Energy Regulatory Commission/Annual Report 2010

Annexes

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Annex 1
Summary of the 28 Resolutions, Rules, Regulations and
Policies Promulgated in 2010

Resolution No. 1: A Resolution Adopting the Rules for the Power Supply Option
Program (PSOP)
(January 25, 2010)

The Rules for the PSOP aim to: (i) provide the regulatory framework for the implemen-
tation of the PSOP and (ii) ensure additional choices of supply are made available
to qualified customers. The Rules apply to all Eligible Customers, Retail Electricity
Suppliers (RES), Eligible Distribution Utilities, Generation Companies or its Affiliates,
National Grid Corporation of the Philippines (NGCP), Independent Power Producers
(IPPs), the Market Operator (MO) and other relevant industry participants, subject to
the eligibility requirements set forth in Article II of the Rules.

The PSOP is another supply option program for customers in Luzon. It is designed to
start either after the transfer of the operation of the Calaca NPC Generation Assets to
the private generation companies concerned or its equivalent in terms of capacity, or
the privatization of at least 70% of the total capacity of generating assets of the Na-
tional Power Corporation (NPC) in Luzon and Visayas. However, once Open Access
and Retail Competition is declared by the ERC, the PSOP and all related contracts and
transactions shall automatically terminate upon Open Access date.

Resolution No. 2: A Resolution Adopting the Amendments to the Distribution

Services and Open Access Rules (DSOAR) (February 22, 2010)

The ERC amended the DSOAR in view of the adoption of new regulatory frameworks
for Distribution Utilities which is the Performance-Based Regulation (PBR) for Private
Utilities (PUs) and the Rules for Setting Electric Cooperatives’ Wheeling Rates (RSEC-
WR) for Electric Cooperatives.

The DSOAR, which was promulgated on January 18, 2006, provides the rules, terms
and conditions pertaining to Distribution Connection Assets and Services, Service to
the Captive and Contestable Markets, Supplier of Last Resort, Unbundled Distribu-
tion Wheeling Service and Guidelines for Establishing Regulated Service Rates. The
DSOAR sets forth the terms and conditions related to the provision of Connection
Assets and Services, service to the Captive Market, Supplier of Last Resort (“SOLR”)
service to the Contestable Market, and unbundled Distribution Wheeling Service
(“DWS”) provided to the Contestable Market. The DSOAR also set forth the proce-
dures for establishing regulated service rates for Distribution Utilities.

The ERC amended the DSOAR to include the redistributors’ service to sub-meter us-
ers. The DSOAR was likewise amended to include the setting forth of terms and con-
ditions related to the Local Retail Electricity Supplier (Local RES) and Redistributors’
service to sub-meter users.
As provided in the DSOAR, all DUs shall perform the duties and obligations as “SOLR”
for the Contestable Market within their respective franchise area as set forth in the
Rules for the “SOLR” and other separate guidelines related to SOLR service to be
adopted by the ERC. SOLR service is regulated by ERC as back-up supply to the
Contestable Market for the contingency that an end-user in the Contestable Market

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does not have supply from a competitive RES. SOLR service is not service to the Cap-
tive Market and is not RES service by the DU.

SOLR service is only designed to be a safety net for instances when End-users in the
Contestable Market temporarily do not have a contract with a RES.

Resolution No. 3: Rules for the Registration of the Wholesale Aggregators, as

Amended (February 15, 2010)

The ERC amended the Rules for the Registration of the Wholesale Aggregators (WAs)
in order to clarify the specific documentary requirements to be submitted to facilitate
the evaluation of said applications.

The Rules, which were promulgated on May 22, 2006, aim to provide for the quali-
fications, requirements and procedures for registration with the ERC, as well as the
obligations of the WAs.

