with the appropriate IEC Standards or their equivalent national standards, for
static watt-hour meter and other types of meters, and be of the accuracy class
of 0.3 or equivalent. The meters shall measure and locally display at least the
kW, kWh, kVAR, kVARh, and cumulative Demand, with the features of time-
of-use, maintenance records, and pulse output.
2. A cumulative record of the parameters measured shall be available on the meter.
Bi-directional meters shall have two such records available. If combined Active
Energy and Reactive Energy meters are provided, then a separate record shall
be provided for each measured quantity and direction. The loss of auxiliary
supply to the meter shall not erase these records.
3. For participants of the WESM, pulse output shall be provided for each
measured quantity. The pulse output shall be from a three-wire terminal with
pulse duration in the range from 40 to 80 milliseconds (preferably selectable)
and with selective pulse frequency or rate. The minimum pulse frequency shall
comply with the IEC Standard or its equivalent national standard, for the
shortest integration period and the accuracy class of the meter. Pulse output
shall be galvanically isolated from the voltage/current transformers being
measured and from the auxiliary supply input terminals. The insulation test
67
voltage shall be 1000 VAC, 60 Hz and applied for one minute.
9.4 SETTLEMENT AUDIT PROCEDURE
• Instrument Transformer Testing
• Meter Testing and Calibration
• Request for Test
• Maintenance of Metering Equipment
9.5 METER READING AND METERING DATA
• Integrating Pulse Metering Data
• On-Site Meter Reading
• Responsibility for Billing

68
 CHAPTER 10: GRID CODE TRANSITORY
PROVISIONS
10.2 MANDATES OF THE ACT
10.2.1 Objectives of the Electric Power Industry Reform
The Act establishes that the objectives of restructuring the Philippine electricity
sector are:
(a) To ensure and accelerate the total electrification of the country;
(b) To ensure the quality, reliability, security, and affordability of the
supply of electric power;
(c) To ensure transparent and reasonable prices of electricity in a regime
of free and fair competition and full public accountability to achieve
greater operational and economic efficiency and enhance the
competitiveness of Philippine products in the global market;
(d) To enhance the inflow of private capital and broaden the ownership
base of the power generation, transmission, and distribution sectors;
69
(a) To ensure fair and non-discriminatory treatment of public and private sector entities in the process
of restructuring the electric power industry;
(b) To protect the public interest as it is affected by the rates and services of electric utilities and other
providers of electric power;
(c) To assure socially and environmentally compatible energy sources and infrastructure;
(d) To promote the utilization of indigenous and new and renewable energy resources in power
generation in order to reduce dependence on imported energy;
(e) To provide for an orderly and transparent privatization of the assets and liabilities of the National
Power Corporation (NPC);
(f) To establish a strong and purely independent regulatory body and system to ensure consumer
protection and enhance the competitive operation of the electricity market; and
(g) To encourage the efficient use of energy and other modalities of demand side management.
10.2.2 Structure of the Electric Power Industry
The electric power industry is divided into four (4) sectors. These are:
(a) Generation Sector;
(b) Transmission Sector;
(c) Distribution Sector; and
(d) Supply Sector.
70
10.2.3 Generation Sector
1. Generation of electric power, a business affected with public interest,
shall be competitive and open.
2. Any new Generation Company shall, before it operates, secure from the
ERC a certificate of compliance pursuant to the standards set forth in the
Act, as well as health, safety, and environmental clearances from the
appropriate government agencies under existing laws.
3. Power generation shall not be considered a public utility operation. For
this purpose, any person or entity engaged or which shall engage in
power generation and Supply of Electricity shall not be required to secure
a national franchise.
4. Upon implementation of retail competition and open access, the prices
charged by a Generation Company for the Supply of Electricity shall not
be subject to regulation by the ERC except as otherwise provided in the
Act.

71
10.2.4 Transmission Sector
The Act created the National Transmission Corporation (TRANSCO), which assumed the electrical
transmission function of the National Power Corporation (NPC). The TRANSCO shall have the authority
and responsibility for the planning, construction and centralized operation, and maintenance of the high
voltage transmission facilities, including Grid interconnection and Ancillary Services.
10.2.5 Distribution Sector
The Distribution of Electricity to End-Users shall be a regulated common carrier business requiring a
national franchise. Distribution of electric power to all End-Users may be undertaken by private
Distribution Utilities, Electric Cooperatives, local government units presently undertaking this function, and
other duly authorized entities, subject to regulation by the ERC.
A Distribution Utility shall have the obligation to provide distribution services and connections to its
System for any End-User within its Franchise Area consistent with the Distribution Code. Any entity
engaged therein shall provide open and non-discriminatory access to its Distribution System to all Users.
10.2.6 Supply Sector
The supply sector is a business affected with public interest. Except for Distribution Utilities and Electric
Cooperatives with respect to their existing Franchise Areas, all Suppliers of electricity to the contestable
market shall require a license from the ERC.
The ERC shall promulgate rules and regulations prescribing the qualifications of electricity Suppliers, which
shall include among other requirements, a demonstration of their technical capability, financial capability,
and creditworthiness.
The ERC shall have authority to require electricity Suppliers to furnish a bond or other evidence of the ability
of a Supplier to withstand market disturbances or other events that may increase the cost of providing service.

72
10.3 GRID ASSET BOUNDARIES
10.3.1 The National Transmission System
1. The Grid Code applies to the national Transmission System and the
associated connection assets at all voltage levels owned and operated
by the TRANSCO. The national Transmission System shall consist of
three (3) separate Grids, namely Luzon, Visayas, and Mindanao.
2. The ERC shall set the standards of the voltage transmission that shall
distinguish the transmission from the sub-transmission assets. Pending
the issuance of such new standards, the distinction between the
transmission and sub-transmission assets shall be as follows: 230 kV
and above in the Luzon grid, 69 kV and above the Visayas and in the
isolated Distribution Systems, and 138 kV and above in the Mindanao
Grid. For the Visayas and the isolated Distribution System, should the
69 kV line not form part of the main Grid and be directly connected to
the substation of a Distribution Utility, it shall form part of the sub-
transmission System.
3. The sub-transmission assets shall be operated and maintained by
TRANSCO until their disposal to qualified Distribution Utilities, which
are in a position to take over the responsibility for operating,
maintaining, upgrading, and expanding said assets.
73
10.4 TRANSMISSION RELIABILITY
10.4.1 Submission of Normalized Reliability Data
Within six (6) months from the promulgation of the Philippine Grid Code, the Grid Owner and the System
Operator shall submit to the ERC each Grid’s normalized reliability data and performance for the last five
years using the reliability indices prescribed by the ERC.
10.4.2 Initial Reliability Targets
The initial targets shall be set to the mean value of the particular Grid’s reliability performance for the last
five (5) years. The upper and lower cutoff points shall be set at plus or minus one (±1) standard deviation
from the mean value.
10.5 MARKET TRANSITION
10.5.1 Establishment of the Wholesale Electricity Spot Market
Within one (1) year from the effectivity of the Act, the DOE shall establish a Wholesale Electricity Spot
Market composed of the wholesale electricity spot market participants. The market shall provide the
mechanism for identifying and setting the price of actual variations from the quantities transacted under
contracts between sellers and purchasers of electricity.
10.5.2 Membership to the WESM
Subject to the compliance with the membership criteria, all Generating Companies, Distribution Utilities,
Suppliers, bulk Customers/End-Users, and other similar entities authorized by the ERC shall be eligible to
become members of the WESM.
The ERC may authorize other similar entities to become eligible as members, either directly or indirectly, of
the WESM.

74
10.6 CONNECTION REQUIREMENTS FOR NEW AND
RENEWABLE ENERGY SOURCES
The connection requirements for Generating Plants that utilize non-
conventional Equipment for new and renewable energy sources, whose
aggregate capacity at the Connection Point exceeds 20 MW, shall be
prescribed by the ERC after due notice and hearing.
EXEMPTIONS FOR SPECIFIC EXISTING EQUIPMENT
Request for Permanent Exemption
Requests for permanent exemptions of Equipment to Grid Code provisions
shall be submitted to the Grid Owner and the System Operator on a case-by-
case basis.

Approval of Exemption
The Grid Owner shall approve requests for exemption only for cases where
the Reliability of the Grid will not be compromised.

75
 PHILIPPINE
DISTRIBUTION
CODE
WMSU

1
CHAPTER 1
DISTRIBUTION CODE GENERAL
1.1 PURPOSE AND SCOPE
CONDITIONS
1.1.1 Purpose

(a) To cite the legal and regulatory framework for

the promulgation and enforcement of the Philippine
Distribution Code;

(b) To specify the general rules pertaining to data

and notices that apply to all Chapters of the
Distribution Code;

(c) To specify the rules for interpreting the

provisions of the Distribution Code; and

(d) To define the common and significant terms and

abbreviations used in the Distribution Code.

2
• 1.2 AUTHORITY AND APPLICABILITY

• 1.2.1 Authority

• The Act provides the Energy Regulatory Commission (ERC)

the authority to promulgate the Philippine Distribution Code.

• 1.2.2 Applicability

• The Philippine Distribution Code applies to all Distribution

Utilities, which include Electric Cooperatives, private
Distributors, government-owned utilities, and existing local
government units that are franchised to operate Distribution
Systems.
3
• 1.3 ENFORCEMENT AND SUSPENSION OF PROVISIONS

• 1.3.1 Enforcement

• 1.3.1.1 The Act assigns to the ERC the responsibility of enforcing the Distribution
Code.

• 1.3.1.2 The ERC shall establish the Distribution Management Committee (DMC) to
monitor Distribution Code compliance at the operations level and to submit regular
and special reports pertaining to Distribution operations.

• 1.3.1.3 The DMC shall also initiate an enforcement process for any perceived
violations of Distribution Code provisions and recomm

• 1.3.2 Suspension of Provisions

• Any provision of the Distribution Code may be suspended, in whole or in part,

when the Grid is not operating in the Normal State and the System Operator has
issued an Alert Warning to the Distributor, or pursuant to any directive given by
the ERC or the appropriate government agency.

4
 CHAPTER 2
DISTRIBUTION
MANAGEMENT
1 PURPOSE (a) To facilitate the monitoring of compliance with the Philippine Distribution Code at
the planning, operations and maintenance level; (a) To ensure that all Users of the Distribution
System are represented in reviewing and making recommendations pertaining to connection,
operation, maintenance, and development of the Distribution System; and (b) To specify the
processes for the enforcement, interpretation and review of the Philippine Distribution Code.
2.2 DISTRIBUTION MANAGEMENT COMMITTEE
2.2.1 Functions of the Distribution Management Committee There shall be established a
Distribution Management Committee (DMC), which shall carry out the following functions: (a)
Monitor the implementation of the Philippine Distribution Code; (b) Monitor, evaluate, and
make recommendations on Distribution operations; (c) Review and recommend standards,
procedures, and requirements for distribution system connection, operation, maintenance, and
development; (d) Manage queries on the application and/or interpretation of the provisions of
the Philippine Distribution Code, and make appropriate recommendations to the ERC; (e)
Initiate the Philippine Distribution Code enforcement process and make recommendations to
the ERC; (f) Initiate and coordinate revisions of the Philippine Distribution Code and make
recommendations to the ERC; and (g) Prepare regular and special reports for submission to the
ERC, or as required by the appropriate government agency, or when requested by a User.

5
2.2.2 Membership of the DMC
2.2.2.1 The DMC shall be composed of the following 15 regular members appointed by the
ERC:
Three members nominated by private and local government Distribution Utilities, one each
from Luzon, Visayas, and Mindanao;
(a) Three members nominated by the Electric Cooperatives, one each from Luzon, Visayas,
and Mindanao;

(b) One member nominated by the largest Distribution Utility;

(c) One member nominated by Embedded Generation Companies;

(d) One member nominated by industrial Customers;

(e) One member nominated by commercial Customers;

6
(f) One member nominated by residential consumer groups;
(g) One member nominated by the Transmission Network Provider;
(h) One member nominated by the System Operator;
(i)One member nominated by the Market Operator; and
(j) One member nominated by a government-accredited professional
organization of electrical engineers

7
2.4 APPLICATION AND
INTERPRETATION OF THE
PHILIPPINE DISTRIBUTION
CODE PROVISIONS
Queries on the interpretation and/or application of any of the provisions of the Philippine Distribution Code will
arise from time to time. This Article applies to the Distribution Utility and all Users of the Distribution System
with respect to the provisions of the Philippine Distribution Code.
It is expected that a query is submitted by a party in good faith, with the aim of clarifying a particular issue, and
not to unnecessarily delay related processes or procedures. Queries involving the interpretation and/or
application of any of the provisions of the Philippine Distribution Code may be referred to the DMC for
clarification or comment, in accordance with the following procedure: (a) A party may submit a query in
writing to the DMC copy furnished the other party or parties, if any, and clearly state therein the factual
antecedents and the provision(s) of the Philippine Distribution Code in issue. (b) Upon verification by the
DMC that the query is within the scope of this Article, it may refer the matter to the appropriate
subcommittee, or form an ad hoc subcommittee composed of three or five members who have the technical
background to understand the technical merits and implications of the inquiry. (c) The subcommittee shall
hold meetings within a period to be prescribed by the DMC, to discuss the merits of the query and to receive
supporting documents, as may be necessary. (d) The proceedings undertaken, reply to the query and any
recommendations of the subcommittee shall be documented and presented to the DMC. (e) The DMC shall
provide a formal reply to the query including any recommendations, copy furnished the ERC. (f) In cases
where the ERC refers a matter to the DMC within the scope of this Article for comment or clarification, the
procedures in paragraphs (b) to (e) shall be observed.

8
 CHAPTER 3
PERFORMANCE STANDARDS FOR
DISTRIBUTION AND SUPPLY

3.1 PURPOSE AND SCOPE

3.1.1 Purpose

(a) To ensure the quality of electric power in the Distribution System;

(b) To ensure that the Distribution System will be operated in a safe and efficient manner and with a high degree of reliability;

(c) To specify Customer Services for the protection of the End-Users in both the captive and contestable markets; and

(d) To specify safety standards for the protection of personnel in the work environment

3.1.2 Scope of Application

This Chapter applies to all Distribution System Users including:

(a) Distributors;

(b) Suppliers;

(c) Embedded Generators; and

(d) End-Users
9
 3.2 POWER QUALITY
STANDARDS FOR
DISTRIBUTORS
• 3.2.1 Power Quality Problems

3.2.1.1 For the purpose of this Article, Power Quality shall be defined as the quality of the voltage,
including its frequency and the resulting current, that are measured in the Distribution System during
normal conditions.

3.2.1.2 A Power Quality problem exists when at least one of the following conditions is present and
significantly affects the normal operation of the System:

(a) The System Frequency has deviated from the nominal value of 60 Hz;

(b) Voltage magnitudes are outside their allowable range of variation;

(c) Harmonic Frequencies are present in the System;

(d) There is imbalance in the magnitude of the phase voltages;

(e) The phase displacement between the voltages is not equal to 120 degrees;

(f) Voltage fluctuations cause Flicker that is outside the allowable Flicker Severity limits; or

(g) High-frequency Overvoltages are present in the Distribution System.

10
• 3.5 CUSTOMER SERVICE STANDARDS FOR DISTRIBUTORS AND SUPPLIERS

3.5.1 Customer Service Standards

3.5.1.1 The Customer Service Standards for Distributors and Suppliers shall
include:

(a) Guaranteed Standards; and

(b) Overall Standards.

3.5.1.2 Guaranteed Standards shall refer to the Customer Services where a

penalty is imposed on the Distributor (or Supplier) for failing to meet the target
level of performance. The penalty is given to the affected Customer.

3.5.1.3 Overall Standards shall refer to the Customer Services where it is not
appropriate to give a guarantee, but where the Customers have a right to expect
the Distributor (or Supplier) to deliver a reasonable level of service.

11
3.3 RELIABILITY STANDARDS FOR DISTRIBUTORS

3.3.1 Criteria for Establishing Distribution Reliability Standards

3.3.1.1 The ERC shall impose a uniform system of recording and reporting of Distribution System reliability performance.

3.3.1.2 The same reliability indices shall be imposed on all Distribution Utilities. However, the numerical levels of performance (or targets)
shall be unique to each Distribution System and shall be based initially on its historical performance.

3.3.1.3 The Distributors shall be grouped into different categories, which shall be based on load density, sales mix, cost of service, delivery
voltage, and other technical considerations that the ERC may deem appropriate.

3.3.1.4 The Distribution System shall be evaluated annually to compare its actual performance with the targets

3.6 SAFETY STANDARDS FOR DISTRIBUTION UTILITIES AND SUPPLIERS

3.6.1 Adoption of PEC and OSHS

3.6.1.1 The Distributor shall develop, operate, and maintain its Distribution System in a safe manner and shall always ensure a safe work
environment for its employees. In this regard, the ERC adopts the Philippine Electrical Code (PEC) Part 1 and Part 2 set by the Professional
Regulation Commission and the Occupational Safety and Health Standards (OSHS) set by the Bureau of Working Conditions of the
Department of Labor and Employment.

3.6.1.2 The Philippine Electrical Code (PEC) Parts 1 and 2 shall govern the safety requirements for electrical installation, operation, and
maintenance. Part 1 of PEC pertains to the wiring System in premises of End-Users. Part 2 covers electrical Equipment and associated work
practices employed by the Electric Utility. Compliance with these Codes is mandatory. Hence, the Distributor and Supplier shall at all times
ensure that all provisions of these safety codes are not violated.

3.6.1.3 The OSHS aims to protect every workingman against the dangers of injury, sickness, or death through safe and healthful working
conditions.
12
 CHAPTER 4
DISTRIBUTION
CONNECTION
REQUIREMENTS
4.1 PURPOSE AND SCOPE 4.1.1 Purpose
To specify the technical, design, and operational criteria at the User’s Connection
Point; (b) To ensure that the basic rules for connection to the Distribution System
are fair and non-discriminatory for all Users; and (c) To list and collate the data
required by the Distribution Utility from the User and to list the data to be provided
by the Distribution Utility to the User.

