General Provisions on Maharlikanism

Definition of Policy

Thu, 30 Sep 2021 00:00:00 +0000

Rule 2. Declaration Of Policy

Ensure and accelerate the total electrification of the country
Ensure the quality, reliability, security and affordability of electricity
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
- promote consumer choice
- enhance the competitiveness of Philippine products in the global market
Enhance the inflow of private capital and participation in the attendant risks
- Broaden the ownership base of the power generation, transmission and distribution sectors
Ensure fair and non-discriminatory treatment of public and private sector entities while restructuring the power industry
Protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power
Assure socially and environmentally compatible energy sources and infrastructure
Promote the utilization of indigenous, new, and renewable energy resources to reduce dependence on imported energy
Provide for an orderly and transparent Privatization of NAPOCOR
Establish a strong and purely independent regulatory body and system to:
- ensure consumer protection
- enhance the competitive operation of the electricity market
Encourage the efficient use of energy and other modalities of Demand Side Management (DSM).

Rule 3: Responsibilities Of The Doe, Erc, Napocor, Nea And Psalm

Section 1. Responsibilities of the DOE.

In addition to its existing powers and functions,

Definition of Policy

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Section 4. Responsibilities of the ERC.

^a As per Section 43, the ERC shall:

promote competition
encourage market development
ensure customer choice
penalize abuse of market power in the electric power industry.

^b As per Sections 43 and 45, the ERC shall:

Definitions

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Name	Definition
^a Act	EPIRA
^b Accredited Facility	a facility granted the certificate of accreditation by NAPOCOR or DOE pursuant to E0 215 and its implementing rules and regulations
^c Affiliate	anyone, alone or together with any other Person, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with another Person. Affiliates shall include a subsidiary company and parent company and subsidiaries, directly or indirectly, of a common parent
^d Aggregator	a Person or entity duly licensed by the ERC to engage in consolidating electric power demand of End-users in a Contestable Market for the purpose of purchasing and reselling electricity on a group basis
^e Ancillary Services	These support the transmission of capacity and energy from resources to loads while maintaining reliable operation of the transmission system in accordance with good utility practice and the Grid Code to be adopted
^f BIR	The attached agency of the Department of Finance (DOF)
^g Board of Investments or BOI	The attached agency of the DTI created by RA 5186
^h Bonafide Member	Anyone who has met all the requirements set forth under the applicable EC by-laws and has been enlisted as such, with voting rights under the “one-man-one-vote” cooperative principle
ⁱ Build-Operate-Transfer or BOT	Defined by RA 6957 (BOT Law) as amended
^j Buyer or Concessionaire	A qualified party awarded the sale agreement or Concession Contract for transmission assets
^k Captive Market	Electricity End-users who do not have a choice of a Supplier of electricity, as determined by the ERC
^l Central Dispatch	The process of issuing direct instructions to Electric Power Industry Participants by the grid operator to achieve the economic operation and maintenance of quality, stability, reliability and security of the transmission system
^m Competition Rules	The rules promulgated by ERC to promote and ensure competition in the electric power industry
ⁿ Concession Contract	The award by the government to a qualified private entity of the responsibility for financing, operating, expanding, maintaining and managing specific Government-owned transmission assets
^o Condonation	The setting aside or suspension from the ECs’ books of accounts of all their financial obligations to NEA and other government agencies as a result of PSALM’s assumption of the same, subject to their compliance with the Program approved by the President of the Philippines
^p Contestable Market	Electricity End-users who have a choice of a Supplier of electricity, as determined by the ERC
^q Contiguous Area	Areas which are within the same boundaries such as subdivisions, villages, Economic Zones, business districts and other similarly situated End-users in which Supply of Electricity can be measured through metering devices;
^r Control	The power to direct or cause the direction of the management policies of a Person by contract, agency or otherwise
^s Cooperative Development Authority or CDA	An entity created under RA 6939
^t Corporation Code	Batas Pambansa Bilang 68 (The Corporation Code of the Philippines)
^u Demand Side Management or DSM	measures undertaken by DUs to encourage End-users in the proper management of their load to achieve efficiency in the utilization of fixed infrastructures in the system
^v Department of Budget and Management or DBM	the govt agency created by EO 25, as amended
^w DOE	The government agency created by RA 7638
^x Department of Finance or DOF	the govt agency created by EO 127, as amended
^y Distribution Code	A compilation of rules and regulations governing electric utilities in the operation and maintenance of their Distribution Systems, which includes, among others, the standards for service and performance, and defines and establishes the relationship of Distribution Systems with facilities or installations of parties connected thereto
^z Distribution of Electricity	The conveyance of electric power from transmission facilities or Embedded Generators to End-users by a Distribution Utility through its Distribution System
pursuant to the provisions and these Rules
^aa Distribution System	The system of wires and associated facilities belonging to a franchised Distribution Utility extending between the delivery points on the transmission or Subtransmission System or generator connection and the point of connection to the premises of the End-user
^bb Distribution Wheeling Charge	The cost or charge regulated by the ERC for the use of a Distribution System and/or the availment of related services
^cc Distribution Utility or DU	Any EC, private corporation, government-owned utility or existing local government unit which has an exclusive franchise to operate a Distribution System
^dd Economic Zones or EZs	Areas being developed into agro-industrial, industrial, tourist, recreational, commercial, banking, investment and financial centers.
.	An EZ may refer to any of the following: Industrial Estates (IEs), Export Processing Zones (EPZs), Free Trade Zones (FTZs), Information Technology Parks and Tourist/Recreational Centers, such as those managed, administered, or operated by the Bases Conversion Development Authority (BCDA), Cagayan Economic Zone Authority (CEZA), Clark Development Corporation (CDC), Philippine Economic Zone Authority (PEZA), Phividec Industrial Authority (PIA), and Zamboanga City Economic Zone Authority (ZCEZA);
^ee Electric Cooperative or EC	a DU organized pursuant to PD 269, as amended
^ff Electric Power Industry Participant	any Person or entity engaged in the generation, transmission, distribution or Supply of Electricity
^gg Embedded Generators	Generating units that are indirectly connected to the Grid through the DUs’ lines or industrial generation facilities that are synchronized with the Grid
^hh End-user	any Person or entity requiring the supply and delivery of electricity for its own use
ⁱⁱ Energized Area	A geographical area enjoying dependable and adequate electric service
^jj Energy Regulatory Board or ERB	The independent, quasi-judicial regulatory body created under EO 172, as amended
^kk ERC	The regulatory agency created by Section 38
^ll Financing for Rural Electrification	Loans and grants extended to ECs to construct or acquire, operate, and maintain distribution, generation, and subtransmission facilities for the purpose of supplying electric service, and those loans
for the restoration, upgrading and expansion of such facilities, in areas which are considered rural at the time of the grant of such loans
^mm Franchise Area	A geographical area exclusively assigned or granted to a DU for Distribution of Electricity
ⁿⁿ Generation Company	Any Person or entity authorized by the ERC to operate facilities used in the Generation of Electricity
^oo Generation Facility	A facility for the production of electricity
^pp Generation of Electricity	The production of electricity by a Generation Company or a co-generation facility pursuant to the provisions
^qq Grid	The high voltage backbone system of interconnected transmission lines, substations and related facilities, located in each of Luzon, Visayas and Mindanao, or as may otherwise be determined by the ERC in accordance with Section 45
^rr Grid Code	The set of rules and regulations governing the safe and reliable operation, maintenance and development of the high voltage backbone transmission system and its related facilities
^ss Independent Market Operator or IMO	A person who is financially and technically capable, with proven experience and expertise of not less than two (2) years as a leading independent market operator of similar or larger size electricity markets endorsed jointly by the DOE and Electric Power Industry Participants to assume the functions, assets and liabilities from the Autonomous Group Market Operator (AGMO), pursuant to Section 30
^tt Independent Power Producer or IPP	an existing power generating entity which is not owned by NAPOCOR as of the effectivity of the Act
^uu Inter-Class Cross Subsidy	An amount charged by DUs to industrial and commercial End-users as well
as to other subsidizing customer sectors in order to reduce electricity
rates of other customer sectors such as the residential End-users,
hospitals, and streetlights
^vv Inter-Regional Grid Cross Subsidy	An amount embedded in the electricity rates of NAPOCOR charged to its customers located in a viable regional grid in order to reduce the electricity rates in a less
viable regional grid

(ww) “Intra-Regional Grid Cross Subsidy” refers to an amount embedded in the electricity rates of NAPOCOR charged to DUs and non-utilities with higher load factor and/or delivery voltage in order to reduce the electricity rates charged to DUs with lower load factor and/or delivery voltage located in the same regional grid; (xx) “IPP Administrator” refers to qualified independent entities appointed by PSALM who shall administer, conserve and manage the contracted energy output of NAPOCOR IPP contracts, including selling the contracted energy output of these contracts and offering Ancillary Services, where applicable;