Below is the list of documents required to be submitted:

1) Articles of incorporation/Partnership with Certificate of Registration (for juridi-

cal person) or Business Name Registration Certification (for single proprietor-
ship);

2) All applicable contracts already signed and executed in relation to the whole-
sale aggregation business, if any;

3) List of affiliates engaged in the generation, distribution and retail supply of

electricity, and their corresponding business addresses if any;

4) List of shareholders and their shareholdings, Directors, and Officers, including

curriculum vitae, if any;

5) Duly accomplished Application form for registration;

6) Five year business plan indicating the:

a) Market Share and revenue Target(s);
b) Type/s of Market to be served;
c) Target Market Areas;
d) Marketing Strategies; and
e) Supply Services to be offered.

7) Sworn Statement or Undertaking to comply with the Obligations of a Whole-

sale Aggregator; and

8) Sworn Statement that the Applicant complies with the restrictions/limitations

on ownership as provided under Article II Section 3 of the Rules.

For renewal, the applicant is only required to submit an application form for renewal,
the latest annual report with audited financial statements and other documents that the
ERC may require.

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The Certificate of Registration, which the ERC will issue within 30 days from submis-
sion of complete documents and payment of PhP10,000.00 registration fee, will be
valid for five (5) years.

Resolution No. 4: A Resolution Setting the Installed Generating Capacity per

Grid, National Grid and the Market Share Limitations per Grid and the National
Grid for 2010 (March 10, 2010)

The ERC promulgated the Guidelines for the Determination of Installed Generating
Capacity in a Grid and the National Installed Generating Capacity and Enforcement
of the Limits of Concentration of Ownership, Operation or Control of Installed Gener-
ating Capacity on December 14, 2005. Based on the Guidelines, the installed gen-
erating capacity per grid and national grid and market share limitations determination
shall be adjusted by the ERC on or before March 15 of each year and/or as often as
necessary.

In line with this, the ERC set the 2010 installed generating capacity per Grid and
National Grid and market share limitations per Grid and National Grid summarized as
follows:

Installed % Market Share

Installed Generating
Grid Generating Limitation per Capacity Limit (kW)
Capacity RA 9136
Luzon 11,188,513.00 30% 3,356,553.90
Visayas 1,715,295.40 30% 514,588.62
Mindanao 1,808,810.00 30% 542,643.00
National 14,712,618.40 25% 3,678,154.60

Resolution No. 5: Resolution Adopting the Distribution Management Committee

(DMC) Significant Incident Reporting Procedures (February 22, 2010)

The Significant Incident Reporting Procedures proposed by the DMC and subse-
quently approved by the ERC aim to ensure that significant incidents are thoroughly
investigated and completely reported on a timely and consistent manner, as well as to
provide assessment on the condition of the distribution system and identify areas for
improvement.

The Guidelines detail the basis for the submission of reports on significant incidents,
and the reporting instructions. Based on the Guidelines, a report on the Significant
Incident shall be submitted to the DMC if any of the following events happen:

1) Outage of at least one (1) substation, for at least one hour, whose primary volt-
age is 69kV and above and owned by the Distributor;
2) Service interruption for at least fifteen (15) minutes affecting at least 25% of
previous month’s customers; and
3) Service interruption for at least 15 minutes affecting at least 25% of previous
year’s peak demand.

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Resolution No. 6: A Resolution Directing All Distribution Utilities to Remit their

Respective Proportionate Shares to the Distribution Management Committee’s
(DMC) 2010 Budget (March 10, 2010)

In line with Section 2.2.4.1, Chapter 2 of the Philippine Distribution Code (PDC)
which provides that all of DMC’s operating costs shall be shared among all DUs as a
direct proportion of their annual peak demand or annual energy sales, the ERC ap-
proved the budget of the DMC for the year 2010 as follows:

BUDGET AMOUNT (PhP)

Approved (2010) 11,995,748.00
Less: Unutilized Portion 2009 218,746.00
TOTAL AMOUNT 11,777,002.00

In the above-mentioned Resolution, the ERC also directed the DUs to remit their pro-
portionate share in the approved budget of the DMC on or before April 15, 2010 and
submit to ERC a proof of its compliance within fifteen (15) days from such compli-
ance.