4.1.2 Scope of Application

This Chapter does not apply to small retail Customers being provided bundled
service by the Distribution Utility unless a Micro Embedded Generating Plant, as
defined in Section 4.4.1, is connected to its premises. Such Customers shall be
governed by the rules and procedures established by the Distribution Utility under
its franchise, and in conformity with the applicable rules and regulations issued by
the ERC

13
 4.2 DISTRIBUTION TECHNICAL, DESIGN, AND OPERATIONAL CRITERIA

4.2.1 Power Quality Standards 4.2.1.1

The Distribution Utility shall ensure that at any Connection Point in the Distribution System, the
Power Quality standards specified in Article 3.2 are complied with. 4.2.1.2 The Embedded
Generation Company shall ensure that the Power Quality standards specified in Section 4.4.5 are
complied with. 4.2.1.3 Users of the Distribution System and Users seeking connection to the
Distribution System or modification of an existing connection shall ensure that their Equipment
can operate reliably and safely within the limits specified in Article 3.2 during normal conditions,
and can withstand the limits specified in this Article.

4.2.2 Frequency Variations 4.2.2.1

The Distribution Utility shall design and operate its System to assist the System Operator in
maintaining the system frequency within the limits specified in Section 3.2.2.
4.2.2.2 The Embedded Generation
Company shall in accordance with its corresponding classification, ensure that the standards for
Frequency Variations for Large Conventional, Large VRE, Medium, Intermediate,

14
Small and Micro Embedded Generating Units are complied with as prescribed in
Sections 4.5.2, 4.6.2, 4.7.2, 4.8.2, and 4.9.2, respectively.
4.2.2.3 In case the system frequency momentarily rises to 62.4 Hz or falls to 57.6 Hz,
all Embedded Generating Units shall remain in synchronism with the Grid for at
least 5 seconds to allow the System Operator to undertake measures to correct the
situation.
4.2.2.4 The Distribution Utility shall take into account the maximum estimated
Frequency Variation during emergency conditions in the specification of distribution equipment.

15
 4.3 PROCEDURES FOR DISTRIBUTION
CONNECTION OR MODIFICATION

4.3.1 Connection Agreement

Any User seeking a new connection to the Distribution System shall secure the required
Connection Agreement with the Distribution Utility prior to the actual connection to
the Distribution System.
The Connection Agreement shall include provisions for the submission of information
and reports, Safety Rules, Test and Commissioning programs, Electrical Diagrams,
statement of readiness to connect, certificate of approval to connect, and other
requirements prescribed by the ERC.
4.3.2 Amended Connection Agreement
Any User seeking to modify an existing connection to the Distribution System shall secure
the required Amended Connection Agreement with the Distribution Utility prior to the
actual modification.
The Amended Connection Agreement shall include provisions for the submission of
additional information required by the Distribution Utility and prescribed by the ERC.

16
 CHAPTER 5
DISTRIBUTION CONNECTION
REQUIREMENTS

5.1 PURPOSE AND SCOPE

5.1.1 Purpose

(a) To specify the technical, design, and operational criteria at the User’s Connection Point;

(b) To ensure that the basic rules for connection to the Distribution System are fair and non-discriminatory for all Users; and

(c) To list and collate the data required by the Distributor from the User and to list the data to be provided by the Distributor to
the Use

5.1.2 Scope of Application

5.1.2.1 This Chapter applies to all Distribution System Users including:

(a) Distributors;

(b) Embedded Generators;

(c) Large Customers; and

(d) Any other entity with a User System connected to the Distribution System.

5.2 DISTRIBUTION TECHNICAL, DESIGN, AND OPERATIONAL CRITERIA

17
5.2.1 Power Quality Standards

5.2.1.1 The Distributor shall ensure that at any Connection Point in the Distribution System, the Power Quality
standards specified in Article 3.2 are complied with.

5.2.1.2 Users seeking connection to the Distribution System or modification of an existing connection shall
ensure that their Equipment can operate reliably and safely within the limits specified in Article 3.2 during
normal conditions, and can withstand the limits specified in this Article.

5.3 PROCEDURES FOR DISTRIBUTION CONNECTION OR MODIFICATION

5.3.1 Connection Agreement

5.3.1.1 Any User seeking a new connection to the Distribution System shall secure the required Connection
Agreement with the Distributor prior to the actual connection to the Distribution System.

5.3.1.2 The Connection Agreement shall include provisions for the submission of information and reports,
Safety Rules, Test and Commissioning programsElectrical Diagrams, statement of readiness to connect,
certificate of approval to connect, and other requirements prescribed by the ERC.

18
5.2.13 Equipment Standards

5.2.13.1 All Equipment at the Connection Point shall comply with the requirements of the IEC
Standards or their equivalent national standards.

5.2.13.2 All Equipment at the Connection Point shall be designed, manufactured, and tested in
accordance with the quality assurance requirements of the ISO 9000 series.

5.2.13.3 The prevailing standards at the time when the Connection Point was designed or modified,
rather than the Test and Commissioning date or the Asset Transfer Date, shall apply to all
Equipment at the Connection Point.

5.2.14 Maintenance Standards

5.2.14.1 All Equipment at the Connection Point shall be operated and maintained in accordance
with Good Industry Practice and in a manner that shall not pose a threat to the safety of any
personnel or cause damage to the Equipment of the Distributor or the User.

5.2.14.2 The Distributor shall maintain a log containing the test results and maintenance records
relating to its Equipment at the Connection Point and shall make this log available when
requested by the User.

5.2.14.3 The User shall maintain a log containing the test results and maintenance records relating
to its Equipment at the Connection Point and shall make this log available when requested by
the Distributor.

19
5.4 REQUIREMENTS FOR EMBEDDED GENERATORS

5.4.1 Requirements Relating to the Connection Point

5.4.1.1 The Embedded Generator’s Equipment shall be connected to the Distribution

System at the voltage level agreed to by the Distributor and the Generator based on
the Distribution Impact Studies.

5.4.1.2 The Connection Point shall be controlled by a Circuit Breaker that is capable of
interrupting the maximum short circuit current at the point of connection.

20
 CHAPTER 6
DISTRIBUTION
OPERATIONS
6.1 PURPOSE
(a) To define the operational responsibilities of the Distribution Utilities and all Users of the Distribution System;
(b) To specify the operational arrangements for mutual assistance, Equipment and inventory sharing, and joint
purchases among Distribution Utilities;
(c) To specify the requirements for communication and the notices to be issued by the Distribution Utility to
Users and the notices to be issued by Users to the Distribution Utility and other Users.
(d) To specify the Maintenance Programs for the Equipment and facilities in the Distribution System;
(e) To describe the Demand Control strategies used for the control of the System Frequency and the methods
used for Voltage Control;
(f) To specify the procedures to be followed by the Distribution Utility and Users during emergency conditions;
(g) To specify the procedures for the coordination, establishment, maintenance, and cancellation of Safety
Precautions when work or testing other than System Test is to be carried out on the Distribution System or
the User System;
(h) To specify the procedures for testing and monitoring the quality of power supplied to the Distribution System
and the User System;
(i) To establish a procedure for the conduct of System Tests which involve the simulation of conditions or the
controlled application of unusual or extreme conditions that may have an impact on the Distribution System
or the User System;
(j) To identify the tests and the procedures that need to be carried out to confirm the compliance of an
Embedded Generating Unit with its registered parameters and its ability to provide Ancillary Services; and
(k) To specify the requirements for Site and Equipment Identification at the Connection Point

21
6.2 OPERATIONAL RESPONSIBILITIES

6.2.1 Operational Responsibilities of the Distribution Utility

6.2.1.1 The Distribution Utility shall be responsible for operating and maintaining Power Quality in the
Distribution System during normal conditions, in accordance with the provision of Article 3.2, and in
proposing solutions to Power Quality problems.
6.2.1.2 The Distribution Utility is responsible for preparing the Distribution Maintenance Program for the
maintenance of its Equipment and facilities.
6.2.1.3 The Distribution Utility is responsible for providing and maintaining all Distribution Equipment and
facilities.
6.2.1.4 The Distribution Utility is responsible for designing, installing, and maintaining a distribution protection
system that will ensure the timely disconnection of faulted facilities and Equipment.
6.2.1.5 The Distribution Utility is responsible for ensuring that safe and economic distribution operating
procedures are complied with.
6.2.1.6 The Distribution Utility is responsible for maintaining an Automatic Load Dropping scheme, as
necessary, to meet the targets agreed upon with the System Operator.
6.2.1.7 The Distribution Utility is responsible for developing and proposing Distribution Wheeling Charges to
the ERC.

22
6.3 OPERATIONAL
ARRANGEMENTS
6.3.1 Mutual Assistance
6.3.1.1 The DMC shall recommend emergency procedures to the Distribution Utilities, including the
development of a mutual assistance program for Distribution Utilities.
6.3.1.2 The Distribution Utilities shall cooperate in the establishment of mutual assistance procedures
and in providing coordinated responses during emergencies
6.3.2 Equipment and Inventory Sharing
6.3.2.1 The DMC shall recommend procedures for Equipment and inventory sharing to the Distribution
Utilities, including the development of an Equipment and inventory sharing program for Distribution
Utilities.
6.3.2.2 The Distribution Utilities shall cooperate in the establishment of procedures for Equipment and
inventory sharing and in the implementation of an Equipment and inventory sharing program that will
minimize procurement cost.
6.3.3 Joint Purchases
6.3.3.1 The DMC shall recommend procedures for joint purchase arrangements to the Distribution
Utilities, including the development of a joint purchase program for Distribution Utilities.
6.3.3.2 The Distribution Utilities shall cooperate in the establishment of procedures for the joint
purchase of Equipment and in the implementation of a joint purchase program to achieve economies
of scale in the procurement of Equipment and supplies.

23
6.5 DISTRIBUTION
MAINTENANCE
PROGRAM

6.5.1 Preparation of Maintenance Program

6.5.1.1 The Distribution Utility shall prepare the following Distribution Maintenance Programs based on
forecasted Demand, User’s provisional Maintenance Program, and requests for maintenance schedule:
(a) Three-Year Maintenance Program; (b) Annual Maintenance Program; and (c) Monthly Maintenance
Program;
6.5.1.2 The three-year Maintenance Program shall be prepared annually for the three succeeding years. The
annual Maintenance Program shall be developed based on the maintenance schedule for the first year
of the three-year Maintenance Program. The monthly Maintenance Program shall provide the details
required by the System Operator for the preparation of the Grid Operating Program, as specified in the
Philippine Grid Code.
6.5.1.3 The Distribution Maintenance Program shall be developed taking into account the following: (a) The
forecasted Demand; (b) The Maintenance Program actually implemented; (c) The requests by Users for
changes in their maintenance schedules; (d) The requirements for the maintenance of the Grid; (e) The
need to minimize the total cost of the required maintenance; and (f) Any other relevant factors.

24
 CHAPTER 7
DISTRIBUTION OPERATIONS
7.1 PURPOSE AND SCOPE

7.1.1 Purpose

(a) To define the operational responsibilities of the Distributor and all Distribution System Users;

(b) To specify the operational arrangements for mutual assistance, Equipment and inventory sharing, and
joint purchases among Distributors;

(c) To specify the requirements for communication and the notices to be issued by the Distributor to Users
and the notices to be issued by Users to the Distributor and other Users.

(d) To specify the maintenance programs for the Equipment and facilities in the Distribution System;

(e) To describe the demand control strategies used for the control of the System Frequency and the
methods used for voltage control;

(f) To specify the procedures to be followed by the Distributor and Users during emergency conditions;

(g) To specify the procedures for the coordination, establishment, maintenance, and cancellation of Safety
Precautions when work or testing other than System Test is to be carried out on the Distribution System or
the User System;

(h) To specify the procedures for testing and monitoring the quality of power supplied to the Distribution
25
System and the User System;
(i) To establish a procedure for the conduct of System Tests which involve the simulation of conditions or the
controlled application of unusual or extreme conditions that may have an impact on the Distribution System or
the User System;

(j) To identify the tests and the procedures that need to be carried out to confirm the compliance of an
Embedded Generating Unit with its registered parameters and its ability to provide Ancillary Services; and

(k) To specify the requirements for Site and Equipment Identification at the Connection Point.

7.1.2 Scope of Application

This Chapter applies to the following:

(a) Distributors;

(b) Other Distributors connected to the Distribution System;

(c) Embedded Generators (greater than or equal to one (1) MVA output);

(d) Large Customers; and

(e) Other Users receiving unbundled service.

26
7.2 OPERATIONAL RESPONSIBILITIES

7.2.1 Operational Responsibilities of the Distributor

7.2.1.1 The Distributor shall be responsible for operating and maintaining Power Quality in the Distribution System during
normal conditions, in accordance with the provision of Article 3.2, and in proposing solutions to Power Quality problems.

7.2.1.2 The Distributor is responsible for preparing the Distribution Maintenance Program for the maintenance of its Equipment
and facilities.

7.2.1.3 The Distributor is responsible for providing and maintaining all Distribution Equipment and facilities.

7.2.1.4 The Distributor is responsible for designing, installing, and maintaining a distribution protection that will ensure the timely
disconnection of faulted facilities and Equipment.

7.2.1.5 The Distributor is responsible for ensuring that safe and economic distribution operating procedures are always
followed.

7.2.1.6 The Distributor is responsible for maintaining an Automatic Load Dropping scheme, as necessary, to meet the targets
agreed to with the System Operator.

7.2.1.7 The Distributor is responsible for developing and proposing Distribution Wheeling Charges to the ERC.

7.2.2 Operational Responsibilities of Embedded Generators

7.2.2.1 The Embedded Generator is responsible for ensuring that its Generating

Units can deliver the capabilities declared in its Connection Agreement or Amended Connection Agreement.

7.2.2.2 The Embedded Generator is responsible for providing accurate and timely planning and operations data to the
Distributor.

7.2.2.3 The Embedded Generator is responsible for executing the instructions of the Distributor during emergency condition
27
7.4 DISTRIBUTION OPERATIONS COMMUNICATIONS, NOTICES, AND REPORTS
7.4.1 Distribution Operations Communications
7.4.1.1 The Distributor and the User shall establish a communication channel for the
exchange of information required for distribution operation. The communication
channel shall, as much as possible, be direct between the Distributor and the
User.
7.4.1.2 If the Distributor decides that a back up or alternative route of
communication and/or emergency communication is necessary for the safe
operation of the Distribution System, the additional means of communication
shall be agreed between the Distributor and the User.
7.4.1.3 A list of duly authorized personnel and their telephone numbers shall be
exchanged between the Distributor and the User so that control activities can be
efficiently coordinated. The Distributor and the User shall maintain 24-hour
availability for these duly authorized personnel when necessary.

28
7.8.7 Cancellation of Safety Precautions

7.8.7.1 When the Requesting Safety Coordinator decides that Safety Precautions are
no longer required, he shall contact the Implementing Safety Coordinator and
inform him that the Safety Precautions are no longer required.

7.8.7.2 Both coordinators shall then cancel the Safety Precautions.

29
7.9 DISTRIBUTION TESTING AND MONITORING

7.9.1 Testing Requirements

7.9.1.1 The Distributor shall, from time to time, determine the need to test and/or monitor the Power
Quality at various points on its Distribution System.

7.9.1.2 The requirement for specific testing and/or monitoring by a Distributor shall be initiated by the
receipt of a complaint relating to Power Quality in the Distribution System.

7.9.1.3 In certain situations, the Distributor may require the testing and/or monitoring to take place at
the Connection Point of a User to be witnessed by a User representative.

7.9.1.4 If testing and/or monitoring is required at the Connection Point, the Distributors shall advise
the User involved and shall make available the results of such tests to the User.

7.9.1.5 Upon the request of the User, a retest shall be carried out. The cost of the retest shall be
charged to the User.

7.9.1.6 If the results of the test show that the User is operating outside the technical parameters
specified in Sections 5.2.5, 5.2.6, and 5.2.7, the User shall be informed accordingly. The User shall
rectify the situation within a period time as agreed upon with the Distributor.
7.9.1.7 If the User failed to rectify the situation, the Distributor may disconnect the User from the
Distribution System, in accordance with the Connection Agreement or Amended Connection
Agreement.

30
 CHAPTER 8
PHILIPPINE DISTRIBUTION
CODE TRANSITORY
PROVISIONS
8.1 PURPOSE
To establish procedures which in some cases may allow permanent exemption from Philippine Distribution Code
requirements.
8.2 COMPLIANCE WITH THE PHILIPPINE DISTRIBUTION CODE 2016 EDITION
8.2.1 Compliance of Distribution Utilities and Users
8.2.1.1 All Distribution Utilities, Embedded Generation Companies, Metering Service Providers and other Users
shall comply with all the prescribed technical specifications, performance standards and other requirements of
the PDC 2016 Edition and shall submit to the ERC through the DMC, a Compliance Report to the Philippine
Distribution Code 2016 Edition, according to the requirements set forth in the Philippine Distribution Code and
in the ERC Resolution No. 13, Series of 2011, adopting the Distribution Management Committee Rules to
Govern the Monitoring of Compliance of Distribution Utilities to the Philippine Distribution Code and future
amendments thereto. The Compliance Report also shall include all approved requests for Derogations. 8.2.1.2
All Embedded Generation Companies shall be required to fully comply upon the approval and renewal of their
Certificate of Compliance (COC).
8.2.1.3 All Distribution Utilities that are not yet compliant to the Philippine Distribution Code 2016 Edition, shall be
required to fully comply upon the application of their next Regulatory Reset.
8.2.1.4 All Metering Service Providers that are not yet fully compliant to the Philippine Distribution Code 2016
Edition, shall be required to fully comply upon renewal of their license/registration with the ERC.
8.2.1.5 All Metering Service Providers shall correct within 1 year Metering Points that do not comply with Chapter
7 of the Philippine Distribution Code 2016 Edition

31
Overall Summary:
Objectives of the Philippine Grid Code 2016 Edition:
The Philippine Grid Code 2016 Edition was developed:
(a) To refine the existing provisions of the Philippine Grid Code Amendment No. 1;
(b) (b) To be responsive to the latest developments, standards, and recent practices in the electric
power industry, both local and international;
(c) (c) To adopt and fully implement the connection and operational requirements for Variable
Renewable Energy (VRE) Generating Facilities consistent with the Renewable Energy Act; and (d)
To be in harmony with and complementary to existing Rules and Regulations issued by the DOE and
the ERC.

