amended nasecor

Republic of the Philippines SUPREME COURT

Manila

NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS (NASECORE), represented by Petronilo L. Ilagan, FEDERATION OF VILLAGE ASSOCIATIONS (FOVA), represented by Siegfriedo A. Veloso, FEDERATION OF LAS PINAS HOMEOWNERS ASSOCIATION (FOLPHA), represented by Bonifacio Dazo, and RODRIGO C. DOMINGO, JR., in his personal capacity and as member of the Class,

Petitioners,

--versus--

MANILA ELECTRIC COMPANY (MERALCO), ENERGY REGULATORY COMMISSION (ERC) and DEPARTMENT OF ENERGY (DOE), PHILIPPINE ELECTRICITY MARKET CORP., SEM-CALACA POWER CORPORATION, MASINLOC POWER PARTNERS CORP., SAN MIGUEL ENERGY CORPORATION, SOUTH PREMIERE POWER CORPORATION, THERMA MOBILE INCORPORATED, FIRST GAS POWER CORPORATION, QUEZON POWER PHILS. (LTD) COMPANY, THERMA LUZON, INCORPORATED, FGP CORPORATION, NATIONAL GRID CORPORATION OF THE PHILIPPINES, 1590 ENERGY

G.R.No.210255

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CORPORATION, BAC-MAN ENERGY DEVELOPMENT CORPORATION / BAC-MAN GEOTHERMAL, INCORPORATED, AP RENEWABLES INCORPORATED, FIRST GEN HYDRO POWER CORPORATION, GN POWER MARIVELES COAL PLANT LTD., CO., PANASIA ENERGY HOLDINGS, POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP., SN ABOITIZ-BENGUET, INCORPORATED / SN ABOITIZ-MAGAT, INCORPORATED, STRATEGIC POWER DEVELOPMENT CORPORATION, TRANS ASIA POWER GENERATION CORPORATION, VIVANT STA. CLARA NORTHERN RENEWABLES GENERATION CORPORATION,

Respondents.

x----------------------------------x

COMPLIANCE {With Attached Copy of the

Amended Petition dated January 12, 2014)

CLASS PETITIONERS, by the undersigned counsel, unto this Honorable Court, respectfully state: THAT-

1. In compliance with the Resolution of the Honorable Court dated December 23, 2013 requiring the "petitioners in G.R. No. 210255 to submit (1) proof of authority of Rodrigo C. Domingo to sign, execute, verify and deliver the Petition and other papers and instruments he may deem appropriate and necessary on behalf of petitioner Federation of Las Pinas Homeowners Association (FOLPHA); and (2) a certified true copy of the assailed Order of the Energy Regulatory Commission dated December 9, 2013", petitioners:

2

1.1. Respectfully inform and manifest to the Honorable Court that they already amended their original Petition for Certiorari and Prohibition dated December 18, 2013 to reflect the fact that Rodrigo C. Domingo is an individual petitioner acting in his own behalf and in behalf of all those individuals belonging to the Class. Said amendment was done in order to rectify the seeming error, committed through inadvertence, which made it appear that the said petitioner is acting as one of the authorized representatives of petitioner FOLPHA, when in truth he is not. That petitioner Rodrigo C. Domingo really intended to act as an individual petitioner in the instant case is supported by his very own "Verification and Certification of Non-Forum Shopping."

1.2. The aforesaid inadvertence on the part of the petitioners was occasioned by the inherent urgency and immediacy to file the present Petition at the earliest possible opportunity, as demanded by the circumstances at hand.

1.3. With the above-said amendment, the need to submit petitioner Rodrigo C. Domingo's proof of authority to represent FOLPHA now becomes irrelevant and inconsequential. Hence, the compliance with the above-said requirement.

1.4. Further, as regards the required "certified true copy of the assailed Order of the Energy Regulatory Commission dated December 9, 2013", petitioners hereby inform the Honorable Court that such certified copy was appended in the original copy of the Petition as Annex "H" thereof. The ERC letter dated December 9, 2013 labeled as Annex "H" in the Petition is one and the same as the referred ERC Order dated December 9, 2013.

2. Additionally, in compliance with the above-mentioned Resolution requiring the petitioners to "submit a soft copy of their Petition by compact disc (CD) pursuant to the Efficient Use of Paper Rule x x x", it is hereby respectfully manifested that the said required soft copy in a CD was already submitted with the Honorable Court upon or simultaneous with the filing of the Petition. A separate soft

3

copy of the Petition, including its annexes, was, in fact, also sent to this Honorable Court via the electronic mail address: efile [email protected].