Resolution No. 07: Amending the Rules for the Default Wholesale Supply (DWS)
Arrangements for the Wholesale Electricity Spot Market (WESM) in the Luzon
Grid, as Amended (March 10, 2010)

To clarify the effectivity of the DWS in relation with the DOE Circular No. 2006-06-009
designating the National Power Corporation (NPC) and Power Sector Assets and Li-
abilities Management Corporation (PSALM) as the DWS of the Philippine WESM for a
period of one (1) year from the start of both the WESM commercial operations in Luzon
for Luzon customers, and in Visayas for Visayas customers, the ERC amended the
Rules for the DWS Arrangements for the WESM in Luzon Grid.

The ERC amended Section 6.1, Article 6 of the Rules, to read as follows:

“These Rules shall be implemented in Luzon from 26 June

2008 until on (1) year after the start of open access and retail
competition, unless the arrangements are earlier discontin-
ued by the Department of Energy (DOE).”

Resolution No. 08: Adopting the Rules to Govern the Interruptible Load Program
(ILP) of Distribution Utilities (DUs) (March 10, 2010)

The ERC approved the Rules to Govern the ILP of DUs in the Visayas and Mindanao
Grids to (1) alleviate the power crisis in the said regions and augment the limited power
requirements of the DUs; (2) ensure the timely compensation and recovery of allow-
able expense related to the interruptible load program entered into by DUs; and (3)
ensure transparent and reasonable prices of electric power service.

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The Rules detail the De-loading program and protocols, including the procedures for
billing and compensation. Under the ILP, the DU and Participating Customer shall en-
ter into an Agreement wherein the participating customer may be requested by the DU
to de-load and the DU shall pay the participating customer a compensation represent-
ing the incremental cost incurred due to the full or partial de-loading.

The amount paid to the participating customer, on the other hand, shall be recovered
from all customers of the DU as part of its Total Cost of Power to be included in the
monthly computation of Generation Rate based on a formula. The procedures for
these are detailed in Article V (Recovery of De-Load Compensation) of the Rules.

The ILP shall be offered by DUs experiencing power supply shortage, and any custom-
ers in the franchise area of a DU are qualified to participate in the ILP, subject to their
mutual agreement.

Resolution No. 09: Adopting the Revised Rules for the Issuance of Certificates
of Compliance (COCs) for Generation Companies/ Facilities (March 10, 2010)

The ERC revised the Rules for the Issuance of Certificates of Compliance (COCs) for
Generation Companies/ Facilities to 1) facilitate the approval of applications for the
issuance of COCs; 2) clarify the requirements and procedures for such applications,
including renewals thereof; 3) reiterate and/or prescribe the qualifications, disqualifica-
tions and the legal obligations of grantees of COCs; and 4) monitor compliance with
R.A. 9136, its IRR, WESM Rules and Manuals, Philippine Grid Code and Philippine
Distribution Code.

The Rules for the Issuance of COCs were amended to specify that a generation facility
whose owner was previously issued a COC and which was then transferred or sold
and the term of such COC has not expired need not secure for a new COC for the re-
mainder of the term of the existing COC. The new owner, however, should inform the
ERC of the transfer of ownership within three (3) days and that the new owner shall
conform to and comply with all the obligations imposed on a Generation Company,
including the submission of reportorial requirements. Moreover, the new owner should
file an application with the ERC for an amendment of the COC if it desires to be named
as the licensee under the COC.

Resolution No. 10: A Resolution Adopting A New Timeline for Privately-Owned

Distribution Utilities (DUs) Entering Performance Based Regulation under the
Fourth Entry Point (April 6, 2010)

To give DUs ample time to review their applications for the approval of their Annual
Revenue Requirement (ARR) and Performance Incentive Scheme (PIS) for the 2nd
Regulatory Period and to prevent regulatory lags that may arise from the simultane-
ous evaluation of the existing applications of DUs under Groups A, B and C, the ERC
resolved to adopt a new timeline for privately-owned DUs under PBR under Group D
and the timeline for the Fourth Entry points, subject to RDWR provisions as follows:

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GROUP ENTRANTS REGULATORY PERIOD

D 1. Angeles Electric Corporation October 1, 2011 to

(AEC) September 30, 2015
2. Bohol Light Company, Inc. (BLCI)
3. Panay Electric Company, Inc.
(PECO)
4. Subic Enerzone Corporation (SEZ)
5. San Fernando Electric Light and
Power Company (SFELAPCO)
6. Clark Electric Distribution
Corporation (CEDC)

Moreover, the ERC directed the above-mentioned DUs to file their respective applica-
tions in accordance with the provisions under the Rules for Setting Distribution Wheel-
ing Rates (RDWR) on or before September 24, 2010.