32
 NATIONAL BUILDING
CODE OF THE
PHILIPPINES
WMSU
REPORTERS:
RADA, JOSE Jr. O.
VICTORIANO, BERNADETTE I.
SUNICO, DEVINE GRACE B.
1
PRESIDENTIAL DECREE NO. 1096
ADOPTING A NATIONAL BUILDING
CODE OF THE PHILIPPINES THEREBY
REVISING REPUBLIC ACT
NUMBERED SIXTY-FIVE HUNDRED
FORTY ONE

2
WHEREAS, the country’s accelerating economic and physical
development, coupled with urbanization and population growth,
makes imperative the formulation and adoption of a uniform building
code which shall embody up-to-date and modern technical
knowledge on building design, construction, use, occupancy and
maintenance;

WHEREAS, while there is Republic Act. No. 6541, entitled “An Act to
Ordain and Institute a National Building Code of the Philippines”, the
same does not conform with the developmental goals and
infrastructure program of the Government and does not adequately
provide for all the technological requirements of buildings and
structures, in terms of up-to-date design and construction standards
and criteria;

WHEREAS, in the formation of new national building code, it is the

desire and policy of the Government to avail of and harness the
technical expertise and professional know-how of men not only in the
public but in the private sectors as well.
3
 CHAPTER 1 : GENERAL PROVISIONS
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to
safeguard life, health, property, and public welfare, consistent
with the principles of sound environmental management and
control; and to this end, make it the purpose of this Code to
provide for all buildings and structures, a framework of
minimum standards and requirements to regulate and control
their location, site, design, quality of materials, construction,
use, occupancy, and maintenance.

4
 SECTION 103. Scope and Application
(a) The provisions of this Code shall apply to the design,
location, siting, construction, alteration, repair,
conversion, use, occupancy, maintenance, moving,
demolition of, and addition to public and private
buildings and structures, except traditional
indigenous family dwellings as defined herein.
(b) Buildings and/or structures constructed before the
approval of this Code shall not be affected thereby
except when alterations, additions, conversions or
repairs are to be made therein in which case, this Code
shall apply only to portions to be altered, added,
converted or repaired.
5
 CHAPTER 3 : PERMITS AND INSPECTION
 SECTION 301. Building Permits
No one is allowed to erect, construct, alter, repair, move, convert or demolish
any building or structure without building permit.

 SECTION 302. Application for Permits

In order to obtain a building permit, the applicant shall follow the
requirements prescribed by the office of the building official.
(1) A description of the work to be covered by the permit applied for;
(2) Certified true copy of the TCT covering the lot on which the proposed work is to be
done. If the applicant is not the registered owner, in addition to the TCT, a copy of the
contract of lease shall be submitted;
(3) The use or occupancy for which the proposal work is intended;
(4) Estimated cost of the proposed work.
*to be submitted with such application or at least 5 sets of plans and specifications,
prepared, signed and sealed by a duly registered Mechanical engineer In case of
mechanical plans and by a REE in case of electrical plans except if its not required by
6
the building official.
 SECTION 304. Issuance of Building Permits
The Building Official may issue a permit for the
construction of only a part or portion of a building or structure
whenever the plans and specifications submitted together with
the application do not cover the entire building or structure.
Approved plans and specifications shall not be changed,
modified or altered without the approval of the Building
Official and the work shall be done strictly in accordance
thereto.

 SECTION 305. Validity of Building Permits

The issuance of a building permit shall not be construed
as an approval or authorization to the permittee to disregard or
violate any of the provisions of this Code. 7
 SECTION 306. Non-Issuance, Suspension or Revocation of
Building Permits
The Building Official may order or cause the non-issuance,
suspension or revocation of building permits on any or all of the
following reasons or grounds:

(a) Errors found in the plans and specifications;

(b) Incorrect or inaccurate data or information supplied;
(c) Non-compliance with the provisions of this Code or of any rule or
regulation.

8
 CHAPTER 4 : TYPES OF CONSTRUCTION
 SECTION 401. Types of Construction
(1) Type I – Type I buildings shall be of wood
construction.
(2) Type II – Type II buildings shall be of wood
construction with protective fire-resistant materials
and one-hour fire-resistive
(3) Type III – Type III buildings shall be of masonry and
wood construction
(4) Type IV – Type IV buildings shall be of steel, iron,
concrete, or masonry construction
(5) Type V – Type V buildings shall be fire-resistive.
9
• SECTION 402. Changes in Types
No change shall be made in the type
of construction of any building which
would place the building in a different sub-
type or type of construction unless such
building is made to comply with the
requirements for such sub-type of
construction.

10
CHAPTER 5 : REQUIREMENTS FOR FIRE ZONE
 SECTION 501. Fire Zones Defined
Fire zones are areas within which only certain types of buildings
are permitted to be constructed based on their use or occupancy, type of
construction, and resistance to fire.
 SECTION 502. Buildings located in more than One Fire Zone
A building or structure which is located partly in one fire zone and
partly in another shall be considered to be in the more highly restrictive
fire zone, when more than one-third of its total floor area is located in
such zone.
 SECTION 503. Moved Building
Any building or structure moved within or into any fire zone shall
be made to comply with all the requirements for buildings in that fire
zone. 11
 SECTION 504. Temporary Buildings
Temporary buildings such as reviewing stands and other
miscellaneous structures conforming to the requirements of this
Code, and sheds, canopies and fences used for the protection of
the public around and in conjunction with construction work,
may be erected in the fire zones by special permit from the
Building Official for a limited period of time, and such buildings
or structures shall be completely removed upon the expiration of
the time limit stated in such permits.
 SECTION 505. Center Lines of Streets
For the purpose of this Chapter, the center line of an
adjoining street or alley may be considered an adjacent property
line. Distances shall be measured at right angles to the street or
alley.

12
 SECTION 506. Restrictions on Existing Buildings
Existing buildings or structures in fire zones that do not comply
with the requirements for a new building erected therein shall not
hereafter be enlarged, altered, remodeled, repaired or moved except as
follows:
(a) Such building is entirely demolished;
(b) Such building is to be moved outside the limits of the more highly
restrictive Fire Zone to a zone where the building meets the minimum
standards;
(c) Changes, alterations and repairs may be made provided that in any 12-
month period, the value of the work does not exceed twenty percent of the
value of the existing building, and provided that, such changes do not add
additional combustible material, and do not, in the opinion of the Building
Official, increase the fire hazard;
(d) Additions thereto are separated from the existing building by fire walls,
as set forth in Sub-section 604 (b);

13
(e) Damage from fire or earthquake, typhoons or any fortuitous event may
be repaired, using the same kind of materials of which the building or
structure was originally constructed, provided that, the cost of such repair
shall not exceed twenty percent of the replacement cost of the building or
structure.

 SECTION 507. Designation of Fire Zones

The Secretary shall promulgate specific restrictions for each type
of Fire Zone.

14
 CHAPTER 6 : FIRE-RESISTIVE
REQUIREMENTS IN CONSTRUCTION
 SECTION 601. Fire-Resistive Rating defined
Fire-resistive rating means the degree to which a
material can withstand fire as determined by generally
recognized and accepted testing methods.
 SECTION 602. Fire-Resistive Time Period Rating
Fire-resistive time period rating is the length of time a
material can withstand being burned which may be one-
hour, two-hours, three-hours, four-hours, etc.

15
 SECTION 603. Fire-Resistive Standards
All materials of construction, and assemblies or combinations
thereof shall be classified according to their fire-retardant or flame-spread
ratings as determined by general accepted testing methods and/or by the
Secretary.
 SECTION 604. Fire-Resistive Regulations
The Secretary shall prescribe standards and promulgate rules and
regulations on the testing of construction materials for flame-spread
characteristics, tests on fire damages, fire tests of building construction
and materials, door assemblies and tinclad fire doors and window
assemblies, the installation of fire doors and windows and smoke and fire
detectors for fire protective signaling system, application and use of
controlled interior finish, fire-resistive protection for structural members,
fire-resistive walls and partitions, fire-resistive floor or roof ceiling, fire-
resistive assemblies for protection of openings and fire-retardant roof
coverings.
16
 CHAPTER 7 : CLASSIFICATION AND GENERAL
REQUIREMENT OF ALL BUILDINGS BY USE OR
OCCUPANCY
 SECTION 701. Occupancy Classified
(a) Buildings proposed for construction shall be identified according to their use or
the character of its occupancy and shall be classified as follows:
(1) Group A – Residential Dwellings
(2) Group B – Residentials, Hotels and Apartments
(3) Group C – Education and Recreation
(4) Group D – Institutional
(5) Group E – Business and Mercantile
(6) Group F – Industrial
(7) Group G – Storage and Hazardous
(8) Group H – Assembly Other Than Group I
(9) Group I – Assembly Occupant Load 1000 or More
(10)Group J – Accessory
(b) Other subgroupings or divisions within Groups A to J may be determined by the 17
Secretary.
 SECTION 702. Change in Use
No change shall be made in the character of occupancy or use of any
building which would place the building in a different division of the same group of
occupancy or in a different group of occupancies, unless such building is made to
comply with the requirements of this Code for such division or group of occupancy
 SECTION 703. Mixed Occupancy
(a) General Requirements
(b) Forms of Occupancy Separation
(c) Types of Occupancy Separation
(1) A “One-Hour Fire-Resistive Occupancy Separation” shall be of not less
than one-hour fire-resistive construction.
(2) A “Two-Hour Fire-Resistive Occupancy Separation” shall be of not less
than two-hour fire-resistive construction.
(3) A “Three-Hour Fire-Resistive Occupancy Separation” shall be of not
less than three hour fire-resistive construction.
(4) A “Four-Hour Fire-Resistive Occupancy Separation” shall have no
openings therein and shall be of not less than four-hour fire-resistive construction.
(d) Fire Rating for Occupancy Separation

18
 SECTION 704. Location on Property
(a) General-No building shall be constructed unless it adjoins or has direct
access to a public space, yard or street on at least one of its sides.
(b) Fire Resistance of Walls- Exterior walls shall have fire resistance and
opening protection in accordance with the requirements set forth by the Secretary.
(c) Buildings on Same Property and Buildings Containing Courts- For the
purpose of determining the required wall and opening protection, buildings on the
same property and court walls shall be assumed to have a property line between
them.
 SECTION 705. Allowable Floor Areas
The allowable floor areas for one-storey building and buildings over one-
storey shall not exceed the limits prescribed by the Secretary for each occupancy
groups and/or types of construction.
 SECTION 706. Allowable Floor Area Increases
The floor areas hereinabove provided may be increased in certain specific
instances and under appropriate conditions, based on the existence of public space,
streets or yards extending along and adjoining two or more sides of the building or
structure subject to the approval of the Building Official.

19
 SECTION 707. Maximum Height of Buildings
The maximum height and number of storeys of every building shall be
dependent upon the character of occupancy and the type of construction as
determined by the Secretary considering population density, building bulk,
widths of streets and car parking requirements.
 SECTION 708. Minimum Requirements for Group A Dwellings
(a) Dwelling Location and Lot Occupancy
(b) Light and Ventilation
(c) Sanitation
(d) Foundation
(e) Post
(f) Floor
(g) Roof
(h) Stairs
(i) Entrance and Exit
(j) Electrical Requirements(j) Electrical Requirements
(k) Mechanical Requirements

20
 CHAPTER 8 : LIGHT AND VENTILATION
 SECTION 801. General Requirements of Light and Ventilation
-every building shall be designed, constructed, and equipped to provide
adequate light and ventilation.
-shall face a street or public alley or a private street
-No building shall be altered nor arranged
-No building shall be enlarged
 SECTION 802. Measurement of Site Occupancy
-shall be taken at the ground level and shall be exclusive of courts, yards,
and light wells.
-Courts, yards, and light wells shall be measured clear of all projections
from the walls enclosing such wells or yards with the exception of roof
leaders, wall copings, sills, or steel fire escapes not exceeding 1.20 meters
in width.
21
 SECTION 806. Size and Dimension of Rooms
Minimum sizes of rooms and their least horizontal dimensions shall be as
follows:
1.) Rooms for Human Habitations – 6.00 square meters with a least
dimension of 2.00 meters;
2.) Kitchens – 3.0 square meters with a least dimension of 1.50 meters;
3.) Bath and toilet – 1.20 square meters with a least dimension of 0.90
meter.

 SECTION 807. Air Space Requirements in Determining the Size of

Rooms
Minimum air space shall be provided as follows:
1.)School Rooms – 3.00 cubic meters with 1.00 square meter of floor area
per person;
2.) Workshops, Factories, and Offices – 12.00 cubic meters of air space per
person;
3.) Habitable rooms – 14.00 cubic meters of air space per person. 22
 SECTION 807. Air Space Requirements in Determining the Size of
Rooms
Minimum air space shall be provided as follows:
1. School Rooms – 3.00 cubic meters with 1.00 square meter of floor area
per person;
2. 2. Workshops, Factories, and Offices – 12.00 cubic meters of air space
per person;
3. 3. Habitable rooms – 14.00 cubic meters of air space per person.

 SECTION 808. Window Openings

Every room intended for any use, not provided with artificial
ventilation system as herein specified in this Code, shall be provided with a
window or windows with a total free area of openings and equal to at least
ten percent of the floor area of room, and such window shall open directly
to a court, yard, public street or alley, or open water courses.

23
 SECTION 809. Vent Shafts
(a) Ventilation or vent shafts shall have a horizontal cross-sectional area of
not less than 0.10 square meter for every meter of height of shaft but
in no case shall the area be less than 1.00 square meter.
(b) Skylights – Unless open to the outer air at the top for its full area, vent
shaft shall be covered by a skylight having a net free area or fixed
louver openings equal to the maximum required shaft area.
(c) Air ducts shall open to a street or court by a horizontal duct or intake at
a point below the lowest window opening. Such duct or intake shall
have a minimum unobstructed cross-sectional area of not less than
0.30 square meter with a minimum dimension of 300 millimeters.

 SECTION 810. Ventilation Skylights

Skylights shall have a glass area not less than that required for the
windows that are replaced.

24
 SECTION 811. Artificial Ventilation
(a) Rooms or spaces housing industrial or heating equipment shall be provided with
artificial means of ventilation to prevent excessive accumulation of hot and/or polluted
air.
(b) Whenever artificial ventilation is required, the equipment shall be designed and
constructed to meet the following minimum requirements in air changes:
1. For rooms entirely above grade and used for office, clerical, or administrative
purposes, or as stores, sales rooms, restaurants, markets, factories, workshops, or
machinery rooms, not less than three changes of air per hour shall be provided.
2. For rooms entirely above grade and used as bakeries, hotel or restaurant
kitchens, laundries other than accessory to dwellings, and boiler rooms – not less than
ten changes of air per hour shall be provided.
3. For auditorium and other rooms used for assembly purposes, with seats or
other accommodations – not less than 0.30 cubic meter of air per minute shall be
supplied for each person.
4. For wards and dormitories of institutional buildings – not less than 0.45 cubic
meter of air per minute shall be supplied for each person accommodated.
5. For other rooms or spaces not specifically covered under this Section of the
Code, applicable provisions of the Philippine Mechanical Engineering Code, shall be
followed.
25
 CHAPTER 9: SANITATION
 SECTION 901. General Requirements
Subject to the provisions of Book II of the Civil Code of the
Philippines on Property, Ownership, and its Modification, all buildings
hereafter erected, altered, remodeled, relocated or repaired for human
habitation shall be provided with adequate and potable water supply,
plumbing installation, and suitable wastewater treatment or disposal
system, storm water drainage, pest and vermin control, noise abatement
device, and such other measures required for the protection and
promotion of health of persons occupying the premises and others living
nearby.

26
 CHAPTER 10: BUILDING PROJECTION
OVER PUBLIC STREETS
 SECTION 1001. General Requirements
(a) No part of any building or structure or any of its
appendages shall project beyond the property line of the
building site, except as provided in this Code.
(b) The projection of any structure or appendage over a public
property shall be the distance measured horizontally from the
property line to the uttermost point of the projection.

27
 CHAPTER 12: GENERAL DESIGN AND
CONSTRUCTION REQUIREMENTS
 SECTION 1201. General Requirements
Buildings proposed for construction shall comply with all
the regulations and specifications herein set forth governing
quality, characteristics and properties of materials, methods of
design and construction, type of occupancy and classification.
All other matters relative to the structural design of all
buildings and other structures not provided for in this Chapter
shall conform with the provisions of the National Structural
Code of Buildings, as adopted and promulgated by the Board of
Civil Engineering pursuant to Republic Act Number 544, as
amended, otherwise known as the “Civil Engineering Law”. 28
 SECTION 1212. Fire-Extinguishing System
(a) Fire-Extinguishing Systems – Where required, standard automatic
fire-extinguishing systems shall be installed in the following places,
and in the manner provided in this Code
(b)Dry Standpipes – Every building four or more storeys in height shall
be equipped with one or more dry standpipes
(c) Wet Standpipes – Every Group H and I Occupancy of any height, and
every Group C Occupancy of two more storeys in height, and every
Group B, D, E, F and G Occupancy of three or more storeys in height
and every Group G and E Occupancy over 1800 square meters in area
shall be equipped with one or more interior wet standpipes
extending from the cellar or basement into the topmost storey:
Provided, that Group H buildings having no stage and having a
seating capacity of less than 500 need not be equipped with interior
wet standpipes.