3. Further, in compliance with the Resolutions dated January 9, 2014 and January 10, 2014 of the Honorable Court requiring the petitioners to implead necessary parties in the instant case, the same had already been accomplished by including the names of the following respondents in the Amended Petition for Certiorari and Prohibition:

a. Philippine Electricity Market Corporation (PEMC);

b. SEM-Calaca Power Corporation;

c. Masinloc Power Partners Corporation;

d. Therma Luzon, Incorporated;

e. San Miguel Energy Corporation;

f. South Premiere Power Corporation;

g. Therma Mobile Incorporated;

h. First Gas Power Corporation;

i. Quezon Power (Phils) Ltd, Co.;

j. FGP Corporation;

k. National Grid Corporation of the Philippines;

I. 1590 Energy Corporation;

m. AP Renewables, Incorporated;

n. Bae-Man Energy Development Corporation/ Bae-Man Geothermal; Ineoporated;

o. First Gen Hydropower Corporation;

p. GN Power Mariveles Coal Plant, Ltd. Company;

q. PANASIA Energy Holdings, Incorporated;

4

r. Power Sector Assets and Liabilities Management Corporation;

s. SN Aboitiz Power-Benguet, Incorporated I SN Aboitiz Power-Magat, Incorporated;

t. Strategic Power Development Corporation;

u. Trans-Asia Power Generation Corporation;

v. Vivant Sta. Clara Northern Renewables Generation Corporation.

3.1. All copies of the petitioners' pleadings in the instant case had already been personally served on the afore-enumerated necessary parties, as shown by their respective acknowledgement stated at the bottom portion hereof.

3.2. In the light of the Resolutions issued by the Honorable Court and the foregoing compliance thereto made by the petitioners, it is still respectfully manifested and reiterated that the present Petition is basically and solely confined to the issue of nonobservance of due process by respondents ERC and MERALCO in the assailed automatic imposition of rate increase. Consequently, such imposition of MERALCO as regards electricity rate adjustments and increases made automatically are certainly illegal and must be refunded to its electricity-consuming subscribers. Verily, nowhere in the allegations of the instant Petition was there a mention of collusion among electricity industry players, particularly with the willing participation of the impleaded necessary parties.

3.3. Thus, aside from the amendment made as regards the legal standing of petitioner Rodrigo C. Domingo, Jr. and the inclusion of the names of the above-mentioned necessary parties, no other amendment was introduced by the petitioners in the Amended Petition for Certiorari and Prohibition.

s

3.4. Petitioners, however, are not manifesting that no collusion is existing between respondents as regards electricity rate fixing; only that the said issue is not covered by their Petition and that they are not prepared to tackle the same in the present case due to lack of sufficient knowledge, authoritative and conclusive factual basis and substantial documents to support such claim at this time.

3.5. Incidentally, a perusal of the Resolution dated January 10, 2013 reveals that it is no other than respondent MERALCO which suggested the inclusion of some of the necessary parties ordered to be impleaded herein.

4. A copy of the Amended Petition dated January 12, 2014 is hereto attached and made an integral part of the instant Compliance.

Prayer

WHEREFORE, premises considered, it is respectfully prayed of the Honorable Court that the foregoing be NOTED and deemed full and sufficient compliance with the Resolutions dated December 23, 2013, January 9, 2014 and January 10, 2014.

Other remedies appropriate under the premises are also prayed for.

Metro Manila, January 12, 2014.

RENE A. V. SAGUISAG Counsel for Petitioners 4045 Bigasan Street

Brgy. Palanan, Makati City IBP Lifetime No. 03214122903

PTR No. 3671506-01.02.13-Rizal Roll of Attorneys No.19190

MCLE Exemption No. 3-001432-6.28.10 Pasig

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LEONARD S. DE VERA Co-Counsel for the petitioners Penthouse B, Windsor Tower

163 Legazpi St., Legazpi Village, Makati City 1229 Telefax No. (02) 8127739

PTR No. 4233296-01.07.14-Makati City IBP Lifetime Member Roll No. 000000

Roll of Attorneys No. 23534 MCLE Compliance No. IV-0019174-04.26.13

NELSON A. LOYOLA Counsel for Petitioners

Suite 201 Carreon Building 2746 Zenaida Street

Brgy. Poblacion, Makati City PTR No. 3676854-01.08.13-Makati

IBP Lifetime No. 0010-11.15.93 Roll of Attorneys No. 23649

MCLE Compliance No. V-0001091-11.12.13

'~-ounsel ( etitioners

RONNIE B. ODILLAS

No. 137 Libis Gochuico Street, Circumferential Road 3,

Caloocan City 1400 Tel. No. 3511718

Email: [email protected] IBP NO. 926338; 01-16-13-Calmana

PTR NO. 5534040; 01-14-13-Caloocan City Roll of Attorneys No. 48536

MCLE Compliance No. IV - 0018734, April 24, 2013

Copy furnished: (By personal service)

MANILA ELECTRIC COMPANY Lopez Building, Ortigas Avenue Pasig City

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ENERGY REGULATORY COMMISSION Pacific Centre Building San Miguel Avenue, Pasig City

DEPARTMENT OF ENERGY Energy Center, Rizal Drive Bonifacio City Taguig City 1632

Impleaded Necessary Parties

THE SOLICITOR GENERAL 134 Amorsolo Street, Legaspi Village, Makati City

PHILIPPINE ELECTRICITY MARKET CORP. 18/F Robinsons Equitable Tower, Ortigas, Pasig City

SEM-CALACA POWER CORPORATION 2/F DMCI Plaza Building 2281, Don Chino Races Extension, Bgy. Magallanes, Makati City

8

I hereby acknowledge receipt, by personal service, of the copies of the (1) Petition for Certiorari and Prohibition (Class Suit) dated December 18, 2013 and the (2) Compliance (with Attached Copy of the Amended Petition) dated January 12, 2014.