Resolution No. 11: A Resolution Clarifying the Policy on the Treatment of kWh
Company Use by Distribution Utilities (May 6, 2010)

The ERC, after directing in Resolution No. 7, Series of 2008 that actual company use
or Administrative Loss shall be treated as an expense of Distribution Utilities (DUs) and
to ensure compliance to such, resolved to clarify the policies on the treatment of kWh
company use, to wit:

1) For PUs under PBR, ECs under the RSEC-WR, and the ECs that are not grid
connected but with final or provisionally approved distribution, supply and me-
tering charges, wherein company use was already incorporated and treated as
part of the Operation and Maintenance Expenses:

a) The kilowatt-hour (kWh) Sales, as reported to the ERC, shall be inclusive

of the actual kWh company use, which shall be used in the computation of
the DU’s generation, transmission, system loss, lifeline and other charges
covered by automatic adjustments;
b) The formula for kWh System Loss shall be the difference between kWh
Purchased/Generated and kWh Sales (inclusive of actual kWh company
use); and

2) For DUs not covered by item 1, they shall continue observing the existing kWh
Sales reporting and computation of generation, transmission, system loss, life-
line and other charges covered by automatic adjustments.

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Resolution No. 12: Resolution Adopting the Rules and Procedures in the Revi-
sion of the Philippine Distribution Code (PDC) and the Philippine Grid Code
(PGC) (May 5, 2010)

The ERC adopted the Distribution Management Committee’s (DMC) Rules and Proce-
dures in the Revision of the PDC and the Grid Management Committee’s (GMC) Rules
and Procedures in the Revision of the PGC.

The purpose of the Rules and Procedures is to serve as guide in reviewing, evaluat-
ing, and processing proposals submitted by any party to revise any provisions in the
PDC and PGC, pursuant to Sections 2.2.5 and 2.5.4 of the PDC and Section 2.5.4 of
the PGC.

The said Rules provide for the process for the revision which includes the submission
of proposals, evaluation of proposals, the hearings and consultations that need to be
conducted, and the approval by the ERC of the revised PDC and PGC.

Resolution No. 13: Resolution Adopting the Grid Management Committee’s

(GMC) Rules and Procedures of Significant Incident Reporting (May 5, 2010)

The Significant Incident Reporting Procedures proposed by the GMC and subsequent-
ly approved by the ERC aim to promptly inform key government offices and electric
power industry participants of significant incidents occurring in the Philippine electric
power system in the interest of national security.

The Guidelines detail the basis for the submission of reports on significant incidents,
and the reporting instructions. Based on the Guidelines, a report shall be submitted
by the National Grid Corporation of the Philippines (NGCP) to the DMC if any of the
following events happen:

1) Uncontrolled loss of 150 MW or 5% of the system demand, whichever is lower

for more than 15 minutes arising from a single incident;
2) Load shedding of 100 MW or 5% of system demand whichever is lower, imple-
mented under emergency operational policy;
3) System-wide voltage fluctuations of 5% or more;
4) Actual or attempted physical, cyber or communications attack, including
weather disturbances that had or could have an impact on electric power sys-
tem adequacy or reliability;
5) Complete operational failure or shutdown of the transmission system;
6) Contingency Reserve is less than the capacity of the largest synchronized
generating unit or power import from a single interconnection, whichever is
higher; and
7) Contingency Reserve is zero or a generation deficiency exists or if there is im-
minent overloading of transmission lines or equipment.