29
(d) Basement Pipe Inlets – Basement pipe inlets shall be
installed in the first floor of every store, warehouse, or factory
where there are cellars or basements under same: Except,
where in such cellars or basements there is installed a fire-
extinguishing system as specified in this Code or where such
cellars or basements are used for banking purposes, safe
deposit vaults, or similar uses.
(e) Approval – All fire-extinguishing systems, including
automatic sprinklers, wet and dry standpipes, automatic
chemical extinguishers, basement pipe inlets, and the
appurtenances thereto shall meet the approval of the Fire
Department as to installation and location and shall be subject
to such periodic tests as it may require.

30
CHAPTER 13 : ELECTRICAL AND MECHANICAL
REGULATIONS
 SECTION 1301. Electrical Regulations
All electrical systems, equipment and installation mentioned in
this Code shall conform to the provisions of the Philippine Electrical Code,
as adopted by the Board of Electrical Engineering pursuant to Republic
Act No. 184 otherwise known as the Electrical Engineering Law.
 SECTION 1302. Mechanical Regulations
All mechanical systems, equipment and installations mentioned in
this Code shall conform to the provisions of the Philippine Mechanical
Engineering code, as adopted by the Board of Mechanical Engineering
pursuant to Commonwealth Act No. 294 as amended, otherwise known as
the Mechanical Engineering Law.
31
 PHILIPPINE FIRE
PROTECTION
CODE

WMSU Ra. 9514

1
Section 1:
This Act shall be known as the "Revised Fire
Code of the Philippines of 2008".

Section 2:Declaration Of Policies.

The following are declared policies of the State:
• (a) The government, with the cooperation of the
private sector, shall develop and promulgate
sets of standards and regulations taking into
consideration the latest development in fire
technology suitable to Philippine conditions; 2
• (b) Fire prevention and fire safety shall be given
equal, if not greater emphasis as the suppression or
extinguishment of fires. Fire prevention education
shall be undertaken continuously involving all sectors
of the community;
• (c) The Fire Service of the Integrated National Police
shall endeavor to respond to all fires before they
reach critical and conflagration stages. Towards this
end, the organization, administration and operation of
the Fire Service shall be improved and developed, its
personnel and equipment augmented and effective
fire alarm systems set up; and
• (d) The Fire Service shall be professionalized. For
this purpose, educational institutions shall endeavor
to include in their curricula, courses on fire
technology and fire protection engineering.
3
Section 3: Definition of Terms.
As used in this Fire Code, the following words and
phrases shall mean and be construed as indicated:

• Abatement - Any act that would remove or neutralize a fire

hazard.
• Administrator - Any person who acts as agent of the owner
and manages the use of a building for him.
• Blasting Agent - Any material or mixture consisting of a fuel
and oxidizer used to set off explosives.
• Cellulose Nitrate Or Nitro Cellulose - A highly combustible
and explosive compound produced by the reaction of nitric
acid with a cellulose material.
• Cellulose Nitrate Plastic (Pyroxylin) - Any plastic
substance, materials or compound having cellulose nitrate
(nitro cellulose) as base.
• Combustible, Flammable or Inflammable - Descriptive of4
materials that are easily set on fire.
• Distillation - The process of first raising the temperature in
separate the more volatile from the less volatile parts and
then cooling and condensing the resulting vapor so as to
produce a nearly purified substance.
• Duct System - A continuous passageway for the transmission
of air.
• Dust - A finely powdered substance which, when mixed with
air in the proper proportion and ignited will cause an
explosion.
• Electrical Arc - An extremely hot luminous bridge formed by
passage of an electric current across a space between two
conductors or terminals due to the incandescence of the
conducting vapor.
• Ember - A hot piece or lump that remains after a material has
partially burned, and is still oxidizing without the manifestation
of flames.
• Finishes - Materials used as final coating of a surface for
ornamental or protective purposes.
• Fire - The active principle of burning, characterized by the
heat and light of combustion. 5
• Fire - The active principle of burning, characterized by the heat and
light of combustion.
• Fire Trap - A building unsafe in case of fire because it will burn easily
or because it lacks adequate exits or fire escapes.
• Fire Alarm - Any visual or audible signal produced by a device or
system to warm the occupants of the building or fire fighting
elements of the presence or danger of fire to enable them to
undertake immediate action to save life and property and to
suppress the fire.
• Fire Door - A fire resistive door prescribed for openings in fire
separation walls or partitions.
• Fire Hazard - Any condition or act which increases or may cause an
increase in the probability of the occurrence of fire, or which may
obstruct, delay, hinder or interfere with fire fighting operations and
the safeguarding of life and property.
• Fire Lane - The portion of a roadway or publicway that should be
kept opened and unobstructed at all times for the expedient
operation of fire fighting units.
6
Section 4: Applicability of The Code.

The provisions of the Fire Code shall apply to all

persons and all private and public buildings,
facilities or structures erected or constructed
before and after its effectivity.

7
Section 5:Grace Period.

The owner, administrator or occupant of buildings or

structures existing at the time of the effectivity of the
Fire Code is given two (2) years to comply with the
provisions thereof on fire safety constructions and on
protective and warning systems. However, the
Director General of the Integrated National Police
may prescribe a shorter period depending upon the
degree of hazard to be recorded and the cost and
extent of the work to be done.
8
Section 6: Responsibility for the Enforcement of this
Code.

The Fire Service, under the direct supervision and

control of the Director General of the Integrated
National Police, hereinafter referred to as the
"Director General" shall be responsible for the
enforcement of this Code, as well as pertinent
provisions of other laws pertaining to fire
protection or fire safety. With the approval of the
Secretary of National Defense, the Director
General is hereby authorized to: 9
• (a) Issue implementing rules and regulations, and prescribe
administrative penalties therefore;
• (b) Reorganize the Fire Service of the Integrated National Police
as may be necessary and appropriate;
• (c) Enter into long term agreement, either through public
biddings or negotiations to include advance payments therefor,
for the acquisition of fire prevention, fire protection and fire
fighting equipment, supplies and materials and related
technical services necessary for the Fire Service; and

• (d) Enter into Memoranda of Agreement with other

departments, bureaus, agencies, offices and corporations of
the government, as well as private institutions, in order to
define areas of corporation and coordination and delineate
responsibility on fire prevention education, fire safety, fire
prevention, fire suppression and other matters of common
concern. 10
 Section 7. Technical Staff.
The Director General shall constitute a technical staff of highly qualified
persons who are knowledgeable on fire prevention, fire safety, and fire
suppression. They may be drawn not only from the organic members of
the Integrated National Police and other government offices and agencies,
but also from other sources. In the latter case, they will either be
appointed into the service or hired as consultants in accordance with law.
The technical staff shall study, review and evaluate latest developments
and standards on fire technology; prepare plans/programs on fire safety,
prevention and suppression and evaluate implementation thereof; develop
programs on the professionalization of the fire service; coordinate with
appropriate government and private institutions for the offering of college
courses on fire technology and fire protection engineering; propose
amendments to the Fire Code; advise the Director General on any matter
brought to his attention; and perform such other functions as directed on
any matter brought to his attention and perform such other functions as
directed by higher authorities.
11
Section 8. Prohibited Acts.
The following are declared as prohibited act and
omission.

(a) Obstructing or blocking the exit ways or

across to buildings clearly marked for fire safety
purposes, such as but not limited to aisles in
interior rooms, any part of stairways, hallways,
corridors, vestibules, balconies or bridges
leading to a stairway or exit of any kind, or
tolerating or allowing said violations;
12
(b) Constructing gates, entrances and
walkways to buildings components and yards
which obstruct the orderly and easy passage
of fire fighting vehicles and equipment;

(c) Prevention, interference or obstruction of

any operation of the Fire Service, or of duly
organized and authorized fire brigades;

(d) Obstructing designated fire lanes or

access to fire hydrants;
13
(e) Overcrowding or admission of persons
beyond the authorized capacity in movie
houses, theaters, coliseums, auditoriums or
other public assembly buildings, except in
other assembly areas on the ground floor
with open sides or open doors sufficient to
provide safe exits;

(f) Locking fire exits during period when

people are inside the building;
14
(g) Prevention or obstruction of the automatic
closure of fire doors or smoke partitions or
dampers;

h) Use of fire protective of fire fighting

equipment of the fire service other than for
fire fighting except in other emergencies
where their use are justified;

(i) Giving false or malicious fire alarms;

15
(j) Smoking in prohibited areas as may be
determined by fire service, or throwing of
cigars, cigarettes, burning objects in places
which may start or cause fire;

(k) Abandoning or leaving a building or

structure by the occupant or owner without
appropriate safety measures;

16
(l) Removing. destroying, tampering or
obliterating any authorized mark, seal, sign or
tag posted or required by the fire service for
fire safety in any building, structure or
processing equipment; and
(m) Use of jumpers or tampering with
electrical wiring or overloading the electrical
system beyond its designated capacity or
such other practices that would tend to
undermine the fire safety features of the
electrical system.
17
Section 9. Violation, Penalties and
Abatement of Fire Hazard.

Fire hazards shall be abated immediately. Upon

the report that a violation of this Code or other
pertinent laws, rules and regulations is being
committed, shall issue notice/order to comply to
the owner, administrator, occupant or other
person responsible for the condition of the
building or structure, indicating among other
things, the period within which compliance shall
be effected, which shall be within ten (10) to
fifteen (15) days after the receipt of the
notice/order, depending on the reasonableness
to adequately comply with the same.
18
If, after the lapse of the aforesaid period, if
the responsible person failed to comply, the
Chief, BFP or his/her authorized
representative shall put up a sign in front of
the building or structure that it is fire hazard,
which shall remain posted until such time that
the person responsible for the condition of
the building, structure and their premises ,
but such period shall not exceed fifteen (15)
days from the lapse of the initial period given
in the notice/order to comply.
19
Finally, with the failure of the person
responsible for the condition of the building
to comply within the period specified above,
the Chief, BFP may issue order for such
abatement. If the occupant of the building,
does not abate the same within the period
fixed in said order, the structure shall be
ordered closed by the Chief, BFP or his/her
duly authorized representative
notwithstanding any permit clearance or
certificate earlier issued by the local
authorities. 20
Any building or structure assessed and declared by the
chief, BFP or his/her duly authorized represtative as a
firetrap on account of the violation or is causing clear
and present imminent fire danger to adjoining
establishments and habitations shall be declared a
public nuisance, as defined in the Civil Code of the
Philippines in a notice to be issued to the person
responsible for the condition of the structure. If the
assessed value of the nuisance or the amount to be
spent in abating the same is not more than One
hundred thousand pesos (P100,000.00), the owner
thereof shall abate the hazard within fifteen (15) days,
or if the assessed value is more than One hundred
thousand pesos (P100,000.00), within thirty (30) days
from receipt of the order declaring said building or
structure a public nuisance; 21
otherwise, the Chief, BFP or his/her duly
authorized representative shall forthwith cause
its summary abatement. failure to comply within
five (5) days from the receipt of the notice shall
cause the Chief, BFP or his/her duly authorized
representative to put up a sign in front of the
building or structure, at or near the entrance of
such premises, notifying the public that such
building or structure is a "FIRETRAP", which
shall remain until the owner, administrator,
occupant or other person responsible for the
condition of the building, structure and their
premises or facilities abate the same within the
specified period.
22
Section 10. Enforcement of The Lien.
If the owner, administrator or occupant fails to
reimburse the government of the expenses
incurred in the summary abatement within
ninety (90) days from the completion of such
abatement, the building or structure shall be
sold at public auction in accordance with existing
laws and rules. No property subject of lien under
Section 9 hereof, may be sold at a price lower
than the abatement expenses incurred by the
government. The property shall be forfeited in
favor of the government if the highest bid is not
at least equal to the abatement expenses. 23
Section 11. Penalties.
1. Against the private individual:

(a) Administrative fine - Any person who violates any

provision of the Fire Code or any of the rules and
regulations promulgated under this Act shall be
penalized by an administrative fine of not exceeding
Fifty thousand (P50,000.00) pesos or in the proper
case, by stoppage of operations or by closure of such
buildings, structures and their premises or facilities
which do not comply with the requirements or by both
such administrative fine and closure/stoppage of
operation to be imposed by the Chief, BFP. 24
Provided, That the payment of the fine, stoppage of
operations and/or closure of such buildings,
structures, and their premises or facilities shall not
absolve the violator from correcting the deficiency or
abating the fire hazard. The decision of the Chief, BFP,
under this subsection, may be appealed to the
Secretary of the Interior and Local Government.
Unless ordered by the Secretary of the Interior and
Local Government the appeal shall not stay the
execution of the order of the Chief, BFP. The decision
of the Secretary of the Interior and Local Government
shall be final and executory.

25
(b) Punitive - In case of willful failure to correct the
deficiency or abate the fire hazard as provided in the
preceding subsection, the violator shall, upon conviction,
be punished by imprisonment of not less than six (6)
months nor more than six (6) years, or by a fine of not
more than One hundred thousand (P100,000.00) pesos or
both such fine and imprisonment; Provided, however, that
in case of a corporation, firm, partnership or association,
the fine and/or imprisonment shall be imposed upon its
officials responsible for such violation, and in case the
guilty party is an alien, in addition to the penalties herein
prescribed, he shall immediately be deported; Provided,
finally, that were the violation is attended by injury, loss of
life and/or damage to property, the violator shall be
proceeded against under the applicable provisions of the
Revised Penal Code.
26
Any person who, without authority, maliciously
removes the sign that a building or structure is a fire
hazard/firetrap placed by the authorized person in this
Code shall be liable for imprisonment for thirty (30)
days or a fine not exceeding One hundred thousand
pesos (P100,000.00) or both in the discretion of the
court.

Any person, who disobeys the lawful order of the fire

ground commander during a firefighting operation
shall be penalized with imprisonment of one (1) day to
thirty (30) days and a fine of five thousand pesos
(P5,000.00).
27
2. Against the public officer/employee

(a) Administrative - The following acts or

omissions shall render the public
officer/employee in charge of the enforcement of
this Code, its implementing rules and regulation
and other pertinent laws, administratively liable,
and shall be punished by reprimand, suspension
or removal in the discretion of the disciplining
authority, depending on the gravity of the
offense and without prejudice to the provisions
of other applicable laws:
28
(1)Unjustified failure of the public
officer/employee to conduct inspection of
buildings or structures at least once a
year;
(2)Deliberate failure to put up a sign in front
of the building or structure within his/her
area of responsibility found to be violating
this Code, its implementing rules and
regulations and other pertinent laws, that
the same is a "FIRE HAZARD" or a
"FIRETRAP"; 29
(3) Endorsing to the Chief, BFP or his/her
duly authorized representative for the
certification, or submitting a report that the
building or structure complies with the
standards set by this Code, its implementing
rules or regulations or other pertinent laws
when the same is contrary to fact;
(4) Issuance or renewal of occupancy or
business permit without the fire safety
inspection certificate issued by the Chief, BFP
or his/her duly authorized representative; 30
(5) Failure to cancel the occupancy or
business permit after the owner,
administrator, occupant or other person
responsible for the condition of the building,
structure and other premises failed to comply
with the notice/order for compliance with the
standards set by this Code, its implementing
rules and regulations and other pertinent
laws, within the specified period;
31
(6) Failure to abate a public nuisance within
fifteen (15) days after the owner,
administrator, occupant or other responsible
person failed to abate the same within the
period contained in the notice to abate;
(7) Abusing his/her authority in the
performance of his/her duty through acts of
corruption and other unethical practices; or
Other willful impropriety or gross negligence
in the performance of his/her duty as
provided in this act or its implementing rules
and regulations.
32
(b) Punitive - In the case of willful violation
involving the abovementioned acts or omissions
enumerated under Section 11 subparagraph 2(A)
the public officer/employees shall, upon
conviction, be punished by imprisonment of not
less than six (6) months nor more than six (6)
years or by a fine of not more than One hundred
thousand (P100,000.00) or both such fine and
imprisonment: Provided, That where the
violation is attended by injury, loss of life and/or
property, the violator shall be proceeded against
under the applicable provisions of the Revised
Penal Code.
33
Section 12. Appropriation and
Sources of Income.
(a)To support the manpower, infrastructure
and equipment needs of the fire service of
the BFP, such amount as may be necessary
to attain the objectives of the Fire Code
shall be appropriated and included in the
annual appropriation of the BFP.
(b) To partially provide for the funding of the
fire service the following taxes and fees which
shall accrue to the General Fund of the
National Government, are hereby imposed: 34
(1)Fees to be charged for the issuance of
certificates, permits and licenses as
provided for in Section 7 (a) hereof;
(2) One-tenth of one per centum (0.1%) of
the verified estimated value of buildings or
structures to be erected, from the owner
thereof, but not to exceed fifty thousand
(P50,000.00) pesos, one half to be paid prior
to the issuance of the building permit, and
the balance, after final inspection and prior to
the issuance of the use and occupancy
permit;
35
(3) One-hundredth of one per centum
(0.10%) of the assessed value of buildings or
structures annually payable upon payment of
the real estate tax, except on structures used
as single family dwellings;
(4) Two per centum (2%) of all premiums,
excluding re-insurance premiums for the sale
of fire, earthquake and explosion hazard
insurance collected by companies, persons or
agents licensed to sell such insurances in the
Philippines; 36
(5) Two per centum (2%) of gross sales of
companies, persons or agents selling fire
fighting equipment, appliances or devices,
including hazard detection and warning
systems; and

(6) Two per centum (2%) of the service fees

received from fire, earthquake, and explosion
hazard reinsurance surveys and post loss
service of insurance adjustment companies
doing business in the Philippines directly
through agents. 37
Section 13. Collection of Taxes,
Fees and Fines.
All taxes, fees and fines provided in this Code, shall be
collected by the BFP. Provided, That twenty percent
(20%) of such collection shall be set aside and
retained for use by the city or municipal government
concerned, which shall appropriate the same exclusive
for the use of the operation and maintenance of its
local fire station, including the construction and repair
of fire station: Provided, further, That the remaining
eighty (80%) shall be remitted to the National
Treasury under a trust fund assigned for the
modernization of the BFP.
38
Sec. 13-A. Assessment of Fire Code Taxes,
Fees and Fines. - The assessment of fire code
taxes, fees and fines is vested upon the BFP.
The BFP shall, subject to the approval of the
DILG, prescribe the procedural rules for such
purpose.
Sec. 13-B. Collection and Assessment of Local
Taxes, Fees and Fines. - The collection and
assessment of taxes, fees and fines as
prescribed in the Local Government Code,
except those contained in this Code, shall be
function of the concerned local government
units. 39
Sec. 13-C. Use of Income Generated from the
Enforcement of the Fire Code. - The Chief,
BFP is authorized, subject to the approval of
the Secretary of the Interior and Local
Government, to use the income generated
under the Fire Code for procurement of fire
protection and fire fighting investigation,
rescue, paramedics, supplies and materials,
and related technical services necessary for
the fire service and the improvement of
facilites of the Bureau of Fire Protection and
abatement of fire hazards.
40
The BFP shall determine the optimal number of
equipment, including, but not limited to, fire trucks
and fire hydrants, required by every local government
unit for the proper delivery of fire protection services
in its jurisdiction. In the procurement of fire fighting
and investigation supplies and materials, the Bureau
of Product Standards of the Department of Trade and
Industry shall evaluate, determine and certify if the
supply to procured conforms to the product standards
fixed by the BFP. For this purpose, the BFP shall
submit to the Bureau of Product Standards a detailed
set of product standards that must be complied with
in the procurement of fire fighting and investigation
supplies and materials within six (6) months from the
effectivity of this act. 41
Sec. 13-D. Monitoring the Implementation of
the Fire Code and the Amount of the Fees
Collected. - The Chief, BFP shall, within six
(6) month from the effectivity of this Code,
submit to the Secretary of the Interior and
Local Government for his/her approval, a
management tool or mechanism that would
ensure effective monitoring of the
enforcement of the Fire Code to include the
amount of Fire Code fees collected.
42
Section 14. Within sixty (60) days from the
effectivity of this Act, the Secretary of the
Interior and Local Government shall issue the
rules and regulations for its effective
implementation.
Section 15. Presidential Decree No 1185 is
hereby repealed. All laws, presidential
decrees, letters of instructions, executive
orders, rules and regulations insofar as they
are inconsistent with this Act, are hereby
repealed or amended as the case may be.
43
Section 16. In case any provision of this Act
or any portion thereof is declared
unconstitutional by a competent court, other
provisions shall not be affected thereby.

