Public consultation on the Proposed Amendments to the Implementing Rules of the GRAM and ICERA

Notice is hereby given that the Proposed Amendments to the Implementing Rules of the Generation Rate Adjustment Mechanism (GRAM) and Incremental Currency Exchange Rate Adjustment (ICERA) are scheduled for a series of public consultation on February 23 and 24, 2004 to start at nine o’clock (9:00 A.M.) in the morning, at the ERC Hearing Room, 15th Floor, Pacific Center Building, San Miguel Avenue, Ortigas Center, Pasig City. The proposed amendments are hereunder stated as follows:

• Formulation on Calculation of System Loss Rate:

S1 = (G1 x U1) + (T x U1)

Where:

S1 = New System Loss Rate
G1 = New Generation Rate
U1 = New Gross up Factor [% System Loss/ (1 -% System Loss)]
T = Total Company Average Transmission Rate in PhP per kWh as determined in the most recent rate application of the Distribution Utility

• The Proposed amendments to GRAM are designed to allow the Distribution Utilities to recover costs associated with changes in the cost of System Loss which are affected by two factors, namely, the cost of purchase power and the percent of system loss.

• Additional Definitions:

• System Loss
• System Loss Cap
• System Loss Rate

Proposed Additional Language on ICERA

• ICERA shall be subject to an annual true-up to determine the accuracy and validity of the amount due to the utility and billed to the end user.

All interested parties may submit their comments (both hard and soft copies) on the proposed amendments on or before January 28, 2004. 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. The proposed amendments may be photocopied, at cost, during the regular office hours at the ERC Main Office at the above-mentioned address or may be downloaded from the ERC Website at www.erc.gov.ph.

January 29, 2004