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Resolution No. 15: A Resolution Resetting the Start of Acceptance Testing to

January 2011 (June 15, 2010)

Section 11.2, Article XI of the Rules and Procedures for the Test and Maintenance of
Electric Meters of DUs issued by the ERC under Resolution No. 12, Series of 2009
which became effective on July 12, 2009 provides that the start of the implementation
of the sampling method of acceptance testing of all meters will be twelve (12) months
after the effectivity date.

The ERC, however, resolved to defer the commencement of the acceptance testing to
the first working day of January 2011 in view of the fact that the Meter Shop accredita-
tion has not been completed. The Meter Shop is a major prerequisite for the implemen-
tation of the sampling method of acceptance testing.

Resolution No. 16: A Resolution Adopting the Feed-In Tariff Rules

(July 12, 2010)

The ERC approved the Feed-In Tariff (FIT) Rules on July 12, 2010, pursuant to Sec-
tion 7 of Republic Act No. 9153, An Act Promoting the Development Utilization and
Commercialization of the Renewable Energy Resources and for Other Purposes, and
Section 5 of its Implementing Rules and Regulations (IRR).

The Rules establish the FIT system which is one of the incentive mechanisms in the
Renewable Energy Act of 2008 intended to accelerate the exploration and develop-
ment of renewable energy resources. It offers guaranteed payments over a definite
period of time to RE developers utilizing renewable energy resources such as wind,
solar, run-of-river hydro, biomass, and ocean.

The ERC mandated the National Grid Corporation of the Philippines (NGCP) and the
DUs, in the case of Renewable Energy Plants embedded in their distribution systems,
to connect and take in the energy generated and delivered by these plants.

The NGCP or the utilities shall allocate the renewable energy among all its custom-
ers or electricity end-users. In turn, all electricity end-users are obligated a Peso/kWh
charge referred to as Feed-In Tariff Allowance (FIT-All). The proceeds of the FIT-All go
to a fund administered by NGCP from which payments to the FIT-eligible RE Develop-
ers shall be taken.

The FITs (rates) which may be differentiated by technology, size, and time of avail-
ability, between peak and off-peak hours, shall have duration of 20 years and shall be
subject to adjustment to account for inflation or foreign currency exchange fluctuations.
The FITs to be set shall be also subjected to degression to encourage the developers
to invest at the initial stage and hasten deployment of renewable energy.

The process of establishing the Feed-in Tariffs starts with the submission by the Na-
tional Renewable Energy Board or NREB with the ERC of its recommended tariffs, cal-
culated based on the methodology outlined in the Feed-in Tariff Rules. Upon submis-
sion of such, the ERC will conduct public hearings and will issue the approved tariffs.

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Resolution No. 17: A Resolution Adopting the Valuation Handbook for the Opti-
mized Depreciated Replacement Cost (ODRC) Valuation of System Fixed Assets
of Privately Owned Distribution Utilities (PDUs) Operating Under Performance-
Based Regulation (PBR) (July 19, 2010)

Clause 4.8.2 of the Rules for Setting Distribution Wheeling Rates for Privately-Owned
Distribution Utilities (RDWR) requires that prior to the commencement of the Third
Regulatory Period, an asset re-evaluation must be undertaken. In line with this, the
ERC adopted a Handbook for this ODRC asset valuation.

The Valuation Handbook describes the ERC’s requirements for the Regulatory Asset
Base (RAB) using the ODRC Methodology. Said Valuation Handbook supersedes the
Asset Valuation Policy Guidelines for PDUs subject to Performance Based Regulation
Final Determination dated August 9, 2006, and the Guidelines for Preparing Asset
Schedules for Performance Based Regulatory Initial Asset Valuations dated March 2,
2009. The Valuation Handbook will apply to the Third Regulatory Period, which com-
mence on July 1, 2011 for the Group A entrants.