(Signature & Date Above Printed Name)

MASINLOC POWER PARTNERS CORP. Philamlife Tower 8767, Paseo De Roxas, Makati City 1200

SAN MIGUEL CORPORATION 2/F 808 Building, Gen. Meralco Avenue, Center, Pasig City 1600

SOUTH PREMIERE CORPORATION 2/F 808 Building, Gen. Meralco Avenue, Center, Pasig City

THERMA INCORPORATED

ENERGY

Lim car. Ortigas

POWER

Lim car. Ortigas

MOBILE

Ground Floor, Philippine Fisheries Development Authority Complex Building, Navotas City

FIRST GAS POWER CORPORATION 3/F Benpres Building, Exchange Road car. Meralco Avenue, Ortigas Center, Pasig City

QUEZON POWER PHILS. (LTD) COMPANY 14/F Zuellig Building Makati Ave. car. Paseo De Roxas, Makati City 1225

THERMA LUZON, INCORPORATED NAC Tower, 32nd Street, Bonifacio Global City, Taguig City

9

FGP CORPORATION 3/F Benpres Building, Exchange Road cor. Meralco Avenue, Ortigas Center, Pasig City

NATIONAL GRID CORPORATION OF THE PHILIPPINES Quezon Avenue cor. BIR Road, Diliman,Quezon City 1100

1590 ENERGY CORPORATION Unit 107 First Midland Office Condominium Building Gamboa St., Legaspi Village, Makati City

AP RENEWABLES INCORPORATED 15/F, NAC Tower, 32nd St., Bonifacio Global City, Taguig City

BAC-MAN ENERGY DEVELOPMENT CORPORATION/ BAC-MAN GEOTHERMAL, INCORPORATED 38/F One Corporate Center Julia Vargas cor. Meralco Avenue, Ortigas Center, Pasig City 1605

FIRST GEN HYDRO POWER CORPORATION 3/F Benpres Building, Exchange Road cor. Meralco Avenue, Ortigas Center, Pasig City

GN POWER MARIVELES COAL PLANT LTD., CO. 1905 Orient Square Building Don Francisco Ortigas, Jr. Road, Ortigas Center, Pasig City

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PANASIA ENERGY HOLDINGS 2/F 808 Building, Gen. Lim cor. Meralco Avenue, Ortigas Center, Pasiq City

POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP. 7/F Bankmer Building, 6756 Ayala Avenue, Makati City

SN ABOITIZ-BENGUET, INCORPORATED/ SN ABOITIZ-MAGAT, INCORPORATED 10/F, NAC Tower, 32nd St., Bonifacio Global City Taguig City

STRATEGIC POWER DEVELOPMENT CORPORATION 2/F 808 Building, Gen. Lim cor. Meralco Avenue, Ortigas Center, Pasig City

TRANS ASIA POWER GENERATION CORPORATION 11/F PHINMA Plaza, 39 Plaza Drive, Rockwell Center Makati City 1200

VIVANT STA. CLARA NORTHERN RENEWABLES GENERATION CORPORATION Unit 107, First Midland Office Condominium Building Gamboa St., Legaspi Village, Makati City

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REPUBLIC OF THE PHILIPPINES ) MAKA TI CITY ) S.S.

AFFIDAVIT OF SERVICE (Jn compliance with Section 12. Rule 13 oft he Rules <~{Court, as amended by Supreme Court Resolution dated April 8. 1997)

L ALLEN D. BUG-AT AN, Filipino, of legal age, with office address at 15111

Floor, LPL Center, 130 L. P. Leviste Street, Salcedo Village, Makati City, after having been duly sworn in accordance with law, hereby depose and state: That -

1. I am a liaison officer of Domingo Dizon Adre & Leonardo - A Law Partnership, of which petitioner Rodrigo C. Domingo. Jr. is one of the pminers;

2. On January 13, 2014, I served by personal service, in so far as can be done, the foregoing "Compliance (With Attached Copy of the Amended Petition for Certiorari and/or Prohibition)" dated January 12, 2014, in the case entitled "National Association of Electricity Consumersf(Jr Refimns (NASECORE). et. al. vs. Manila Electric Company. et. al." G. R. No. 210255, pending with the Supreme Court, Manila, to the following respondents:

1. Manila Electric Company Lopez Building, Ortigas A venue Pasig City

2. Energy Regulatory Commission Pacific Centre Building San Miguel A venue, Pasig City

3. Department of Energy Energy Center, Rizal Drive Bonifacio City Taguig City 1632

4. The Solicitor General 134 Amorsolo Street Legaspi Village, Makati City

5. Philipine Electricity Market Corporation 18/F Robinsons Equitable Tower 01iigas Center, Pasig City

6. Sem-Calaca Power Corporation 2/F DMCI Plaza Building 2281 Don Chino Roces Extension Brgy. Magallanes, Makati City

7. Masinloc Power Partners Corporation Philamlife Tower 8767 Paseo de Roxas Makati City

8. San Miguel Energy Corporation 2/F 808 Building Gen. Lim comer Meralco A venue 01iigas Center, Pasig City

9. South Premiere Power Corporation 2/F 808 Building Gen. Lim corner Meralco A venue Ortigas Center, Pasig City

10. Therma Mobile Incorporated Ground Floor Philippine Fisheries Development Authority Complex Building Navotas City

11. First Gas Power Corporation 3/F Benpress Building Exchange Road corner Meralco A venue Ortigas Center, Pasig City

12. Quezon Power Phi ls. (LTD) Company 14/F Zuellig Building Makati A venue corner Paseo de Roxas Makati City

13. Therma Luzon Incorporated NAC Tower, 3211

d Street Bonifacio Global City Taguig City

14. FGP Corporation 3/F Benpress Building Exchange Road corner Meralco A venue 01iigas Center, Pasig City

15. National Grid Corporation of the Philippines Quezon A venue corner BIR Road Diliman, Quezon City

16. 1590 Energy Corporation Unit 107 First Midland Office Condominium Building Gamboa Street, Legaspi Village, Makati City