Section 17. This Act shall take effect fifteen

(15) days after its publication in the Official
Gazette or in two (2) national newspapers of
general circulation.

44
 ERC – Energy
Regulatory
Commission
WMSU
Presented by:
Ivan Troy Varon
Dennijon Perez
Sam Andrean Atilano
1
 Brief history of Energy Regulation
The regulations started in 1902.

 Act No. 520 which created the Coastwise Rate Commission.

 In 1906, Act No. 1507 was passed creating the Supervising Railway
Expert.

 The following year, Act No. 1779 was enacted creating the Board of
Rate Regulation

Commonwealth Act No. 146 - otherwise known as the Public Service

Law, was enacted by the National Assembly. It stated that the Public
Service Commission (PSC) had jurisdiction, supervision, and control
over all public services, including the electric power service.
2
After almost four decades, significant developments in
the energy sector changed the landscape of economic
regulation in the country.
 April 30, 1971 – R.A. No. 6173

 September 24, 1972 – then President Ferdinand E. Marcos

issued Presidential Decree No. 1

 October 6,1977 - the government created the Department of

Energy (DOE)

3
May 8, 1987 - the BOE was reconstituted into
the Energy Regulatory Board (ERB)

December 28, 1992 – Republic Act No. 7638 signed

February 10, 1998 – enactment of Republic Act 8479

June 12, 1998 – the Philippine oil industry was fully

deregulated, thus, ERB’s focus of responsibility
centered on the electric industry.

June 8, 2001 – enactment of Republic Act No. 9136

4
5
Vision:
Ensuring progress through exemplary power regulation.

Mission:
A technically competent and professional ERC committed,
through the exercise of its regulatory authority, to be the driving force in
the transformation of the electric power industry in ensuring reasonable
electricity rates, enhancing market competition, promoting long-term
consumer interest, and assuring that electricity industry participants
provide and maintain safe, adequate, reliable and efficient electric
service.

6
Objectives:

1. Promulgate/approve rules, regulations, guidelines and policies;

2. Enforce rules, regulations including issuances of permits and

licenses;

3. Resolve cases (rates and other cases) and disputes;

4. Promote consumer interest; and

5. Become a dynamic organization of professional people with the

highest degree of technical competence and integrity

7
 ERC Powers and Functions
 Promote competition, encourage market development, ensure customer
choice and penalize abuse of market power in the electricity industry.

 Determine, fix and approve, after due notice and hearing, Transmission
and Distribution Wheeling Charges, and Retail Rates through an ERC
established and enforced rate-setting methodology that will promote
efficiency and non-discrimination;

 Approve applications for, issue, grant, revoke, review and modify

Certificate of Public Convenience and Necessity (CPCN), Certificate of
Compliance (COC), as well as licenses and/or permits of electric industry
participants;
8
 Promulgate and enforce a National Grid Code and a Distribution Code that
shall include performance standards and the minimum financial capability
standards and other terms and conditions for access to and use of the
transmission and distribution facilities;

 Enforce the rules and regulations governing the operations of the

Wholesale Electricity Spot Market (WESM) and the activities of the WESM
operator and other WESM participants, for the purpose of ensuring
greater supply and rational pricing of electricity;

 Promulgate rules and regulations prescribing the qualifications of

Suppliers which shall include, among other things, their technical and
financial capability and credit worthiness;

9
 Ensure that NPC and distribution utilities functionally and structurally
unbundle their respective business activities and rates; determine the
level of cross subsidies in the existing retail rates until the same is
removed and thereafter, ensure that the charges of National Grid
Corporation of the Philippines (NGCP) or any distribution utility bear no
cross subsidies between grids, within grids, or between classes of
customers, except as provided by law;

 Set a Lifeline Rate for the Marginalized End-Users;

 Determine the electricity end-users comprising the Contestable and

Captive Markets;

 Handle consumer complaints and ensure promotion of consumer

interests;
10
 Verify the reasonable amounts and determine the manner and duration
for the full recovery of stranded debts and stranded contract costs of NPC
and the distribution utilities;

 Act on applications for cost recovery and return on Demand-Side

Management (DSM) projects;

 Fix user fees to be charged by NGCP for ancillary services to all electric
power industry participants or self-generating entities connected to the
Grid;

 Review power purchase contracts between IPPs and NPC, including the
distribution utilities;

 Test, calibrate and seal electric watt-hour meters;

11
 Monitor and take measures to discourage/penalize abuse of market
power, cartelization and any anti-competitive or discriminatory behavior
by any electric power industry participant;

 Review and approve the terms and conditions of service of the NGCP or
any distribution utility and any changes therein;

 Determine, fix and approve a universal charge to be imposed on all

electricity end-users;

 Implement pertinent provisions of R.A. No. 7832 or the Anti-Pilferage of

Electricity Law; and

 Fix and regulate the rate schedule or prices of piped gas to be charged by
duly franchised gas companies which distribute gas by means of
underground pipe system
12
13
 Major ERC Organizational Units
 Office of the Executive Director
- Responsible for the execution and implementation of policies,

decisions, orders and resolution approved by the Commission.

 Office of the General Counsel and Secretariat to the Commission

- Responsible for providing legal advice or assistance to the Commission
and acts as secretariat to the Commission.

 Regulatory Operations Service

- Responsible for recommending and enforcing the rules, regulations,
standards and methodologies adopted by the Commission.

14
 Market Operations Service

- Responsible for performing oversight functions for the competitive

electricity markets and ensuring that the ERC's mandate of promoting
competition and encouraging market development in the restructured electricity
industry is achieved.

 Planning and Information Service

- Responsible for providing the Commission with relevant, timely and
accurate reports, data/information, and for taking the lead role in the information
dissemination to the general public.

 Consumer Affairs Service

- Responsible for handling consumer complaints and ensure the
adequate promotion of consumer interests.
15
 Legal Service

- Responsible for providing legal assistance and representation to all line

departments in any proceeding before the Commission and assistance in external
legal matters as requested by the General Counsel. Responsible for safekeeping of

legal documents.

 Financial and Administrative Service

- Responsible for the preparation of ERC's annual budget for submission

to the DBM and Congressional approval, under the direction of the CEO.

16
ThaT’s all
Thank you
17
 Wholesale
Electricity Spot
Market Rules
EEL 132: EE Laws, Codes and Professional Ethics
WMSU PRESENTED BY:
ENRIQUEZ, ANTHONY S.
DACULES, MELBOURNE F.
LIM, VINCE WAYNE
1
WESM RULES CHAPTERS
CHAPTER 1: INTRODUCTION
CHAPTER 2: REGISTRATION
CHAPTER 3: THE MARKET
CHAPTER 4: METERING
CHAPTER 5: MARKET INFORMATION AND CONFIDENTIALITY
CHAPTER 6: INTERVENTION AND MARKET SUSPENSION
CHAPTER 7: ENFORCEMENT AND DISPUTES
CHAPTER 8: RULE CHANGE
CHAPTER 9: INTERPRETATION
CHAPTER 10: TRASITORY PROVISIONS

2
 What is WESM Rules?
The Wholesale Electricity Spot Market (WESM) Rules establishes the
basic rules, requirements and procedures that govern the operation of
the Philippine electricity market. The WESM Rules identifies and
recognizes and sets the responsibilities of the Market Operator, System
Operator, WESM Participants, and the PEM Board. These groups shall
comply with and are bound by all the provisions of the WESM Rules.
Republic Act No. 9136, also known as the “Electric Power Industry
Reform Act of 2001” (Act), mandates the Department of Energy (DOE)
to establish the WESM within one (1) year from its effectivity. The Act
also mandates the DOE, jointly with the electric power industry
participants, to formulate the detailed rules for the WESM.
The WESM is the market where trading of electricity will be made. It
shall be governed by the Philippine Electricity Market Board (PEM
Board). The PEM Board shall provide the policies and guidelines of the
WESM contained in the Implementing Rules and Regulations of the
Act, WESM Rules, and such other relevant laws, rules and regulations.
3
CHAPTER 1 INTRODUCTION
1.1 SCOPE OF CHAPTER 1
(a) Purpose of the WESM Rules;
(b) Parties bound by the WESM Rules;
(c) Responsibilities of the Market Operator;
(d) Responsibilities of the System Operator;
(e) Composition and functions of the PEM Board;
(f) Responsibilities of the PEM Auditor;
(g) Responsibilities of the Market Surveillance Committee;
(h) Responsibilities of the Technical Committee; and
(i) Public consultation procedures.

4
1.2 PURPOSE AND APPLICATION OF RULES
1.2.1 About the Philippines Wholesale Electricity Spot Market Rules
This document shall be known as the Wholesale Electricity Spot Market Rules
(“WESM Rules”). Formulated jointly with electric power industry participants;
Promulgated by the DOE
1.2.2 Purpose of the WESM Rules
The WESM Rules are promulgated to implement the provisions of the Act, its
Implementing Rules and Regulations and other related laws as well as to:
(a) Promote competition;
(b) Provide an efficient, competitive, transparent and reliable spot market
1.2.3 The Regulatory Framework
1.2.4 Scope of Application
1.2.5 WESM Objectives
The objectives of the spot market are to establish a competitive, efficient,
transparent and reliable market for electricity where:
(a) A level playing field exists among WESM Participants;
(b) Trading of electricity is facilitated among WESM Participants within the
spot market;

5
1.3 MARKET OPERATOR AND SYSTEM OPERATOR
1.3.1 Responsibilities of the Market Operator
The Market Operator shall, generally and non-restrictively, have the following
functions and responsibilities: (a) Administer the operation of the WESM in
accordance with the WESM rules;
(b) Allocate resources to enable it to operate and administer the WESM on a
non-profit basis;
(c) Determine the dispatch schedule of all facilities in accordance with the
WESM Rules. Such schedule shall be submitted to the System Operator.
1.3.2 Market Operator Performance
1.3.3 Responsibilities of the System Operator
1.4 GOVERNANCE OF THE MARKET
1.4.1 Philippine Electricity Market (PEM) Board
The WESM shall be governed, and its powers and functions exercised by the
PEM Board.
1.4.2 Composition of the PEM Board
1.4.3 Appointment to the PEM Board
1.4.4 Voting Rights
1.4.5 Obligations of the PEM Board

6
1.5 THE PHILIPPINES ELECTRICITY MARKET AUDITOR
1.5.1 Responsibilities of the Auditor
Conduct annual audits of the Market Operator and the settlement
system and any other procedures, persons, systems or other matters
relevant to the spot market;
1.5.2 Review of WESM Rules
The PEM Auditor may appoint a qualified team of auditors to carry out
a review of the scheduling and central dispatch processes under the
WESM Rules.

7
1.6 MARKET SURVEILLANCE COMMITTEE
1.6.1 Appointment to the Market Surveillance Committee
The PEM Board shall appoint persons to form a Market Surveillance Committee
in such number and with such skills and expertise, and on such terms and
conditions, as the PEM Board reasonably deems to be appropriate, taking into
consideration the nature of the obligations and functions of the Market
Surveillance Committee
1.6.2 Responsibilities of the Market Surveillance Committee
1.7 TECHNICAL COMMITTEE
1.7.1 Appointment to the Technical Committee
The PEM Board shall appoint persons to form a Technical Committee, taking
into consideration the nature of the obligations and functions of the Technical
Committee,
1.7.2 Responsibilities of the Technical Committee

8
1.8 ENFORCEABILITY AND AMENDMENT OF THESE RULES
1.8.1 Enforceability
1.8.2 Changes to the WESM Rules
1.9 PUBLIC CONSULTATION PROCEDURES
Where the WESM Rules identify matters that are subject to review or
consultation in accordance with the public consultation procedures, the PEM
Board shall ensure that, as a minimum, the following procedures are followed:
(a) The PEM Board shall publish in at least two (2) newspapers of national
circulation particulars of the matter to WESM Participants and other
interested persons, inviting written submissions concerning the matter to
be made by a specified date;
(b) Where, in the reasonable opinion of the PEM Board, there is a diversity of
views expressed in the written submissions received under clause 1.9(a),
the PEM Board shall invite WESM Participants and other interested persons
to a meeting or meetings at which those views may be presented and
discussed. Non-members, who may be deemed interested persons may be
invited to attend subject to the discretion of the PEM Board;

9
CHAPTER 2 REGISTRATION
2.1 SCOPE OF CHAPTER 2
This chapter 2 sets out:
(a) The categories of WESM Members;
(b) The procedure for registration as a WESM Member, including registration as
an Intending WESM Member;
(c) The procedure for ceasing to be a WESM Member;
(d) The procedure for suspension of a WESM Member and liability of
Deregistered WESM Members; and
(e) The procedure for recovery of the Market Operator’s costs and expenses

10
2.2 GENERAL
2.2.1 Scope of Application
2.2.2 Registration
Trading Participants:
(a) Shall register with the Market Operator under clauses 2.3.1, 2.3.2 or 2.4 as
either a Direct WESM Member or an Indirect WESM Member; and
(b) b) Are bound by the WESM Rules upon registration with the Market
Operator.
2.2.3 Registration in Multiple Categories
2.2.4 WESM Members
A WESM Member is person or an entity registered with the Market
Operator in any one or more of the above categories, whether
registered as a Direct WESM Member or an Indirect WESM Member, if
applicable.

11
REGISTRATION
2.3 CATEGORIES OF WESM MEMBER
2.3.1 Generation Company
A Generation Company with facilities connected to a transmission or distribution
system shall register with the Market Operator as a WESM Member.
2.3.2 Customer
2.3.3 Trading Participant
2.3.4 Network Service Provider
2.3.5 Ancillary Services Provider
2.3.6 Metering Services Provider
2.3.7 System Operator
2.4 INDIRECT WESM MEMBERS
A person or an entity who wishes to indirectly trade in the spot market shall
register with the Market Operator as an Indirect WESM Member. However, an
Indirect WESM Member may only transact through a direct WESM Member.

12
2.5 APPLICATIONS FOR REGISTRATION
2.5.1 Application process
An application for registration shall be submitted to the Market Operator in the
form prescribed by the Market Operator and shall be accompanied by a
registration fee published by the Market Operator.
2.5.2 Prerequisites for applicant
2.5.3 Further information to assess application
2.5.4 Approval of applications
2.5.5 Notice of approval of application
2.5.6 Notice of non-approval of application
2.5.7 Market Operator to maintain a list
2.6 CEASING TO BE A WESM MEMBER
2.6.1 Notifying the Market Operator
If a person or an entity wishes to cease to be registered:
(a) In any one or more categories of WESM Member set out in clause 2.3; or
(b) As an Indirect WESM Member, it shall notify the Market Operator in
writing.

