Rules for Setting Distribution Wheeling Rates for Privately Owned Distribution Utilities Entering Performance Based Regulation

December 8, 2008

ERC RESOLUTION NO. 20-08

RESOLUTION MODIFYING THE RULES FOR SETTING DISTRIBUTION WHEELING RATES FOR PRIVATELY OWNED DISTRIBUTION UTILITIES ENTERING PERFORMANCE BASED REGULATION (RDWR)

WHEREAS, Section 43 (f) of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA) and 5 (a), Rule 15 of its Implementing Rules and Regulations (IRR), authorize the Commission to adopt alternative forms of internationally accepted rate-setting methodology;

WHEREAS, on December 10, 2005, the Commission adopted a performance-based rate setting methodology for setting distribution wheeling rates of private distribution utilities embodied in a document denominated as the "Distribution Wheeling Rates Guidelines" (DWRG);

WHEREAS, on April 11, 2006, the Commission adopted Resolution No. 16, Series of 2006 entitled, "Adopting a Policy that Entry to the Performance Based Regulation (PBR) by Private Utilities Under the Distribution Wheeling Rates Guidelines (DWRG) be Made Mandatory";

WHEREAS, on July 26, 2006, the Commission adopted Resolution No. 39, Series of 2006 entitled, "Adopting the Rules for Setting the Distribution Wheeling Rates (RDWR) for Privately Owned Distribution Utilities Entering Performance Based Regulation (First Entry Point)"; TEcADS

WHEREAS, on December 13, 2006, the Commission adopted Resolution No. 54, Series of 2006 entitled, "Adopting the Rules for Setting the Distribution Wheeling Rates (RDWR) for Privately Owned Distribution Utilities Entering Performance Based Regulation (Second and Later Entry Points)";

WHEREAS, under Section 1.9 of the RDWR, the Commission is authorized to amend from time to time the said Rules;

WHEREAS, from the first entry processes, the Commission has identified a number of required changes to the RDWR;

WHEREAS, on September 26, 2008, the Commission posted in its official website at www.erc.gov.ph the proposed modifications to the RDWR;

WHEREAS, on September 29, 2008, the Commission issued a Notice of Public Consultation informing the public where they can secure a copy or access said proposed modifications to the RDWR and set the same for public consultation on October 28, 2008;

WHEREAS, in the same Notice, interested parties were directed to file their written comments/inputs on the said issues paper not later than October 23, 2008; ISCcAT

WHEREAS, on various dates, all privately owned DUs submitted their respective written comments/inputs on the said proposed modifications to the RDWR;

WHEREAS, during said public consultation, various stakeholders (privately owned DUs, commercial, industrial and residential consumers) were present and given opportunity to manifest their respective positions on the matters or issues presented in the proposed modifications to the RDWR;

WHEREAS, the public consultation was held in preparation for issuance of the Proposed Updated Rules for Setting Distribution Wheeling Rates (RDWR) for the Third Entry Group Entering Performance Based Regulation (PBR);

NOW, THEREFORE, be it RESOLVED, as the Commission hereby RESOLVES to APPROVE and ADOPT the Proposed Updated Rules for Setting Distribution Wheeling Rates (RDWR) for the Third Entry Group Entering Performance Based Regulation (PBR) for the Second Regulatory Period hereto attached and made an integral part of this Resolution as Annex "A".

This Resolution shall take effect immediately following its publication in a newspaper of general circulation in the Philippines.

Let copies of this Resolution be furnished the University of the Philippines Law Center-Office of the National Administrative Register (UPLC-ONAR), all DUs, National Transmission Corporation (TRANSCO) and National Power Corporation (NPC). AHCETa

Pasig City, December 8, 2008.

(SGD.) ZENAIDA G. CRUZ-DUCUTChairperson

(SGD.) RAUF A. TANCommissioner

(SGD.) ALEJANDRO Z. BARINCommissioner

(SGD.) MARIA TERESA A.R. CASTAÑEDACommissioner

(SGD.) JOSE C. REYESCommissioner