Guidelines for the Recovery of Costs for the Generation Component of the Distribution Utilities’ Rates

Pursuant to Sections 25 and 67 of Republic Act No. 9136 or “the Act” and Part II, Rule 5, Section 6 of the Implementing Rules and Regulations (IRR) of the Act, the Energy Regulatory Commission (ERC) hereby adopts and promulgates this guidelines:

(a) To establish the process for determining when the recovery of the generation component of the supply of electricity in the Retail Rates of a Distribution Utility should be limited by the rate contained within the Transition Supply Contract (“TSC”);

(b) To establish procedures, standards and criteria for the full recovery of prudent and reasonable economic costs related to the generation component included in the Retail Rates charged by Distribution Utilities for the supply of electricity to their Captive Market; and

(c) To establish guidelines for the approval of new generation contracts by the ERC.

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Guidelines for the Recovery of Costs for the Generation Component of the Distribution Utilities Rates

April 21, 2004