Resolution No. 18: A Resolution Adopting the Rules to Govern the Submission,
Evaluation and Approval of Lease of Property by Distribution Utilities
(July 19, 2010)

Pursuant to Sections 26 and 43 of R.A. 9136, Rules 3 and 7 of its IRR, and Section
20 (g) of Commonwealth Act No. 146, as amended, the ERC promulgated the Rules
Govern the Submission, Evaluation and Approval of Lease of Property by DUs. The
objective of the Rules is to provide the DUs with a uniform system of filing applications
for approval of lease of its properties in order to maximize the utilization of their assets.
In addition, it seeks to ensure that the lease of equipment, materials and properties of
DUs is transparent and compliant with applicable laws and accepted industry practices
and standards to protect public interest.

The Rules apply to ECs, DUs, Local Government Unit Owned and Operated Distribu-
tion Systems and Qualified Third Parties (QTPs) operating in waived areas of a fran-
chised DU, for the following Regulatory Asset Base (RAB) Properties:

1. Pole space rental/pole attachment;

2. Lease of lots/space; and/or
3. Lease of other facilities/equipment/ materials.

Moreover, the Rules detail the application, evaluation and approval procedures, as
well as the reportorial requirements for the approval of such by the ERC.

Resolution No. 20: A Resolution Setting the Installed Generating Capacity per
Grid, National Grid and the Market Share Limitations per Grid and the National
Grid for 2010 (October 4, 2010)

In line with the Guidelines for the Determination of Installed Generating Capacity in a
Grid and the National Installed Generating Capacity and Enforcement of the Limits of
Concentration of Ownership, Operation or Control of Installed Generating Capacity,
the ERC adjusted the 2010 installed generating capacity per Grid and National Grid

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and market share limitations per Grid and National Grid set on March 10, 2010 (Reso-
lution No. 4, Series of 2010) to account for the increase in capacities in the Visayas
Grid, change in material circumstances, correction in the inclusion of the capacity of
the blackstart and standby generating sets and increase/ decrease in the originally
reported installed capacity of some power plants based on recent submission by the
generation companies.

The adjusted limitations are summarized as follows:

Installed % Market Share Installed

Grid Generating Limitation per Generating
Capacity RA 9136 Capacity Limit (kW)
Luzon 10,839.012.00 30% 3,251,703.60
Visayas 1,954,774.00 30% 586,432.20
Mindanao 1,799,750.00 30% 539,925.00
National 14,593,536.00 25% 3,648,384.00

Resolution No. 21: A Resolution Amending Section 4 of Article 4 and Section 1

of Article 5 of the Rules Governing the Automatic Cost Adjustment and True-Up
Mechanisms and Corresponding Confirmation Process for Distribution Utilities
(October 18, 2010)

The ERC, on July 13, 2009, promulgated the Rules Governing the Automatic Cost
Adjustment and True-Up Mechanisms and Corresponding Confirmation Process for
Distribution Utilities through Resolution No, 16, series of 2009. Furthermore, it issued
Resolution No. 23 on October 12, 2009 adopting the template for the filing of DUs of
their applications for over/under recoveries.

The ERC, recognizing the need to address the inherent misalignment of kWh sales
and purchased power which causes spikes and dips in the computed monthly system
loss, amended Section 4, Article 4 of the Rules, specifically the formula in computing
the system loss rate over/under recovery.

Moreover, the ERC amended Section 1, Article 5 of the Rules by adjusting the timeline
of the DUs for the filing of applications to afford the DUs sufficient time to adequately
prepare. Below is the adjusted timetable:

Distribution Utilities Period of Filing Covered Adjustments

Luzon DUs March 31, 2011 Adjustments implemented until
the billing month of December
2010
Visayas DUs March 31, 2012 Adjustments implemented until
the billing month of December
2011
Mindanao DUs March 31, 2013 Adjustments implemented until
the billing month of December
2012

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Thereafter, the DUs shall file their applications within the period below:

Distribution Utilities Period of Filing Covered Adjustments

Luzon DUs March 31, 2014 Jan. 2011-Dec. 2013
Visayas DUs March 31, 2015 Jan. 2012-Dec. 2014
Mindanao DUs March 31, 2016 Jan. 2013-Dec. 2015

Resolution No. 22: A Resolution Adopting the Rules Governing the Type Ap-
proval of Meter Products to be Used in Revenue Metering by Distribution Utilities
and Redistributors (September 27, 2010)

Section 16 (f) of Commonwealth Act No. 146, as amended, and Section 2 of Com-
monwealth Act No. 349 mandate the ERC to establish reasonable rules, regulations
and standards, and authorizes the ERC to inspect, examine and approve periodically
all meters used to ensure its accuracy.