Definitions Part 2

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Name	Definition
^yy Lifeline Rate	The subsidized rate given to Marginalized/low-income Captive Market End-users who cannot
afford to pay at full cost
^zz Marginalized End-users	Low-income, captive, household electricity consumers who cannot afford to pay at full cost and have levels of electricity consumption below a threshold level to be determined by the ERC
^aaa Market Fees	The charges imposed on all market members by the Market Operator to cover the cost of administering and operating the WESM, as approved by the ERC
^bbb Market Operator	Either the “Autonomous Group Market Operator” or “AGMO” constituted by the DOE under Section 30 of the Act, with equitable representation from Electric Power Industry Participants, initially under the administrative supervision of the TRANSCO, which shall assume the functions, assets and liabilities of the AGMO or the IMO, the entity jointly endorsed by the DOE and Electric Power Industry Participants to assume the functions, assets
and liabilities from AGMO pursuant to Section 30
^ccc Merit Order Dispatch Instructions	The dispatch schedule that will be submitted by the Market Operator to the Grid/system operator for the purpose of providing Central Dispatch
^ddd Missionary Electrification	the provision of basic electricity service in Unviable Areas with the ultimate aim of bringing the operations in these areas to viability levels
^eee National Electrification Administration or NEA	the government agency created under PD 269, as amended
^fff NAPOCOR	The government corporation created under RA 6395, as amended
^ggg National Transmission Corporation or TRANSCO	The corporation organized pursuant to the Act to acquire all the
transmission assets of the NAPOCOR
^hhh Open Access	The system of allowing any qualified Person the use of transmission, and/or Distribution System and associated facilities subject to the payment of transmission and/or distribution retail wheeling rates duly approved by the ERC. For this purpose, qualified Persons shall include all WESM Participants
ⁱⁱⁱ Person	A natural or juridical person
^jjj Philippine Energy Plan or PEP	the overall energy program formulated and updated yearly by the DOE and submitted to Congress pursuant to RA 7638
^kkk Philippine Stock Exchange or PSE	The corporate body licensed to operate as a securities exchange by the SEC
^lll Power Commission	The Joint Congressional Power Commission created pursuant to Section 62
^mmm Power Development Program or PDP	The indicative plan for managing electricity demand through energy-efficient programs and for the upgrading, expansion, rehabilitation, repair and maintenance of power generation and transmission facilities, formulated and updated yearly by the DOE in coordination with the generation, transmission and Distribution Utility companies
ⁿⁿⁿ PSALM	The corporation created pursuant to Section 49
^ooo Privatization	The sale, disposition, change and transfer of entire ownership and control of all assets and IPP contracts from the Government or a government corporation to a private Person or entity
^ppp Qualified DUs” refer to DUs that are technically and financially capable of owning, operating,
maintaining, upgrading and expanding subtransmission facilities in
accordance with the requirement
^qqq Referendum	An electoral process which Bonafide Members of ECs register their respective vote on the issue of conversion, through secret balloting, in designated voting centers, the conduct of
which shall be under the supervision of NEA;
^rrr Related Group	A Person and any business entity Controlled by that Person, along with the Affiliates of such business entity, and the directors and officers of the business entity or its Affiliates, and relatives by consanguinity or affinity, legitimate or common law, within the fourth civil degree, of the Person or any of the
foregoing directors or officers
^sss Renewable Energy Resources	Energy resources that do not have an upper limit on the total quantity to be used. Such resources are renewable on a regular basis and the renewable rate is rapid
enough to consider availability over an indefinite time. These include,
among others, biomass, solar, wind, hydro and ocean energy;
^ttt Restructuring	The process of reorganizing the electric power industry in order to introduce higher efficiency, greater innovation and End-user choice. It shall be understood as covering a range of alternatives enhancing exposure of the industry to competitive market forces
^uuu Retail Rate	The total price paid by End-users consisting of
the charges for generation, transmission and related Ancillary
Services, distribution, supply and other related charges for electric
service;
Page 15 of 100(vvv) “Retail Competition” refers to the provision of electricity to a
Contestable Market by Suppliers through Open Access;
(www) “Return-On-Rate-Base” or “RORB” refers to the rate setting
methodology as determined by the ERC whereby TRANSCO or its
Buyer or Concessionaire and DUs are allowed to
recover just and reasonable costs and earn a reasonable return so as
to enable such entities to operate viably;
(xxx) “Rural Electrification” refers to the delivery of basic electric
services, consisting of power generation, subtransmission and/or
extension of associated power delivery system that would bring about
important social and economic benefits to the countryside;
(yyy) “Rural Electrification Loan” refers to financial obligations strictly