17. AP Renewables Incorporated 15/F NAC Tower, 3211


18. Bae-Man Energy Development Corporation/ Bae-Man Geothermal Incorporated 3 8/F One Corporate Center Julia Vargas corner Meralco Avenue Ortigas Center, Pasig City

2

19. First Gen Hydro Power Corporation 3/F Benpress Building Exchange Road comer Meralco A venue Otiigas Center, Pasig City

20. GN Power Mariveles Coal Plant Ltd., Co. 1905 Orient Square Building Don Francisco 01iigas, Jr. Road 01iigas Center, Pasig City

21. Panasia Energy Holdings 2/F 808 Building

" Gen. Lim corner Meralco A venue Otiigas Center, Pasig City

22. Power Sector Assets & Liabilities Management Corporation 7 IF Bankmer Building 6756 Ayala A venue, Makati City

23. SN Aboitiz-Benguet Incorporated/ SN Aboitiz-Magat Incorporated I O/F NAC Tower, 3211

d Street Bonifacio Global City, Taguig City

24. Strategic Power Development Corporation 2/F 808 Building Gen. Lim corner Meralco A venue Ortigas Center, Pasig City

25. Trans Asia Power Generation Corporation 11 /F Phinma Plaza 39 Plaza Drive, Rockwell Center Makati City

26. Vivant Sta. Clara Northern Renewables Generation Corporation Unit l 07 First Midland Office Condominium Building Gamboa Street, Legaspi Village, Makati City

or their respective counsel of record. Service on the other respondents shall be made today, as far as practicable, on the following working day.

3. I am executing this Affidavit in order to attest to the truth of the foregoing statements.

SUSCRIBED AND SWORN TO before me this 13th day of January 2014 in Makati City, affiant exhibiting to me his Philhealth Card No. 01-051485921-9 with his picture attached thereon as a competent of proof his identity.

Doc.No . .Jl!i_; Page No. JJ, ; Book No.~ __ ; Series of 2014.

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Republic of the Philippines SUPREME COURT

Manila

NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS (NASECORE), represented by Petronilo L. Ilagan, FEDERATION OF VILLAGE ASSOCIATIONS (FOVA), represented by Siegfriedo A. Veloso, FEDERATION OF LAS PINAS HOMEOWNERS ASSOCIATION (FOLPHA), represented by Bonifacio Dazo, and RODRIGO C. DOMINGO, JR., in his personal capacity and as member of the Class,

Petitioners,

Page 1of43

--versus-- G.R.No.210255

MANILA ELECTRIC COMPANY (MERALCO), ENERGY REGULATORY COMMISSION (ERC) and DEPARTMENT OF ENERGY (DOE), PHILIPPINE ELECTRICITY MARKET CORP., SEM-CALACA POWER CORPORATION, MASINLOC POWER PARTNERS CORP., SAN MIGUEL ENERGY CORPORATION, SOUTH PREMIERE POWER CORPORATION, THERMA MOBILE INCORPORATED, FIRST GAS POWER

,:'.';' ,-; .. -.

-

CORPORATION, QUEZON POWER PHILS. (LTD) COMPANY, THERMA LUZON, INCORPORATED, FGP CORPORATION, NATIONAL GRID CORPORATION OF THE PHILIPPINES, 1590 ENERGY CORPORATION, BAC-MAN ENERGY DEVELOPMENT CORPORATION / BAC-MAN GEOTHERMAL, INCORPORATED, AP RENEWABLES INCORPORATED, FIRST GEN HYDRO POWER CORPORATION, GN POWER MARIVELES COAL PLANT LTD., CO., PANASIA ENERGY HOLDING~

POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP., SN ABOITIZBENGUET, INCORPORATED / SN ABOITIZ-MAGAT, INCORPORATED, STRATEGIC POWER DEVELOPMENT CORPORATION, TRANS ASIA POWER GENERATION CORPORATION, VIVANT STA. CLARA NORTHERN RENEWABLES GENERATION CORPORATION,

Respondents. x-----------------------------x

Page 2 of 43

AMENDED PETITION FOR CERTIORARI

and/or PROHIBITION (Class Suit)

(Under Rule 65, Revised Rules of Court, with Prayer for a Temporary Restraining Order/

Status Quo Ante Order and Injunction)

Page 3 of 43

CLASS PETITIONERS, by the undersigned counsel, unto this Honorable Court, respectfully state: THAT-

I.

