Napocor Offer Of Transition Supply Contracts

Section 1. Guiding Principle

As per Section 67 , NAPOCOR shall, within six (6) months from the effectivity , file with the ERC for its approval the transition supply contracts (TSCs) duly negotiated with the DUs.

Section 2. Scope of Application.

This Rule shall apply to all DUs.

Section 3. Terms and Conditions of the TSCs.

(a) The TSCs shall contain the terms and conditions of supply and a corresponding schedule of rates, consistent with the provision of the Act, including adjustments and/or indexation formulas which shall apply during the term of such contracts. (b) The term of the TSCs shall not extend beyond one (1) year from the introduction of Open Access. (c) Such contracts shall be based on the projected demand of the DUs less any of their currently committed quantities under eligible contracts, if any, as defined in Section 33 . (d) The total generation capacity of such signed TSCs shall not exceed the level of NAPOCOR owned, controlled, or committed capacity as of the effectivity . (e) The TSCs shall be assignable to the NAPOCOR successor Generation Companies. (f) Notwithstanding the provisions of Section 25 , the rates charged by a Distribution Utility for the generation component of the Supply of Electricity in the Retail Rate shall, for the term of the TSCs, not exceed the TSC rates, as updated monthly. Page 91 of 100(g) The recovery of costs incurred by a Distribution Utility for any generation component in excess of the TSC rates shall be disallowed by the ERC except for eligible contracts and mandated purchases from the WESM. (h) The limitation on the recovery of generation component costs by a Distribution Utility shall apply only to the equivalent quality and quantity of electricity still available to the Distribution Utility from NAPOCOR. Section 4. TSCs Approval and Monitoring. (a) Within six (6) months from the date of submission of the TSC by the NAPOCOR, the ERC shall notify NAPOCOR of their approval of the rates contained therein. (b) The ERC shall maintain a record of the contract terms and rates offered by NAPOCOR. (c) The ERC shall update monthly the rates using the appropriate adjustment and/or indexation formula.

Section 5. Utility.

Recovery of Generation Component by Distribution Notwithstanding the provisions of Section 25 , the rates charged by a Distribution Utility for the generation component of the Supply of Electricity in its Retail Rates shall, for the term of the TSC, not exceed the generation component of the TSC rates, as updated monthly. (a) Recovery of cost incurred by a Distribution Utility for any generation component in excess of the TSC rates shall not be allowed, except for eligible contracts approved by the ERC for the recovery of Stranded Contract Costs of Eligible Contracts of DUs as provided in Section 33 and mandated purchases from the WESM.

(b) The limitation on the recovery of generation component costs by a Distribution Utility shall apply only to the equivalent quality and quantity of electricity still available to the Distribution Utility from NAPOCOR. For purposes of the determination of equivalent quality and quantity of electricity, the ERC shall consider, among others, firm and non-firm capacities, standards specified in the Grid and Distribution Codes, and other similar criteria as may be determined by the ERC.