13
REGISTRATION
2.6.2 Date of cessation
2.6.3 Notifying all WESM Members
2.6.4 Market Operator notification of cessation
2.7 SUSPENSION
2.7.1 Grounds for Suspension
2.7.2 Effect of a suspension notice
If a Trading Participant who is either a Direct WESM Member or an Indirect
WESM Member receives a suspension notice from the Market Operator in
accordance with any provision of the WESM Rules, that Trading Participant is
suspended from participation in the spot market unless and until the Market
Operator declares the suspension notice to be revoked

14
2.8 DEREGISTRATION
2.8.1 Deregistration of a Trading Participant
If the Market Operator issues a deregistration notice to any Trading Participant
under the deregistration process, the Trading Participant is deemed to be
deregistered as a Trading Participant from the date specified in the
deregistration notice.
2.8.2 Obligations and liabilities following deregistration
2.8.3 Deregistration procedure development
2.9 INTENDING WESM MEMBERS
2.9.1 Registration as an Intending WESM Member
Any person or entity who intends to register as a WESM Member may register
with the Market Operator as an Intending WESM Member if that person or
entity can satisfy the Market Operator of its bona fide intent to commence an
activity, within a reasonable timeframe, which would entitle or require that
person or entity to be registered as a WESM Member once that activity is
commenced.
2.9.2 Applications for registration
2.9.3 Notice of cessation of registration

15
REGISTRATION
2.9.4 Activities of Intending WESM Members
2.9.5 Rights and obligations of Intending WESM Members
2.10 MARKET FEE
2.10.1 Imposing Market Fees
The cost of administering and operating the WESM shall be recovered by the
Market Operator through a charge imposed on all WESM Members or WESM
transactions, provided such charge shall be filed by the Market Operator with
the ERC for approval, consistent with the Act.
2.10.2 Structure and Level of Market Fees
2.10.3 Guiding Principles
2.10.4 Components of Market Fees
2.10.5 Publication of Market Fees Structure

16
REGISTRATION
2.11 BUDGET
2.11.1 Submission of annual statements and other documents
No later than four months prior to the start of each financial year, the Market
Operator shall submit an annual statement of expected income and expenses
to the PEM Board for approval, setting out, among others
2.12 FINANCIAL YEAR REPORT
2.12.1 Market Operator to prepare report
No later than four months after the end of each financial year, the Market
Operator shall prepare an annual report, setting out, among others
2.12.2 Providing copy of report

17
CHAPTER 3 THE MARKET
3.1 SCOPE OF CHAPTER
This chapter 3 sets out the rules which govern operation of the spot market, and
related matters, including but not limited to:
(a) The definition of the market network model, pricing zones, reserve categories
and reserve regions, trading interval and timetable;
(b) The procedures to be followed by WESM Members in submitting offers, demand
bids and data into the spot market;
(c) The structure and use of the market dispatch optimization model; (d) The
procedures for provision of ancillary services and for determining payment for
those services;
(e) The procedures for preparing week ahead projections and day ahead
projections;
(f) The procedures for scheduling and dispatch, load shedding and excess
generation;
(g) The determination of market prices;
(h) The requirement relating to the publication of information, in accordance with
the timetable;
(i) The procedures for determining settlements amounts and for paying and
receiving settlements;
(j) The determination of prudential requirements; and
(k) The procedures for supporting transmission rights.

18
3.2 MARKET NETWORK MODEL, TRADING NODES, AND PRICING ZONES
3.2.1 Market Network Model
The Market Operator shall maintain and publish a market network model, which will be used
for the purpose of central scheduling and dispatch, pricing and settlement.
3.2.2 Market Trading Nodes
3.2.3 Customer Pricing Zones

3.3 ANCILLARY SERVICES

3.3.1 Introduction
Ancillary services are services that are essential to the management of power system
security, that facilitate orderly trading in electricity and ensure that electricity supplies are of
an acceptable quality.
3.3.2 Ancillary Services Contracting by the System Operator
3.3 Ancillary Services Agreements
3.3.4 Reserve Market Arrangements
3.3.5 Ancillary Services Cost Recovery
3.3.6 Provision of Ancillary Services
3.3.7 Approval, Periodic Review and Evaluation of Ancillary Service Arrangements

19
3.4 MARKET TRADING INTERVAL AND TIMETABLE
3.4.1 Trading Intervals
For the purpose of trading in energy and ancillary services, a trading interval is
one (1) hour, commencing on the hour.
3.4.2 Timetable
3.5 SUBMISSION OF OFFERS, BIDS, AND DATA
3.5.1 Communications of Offers and Bids
Each Trading Participant shall provide to the Market Operator the information
required under this clause 3.5 in accordance with the electronic
communication procedures.
3.5.2 Network Service Provider Data
3.5.3 System Operator Data
3.5.4 Load Forecasting
3.5.5 Generation Offers and Data

20
 3.5.6 Customer Demand Bids
3.5.7 Generation Company Reserve Offers
3.5.8 Customer Reserve Offers
3.5.9 Revision of Standing Offers/Bids
3.5.10 Initial setting of Market Offers/Bids
3.5.11 Revision of Market Offers/Bids
3.5.12 Confirmation of Receipt of Valid Offers and Bids
3.5.13 Over-riding Constraints
3.6 MARKET DISPATCH OPTIMIZATION MODEL
3.6.1 Model Definition
The market dispatch optimization model simultaneously determines dispatch
targets for the end of a trading interval, reserve allocations for the trading
interval, associated energy prices at all trading nodes in the power system and
when applicable reserve prices for all reserve regions.
3.6.2 Constraint Violation Coefficients
3.6.3 Interpretation of Model Outputs

21
 3.6.4 Modelling Approximations
3.6.5 Model Development
3.6.6 Market Settlement
3.7 MARKET PROJECTIONS
3.7.1 Week Ahead Projections
The Market Operator shall prepare and publish week ahead projections and
day ahead projections using the market dispatch optimization model, in
accordance with the timetable.
3.7.2 Day Ahead Projections
3.7.3 Preparation of Market Projections
3.7.4 Published Information
3.8 SCHEDULING AND DISPATCH IMPLEMENTATION
3.8.1 Responsibilities of the Market Operator
Prior to commencement of each trading interval, the Market Operator shall, in
consultation with the Grid Operator, and in accordance with the timetable:

22
 3.8.2 Responsibilities of the System Operator
3.8.3 Communication of target loading levels
3.8.4 Dispatched Trading Participants
3.8.5 Ramp Rate of Trading Participant
3.8.6 Deviations from the Ramp Rate
3.8.7 Dispatch Tolerances
3.8.8 Sanctions of Trading Participants
3.9 TREATMENT OF LOAD SHEDDING AND EXCESS
GENERATION
3.9.1 Direction To Conduct Load Shedding
The System Operator may direct a Trading Participant to conduct load shedding
in response to: (a) An overall shortage of energy at a node or in a region
specified in the market network model; or
(b) Other network conditions, as determined by the System Operator in
accordance with the procedures established under the Grid Code and
Distribution Code..
3.9.2 Market Operator Advice On Load Shedding
3.9.3 System Operator Responsibility to Initiate Load Shedding

23
 3.9.4 Advising of Load Shedding
3.9.5 Revising Forecasts
3.9.6 Pricing Error Notice
3.9.7 Management of Load Shedding
3.9.7 Management of Load Shedding
3.10 DETERMINATION OF MARKET PRICES
3.10.1 Calculation of Prices
3.10.2 Determination of Ex-Ante Nodal Energy Price
3.10.3 Determination of Ex-Ante Zonal Energy Prices
3.10.4 Publishing Ex-Ante Prices According to Timetable
3.10.5 Pricing Error Notice
3.10.6 Determination of Ex-Post Nodal Energy Price
3.10.7 Procedures for Ex-Post Nodal Energy Price
3.10.8 Determination of Ex-Post Zonal Energy Prices
3.10.9 Determination of Ex-Ante And Ex-Post Energy Settlement Prices
3.10.10 Determination of Zonal Reserve Price

24
3.11 MARKET INFORMATION
3.11.1 Market Information
3.11.2 Access to Information
3.12 FINANCIAL TRANSMISSION RIGHTS
3.12.1 Market for Transmission Rights
3.12.2 Publication of Rental Information
3.12.3 Further Transmission Rights
3.12.4 Matters to Consider in Assessment
3.12.5 Issuing Transmission Rights
3.12.6 Accounting for Net Income
3.13 SETTLEMENT QUANTITIES AND AMOUNTS
3.13.1 Submission of Bilateral Contract Data
3.13.2 Submission of Transmission Right Data
3.13.3 Data for Bilateral Contracts and Transmission Right
3.13.4 Zonal Reserve Settlement Quantity
3.13.5 Defining the Gross Ex-Ante Energy Settlement Quantity for Market
Trading 3.13.6 Defining the Gross Ex-Post Energy Settlement Quantity for
Market Trading Nodes
25
 3.13.7 Energy Settlement Quantity Adjustments for Bilaterals
3.13.8 Determining the Ex Ante Energy Trading Amount
3.13.9 Determining the Ex Post Energy Trading Amount
3.13.10 Determining the Reserve Trading Amount
3.13.11 Determining the Reserve Cost Recovery Charge
3.13.12 Calculation of Line Rental Trading Amounts
3.13.13 Determining the Transmission Rights Trading Amount
3.13.14 Settlement Amounts for Trading Participants
3.13.15 Settlement Amounts for the Network Service Provider
3.13.16 Treatment of Remaining Settlement Surplus
3.14 SETTLEMENT PROCESS
3.14.1 Settlements Management by Market Operator
3.14.2 Electronic Funds Transfer
3.14.3 Payment of Settlement Amount
3.14.4 Preliminary Statements
3.14.5 Final Statements
3.14.6 Payment by Trading Participants
3.14.7 Payment to Trading Participants

26
 3.14.8 Disputes
3.14.9 Settlement Revisions
3.14.10 Payment of Adjustments
3.14.11 Payment Default Procedure
3.14.12 Interest on Overdue Amounts
3.15 PRUDENTIAL REQUIREMENTS
3.15.1 Purpose
3.15.2 Provision of Security
3.15.3 Form of Security
3.15.4 Amount of Security
3.15.5 Replacement Security
3.15.6 Drawdown of Security
3.15.7 Suspension of a WESM Member
3.15.8 Trading Limits
3.15.9 Monitoring
3.15.10 Margin Calls
3.15.11 Confidentiality

27
CHAPTER 4 METERING
4.1 SCOPE OF CHAPTER 4
This chapter 4 sets out the:
(a) Obligations of Trading Participants;
(b) Requirements in relation to the installation, use and security of meters;
(c) Manner in which metering data is to be used and managed;
(d) Method of deregistration of Metering Services Providers;
(e) Manner in which metering databases are to be managed; and
(f) Manner in which new technologies are to be adopted.
4.2 APPLICATION OF CHAPTER
This chapter 4 applies to:
a) A Customer in respect of any connection point through which it purchases
electricity from the spot market;
b) A Generation Company in respect of a connection point through which it sells
electricity to the spot market;
c) Metering Services Providers in respect of metering installations for which they
are responsible; and
d) All WESM members as far as applicable.

28
4.3 OBLIGATIONS OF TRADING PARTICIPANTS
4.3.1 Obligations
Before a Trading Participant who is a Direct WESM Member will be permitted by the
Market Operator to participate in the spot market in respect of a connection point,
the Trading Participant shall ensure that:
4.3.2 Election of a Metering Services Provider by a Trading Participant
4.3.3 Metering Services Provider Obligations
4.4 REGISTRATION OF METERING SERVICES PROVIDERS
Other than the TRANSCO, a Metering Services Provider is a person or an entity who:
(a) Is authorized by the ERC to provide metering services; (b) Is registered with the
Market Operator as a Metering Services Provider; and page 81 (c) Is required to
have the qualifications and adhere to any performance standards specified by the
Market Operator in relation to Metering Services Providers.
4.5 METERING INSTALLATION
4.5.1 Metering Installation Components
4.5.2 Location of Metering Point
4.5.3 Meter Accuracy
4.5.4 Use of Meters
4.5.5 Security of Metering Equipment
4.5.6 Security of Metering Data Held in a Metering Installation
4.5.7 Performance of Metering Installations
4.5.8 Meter Time

29
4.6 METERING DATA
4.6.1 Changes to Metering Data
4.6.2 Data Transfer and Collection
4.7 DEREGISTRATION OF METERING SERVICES PROVIDERS
4.7.1 Settlement with inaccurate metering information
4.7.2 Sanctions for inaccurate metering information
4.7.3 Notice following material breach of WESM Rules
4.7.4 Deregistration following unethical act
4.7.5 Effect of deregistration for unethical ac
4.8 DATABASES
4.8.1 Installation Databases
4.8.2 Metering Database
4.8.3 Rights of Access to Metering Data
4.8.4 Confidentiality
4.8.5 Payment for Access to Metering Data

30
4.9 DATA VALIDATION AND SUBSTITUTION
The Market Operator is responsible for the validation and substitution of
metering data after being furnished settlement-ready metering data by the
Metering Services Provider and shall develop data validation procedures in
consultation with WESM Participants
4.10 PROCESSES AND REVIEW
The Market Operator shall undertake a periodic review of the provisions of this
chapter 4 in accordance with the public consultation procedures, including but
not limited to:
(a) New technologies and the impact of new technologies on and in relation to
technical standards for metering in the WESM Rules, the Grid Code and
Distribution Code;
(b) Contestability in the provision and types of meters used; and
(c) Whether the provisions of this chapter 4 have the effect of eliminating the
use of alternative types of meters.
4.11 TRANSITORY PROVISION
During the initial operation of the WESM, the TRANSCO shall provide the
services required of the Metering Services Provider, but this shall not exclude
other entities from doing the same, provided they meet the requirements
provided herein.

31
CHAPTER 5 MARKET INFORMATION
AND CONFIDENTIALITY
5.1 SCOPE OF CHAPTER 5
This chapter 5 sets out:
(a) Procedures for dealing with spot market information, including:
(1) Systems and procedures for the provision and storage of spot
market information; and
(2) A requirement to audit spot market information; and
(b) Procedures for dealing with confidential information, including
(1) Exceptions to the general rule that confidential information shall
not be disclosed; and
(2) Conditions of disclosure of confidential information.

32
5.2 MARKET INFORMATION AND CONFIDENTIALITY
5.2.1 Provision of Information
The provisions of this chapter are always subject to the rights and obligations of the
Market Operator and WESM Members in relation to confidential information
5.2.2 Systems and Procedures
5.2.3 Participant Data
5.2.4 Planning and Design Data
5.2.5 Information Records
5.2.6 Market Audit
5.3 CONFIDENTIALITY
5.3.1 Confidentiality
Each WESM Member and the Market Operator shall keep confidential any
confidential information which comes into their control, possession or otherwise be
aware of.
5.3.2 Exceptions
5.3.3 Conditions
5.3.4 Indemnity to the Market Operator
5.3.5 Survival
5.3.6 The Market Operator Information

33
CHAPTER 6 INTERVENTION AND
MARKET SUSPENSION
6.1 SCOPE OF CHAPTER 6
This chapter 6 sets out:
(a) The procedures which shall be established by the Market Operator, System
Operator and WESM Participants to ensure that they are able to take all
necessary actions in an emergency;
(b) The procedures to be followed by the Market Operator, System Operator
and WESM Participants in an emergency;
(c) The procedures which are to take effect in the event of a threat to system
security; and
(d) The circumstances and manner in which the ERC through the Market
Operator may intervene or suspend the spot market

34
6.1 SCOPE OF CHAPTER 6
6.2 OVERVIEW
6.2.1 Preparation and Responses
The System Operator is responsible for giving directions and coordinating the
actions, which are to be taken by WESM Participants and Market Operator
when there is market suspension or intervention.
6.2.2 Exemption from Liability due to Market Suspension and Intervention
6.2.3 Administered Price Cap
6.3 EMERGENCIES
6.3.1 Emergency
The System Operator shall declare an emergency when it determines the
existence of a situation which has an adverse material effect on electricity
supply or which poses as a significant threat to system security. The System
Operator shall report an emergency to the ERC.
6.3.2 Emergency Procedures
6.4 EMERGENCY PLANNING BY WESM PARTICIPANTS
6.4.1 WESM Participant Emergency Contacts
6.4.2 WESM Participant Procedures
6.4.3 Emergency Procedures Awareness

35
6.5 RESPONSE TO AN EMERGENCY
6.5.1 Declarations and Directions in an Emergency
6.5.2 Intervention Due to Emergency
6.6 SYSTEM SECURITY
6.6.1 System Security and Reliability Guidelines
In consultation with WESM Participants and the Market Operator, the System
Operator shall develop and periodically update system security and reliability
guidelines, subject to approval of the PEM Board.
6.6.2 Notice of Threat to System Security
6.6.3 Response to System Security Threat
6.6.4 Market Response to Threat to System Security
6.6.5 Intervention Due to System Security Threat
6.7 FORCE MAJEURE
6.7.1 Force majeure event
6.7.2 Force majeure event
6.7.3 Notification
6.7.4 Obligations of WESM Participants

36
6.8 MARKET SUSPENSION
6.8.1 Conditions for Suspension of the Market
6.8.2 Declaration of Market Suspension
6.8.3 Effect of Market Suspension
6.8.4 Intervention Report
6.8.5 Market Suspension Report

37
CHAPTER 7 ENFORCEMENT AND
DISPUTES
7.1 SCOPE OF CHAPTER 7
In line with the principles of self-governance, expeditious, just and least
expensive disposition of disputes and considering the continuous nature of the
transactions and operations of the WESM, this chapter sets out:
(a) The responsibilities for ensuring that all WESM Members comply with the
WESM Rules;
(b) The procedures on how the alleged breaches will be dealt with including:
(1) The correct party to whom notice of an alleged breach of the WESM Rules
by a WESM Member shall be given;
(2) The manner in which an alleged breach is to be investigated;
(3) The manner in which a breach is to be sanctioned; and (c) Other provisions
on how disputes are to be resolved, including the appointment of a Dispute
Resolution Administrator and Dispute Resolution Panel.

38
7.2 ENFORCEMENT
7.2.1 Compliance
The PEM Board, in consultation with the Market Operator and the System Operator,
shall do all things reasonably necessary to ensure that all WESM Members comply
with the WESM Rules.
7.2.2 Breaches of the WESM Rules by WESM Participants
7.2.3 Alleged Breaches of the WESM Rules by the Market Operator or System
Operator
7.2.4 Investigations
7.2.5 Sanctions
7.2.6 Actions by Agents, Employees or Officers of Participants
7.2.7 Publication
7.3 DISPUTE RESOLUTION
7.3.1 Application and Guiding Principles
7.3.2 Appointment of Dispute Resolution Administrator and Panel Group
7.3.3 Dispute Management Systems
7.3.4 Dispute Resolution Process
7.3.5 The Dispute Resolution Panel
7.3.6 Disputes About Payment
7.3.7 Disputes Affecting Final Statements

39
7.3.8 Legal Representation
7.3.9 Cost of Dispute Resolution
7.3.10 Effect of Resolution
7.3.11 Recording and Publication
7.3.12 Judicial Review
7.3.13 Limitation of Liability
7.3.14 Indemnity

40
CHAPTER 8 RULE CHANGE
8.1 SCOPE OF CHAPTER 8
Upon the actual commercial operation of the spot market, changes,
amendments, and modifications of the WESM Rules shall be undertaken in
accordance with the provisions of this chapter. This chapter 8 sets out:
(a) The composition and manner of appointment of the Rule Change
Committee;
(b) The procedure for effecting a change to the WESM Rules; and
(c) The procedure for approval of a change to the WESM Rules.

