ERC sets policies for the TSCs assigned to the buyers of NPC plants
The Energy Regulatory Commission (ERC) approved on 15 December 2008 a resolution entitled "A Resolution Adopting Policies to Govern the Transition Supply Contracts (TSCs) which have been Assigned and Transferred to the National Power Corporation Successor Generating Companies (NPC-SGCs)". The said Resolution addresses several regulatory issues arising from the assignment of the TSCs earlier executed by NPC with distribution utilities (DUs) to the buyers of NPC's plants (NPCSGCs). Among the issues addressed are: the extension of the term of the TSCs, the applicable rates, the applicability of the Mandated Rate Reduction (MRR) under Republic Act No. 9136 (EPIRA), and the applicable VAT rates.
As clarified in the said Resolution:
1) The TSCs generally cannot be extended
by the NPC-SGCs and the DUs;
2) If their TSC is about to expire, the NPC-SGC and the DU shall endeavor to
negotiate and enter into a bilateral supply contract to be filed with the ERC
for approval;
3) The applicable rates for the power supplied by the NPC-SGC to its DU customer
under the TSC shall be the NPC-TOU rates, which shall also include GRAM and
ICERA adjustments as approved by the ERC;
4) The NPC-SGCs shall be responsible for the GRAM and ICERA adjustments for
test periods after the closing date of their respective NPC plant sale;
5) The MRR shall continue to apply and be enjoyed by the end-users during the
original term of the assigned TSCs; and
6) The applicable VAT rate shall depend on the nature of the plant acquired
by the NPC-SGC.
Section 67 of the EPIRA requires the
NPC to file for approval of the ERC the TSCs duly negotiated with the DUs. Under
the said provision, the TSCs shall not extend beyond one (1) year from the introduction
of the actual open access and retail competition and that said contracts shall
be assignable to the NPC-SGCs.
December 22, 2008