Definition of Policy

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:

• promulgate rules and regulations including the Competition Rules and limitations on recovery of system losses
• impose fines or penalties for any non-compliance with or breach

The ERC shall:

• ^c review and approve any plan for the expansion or improvement of transmission facilities submitted by TRANSCO or its Buyer or Concessionaire with due regard to the TDP.
• ^d after the conduct of public hearings, shall determine, fix and approve Transmission and Distribution Wheeling Charges, and Retail Rates through an ERC established and enforced methodologies setting the same To promote efficiency and non-discrimination
  • It shall fix and regulate the rates and charges to be imposed by DUs on their Captive Market as well as the Universal Charge to be imposed on all electricity End-users including self-generating entities.

^e Any application or petition for rate adjustment or for any relief affecting the consumers must be verified, and accompanied with an acknowledgement of receipt of a copy thereof by the LGU Legislative Body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than 75 calendar days from the filing of the application or petition, based on the same and the supporting documents attached thereto and such comments or pleadings the consumers or the LGU concerned may have filed within 30 calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide the matter on the merits not later than twelve (12) months from the issuance of the aforementioned provisional order.

This Section 4(e) shall not apply to those applications or petitions already filed as of 26 December 2001 in compliance with Section 36.

^f Amend or revoke, after due notice and hearing, the authority to operate of any Person or entity which fails to comply with the provisions , these Rules or any order or resolution of the ERC. In the event a divestment is required, the ERC shall allow the affected party sufficient time to remedy the infraction or for an orderly disposal, but shall in no case exceed twelve (12) months from the issuance of the order.

(g) In order to facilitate the provision of an efficient, reliable and quality service to End-users, the ERC shall promulgate a 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 within six (6) months from the effectivity . (h) Act on applications for cost recovery and return on DSM . (i) The ERC shall set the criteria for eligibility and authorize eligible Generation Companies, DUs, Suppliers, IPP Administrators, End-users and other entities authorized by ERC in accordance with the Act for membership in the WESM. For the purposeof ensuring a greater supply and rational pricing of electricity, the ERC shall enforce the rules and regulations governing the operations of WESM and the activities of the WESM Operator and other WESM Participants. In cases of national and international security emergencies or natural calamities, it can suspend spot market operations within the WESM.

^j The ERC shall ensure that Electric Power Industry Participants and NAPOCOR functionally and structurally unbundle their respective business activities and rates and determine the levels of cross subsidies in the existing Retail Rates until the same is removed in accordance with the sectors as identified in and as required by Sections 5, 36 and 74 of Page 7 of 100the Act.

ERC shall set a Lifeline Rate for the Marginalized End-users. In particular, the distribution rates should unbundle at least the following business activities or assets: supply, distribution, and such other services as the ERC may determine.

(k) The ERC shall promulgate rules and regulations prescribing the qualifications of Suppliers, which shall include among others their technical and financial capability and credit worthiness.

(l) The ERC shall determine the electricity End-users comprising the Contestable and Captive Markets. The ERC shall also seek to foster competition in credit, collection and metering services in Contestable Markets. It shall likewise license Suppliers to Contestable Markets. (m) The ERC shall perform such other regulatory functions as are appropriate and necessary in order to ensure the successful Restructuring and modernization of the electric power industry, such as, but not limited to, the rules and guidelines under which Generation Companies, DUs, which are not publicly listed, shall offer and sell to the public a portion not less than fifteen percent (15%) of their common shares of stocks: Provided, however, That Generation Companies, DUs or their respective holding companies that are already listed in the Philippine Stock Exchange (PSE) are deemed in compliance.

For existing companies, such public offering shall be implemented not later than five (5) years from the effectivity of this Act.

New companies shall implement their respective public offerings not later than five (5) years from the issuance of their Certificate of Compliance (COC)

ⁿ The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed in the exercise of its powers, functions and responsibilities and over all cases involving disputes between and among participants or players in the energy sector relating to the foregoing powers, functions and responsibilities.

^o It shall also be empowered to issue such other rules that are essential in the discharge of its functions as an independent quasi-judicial body.

^p All actions taken by the ERC pursuant to the Act are subject to judicial review and the requirements of due process and the cardinal rights and principles applicable to quasi-judicial bodies.

^q The ERC may require reports or documents from the Electric Power Industry Participants as necessary to facilitate compliance with the Act, subject to appropriate measures to preserve the confidentiality of proprietary or commercially sensitive information.

^r All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published at least twice for 2 successive weeks in two (2) newspapers of nationwide circulation.

^s The ERC shall conduct rate application hearings in the locality where the applicant is conducting its operations: Provided, That this requirement shall not apply to applications filed pursuant to Section 36.

Section 5. Responsibilities of the PSALM.

^a Consistent with Section 49, PSALM shall own all existing NAPOCOR:

• generation assets
• liabilities
• IPP contracts
• real estate
• disposable assets.

NAPOCOR’s outstanding obligations from loans, issuances of bonds, securities and other instruments of indebtedness shall be transferred to and assumed by PSALM.

^b PSALM shall:

• sell and privatize NAPOCOR assets and IPP contracts
• liquidate NAPOCOR Debts and Stranded Contract Costs
• calculate NAPOCOR’s Stranded Debts and Stranded Contract Costs
  • This amount shall be part of the Universal Charge which will be fixed and approved by the ERC.

^c As per Section 60, PSALM shall assume all outstanding financial obligations of ECs to NEA and other government agencies arising from their respective Rural Electrification Program.