In line with this, the ERC formulated the Rules Governing the Type Approval of Meter
Products to be Used in Revenue Metering by DUs and Redistributors to ensure that
watt-hour meter products installed conform to standards and requirements adopted by
ERC and to establish a common database of acceptable types of watt-hour meters for
reference in procurements.

The Rules detail the approval requirements for new meter type products, as well as
the approval and certification testing requirements for reconditioned or repaired meter
products.

Resolution No. 23: A Resolution Adopting the Rules Implementing the Discounts
to Qualified Senior Citizen End-Users and Subsidy from the Subsidizing End-
Users on Electricity Consumption Under Sections 4 and 5 of Republic Act No.
9994 (December 15, 2010)

Pursuant to Sections 4 and 5 of Republic Act No. 9994, An Act Granting Additional
Benefits and Privileges to Senior Citizens Further Amending Republic Act No. 7432,
As Amended, and Article 12, Section 3 of its Implementing Rules and Regulations
(IRR), the ERC promulgated the Rules Implementing the Senior Citizen Discounts and
Subsidy on Electricity Consumption.

The Rules provide for the qualifications of residential senior citizens and Senior Citi-
zen Centers and Residential Care Facilities/ Institutions or Group Homes. Residential
senior citizens can only avail of the discount if the kilowatt-hour meter is registered
under the name of the senior citizen for a period of not less than one year and only for
monthly consumption not exceeding 100kWh. Senior Citizen Centers and Residential
Care Facilities/ Institutions or Group Homes can only avail of the discount if they are
Department of Social Welfare and Development (DSWD) accredited and if they are in
operation for at least six (6) months with a separate meter.

A formula is provided in the Rules for the computation of the discount and the rate to
be paid by subsidizing end-users.

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Resolution No. 24: A Resolution Suspending the Timelines for the Filing of the
Multi-Year Capital Expenditure (CAPEX) Applications of Electric Cooperatives
(ECs) Prescribed in Section 6.2 (Transitory Provision) of the Amended Rules for
the Approval of Regulated Entities’ Capital Expenditure Projects (December 6,
2010)

Pursuant to Section 6.2 of the Amended CAPEX Rules, the ERC set timelines for the
filing of the initial and regular CAPEX applications. However, for the period June to
November 2010, only fifteen (15) ECs were able to file their applications out of the fifty-
eight (58) ECs required to file.
In line with the recent developments, specifically the filing by the Philippine Rural Elec-
tric Cooperatives Association, Inc. (PHILRECA) of its petition to initiate rule-making
on the Tariff Glide Path Rules, the ERC sees the possibility of requiring the ECs to file
their respective CAPEX applications simultaneously with their applications under the
proposed Rules.

Thus, the ERC resolved to suspend the timelines for the filing of the multi-year CAPEX
applications of the ECs until such time that the Tariff Glide Path Rules are promul-
gated.

Resolution No. 25: A Resolution Clarifying Article III (Transitory Provision) of the
Rules to Govern the Submission, Evaluation and Approval of Lease of Property
by Distribution Utilities (December 6, 2010)

Article III of the Rules to Govern the Submission, Evaluation and Approval of Lease
of Property by Distribution Utilities required the submission to ERC of all contracts of
lease on Regulatory Asses Base (RAB) and non-RAB properties executed prior to the
effectivity of the Rules, which have not been covered by any application filed before
the ERC.

The ERC resolved to clarify such provision to mean that all DUs should file such
through a letter-request for confirmation instead of a formal application to ERC not
later than March 31, 2011.