41
8.2 RULE CHANGE COMMITTEE
8.2.1 Establishment of Rule Change Committee
The PEM Board shall establish a Rule Change Committee in consultation with
industry participants.
8.2.2 Composition of Rule Change Committee
8.2.3 Membership requirements – PEM Board
8.2.4 Termination
8.2.5 Appointment termination
8.2.6 Resignation
8.2.7 Conduct of meetings
8.2.8 Advice and assistance
8.3 REFERRAL OF MATTERS TO THE RULE CHANGE
COMMITTEE
8.3.1 Rule change proposals
The Market Operator, the Government or any WESM Member and other
interested parties may submit proposals for changes to the WESM Rules to the
PEM Board.
8.3.2 Form of submission
8.3.3 PEM Board obligations

42
8.4 CONSIDERATION OF PROPOSED RULES CHANGE BY
THE RULES CHANGE COMMITTEE
8.4.1 Assessment of proposed Rule change
8.4.2 Discretions when assessment proposed Rule change
8.4.2 Discretions when assessment proposed Rule change
8.4.4 Notification following satisfying criteria
8.4.5 Submissions regarding proposed Rule change
8.4.6 Consideration of submissions
8.4.7 Approval of proposed Rule change
8.5 CONSIDERATION OF PROPOSED RULES CHANGES BY
THE PEM BOARD
8.5.1 PEM Board assessment of proposed Rule change
8.5.2 PEM Board discretions when assessing proposed Rule change
8.5.3 Notification following unsuccessful proposal
8.5.4 Submitting proposed Rule change for approval

43
8.6 APPROVAL OF PROPOSED RULES CHANGES
8.6.1 DOE assessment of proposed Rule change
8.6.1 DOE assessment of proposed Rule change
8.6.3 Notification following failure to satisfy criteria
8.6.4 Approval of proposed Rule change
8.6.4 Approval of proposed Rule change

8.7 RULES CHANGE COMMITTEE INDEMNITY

The Rules Change Committee and its members, and any working group to
whom any task or obligation is delegated under clause 8.4, are not to be
personally liable in any way for any change, which is made to the WESM Rules

44
CHAPTER 9 INTERPRETATION
9.1 GENERAL
In the WESM Rules, unless the context otherwise requires:
(a) Headings are for convenience only and do not affect the interpretation of
the WESM Rules;
(b) Words importing the singular include the plural and vice versa;
(c) Words importing a gender include any gender;
(d) Where italicized, a word or phrase has the definition given to that word or
phrase in chapter 10;
(e) Other parts of speech and grammatical forms of a word or phrase defined
in the WESM Rules have a corresponding meaning

45
9.2 TIME AND DATES
9.3 ASSIGNMENT
Unless otherwise expressly permitted by the WESM Rules, a WESM Member
shall not assign or transfer and shall not purport to assign or transfer any of its
rights or obligations under the WESM Rules.
9.4 WAIVER
9.5 PAYMENT
9.5.1 Method of payment
9.5.2 Interest rates
9.6 NOTICES
9.6.1 Properly giving notices
9.6.1 Properly giving notices
9.6.1 Properly giving notices
9.6.4 Calculating a specified period for notices
9.6.5 General

46
9.7 RETENTION OF RECORDS AND DOCUMENTS
Unless otherwise specified in the WESM Rules, all records and documents
prepared for or in connection with the WESM Rules shall be retained for a
period of at least seven years.
9.8 SEVERABILITY
Each part or all of a provision of the WESM Rules:
(a) Will be construed so as to be valid and enforceable to the greatest extent
possible; and
(b) May be so construed (or deleted if necessary) regardless of the effect
which that may have on the provision in question or any other provision or
the WESM Rules as a whole

47
CHAPTER 10 TRANSITORY
PROVISIONS
10.1 PURPOSE AND SCOPE
10.1.1 Purpose
10.1.2 Scope of Application
10.2 MARKET TRANSITION
10.2.1 Establishment of the Wholesale Electricity Spot Market
10.2.2 The Market Operator
10.2.3 The Governing Board Membership to the WESM
10.2.4 Membership to the WESM
10.2.5 Price Determination Methodology
10.3 PROVISIONS FOR THE INTERIM WESM
10.3.1 Spot Market Trading
The following provisions shall be applicable during the operation of the interim
WESM.
10.3.2 Ancillary Services
10.3.2 Ancillary Services
10.3.4 Metering

48
10.4 ACTIONS TO BE TAKEN PRIOR TO SPOT MARKET
COMMENCEMENT DATE
10.4.1. Significant Variations
The Market Operator shall, in consultation with WESM Participants, develop
guidelines as to what constitutes a significant variation in and between trading
intervals subject to the approval of the PEM Board.
10.4.2. Market Operator Performance
10.4.3. Formulation of PEM Board By-law
10.4.4. Determination of Market Network Model
10.4.5. Determination of Market Trading Nodes
10.4.6. Determination of Customer Pricing Zones
10.4.7. Ancillary Services
Ancillary Services Agreements
Reserve Market Arrangements
10.4.8. Timetable
10.4.9. Load Forecasting
10.4.10. Market Dispatch Optimization Model
10.4.11. Constraint Violation Coefficients
10.4.12. Dispatch Tolerances
10.4.13. Management Procedures During Load Shedding

49
10.4.14. Management Procedures for Excess Generation
10.4.16. Procedures for Ex-Post Nodal Energy Price
10.4.16. Procedures for Ex-Post Nodal Energy Price
10.4.18. Harmonization
10.4.18. Harmonization
Creation of the TWG
Responsibilities
Applicability
Tenure

50
 PERFORMANCE
BASE
REGULATION
WMSU
Jomar Pao
Kenneth Ladag 1
Republic Act No. 9136
Electric Power Industry Reform Act
(EPIRA)
• Signed: 8 June 2001
• Effectivity: 26 June 2001

Implementing Rules & Regulations

• Signed: 27 February 2002
2
 EPIRA Section 2: Declaration of Policy of
the State
a) xxx
b) To ensure the quality, reliability, security and affordability of the supply of electric
power;
c) To ensure transparent and reasonable prices of electricity in a regime of free and
fair competition and full public accountability to achieve greater operational and
economic efficiency and enhance the competitiveness of Philippine products in the
global market;
d) xxx
e) xxx
f) To protect the public interest as it is affected by the rates and service of electric
utilities and other providers of electric power.
g) xxx
h) Xxx
i) Xxx
j) To establish a strong and purely independent regulatory body and system to ensure
consumer protection and enhance the competitive operation of the electricity
market; and
k) k) xxx
3
ERC Mandate

Sec. 38 of EPIRA
“There is hereby created an
independent, quasi-judicial
regulatory body to be named
the Energy Regulatory
Commission (ERC).”
4
ERC Major Functions

5
Where does the peso in your electric
bill go?

6
What is the (PBR)?

7
 What is PBR?
A new rate setting methodology to determine
distribution charges for DU’s like Meralco and Davao
Light and VECO in Cebu.
• Rates that are “in the public interest”
• Rates that are “fair and reasonable”
• Methodology that result to least cost power
• Methodology that results to efficiency at fair and
reasonable rates

8
 Performance-based Rate-Setting
Methodology (PBR)
It is an internationally-accepted methodology which
uses projections of operating and capital expenditures
to enable the regulator to evaluate investment in
facilities to meet customer requirements and
prescribed service levels.
It also has a performance incentive scheme by which
the regulator provides incentives and penalties to the
utility to compel it to be more efficient and reliable,
while maintaining reasonable rates and improving the
quality of service to achieve pre-determined target
levels. 9
▪ PBR has been used in the UK, Australia, New
Zealand, USA and many other countries in Europe
and Asia
▪ As authorized under Section 43(f) of the Electric
Power Industry Reform Act (EPIRA), the ERC,
promulgated the Performance Based Regulation
(PBR):
– In May 2003, thru the Transmission Wheeling Rates
Guidelines (TWRG), later amended as Rules for
Setting Transmission Wheeling Rates (RTWR) in
September 2009
– In December 2004, thru the Distribution Wheeling
Rates Guidelines (renamed as Rules for Setting
Distribution Wheeling Rates, RDWR) . 10
PBR is based on three key formulas:

• The building block formula

– calculating the allowed revenue
• The calculation of the smoothing factor
(X-factor)
• The annual price-setting (price-cap)

11
The 1st key formula – allowed revenue
requirement
ARRt =Opext +Taxm,t +RegDepnt +[(RABt +WCt )×WACC]+Taxp,tt

This formula :
– determines the allowed annual revenue requirement for a utility,
– is based on the so-called “building block” principle,
– fully compensates the utility for efficient distribution expenses,
and
– compensates investors for efficient investment and associated
risk.

12
The building blocks for the revenue
requirement are …

13
 Efficient
operating
costs

– the reasonable operating costs, and

– the reasonable maintenance costs
that
A utility is entitled to for each year of the
regulatory period.

14
Other taxes
ERC will assess a utility’s
reasonable and efficient
expenses on:
– Business taxes (other than income tax)
– Duties
– Levies (which will include regulatory reset cost)

15
 Corporate
income tax

Utilities may recover income tax expenditure, based

on:
• Clear separation of expenses and income for the
regulated business from other businesses
• Carry-over of tax losses from previous regulatory years
• Estimate of regulatory interest and historical asset base
depreciation

16
 Return of
capital

Regulatory depreciation
• Based on regulatory life of assets
• Straight-line depreciation
• Treatment of asset at end of standard life, but
still in service.
Also require historic cost depreciation – for
calculating income tax
17
 Return on
capital

Regulatory asset base

• ERC to determine the value of the rolled-
forward optimized depreciated regulatory
asset base (RAB)
• RAB going forward will be based on initial
opening value and future (efficient) capital
expenditure.
18
 Return on
capital

Working capital
ERC to determine working capital
allowance
• To compensate utilities for capital tied up
in operations
• Based on proportion of operating
expenditures.
19
 Return on
capital

Weighted average cost of capital

ERC to determine regulatory
WACC is a critical, but uncertain parameter, usually
contentious

20
The 2nd key PBR formula : determining
the X-factor

21
Key parameters

22
and…

23
and…

24
and…

25
and finally…

26
The X Factor…

27
Service Quality Measures
under PBR

28
How are the target performance levels set
for the regulatory period?
• The utilities’ historical performance of the outcomes of
the various performance indicators is reviewed
• An assessment is done on the performance indicators
that need to be addressed in the regulatory period
• Relative weighting on each performance indicator is
determined based on the foregoing
• The average performance or target performance level
is set
• Average of the previous regulatory period
• Best of the regulatory Period (see Distribution Code: historical)
• Performance steps for reward and penalty are set
29
Price-linked incentive scheme
– depending on network and service
performance, a reward is added to the
annual price-cap or a penalty is deducted
Guaranteed Service Levels
– component of the PIS in which the DUs
will compensate a consumer directly if
certain service delivery performance
standards are not met
30
What are the control
mechanisms?

31
1. A review every 4 years (Reset)

• Determine Annual Revenue Requirement

thru the Building Block analysis
• to determine/benchmark the actual cost
that has been incurred by the Utility;
• to determine/adjust the service
performance measures

32
2. Annual Verification
• to ensure that Utility earns only within the
approved constraints;
• to adjust for the actual increase/decrease
in price of commodities (inflation);
• to adjust for the actual increase/decrease
in sales;
• to review the service performance
(incentive or penalty)
33
PBR Process

34
35
36
And for the annual resets - the price-
cap formula :

which is a variant of the so-called “CPI-X” form of regulation

It essentially means :
Next year’s price is capped at this year’s price plus
an allowance for general cost increases, reduced
by an efficiency factor.
𝑴𝑨𝑷𝒕 means the maximum average price (for distribution
services) for year t
37
The price-cap formula, in some more
detail :
Service Correction for Correction for
performance revenue over tax over or
incentive factor or under- under-
recovery in recovery in
previous year previous year

MAP = [ MAP − ×{1 + CWI − X }] + St − K + ITA

t t 1 t t t
This year’s Previous Index of change Efficiency (or
price per unit of year’s price per in Consumer smoothing)
electricity unit of Prices factor
electricity and,
if a trigger level
is reached, also
US$/PhP
exchange rate
60% CPI 40% Exchange
38
Thank You

39
 POWER SUPPLY
AGREEMENT #14

Prepared by Group 13

WMSU
GLENDEL JOHN B. PASAGUE
JOHN LLOYD T. SEBAN
BSEE 3A
1
WHAT IS A POWER SUPPLY
AGREEMENT (PSA)?

A PSA is a bilateral agreement between a

Generation Company (GenCo) and a
Distribution Utility (DU) for the purchase
and supply of power.

2
 National Power Corperation
The national power corporation (NPC) was created under
commonwealth act no. 120 on november 3, 1936 as a non-stock
government corporation. In 1960, NPC was converted into a stock
corporation wholly owned by the government under republic act (RA)
2641. In 1971, its charter was revised through RA 6395.

The National Power Corporation is a Philippine government-owned and

controlled corporation that is mandated to provide electricity to all rural
areas of the Philippines by 2025 to manage water resources for power
generation, and to optimize the use of other power generating asset.
 Prior to the deregulation of the power industry in 2001, NPC was a
vertically integrated power utility engaged in the production,
transmission and distribution of electric power and used to be the
largest provider and generator of electricity in the Philippines. 
3
Power Generation Sources

4
Power Generation Sources

5
Power Generation Sources

6
Power Generation Sources

7
Power Generation Sources

8
Power Generation Sources

9
• Distribution Sector The distribution of electricity to end-
users shall be a regulated common carrier business
requiring a national franchise. Distribution of electric
power to all end-users may be undertaken by private
distribution utilities, cooperatives, local government units
presently undertaking this function and other duly
authorized entities, subject to regulation by the ERC. (Sec.
22, RA 9136)

• Distribution Utility refers to any electric cooperative,

private corporation, government-owned utility or existing
local government unit which has an exclusive franchise
area to operate a distribution system in accordance with
this Act. (Sec. 4 q, RA 9136) Utilities, including grid
interconnections and ancillary services. (Sec. 8, RA 9136)
10
Energy Regulatory Commission
A world class and independent electric
power industry regulator that equitably
promotes and protects the interests of
consumers and other stakeholders, to
enable the delivery of long-term benefits
that contribute to sustained economic
growth and an improved quality of life.

11
Why does the ERC need to review and
approve PSAs?
Section 25, Chapter 2 of the Republic Act No.
9136 or the Electric Power Industry Reform
Act of 2001 (EPIRA) states that: RETAIL RATE.
The retail rates charged by distribution
utilities for the supply of electricity in their
captive market shall be subject to regulation
by the ERC based on the principle of full
recovery of prudent and reasonable economic
costs incurred, or such other principles that
will promote efficiency as may be determined
by the ERC.
12
MOST ESPECIALLY:

EPIRA-RA9136

• Sec. 41. Promotion of Consumer Interests.

– The ERC shall handle consumer
complaints and ensure the adequate
promotion of consumer interests

13
THE FIVE MAJOR FUNCTIONS (ERC)

14
What does the ERC look into in its PSA
review and approval process?

Capacity Fee/Capital Recovery Fee Fixed Cost

• Cost for the recovery of capital or

investment incurred in putting up the
power plant
• Fixed for the duration of the project life/
plant economic life.
15
Operations & Maintenance Fee Fixed O&M
Variable O&M
• Costs involved in operating and
maintaining a utility plant and in the
provision of utility service; and
• Operating outlays consist mainly of costs
for purchased power, fuel, wages,
applicable taxes, maintenance, supplies,
and other necessary expenditures.

16
Fuel Recovery Fee/Energy Fee Variable Cost

• Pass-through cost to allow recovery of

fuel consumed to generate power
• Cost also depends on the plant heat ra

17
 TYPES OF AGREEMENT

• Purchase Order
A purchase order is a document sent from a buyer to a seller, with
a request to order a product. When the seller accepts the document,
it forms a legally binding contract between the buyer and the seller.
• Memorandum of Understanding
An MOU is an expression of agreement to proceed. It indicates
that the parties have reached an understanding and are moving
forward

18
TYPES OF AGREEMENT
• Memorandum of Agreement
An MOA is a document written between parties to cooperatively
work together on an agreed upon project or meet an agreed upon
objective.
• Contract of Supply and/or Services
A contract that documents the terms upon which a party supplies
both good and services to another party, and lends enforceability to
parties’ rights and obligations under the supply engagement.

19
PSA Rules
SECTION ONE - SCOPE OF AGREEMENT
• Supply of electric power and energy between NPC
SPUG and Distribution Utilities

SECTION TWO - TERM OF AGREEMENT

• Cooperation period is ten (10) years from
Effectivity Date and renewable by mutual consent
of the parties.

• DU or NPC has an option to enter into a Power

Supply Agreement with new power provider (NPP).

20
SECTION ONE - SCOPE OF AGREEMENT
• Supply of electric power and energy between NPC
SPUG and Distribution Utilities

SECTION TWO - TERM OF AGREEMENT

• Cooperation period is ten (10) years from
Effectivity Date and renewable by mutual consent
of the parties.

• DU or NPC has an option to enter into a Power

Supply Agreement with new power provider (NPP).