PREFATORY STATEMENT

"The essence of due process is distilled in the immortal cry of Themistocles to Alcibiades "Strike -but hear me first!1

" (Italics supplied)

1. The same allegorical and resounding cry was heard by the framers of our present Constitution when they enshrined in Article III, Section 1 thereof that:

"Section 1. No person shall be deprived of life liberty or property without due process of law, x x x." (Italics supplied)

2. It is the very same resounding cry which the class petitioners eloquently repeat in the present petition as they plead and challenge the validity of the oppressive and exorbitant automatic electricity rate adjustments and increases imposed by respondent MERALCO to its electricity subscribers, with the accommodating imprimatur of the Energy Regulatory Commission (ERC), the very administrative agency tasked to regulate and ensure the welfare and protection of the electricity-consuming public.

1 Restituto Ynot vs. Intermediate Appellate Court, G. R. No. 74457, March 20, 1987.

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3. The present Petition squarely rests on and is delimited by the legal postulate that respondent ERC gravely abused its discretion, amounting to lack or excess of jurisdiction, when it allowed the said automatic rate adjustments and increases of MERALCO in its generation costs, without first requiring publication, notice or hearing involving the public who will bear the brunt of such adjustments or increases in electricity rates, in violation of the due process clause of the Philippine Constitution. Consequently, such imposition of MERALCO as regards electricity rate adjustments and increases made automatically are certainly illegal and must be refunded to its electricity-consuming subscribers.

4. The present Petition made no attempt to include in its scope the issue regarding the alleged collusion between and among the electric power industry players, to include government agencies tasked to oversee and regulate them.

5. Petitioners come directly to this Honorable Court on account of the fact that the present case seriously and plainly involves public policy and that it is of transcendental importance to the public in general, and that swift and immediate redress from the Court is required by the circumstances.

II.

NATURE OF THE PETITION

6. This Petition for Certiorari is a valid recourse under Rule 65, Sections 1 and 2 of the 1997 Revised Rules of Civil Procedure availed of to impugn the Resolutions and Orders (letters) made by the ERC pertaining to automatic rate adjustments or increases imposed by MERALCO in its generation costs for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

Section 1, Rule 65 of the 1997 Revised Rule on Civil Procedure provides:

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"Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack of excess of its jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

X x x." (Italics and underscoring supplied)

Upon the other hand, Section 2 of Rule 65, Revised Rules of Court, provides:

"Section 2. Petition for orohibition. - When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasijudicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require.

The petition shall likewise be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46." (Italics and underscoring supplied)

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III.

TIMELINESS OF THE PETITION

7. On December 5, 2013, MERALCO sought the ERC's clearance for the staggered implementation of its generation costs recovery for the November 2013 supply month, by way of an exception to the Automatic Generation Rate Adjustment (AGRA) Rules.

8. On December 9, 2013, the ERC, through its Chairperson, Zenaida G. Cruz-Ducut, and Commissioners Alfredo J. Non and Josefina Patricia A. Magpale-Asirit, sent a letter to MERALCO's Ivanna G. Dela Pena, First Vice President and Head, Regulatory Management Office, advising the grant of clearance for a sought-staggered implementation of its generation cost recovery.

9. Based on Section 4, Rule 65 of the Revised Rules on Civil Procedure, herein petitioners have a period of sixty (60) days from receipt of the above-stated letter granting clearance for the staggered implementation of MERALCO's generation cost recovery for the November 2013 supply month. Considering that petitioners came to know of the issuance of the said clearance only on December 12, 2013, then it has until February 10, 2014 within which to file the present Petition.

10. The filing of the present Petition on December 20, 2013 is, therefore, within the reglementary period.

IV.

THE PARTIES

11. Herein petitioners are a class of similarly situated individuals who are all subscribers of the respondent utility company MERALCO, with common or general interest to numerous persons who are also its subscribers and consumers. Class petitioners may be served with orders, resolutions, decisions and other processes of this Honorable Court at the given address of the undersigned counsel.

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12. Petitioners NASECORE, FOVA and FOLPHA are an aggrupation of different socio-civic organizations who are collectively promoting and upholding consumer rights welfare and protection, which are all organized and existing under and by virtue of the laws of the Republic of the Philippines. Almost all of its members, if not all, are subscribers or consumers being serviced by respondent MERALCO.

The following are the enumeration of the different Secretary's Certificates showing the appointment or delegation of the following individuals who represent and can act for and in behalf of their respective petitionerorganizations, to wit:

a. NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS (NASECORE), represented by Petronila Ilagan, as Annex "A" hereof;

b. FEDERATION OF VILLAGE ASSOCIATIONS (FOVA), represented by Siegfriedo Veloso, as Annex "B" hereof·

'

c. FEDERATION OF LAS PINAS HOMEOWNERS ASSOCIATION (FOLPHA), represented by Bonifacio C. Daza, as Annex "C" hereof.

13. Petitioner Rodrigo C. Domingo, Jr. is a Filipino, of legal age, a member of the Philippine Bar and, similar to the rest of the members of the class, is a subscriber and consumer of respondent MERALCO. He is suing in his individual capacity and as a member of the Class. He may be served with resolutions, notices, orders and other processes of this Honorable Court at his postal address located at 15/F LPL Center, 130 L. P. Leviste Street, Salcedo Village, Makati City. He requests that henceforth he be furnished copies of all relevant pleadings.

