MISSIONARY ELECTRIFICATION

Section 1. Guiding Principle.

• a) As per Section 70 , the SPUG shall be responsible for providing power generation and its associated power delivery systems in areas that are not connected to the transmission system.

(b) The Missionary Electrification function of SPUG shall be funded from the revenues from sales in the missionary areas and from the Universal Charge to be collected from all electricity End-users as determined by the ERC.

• c) The DOE’s Missionary Electrification Development Plan (MEDP) shall include capital investment and operations regarding capacity additions in existing missionary areas and the facilities to be provided in other areas not connected to the transmission system.

• d) The DOE shall, no later than ninety (90) days from the promulgation of these Rules, issue specific guidelines on how to encourage the inflow of private capital and the manner whereby other parties, including DUs and qualified third parties, as provided for in Section 23 and Section 59 , can participate in the Missionary Electrification projects set forth in the MEDP. (e) The SPUG shall continue to endeavor to privatize its power generation facilities and the necessary associated power delivery systems.

Section 2. Scope of Application.

This Rule shall apply to all entities and areas identified in the MEDP.

Section 3. Obligations of SPUG.

• a) SPUG shall be responsible for providing power generation and its associated power delivery systems in areas that are not connected to the Grid and cannot be serviced by DUs and other qualified third parties.

• b) SPUG shall periodically assess the requirements and prospects for bringing its functions to commercial viability on an area-by-area basis at the earliest possible time, including a program to encourage private sector participation.

• c) Whenever feasible, SPUG shall utilize Renewable Energy Resources.

• d) SPUG shall file for review and approval its unbundled rates following Rule 15 on Unbundling of Rates.

• e) SPUG shall file a petition to the ERC with respect to the Missionary Electrification portion of the Universal Charge as prescribed in Rule 18 on Universal Charge.

• f) PSALM shall ensure that SPUG conducts proper monitoring, accounting and control of expenditures, and efficient utilization of the Missionary Electrification funds from the Universal Charge.

Section 4. Source of Funds.

• a) The Missionary Electrification shall be funded from the revenues from sales in missionary areas and from its appropriate share in the Universal Charge
• b) SPUG may also draw on other funding sources including appropriations from Congress, the utilization of private capital, multilateral aids or grants, Official Development Assistance (ODA) Funds and others.
• c) SPUG shall source all the cost differentials between the sales revenues and operating expense and capital expense for expansion, rehabilitation and facilities for new areas of development based on the approved MEDP from its share from the Universal Charge and/or other sources as it may obtain.
• d) In accordance with DOE’s MEDP, the proposed five- (5) year annual budget for operating and capital expenditures of SPUG shall be submitted to ERC.

Section 5. Reliability Improvement

• a) To improve systems reliability, the SPUG shall install transmission systems in all qualified areas under the coverage of SPUG. Priority will be given to areas showing big growth in its electricity demand.
• b) SPUG shall also collect revenues in providing power delivery and Ancillary Service to Generation Companies or DUs at a rate to be filed with and approved by ERC. In the absence of such rate, SPUG shall use the applicable major Grids’ rate.
• c) SPUG shall cease providing Missionary Electrification to areas interconnected to the transmission system.