21
SECTION THREE – SERVICE SPECIFICATIONS

*CONTRACT DEMAND AND CONTRACT ENERGY

• Allocation of Contract Demand and Contract Energy as
set forth in Annex A.
• To increase the contracted volumes, notify at least two
(2) years in advance to adjust capacity

*SERVICE RELIABILITY
• Supply shall be available continuously except for
allowable interruption or reduction
• The parties shall have a period of three (3) years to
improve their respective facilities, including ensuring the
compliance of the CUSTOMER with the pertinent
technical specifications and performance standards of
the Distribution Code.
22
*APPLICATION FOR INCREASE IN DEMAND AND ENERGY
• Through an amendment in Contract Demand or Contract
Energy for any particular year or years subject to the technical
constraints of generating plants, transmission, substation, and
other facilities and subject to such rates and to other terms
and conditions as the parties may agree upon
*ASSIGNABILITY
NPC-SPUG shall assign, cede, transfer, allocate wholly or partly
its rights and obligations under this agreement unilaterally to an
NPP which will be selected by the NPC-SPUG/CUSTOMER to take
over the former's power generation function by reason of private
sector participation.
CUSTOMER shall not assign any of its rights and/or obligations
under this Agreement without the prior written consent of NPC-
SPUG, which consent shall not be unreasonable withheld, and
subject to the terms and conditions imposed in this Agreement.23
SECTION FOUR - CHARGES AND ADJUSTMENT
• Billing and payment for energy delivered by
NPCSPUG Subsidized Approved Generation
Rate (SAGR) Other adjustments and
procedures as approved by the ERC and
provided in Annex B on Charges and
Adjustments.
SECTION FIVE – DEFAULT
The occurrence of the following events:
• Breach or failure in the performance
• An assignment by either party
• Repeated breaches of this agreement
• Cessation by either party
24
SECTION SIX – TERMINATION
• Default
• Initial Term
• Extended Term

25
PENALTIES
• If the CUSTOMER fails to meet the annual
Contracted Energy, CUSTOMER shall still pay for
the Full Fixed Cost component of the True Cost
Generation Rate (TCGR) of the undelivered

• Contracted Energy If the CUSTOMER offtakes is

in excess to the Contracted Energy, CUSTOMER
shall pay for the Full Variable Cost component of
the True Cost Generation Rate (TCGR) of the
incremental excess energy
26
 PENALTIES

• If NPC-SPUG fails to meet the Contracted

Energy, and the CUSTOMER secures an
alternative supplier to meet the deficiency,
NPCSPUG shall pay for the electricity
produced by the CUSTOMER equivalent to
the true cost of generation of NPC-SPUG.

27
Case Filing Procedures - Applications for Approval of
Power Supply Contract

Section 1. Applications for Approval of Power Supply Contract. –

Applications for approval of power supply contract between a
distribution utility and power producer, other than those covered by
the Guidelines for the Setting and Approval of Electricity Generation
Rates and Subsidies for Missionary Electrification Areas (ERC
Resolution No. 11, series of 2005, dated 6 July 2005), shall include
a statement of the salient provisions of the said contract, including
the stipulations on the pricing, and a statement of its impact on the
overall rates of the applicant-utility once said contract is approved.

28
Section 2. Supporting Documents and Information. - The
application for approval of power supply contract shall be
accompanied by the following documents and information:
(a) Articles of Incorporation of Generation Company
(b) Securities and Exchange Commission (SEC) Certificate of
Registration of the said Articles of Incorporation of Generation
Company
(c) Latest General Information Sheet of Generation Company
(d) Board of Investment (BOI) Certificate of Registration of
Generation Company
(e) Environmental Compliance Certificate (ECC) issued by the
Department of Environment and Natural Resources (DENR) to the
Generation Company
(f) Power Supply Agreement/Energy Conversion Agreement
Contract (PSA/ECA)
(g) Details of the PSA/ECA
29
1. Executive Summary
2. Sources of Funds/Financial Plans
2.1. Debt/Equity Ratio
2.2. Project Cost 
2.3. Annual Interest
2.4. Computation of Return on Investment/WACC
2.5. Certification from the Bank/Lending Institution specifying the principal amortization,
term and interest during the cooperation period of the loan agreement
3. Purchased Power Rate
3.1. Breakdown of the base prices of Operation and Maintenance, Capacity Fee, Fixed
Operation Fee, and Energy Fee (provide computations)
3.2. Sample Computation of Power Rates with the supporting documents on the
assumptions taken
3.3. If applicable, basis/rationale of indexation and level of indexation
4. Cash Flow specifying the following:
4.1. Initial Costs 
4.2. Breakdown of Operating and Maintenance Expenses and
4.3. Minimum Energy Off-take (MEOT) 30
(i) All details on the procurement process of fuel including requests, proposals
received, tender offers, etc.
(j) Copy of Related Agreements (i.e. Transmission Wheeling Contract, Fuel Supply
Agreements, etc.)
(k) Certificate of Compliance (COC) issued by the ERC pursuant to the Guidelines
for the issuance of COC for Generation Companies/Facilities

(l) Certification by NPC on whether or not Transition Supply Contract (TSC)

capacity and energy are expected to be available during the contractual period
(include relevant supporting documentation, data and analysis supporting each
statement)

(m) All relevant technical and economic characteristics of the generation capacity,
installed capacity, mode of operation, and dependable capacity of the plant

(n) Details on the procurement process used by the Distribution Utility leading to
the selection of the Generation Company including request(s) for proposals,
proposal received by the Distribution Utility, tender offers, etc.

31
(o) Details regarding transmission projects or grid connection projects necessary to complement
the proposed generation capacity, including the parties that will develop and/or own such
facilities, any costs related to such project, and specification of the parties responsible for
recovery of any costs related to such projects

(p) Certification regarding the consistencies and inconsistencies between the proposed
generation capacity and the Department of Energy’s (DOE) Philippine Development Plan (PDP).
Any inconsistency shall be supported by relevant analysis including but not limited to, forecasts
and assessment of available generation capacity and technology mix.

(q) Details regarding the load forecast projections in accordance with the latest Distribution
Development Plan of the Distribution Utility and the variability of those projections over the
proposed contractual period, including the estimation of the potential for a reduction in load
supplied by the Distribution Utility due to retail competition. Any inconsistency shall be
supported by relevant analysis.

(r) If the application is filed later than two years following the effectivity of the Guidelines for the
Recovery of Costs for the Generation Component of the Distribution Utilities’ Rates, the
application must include an alternative Demand Side Management (DSM) program that could be
implemented by the Distribution Utilities if approved by the ERC. The Distribution Utility shall
submit the projected costs and benefits of the DSM program.
32
Section 3. Applications for Approval of Power Supply Contract
between an Electric Cooperative and a New Power Provider. -
The applicant in applications for approval of power supply
agreement between an electric cooperative and a new power
provider (NPP), as the same is defined in the Guidelines for the
Setting and Approval of Electricity Generation Rates and
Subsidies for Missionary Electrification Areas (ERC Resolution
No. 11, series of 2005, dated 6 July 2005), shall comply with
the requirements in said guidelines pertaining to the
notification by the electric cooperative of the launch of the
competitive selection process and the requirements pertaining
to the filing and approval of the power supply agreement (PSA)
between an electric cooperative and an NPP and approval of
the true cost of generation rate (TCGR).

33
34
 Feed-in
Tariff Policy
in the Philippines
REPORTERS:
ALVARAN, CLIEF VINCENT MARAVILLAS
DE GUZMAN, CHESTER

WMSU TANJILUL, AL-SHAHUDI ABUHAJIM

BSEE 3A

INSTRUCTOR:
ENGR. RITCHEL F. BAUTISTA

1
Introduction

Energy is a critical component in the

Philippines’ pursuit of sustained economic growth
and development. Economic expansion and the
rapid growing population have raised concerns on
how the increasing demand for energy will be met.
The Asian Development Bank (2018) estimates
that the country’s energy consumption will double
by 2035.

2
 The Philippine energy mix is dominated by fossil fuels
with the power sector relying on imported coal to power its
baseload generation capacity which highlights the problem
of resource depletion and CO2 emissions. The Philippines
is also vulnerable to price volatility and supply disruptions.

These are inherent risks of an energy importer and the

gradual depletion of the Malampaya gas field has forced
the government to find other energy sources. Confronted
with the challenges of energy security and environmental
sustainability, the Philippines has sought to develop and
utilize renewable energy sources.
3
 The Renewable Energy (RE) Act of 2008,
together with the Biofuels Act of 2006 aim to
address the country’s continuous dependence on
imported fossil fuels by promoting the exploration,
development and use of the country’s renewable
energy sources such as solar, wind, biomass,
hydro and geothermal. The enactment of the RE
Law is also vital for the low carbon emission
development strategy of the Philippines and in
addressing the challenges of energy security and
threats of climate change.
4
Feed-in Tariff Policy
Feed-in Tariff is a price-based support mechanism
for RE developers which sets a guaranteed price to be paid
to RE developers per kWh of electricity generated. It
involves a purchase obligation on distribution utilities to buy
the electricity produced by FiT-eligible RE generating
plants. To date, FiT is recognized as the most efficient
support scheme for promoting renewable energy
(Menanteau, Finon, & Lamy, 2003) with over 111
states/countries/provinces adopting FiT to promote RE
(IRENA, 2018). In Europe, FiT is responsible for the large-
scale deployment of wind, solar, and biomass (Sijm, 2002).

5
Feed-in Tariff Policy
Compared to quantity-based policies like the
renewable portfolio standard (RPS), FiT is more
attractive to investors as it poses lower investment
risk due to the provision of long-term financial
support. Purchase agreements for the sale of
electricity under the FiT usually last from 10-25
years. Other design features of the FiT include
differentiated FiT rates (to account for the level of
maturity for each technology), installation targets,
and degression rates to encourage technological
change (Couture, et al. 2010). FiT is considered a
subsidy and the cost of subsidizing producers are
covered by electricity consumers.
6
Feed-in Tariff Policy
The most important component of a FiT policy
is determining the level of price which will stimulate
investments in RE. A price that is too low will
discourage RE developers from availing the FiT and
a price that is set too high poses an additional
burden to society. FiT payment design policies can
either be independent or dependent of electricity
price. Market-independent FiT, more commonly
known as the Fixed-Price Policy is the most widely
implemented policy design in Europe and Canada.
Under this policy, RE developers are guaranteed a
price for a fixed period of time independent of
electricity price volatilities in the market.
7
Feed-in Tariff Policy
In South East Asia, the Philippines is one
of the first countries to adopt the FiT policy but
studies on its impact is scant. Guild (2019)
compared the implementation of FiT in the
Philippines and Indonesia with the former
successfully leading the development of the RE
industry as seen in the rapid growth in installed
capacity in biomass, solar, and wind. Pacudan
(2014) studied the impact of FiT on electricity
rates and found that the feed-in tariff allowance
(FiT-All), a uniform…

8
Feed-in Tariff Policy
charge to consumers meant to cover payments
for RE developers, is regressive for households
with lower electricity consumption. De La Viña
(2015) assessed the financial impact of the
integration of FiT qualified resources such as
wind and solar in the Wholesale Electricity Spot
Market (WESM) and finds that the system
receives a net benefit through the merit order
effect but the impact to end-users may be a net
cost.

9
Feed-In Tariff Policy in the
Philippines
The RE Law mandates the institutionalization of the
FiT for renewable technologies such as biomass, solar,
wind, run-of-river hydro, and ocean.
On July 12, 2010, the Energy Commission released
Resolution No. 16, series of 2010 (which was later
amended through ERC Resolution No. 15, series of 2012)
detailing the implementing rules on the establishing the FiT
system, the method of establishing and approving the FiT
rates and the administration of the FiTAll.
According to the resolution, the FiT will follow a
fixed-price policy design with the National Renewable
Energy Board (NREB) calculating the initial technology-
specific FiT rates which will be submitted to the ERC for
approval.
10
11
 Table 1 shows the approved feed-in tariff rates
together with their corresponding installation targets as set
forth in ERC Resolution No. 10, series of 2012. For the first
round of FiT, Solar PV received the highest FiT price at
PhP 9.68/kWh with 50 MW of installed capacity followed by
wind with an approved rate of PhP 8.53/kWh and a target
capacity of 250 MW. Runof-river hydro and biomass FiT
rates were at PhP 6.63/kWh and PhP 5.90/kWh,
respectively. Installation target for both were capped at 250
MW.

12
 ERC released Resolution No. 06, series 2015
revising the installation target for solar energy
generation from 50 MW to 450 MW and setting a
new Solar FiT rate of PhP 8.69/kWh (“Solar FIT 2”).
A new wind FiT rate of PhP 7.40/kWh (“Wind FiT 2”)
was set under ERC Resolution No. 14, series 2015
to be applied to three wind power projects namely
San Lorenzo, Nabas, and Pililia Power. On 24
February 2018, the DOE endorsed the extension of
the biomass and run-of-river hydropower installation
targets eligibility until December 31, 2019, or upon
successful commissioning of the run-of-river hydro
and biomass power projects.

13
 The extension covers the remaining
balance of the respective initial installation
targets. The FiT mechanism also guarantees all
eligible renewable energy plants a (1) purchase
agreement for a period of twenty (20) years, (2)
priority connection to the transmission or
distribution system, and (3) priority scheduling
and dispatch in the spot market. According to
De La Viña (2015), these concessions are a
departure from the market-based scheduling
and pricing regime of WESM.

14
Philippine Feed-In Tariff System
Implementation
Renewable Energy Act of 2008
Republic Act No. 9513 An Act Promoting the
Development, Utilization and Commercialization of
Renewable Energy Resources and For Other
Purposes December 16, 2008.

On-Grid Renewable Energy Development

❖ Renewable Portfolio Standards
❖ Feed-In Tariff System
❖ Renewable Energy Market
❖ Green Energy Option
❖ Net-metering for Renewable Energy
15
Off-Grid Renewable Energy Development
❖ Minimum RE generation capacities

Renewable Portfolio Standards

Defined as “a market-based policy that requires
electricity suppliers to source an agreed portion of
their energy supply from eligible RE resources”

The NREB shall set:

• Minimum percentage of generation from eligible
renewable energy resources
• Which sector RPS shall be imposed on a per grid
basis
16
Renewable Energy Market (REM)
• The DOE shall establish the REM
• Direct PEMC to implement changes to the WESM rules
in order to incorporate the rules specific to the operation
of the REM under the WESM
• PEMC, under DOE supervision, establish a Renewable
Energy Registrar
• Issue, keep and verify RE Certificates

Green Energy Option

• The DOE shall establish a Green Energy Option
program which provides end-users the option to choose
RE resources as their sources of energy
• End-users may directly contract from RE facilities their
energy requirements
17
• TRANSCO, DUs, PEMC and all relevant parties are
hereby mandated to provide the mechanisms for the
physical connection and commercial arrangements
necessary to ensure the success of the Green Energy
Option
• ERC to develop regulatory framework

Net Metering for RE

• DUs may enter into Net-Metering agreements with
qualified end-users
• The ERC, in consultation with the NREB shall develop
Net-metering interconnection standards and pricing
methodology and other commercial arrangements
18
• The DOE, ERC, Transco, DUs, PEMC and all relevant
parties are mandated to provide mechanisms for
physical connection and commercial arrangements

Feed In Tariff System Mandate

• ERC, in consultation with the NREB
• For emerging renewable energy resources to be used in
compliance with the renewable portfolio standard
✓ Wind
✓ Solar
✓ Ocean
✓ Run-of-river
✓ Hydro Biomass
• Priority connection to the grid
• Priority purchase and transmission of, and payment for, such
electricity by the grid system operators
• Fixed tariff by technology
• Mandated number of years, not less than 12 19
Feed-In Tariff Rules Rate

20
The Overall Fit Framework

21
The Fit to be Paid to RE Developers

• Based on cost of a representative project Technology-

specific
• 20 years duration
• Subject to degression and adjustments
• Subject to review

22
ERC-Approved FITs
ERC Case No. 2011-006 RM

Note: Decision on OTEC FIT deferred

Effectivity
“Payment of the approved FIT rates to the eligible RE
Developers shall commence upon the effectivity of the Feed-in
Tariff Allowance (FIT-All), which shall be determined by the
Commission at a later date after due proceedings thereon.”

23
DOE Installation Targets

24
ERC-Approved Degression Rates

25
Section 2.5: FIT Rules
Feed-In Tariff Allowance (FIT-All)

• Uniform /kwh charge

• Payable by all electricity users
• Periodically calculated and set
• Based on forecasted RE deliveries
• Proceeds go to a fund administered by Transco from
where the RE payments will be sourced

26
Other Provisions: FIT Rules
• Sec. 2.6 of the FIT Rules provides that NREB
shall establish more detailed guidelines for the
collection & disbursement of the FIT-All Fund.

• Sec. 2.9 of the FIT Rules provides that ERC may

consider the issuance of additional guidelines
governing the dispatch and settlement of the FIT.

27
FIT-All Application
• Application to be filed by Administrator
annually, no later than July 31 of each
year.
• FIT-All to be approved by the ERC no later
than October 31 of each year.
• FIT-All to be approved by ERC shall be
applied to the succeeding calendar year.
• Formula for computing the FIT-All provided
in the Guidelines.
28
Collection of the FIT-All
• FIT-All Fund shall be in the form of a
special discretional trust account
corresponding to each component of the
FIT-All Fund with a Government Financial
Institution as Trustee.
• Agreement shall be governed by a Trust
Agreement to be approved by the ERC.
• For the sole and exclusive benefit of the
Eligible RE Plants except AA and DA.

29
Collection of the FIT-All
• Eligible RE Plant may assign the Actual
FIT Revenue to banks or financial
institutions for purposes of securing
financing.
• FIT-All Fund shall not form part of the
assets of the Administrator.
• Nor shall it be made to pay out from its
own funds for any liability of the FIT-All
Fund.

30
Collection of the FIT-All
• All Eligible RE Plants shall enter into a
Renewable Energy Payment Agreement
(REPA) with the Administrator for the
payment of the FIT, a template of which shall
be issued by the ERC.
• Trustee shall separate and allocate the
remittances into the component accounts, as
computed by the Administrator, and in
accordance with this Rules and the ERC
Decision on FIT-All.
31
Fund Flow

32
THANK YOU!

33