14. Petitioners are suing on the ground that the issues raised herein are matters of public service, policy and interest, and that respondent MERALCO, being a public utility company enjoying franchise from the government, had submitted itself to government regulations and

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surrendered certain business prerogatives. Petitioners, as citizens organizations of the Philippines, is therefore invoking the sovereign police and protective power of the State in filing the instant case2

.

15. Respondent Department of Energy (DOE) is a government instrumentality tasked mainly to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of the government relative to energy exploration, development, utilization, distribution and conservation. It is the agency which effected the assailed amendment of Section 4 (e), Rule 3 of the IRR EPIRA. It may be served with summons and other processes of this Honorable Court at its principal office located at Energy Center, Rizal Drive, Bonifacio Global City, Taguig City 1632.

16. Respondent Energy Regulatory Commission (ERC) is, likewise a government instrumentality created under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA Law), tasked mainly to regulate electricity power rates and to protect consumer and subscriber interests.

It may be served with summons and other processes of this Honorable Court at Pacific Centre Building, San Miguel Avenue, Pasig City, where it maintains its principal office.

17. Respondent Manila Electric Company (MERALCO) is a corporation duly organized and existing under the laws of the Republic of the Philippines with principal address at Lopez Building, Ortigas Avenue, Pasig City, where it may be served with summons and other processes of this Honorable Court. MERALCO is engaged in the business of electricity distribution with franchise to operate granted by the Republic of the Philippines in Metro Manila, Bulacan, Laguna, and other adjoining provinces in Luzon.

18. As stated, the present Petition makes no attempt to include in its scope the issue regarding the alleged collusion between and among the electric power industry players, to include government agencies tasked to oversee and regulate them. However, such non-inclusion of the said

2 Lawyers Against Monopoly and Poverty (LAMP), et. al. vs. MERALCO, G. R. No. 141369, April 9, 2003.

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issue of collusion does not mean that herein petitioners are of the admission that no such collusion exists within the power industry.

19. It must be stressed, however, in its Consolidated Comment I Opposition with Counter-Petition dated January 8, 2014, respondent MERALCO, no less, clearly pointed to the generation and/or transmission companies as the main reason for the imposition of the arbitrary power rate increase. Such asseveration is a clear admission on the part of respondent MERALCO that the said generation and/or transmission companies are the culprits in the present dispute. In effect, respondent MERALCO is pointing out that on the issue of collusion it is practically out of the loop, so to speak, as it merely passes-on to the consumers the generation and transmission charges.

Thus:

"l.29 In order to ensure lower electricity rates, generation charges of GenCos and transmission charges of NGCP, among others, are legallv considered as mere "pass-through charges", which are billed directly by the DUs to their customers. When MERALCO bills its customers the pass-through charges it does not stand to benefit therefrom. The only portion that goes to MERALCO are the distribution-related charges." (Italics and underscoring supplied)

20. Threading on the above position, no less than respondent MERALCO sought relief from the Honorable Court in order to implead in the present case generation and transmission companies, as well as the market, where it sources its supply of electricity. The following entities are necessary parties and part of the electric power industry which may have colluded with each other, as determined by the Honorable Court in its Resolutions dated January 9 and 10, 2014, and which are all impleaded herein as respondents, to wit:

a. Philippine Electricity Market Corporation (PEMC);

b. SEM-Calaca Power Corporation;

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c. Masinloc Power Partners Corporation;

d. Therma Luzon, Incorporated;

e. San Miguel Energy Corporation;

f. South Premiere Power Corporation;

g. Therma Mobile Incorporated;

h. First Gas Power Corporation;

i. Quezon Power (Phi ls) Ltd, Co.;

j. FGP Corporation;

k. National Grid Corporation of the Philippines;

I. 1590 Energy Corporation;

m. AP Renewables, Incorporated;

n. Bae-Man Energy Development Corporation I Bae-Man Geothermal; Incoporated;

o. First Gen Hydropower Corporation;

p. GN Power Mariveles Coal Plant, Ltd. Company;

q. PANASIA Energy Holdings, Incorporated;

r. Power Sector Assets and Liabilities Management Corporation;

s. SN Aboitiz Power-Benguet, Incorporated I SN Aboitiz Power-Magat, Incorporated;

t. Strategic Power Development Corporation;

u. Trans-Asia Power Generation Corporation;

v. Vivant Sta. Clara Northern Renewables Generation Corporation.

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They are corporations existing and duly organized under and by virtue of the laws of the Republic of the Philippines and that they may be served with Summons, notices, resolutions, orders and other processes of the Honorable Court at their respective addresses stated at the bottom page of this Amended Petition.

v.

Class Suit Allegations

21. Class petitioners bring this action in their behalf and on behalf of the class of similarly situated persons, whether natural or juridical, with common or general interest to many persons who are all subscribers and consumers of respondent MERALCO.

22. The subject matter of the present Petition is of transcendental importance to all and is aimed to affect and promote the common good. It is therefore a class suit pursuant to Sec. 12, Rule 13 of the Rules of Court of the Philippines. The affected parties are so numerous, consisting of some 5,000 MERALCO subscribers, more or less, that it is impracticable to bring them all before the court so that they may sue for the benefit of all.