Resolution No. 26: A Resolution Amending Section 5, Article V of Resolution

Nos. 1 and 18, Series of 2009 Adopting the Amendments to the “Guidelines to
the Sale and Transfer of Transco’s Subtransmission Assets and the Franchising
of Qualified Consortiums” (December 15, 2010)

The ERC, on October 17, 2003, issued the Guidelines to the Sale and Transfer of the
TRANSCO’s Subtransmission Assets and the Franchising of Qualified Consortiums
which was subsequently amended on March 17, 2005 through Resolution No. 3, Se-
ries of 2005 and on January 26, 2009 through Resolution No. 1, Series of 2009, and
clarified Article V, Sections 2, 5 and 6 of the Rules on August 10, 2009 through Resolu-
tion No. 18, Series of 2009.

Because of the requests of various stakeholders of the difficulty in forming a consor-

tium, the ERC resolved to amend Section 5, Article V of Resolution No. 1, Series of
2009, extending the deadline for the disposition of the Residual Sub-transmission As-
sets (RSTAs) until December 31, 2011.

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Resolution No. 27: A Resolution Amending the Pertinent Provisions of Reso-

lution No. 48, Series of 2006 (A Resolution Summarizing the Applicable Legal
Principles and Policies of the Energy Regulatory Commission on End-User Con-
nections (December 15, 2010)

The ERC amended some provisions on its policies on End-User Connections, specifi-
cally Section 4.2.2 referring to Generation and Transmission Charges for Directly-Con-
nected End-Users upon the sale of subtransmission assets to the Distribution Utilities,
and Section 7 (formerly Section 5 in Resolution No. 48, series of 2006) on the Sum-
mary of ERC Policies on End-user Connections.

Section 5 was also added on the alternative power source of directly-connected cus-
tomers considering that most of NPC’s generation plants were already privatized. The
directly-connected customers may source power directly from IPPs in case the DU
concerned has not established its capability of providing power to such end-users.
Moreover, the ERC added a new provision on the qualification of a directly connected
end-user upon implementation of open access and retail competition.

Resolution No. 28: A Resolution Adopting the Amendments to the Magna Carta
for Residential Electricity Consumers (November 15, 2010)

The ERC, in order to address current issues and to incorporate newly-adopted poli-
cies and procedures, amended the Magna Carta for Residential Electricity Consumers
promulgated on June 25, 2004 to provide rules, procedures, terms and conditions ap-
plicable to residential electricity consumers.

The amended Magna Carta includes the following policies:

1) Requirements to support applications for connection of owners or their author-

ized representatives, successors, tenants and informal settlers of government-
owned properties;
2) Responsibility of DUs to install a proper type and classification of meter, com-
patible with the network in the premises of the consumer;
3) Computation of refund due of billing errors (in case of overbilling) and the right
of the consumer to be informed of such in writing and to contest the refund
before the ERC (also applicable to errors resulting from inaccurate meters);
4) Allowing clustering of meters upon the request of a consumer (consumer to
bear cost of wire extending from the meter to actual premises) or when there
is no right of way or in areas with high incidence of pilferages;
5) Responsibility of a consumer to coordinate with the DU regarding the reloca-
tion of a meter;
6) Right of a consumer or developer, in case of advance payment for extension
of line, to demand for a refund;
7) Additional conditions for the disconnection of electric service;
8) Additional conditions for the suspension of disconnection;
9) Right of a consumer to file a complaint with the ERC if he/she disagrees with
the resolution of the DU of the complaint (other than for high billing). In this
case, DUs are directed to resolve such protest within 15 days from payment of
protested amount;
10) Basis for the computation of bill deposit including the interest to be paid by
DUs on cash bill deposits;

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11) Right of consumers, in case of high billings, to protest even if the questioned
bills were already been paid in full. High billing is when a consumer’s bill for
the month exceeds 100% of the average 12-month consumption. The pro-
cedure for complaint and the resolution of such by the DU or by the ERC are
detailed in the Magna Carta; and
12) Additional Section to cover the conditions and procedure for the transfer and
termination of electric service.

Atty. Maria Corazon C. Gines presides over the Public Consultation on the amendments to the
Magna Carta for Residentail Electricity Consumers.

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