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Draft Wheeling Rates Guidelines and comments

I. NOTICE, ERC Case No. 2003-34

Notice is hereby given that the proposed Guidelines for the Adoption of an Alternative Form of Rate Setting Methodology for the National Transmission Corporation (TRANSCO) and any future concessionaire thereof is scheduled for public consultation on February 19, 20, and 21, 2003 all at nine o'clock (9:00 A.M.) in the morning and two o'clock (2:00 P.M.) in the afternoon at the Energy Regulatory Commission (ERC) Hearing Room, 15th Floor, Pacific Center Bldg., San Miguel Avenue, Ortigas Center, Pasig City.

All interested parties may submit their written comments (both hard and soft copies) on the proposed guidelines on or before February 10, 2003. A copy of said guidelines may be photocopied, at cost, during the usual office hours at the ERC Office at the abovementioned address and downloadable from the ERC website at www.erc.gov.ph. Only parties who have filed their written comments on or before the prescribed period would be allowed to participate in the above scheduled public consultation.

PROCEDURES FOR CONSULTATION ON AN ALTERNATIVE FORM OF RATE-SETTING METHODOLOGY FOR THE NATIONAL TRANSMISSION CORPORATION (TRANSCO) AND ANY FUTURE CONCESSIONAIRE THEREOF

Pursuant to Section 43(f) of the Republic Act No. 9136, otherwise know as the Electric Power Industry Reform Act of 2001, the Energy Regulatory Commission (ERC) is authorized to adopt alternative forms of internationally accepted rate-setting methodology as it may deem appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable price for electricity on non-discriminatory rates.

Today, the ERC has issued its proposed rules to establish a framework which will provide an alternative form of rate-setting methodology for TRANSCO and any future concessionaire of TRANSCO. This rate-setting methodology can be categorised as a Performance Based Regulatory arrangement which over time will provide incentives for TRANSCO and any future concessionaire of TRANSCO to reduce its costs of service provision, improve its service performance, and overtime to reduce the prices which it charges to customers.

The consultation process shall proceed as follows:

• Those persons who are parties of record following our notice of October 23, 2002, shall receive a copy of the proposed rules by mail. The ERC shall post the proposed rules and a summary presentation on the rules structure on its website at www.erc.gov.ph.

• Parties of record may fax or e-mail written comments or questions on the proposed rules, which must be received by the ERC prior to close of business on February 10, 2003. All written comments or questions will be published on the website as these are received.

• The ERC shall prepare responses to comments or questions from the parties of record and post these on its website prior to the first day of the verbal consultation. As such any written comments and questions provided shall be considered read, and do not need to be reiterated further in the verbal consultation.

• The verbal consultation shall be run on three consecutive days commencing on Wednesday, February 19, 2003 and concluding on Friday, February 21, 2003. Each day the verbal communication sessions shall commence at 9:00 A.M., break for lunch at 12:00 NN, resume at 2:00 P.M. and end at 4:00 P.M., or earlier should there be no further comment or discussion for the day. No irrelevant requests for adjournment or delay of the verbal consultation shall be entertained. All parties of record must have read the material posted on the ERC website prior to the verbal consultation.

• Questions raised during each of the first two days of the hearing shall have answers prepared by the ERC which will be posted on its website as soon as is practical, and shall be addressed on the following hearing day. Questions raised during the last day of the hearing shall have answers prepared by the ERC which will be posted on its website.

• The ERC expects that any parties of record shall limit their participation in the verbal consultation to new areas of comment or new questions. The ERC shall reserve its right to limit repetition of comments or questions previously raised and answered. Additional discussion of detail points is encouraged, but the ERC shall in some instances take the question on notice for detailed response on its website or on the following day.

• Following the verbal consultation period, the ERC shall work to finalize its consideration of all the written and verbal comments raised during the consultation process. The ERC shall work towards a rapid finalization of its rules for an alternative form of rate-setting methodology for TRANSCO and any future concessionaire of TRANSCO, once the consultation process is concluded.

Parties of record may submit their comments by either fax at 634-8641, 631-7287, and 631-5879 or e-mail to regulatory@erc.gov.ph, attention of Atty. Marina C. Bugayong or Ms. Maurisa Moncada of the Regulatory Operations Service.

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II. GUIDELINES OVERVIEW

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Transmission Wheeling Rate Guidelines Overview (Zip PowerPoint file, 117 KB)

III. DRAFT GUIDELINES FOR DISCUSSION

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Guidelines on the Methodology for Setting Transmission Wheeling Rates for 2003 to 2027 (Zip PDF file, 319 KB)

IV. COMMENTS ON GUIDELINES FOR WHEELING RATES

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SUMMARY OF COMMENTS

Edgardo M. Del Fonso, President, Power Sector Assets & Liabilities Management Corporation

Dave Andrew F. Opiso, Corporate Staff Engineer, Dagupan Electric Corp.