23. The named members of the class petitioners are typical and representative of the class and that they can fairly and adequately protect the interest and welfare of the class. Class petitioners' claims do not conflict with those of the class and that they are represented by an experienced group of lawyers knowledgeable in civil and class actions.

24. There are common questions of facts and law relating to the relief demanded by the class petitioners including, but not limited, to the following:

a. Declaring the amendment of Section 4 ( e), Rule 3 of the IRR EPIRA made by the DOE to be illegal, null and void ab initio;

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b. Declaring all Resolutions, Orders or any other issuances of the ERC authorizing, allowing, confirming, sanctioning or clearing the automatic power rate adjustments or increases imposed by MERALCO as inherently null and void on the ground of grave abuse of discretion, amounting to lack or excess of jurisdiction;

c. Declaring all electricity rate adjustments or increases automatically imposed or collected by MERALCO from its subscribers and consumers as inherently and patently null, void and illegal;

d. Prohibiting the ERC from allowing MERALCO to automatically impose and collect electricity rate adjustments and increases;

e. Ordering the audit and subsequent refund of all rate adjustments or increases automatically collected or imposed by MERALCO to all of its consumers or subscribers by virtue of the assailed ERC Resolutions, Orders or issuances;

f. Ordering the creation of a committee, headed by the Commission on Audit (COA), and where consumer interests are sufficiently represented, that would conduct the audit and subsequent refund of all automatic electricity rate adjustments or increases illegally imposed and collected by MERALCO;

g. Ordering the deposit into an escrow account of the aggregate amount of refund determined by the above-said Committee;

h. Ordering the proportionate distribution of the determined amount of refund to all class members;

i. Ordering the reimbursement in favor of the petitioners the costs of the present class suit.

VI.

Brief Statement of Material Facts and of the Case

Page 13 of 43

25. On February 2, 2006, this Honorable Court, in the case entitled "NASECORE, et. al. vs. ERC and MERALC03

",

issued a Decision of even date, the dispositive portion of which states:

"WHEREFORE, premises considered, the petition is GRANTED. The assailed ERC Order dated June 2, 2004 in ERC Case No. 2004-112 is DECLARED VOID and accordingly SET ASIDE." (Italics supplied)

26. On August 16, 2006, this Honorable Court issued a Resolution of even date denying the respective Motions for Reconsideration filed by the ERC and MERALCO assailing the above-quoted Decision, the dispositive portion of which states that:

"WHEREFORE, the Motion for Reconsideration dated February 17, 2006 of the ERC and the Motion for Reconsideration dated February 20, 2006 of MERALCO are DENIED with FINALITY.

The Comment-in-Intervention dated March 6, 2006 of PEPOA and the Intervention dated March 27, 2006 of PIPPA are, likewise, DENIED.

Consequently, upon finality of the Decision dated February 2, 2006, MERALCO is DIRECTED to REFUND to the affected consumers the amount of P0.1327 per kWh (representing the unauthorized increase from P3.1886 to P3.3213 per kWh under the nullified ERC Order dated June 2, 2004) reckoned from when the same was charged and collected from the affected consumers. Instead of an actual refund, MERALCO may correspondingly credit in favor of the affected customers the appropriate amounts for their future consumption. The ERC is DIRECTED to ensure the proper execution of the judgment in this case." (Italics supplied)

3 G. R. No. 163935, February 2, 2006.

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27. The above-said case proceeded ·from the petition for certiorari, prohibition and injunction, on the ground of violation of due process, filed by NASECORE, FOVA and FOLPHA, seeking to nullify the Order dated June 2, 2004 of the Energy Regulation Commission (ERC) in ERC Case No. 2004-112 approving the increase of respondent MERALCO's generation charge from P3.1886 per kWh to P3.3213 per kWh effective immediately, even without complying first with the requisites of publication mandated by Section 4 (e), Rule 3 of the Implementing Rules and Regulations (IRR) of the Electric Power Industry Reform Act (EPIRA).

Said Section 4 (e) of the IRR for EPIRA provides:

"(e) Any application or oetition for rate adjustment or for any relief affecting the consumers must be verified, and accompanied with an acknowledgement of receipt of a copy thereof by the LGU Legislative Body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy-five (75) calendar days from the filing of the application or petition, based on the same and the supporting documents attached thereto and such comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide the matter on the merits not later than twelve (12) months from the issuance of the aforementioned provisional order.

This Section 4(e) shall not apply to those applications or petitions already filed as of 26 December 2001 in compliance with Section 36 of the Act." (Italics and underscoring supplied)

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28. In emphasizing the need and the importance to comply with the publication requirement, this Honorable Court ratiocinated that:

"Indeed, the basic postulate of due process ordains that the consumers be notified of any application, and be apprised of its contents, that would result in compounding their economic burden. In this case, the consumers have the right to be informed of the bases of respondent MERALCO's amended application for the increase of its generation charge in order to, if thev so desire, effectively contest the same.

xx x.

The requirement of due process is not some favor or grace that the ERC mav dole out on a bout of whim or on occasion of charitv. Rather, it is a statutory right to which the consuming public is entitled.