incurred for Rural Electrification;
(zzz) “Rural Electrification Program” refers to the National Government
plan to achieve total electrification of the countryside for the purpose
of fostering economic development and uplifting the living standards
of the Filipino people;
(aaaa) “Self-Generation Facility” refers to a power Generation Facility
owned and constructed by an End-user for such End-user’s own
consumption or internal use excluding Generation Facilities for use
by households, clinics, hospitals and other medical facilities;
(bbbb)
“Small Power Utilities Group” or “SPUG” refers to the
functional unit of NAPOCOR created to pursue Missionary Electrification
function;
(cccc) “Small Distribution Company” refers to a Distribution Utility whose
peak demand is equal to or less than ten (10) megawatts;
(dddd)
“Stock Cooperative” refers to a duly-registered association of
Persons with a common bond of interest, who have voluntarily joined
together to achieve a lawful common social or economic end, making
equitable contributions to the capital required and accepting a fair
share of the risks and benefits of the undertaking in accordance with
the universally-accepted cooperative principles as defined under
Article 4, Chapter 1 of Republic Act No. 6938, otherwise known as the
“Cooperative Code of the Philippines;”
(eeee) “Stock Corporation” refers to an artificial being created by operation
of law with capital stock divided into shares and authorized to
distribute to its shareholders dividends out of its surplus profits,
having the right of succession and the powers, attributes and
properties expressly authorized by law or incident to its existence;
(ffff)
“Stranded Contract Costs of Eligible Contracts of Distribution
Utilities” refer to the excess of the contracted cost of electricity under
eligible contracts of DUs over the actual selling price
of the contracted energy output of such contracts that would be
incurred upon Retail Competition and Open Access. For this purpose,
Page 16 of 100“eligible contracts” are contracts which have been approved by the
ERB as of 31 December 2000;
(gggg) “Stranded Contract Costs of NAPOCOR” refer to the excess of the
contracted cost of electricity under eligible contracts of NAPOCOR over the
actual selling price of the contracted energy output of such contracts
in the market. Such contracts shall have been approved by the ERB
as of 31 December 2000;
(hhhh)
“Stranded Debts of NAPOCOR” or “Stranded Debts ” refer to any
unpaid financial obligations of NAPOCOR which have not been liquidated by
the proceeds from the sales and Privatization of NAPOCOR assets: Provided,
however, That such obligations include any of such obligations
refinanced by PSALM: Provided, further, That such refinancing of such
unpaid obligations shall not result in increasing the Universal Charge
burden;
(iiii) “Subtransmission Assets” refer to the facilities related to the power
delivery service below the transmission voltages and based on the
functional assignment of assets including, but not limited to step-
down transformers used solely by load customers, associated
switchyard/substation, control and protective equipment, reactive
compensation equipment to improve customer power factor, overhead
lines, and the land where such facilities/equipment are located.
These include NAPOCOR assets linking the transmission system and the
Distribution System which are neither classified as generation nor
transmission;
(jjjj) “Subtransmission System or
Subtransmission Assets;
refers
to
systems
comprised
of
(kkkk) Supplier	Any Person licensed by the ERC to sell, broker, market or aggregate electricity to End-users;
(llll) Supplier’s Charge	The charge imposed by Suppliers for the sale of electricity to End-users, excluding the charges for generation, transmission and distribution wheeling
^mmmm Supply of Electricity	The sale of electricity by a party other than a Generation Company or a Distribution Utility in the Franchise Area of a Distribution Utility using the wires of such DU
(nnnn) Technical Constraints	The line, equipment, and other limitations as defined in the WESM Rules, Grid Code and Distribution Code
^oooo Transmission Charge	The regulated cost or charges for the use of a transmission system which may include the availment of Ancillary Services
^pppp Transmission Development Plan or TDP	The program for managing the transmission system through efficient
planning for its expansion, upgrading, rehabilitation, repair and maintenance, to be formulated by DOE and implemented by the
TRANSCO or its Buyer or Concessionaire pursuant to the Act
(qqqq) “Transmission of Electricity” refers to the conveyance of electricity
through the high voltage backbone system
^rrrr Universal Charge	The charge, if any, imposed for the recovery of the Stranded Debts, Stranded Contract Costs of NAPOCOR, and Stranded Contract Costs of Eligible Contracts of DUs
and other purposes pursuant to Section 34
^ssss Unviable Area	A geographical area within the Franchise Area of a Distribution Utility where immediate extension of distribution line is not feasible
^tttt WESM	The Wholesale Electricity Spot Market
^uuuu WESM Participants	All Generation Companies, DUs, Suppliers, Aggregators, End-users, the
TRANSCO or its Buyer or Concessionaire, IPP Administrators, and other entities authorized by the ERC to participate in the WESM
^vvvv WESM Rules	The detailed rules that govern the administration and operation of the WESM.