The reauirement of publication in applications for rate adjustment is not without reason or purpose. It is ancillary to the due orocess requirement of notice and hearing. Its purpose is not merely to inform the consumers that an application for rate adjustment has been filed by the public utility. It is to adequately inform them that an application has been made for the adjustment of the rates being implemented by the public utility in order to afford them the opportunity to be heard and submit their stand as to the oroorietv and reasonableness of the of the rates within the period allowed by the Rule. Without the publication of the application, the consumers are left to second-guess the substance and merits of the application. 4 " (Italics and underscoring supplied)

29. The attempt to automatically impose - that is, without complying with the required publication an electricity rate increase or adjustment having been stunted and struck down by this Honorable Court's above-mentioned Decision and Resolution, the Department of Energy, through then Secretary Raphael P. M. Lotilla, in a seeming act of

4 Ibid.

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accommodation in favor of respondent MERALCO and apparently in collusion with respondent ERC, subsequently issued "Amendments to Section 4 (e) of Rule 3 and Section 7 of Rule 18 of the Implementing Rules and Regulations (IRR) of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act", effectively doing away with the requirement of publication in certain rate increase and adjustment applications of distribution utilities (referring to MERALCO in the present case).

The lone amendment to Section 4 (e) of Rule 3 of the IRR EPIRA reads:

"(e) Any application or petition for rate adjustment or for any relief affecting the consumers must be verified, and accompanied with an acknowledgement of receipt of a copy thereof by the LGU Legislative Body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy-five (75) calendar days from the filing of the application or petition, based on the same and the supporting documents attached thereto and such comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide the matter on the merits not later than twelve (12) months from the issuance of the aforementioned provisional order.

This Section 4 (e} shall not apply to Generation Rate Adjustment Mechanism (GRAM}, Incremental Currency Exchange Recovery Adjustment (ICE RA}, Transmission Rate Adjustment Mechanism, Transmission True-up Mechanism, System Loss Rate Adjustment Mechanism, Lifeline Rate Recoverv Mechanism, Cross-Subsidy Mechanism, Local

. .,.

Page 17 of 43

Franchise Tax Recovery Mechanism, Business Tax Recovery Mechanism, Automatic Generation Rate Adjustment Mechanism, VAT Recovery Mechanism, Incremental Generation Cost Adjustment Mechanism, and Recovery of Deferred Accounting Adjustment for Fuel Cost and Power Producers bv NPC and NPC-SPUG, Provided that, such adjustments shall be subject to subsequent verification by the ERC to avoid over /under recovery of charges." (Italics and underscoring supplied)

30. The introduction of the above-quoted amendment to Section 4 (e), Rule 3 of the IRR EPIRA paved the way for the ERC's introduction of the "GUIDELINES FOR THE AUTOMATIC ADJUSTMENT OF GENERATION RA TES AND SYSTEM LOSS RATES BY DISTRIBUTION UTILITIES." Under the said guidelines, a distribution utility like respondent MERALCO may now automatically adjust or increase not only the system loss rates, but the generation rates as well. This is so because the publication and other requirements stated in Section 4 (e) of the original IRR EPIRA had already been effectively amended as stated above, providing for an Automatic Generation Rate Adjustment Mechanism.

Section 2, Article III of the above-mentioned Guidelines provides for an automatic Generation Rate increase, as follows:

"Section 2. Billing of New Generation Rate -The Distribution Utilities shall bill their customers the Generation Rate calculated in accordance with the immediately preceding Section effective on the tenth (10) day of each month." (Italics and underscoring supplied)

A certified true copy of the "GUIDELINES FOR THE AUTOMATIC ADJUSTMENT OF GENERATION RATES AND SYSTEM LOSS RA TES BY DISTRIBUTION UTILITIES" is hereto attached and marked as Annex "D" hereof.

31. Subsequently, ERC likewise issued Resolution No. 10-01 and Resolution No. 10-04, both Series of 2004 and both entitled IN THE MATTER OF AMENDING THE

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GUIDELINES FOR THE AUTOMATIC ADJUSTMENT OF GENERATION RATES AND SYSTEM LOSS RATES BY DISTRIBUTION UTILITIES."

Certified true copies of the said Resolution No. 10-01 and Resolution No. 10-04, both Series of 2004, are hereto attached and marked as Annexes "E" and "F" hereof.

32. Likewise, Resolution No. 16, Series of 2009, entitled "A RESOLUTION ADOPTING THE RULES GOVERNING THE AUTOMATIC COST ADJUSTMENT AND TRUE-UP MECHANISMS AND CORRESPONDING CONFIRMATION PROCESS FOR DISTRIBUTION UTILITIES", a certified true copy of which is hereto attached and marked as Annex "G" hereof.

33. On December 5, 2013, respondent MERALCO sought clearance from respondent ERC for the staggered collection of its generation costs for the November 2013 supply month. MERALCO proposed to impose a generation charge of PhP7.90/kWh in its December 2013 billing, instead of the calculated PhP9.1070/kWh, and collect the deferred amount of about PhP3 Billion in its February 2014 billing.

34. Likewise, in a letter dated December 5, 2013, petitioner NASECORE wrote the respondent ERC, through its Chairperson Zenaida G. Cruz-Ducut, urging it "to immediately direct MERALCO not to implement its reported rate increase this month and .January next year as this will be contrary to law", to no avail.

35. On December 9, 2013, the ERC, through its Chairperson, Zenaida G. Cruz-Ducut, and Commissioners Alfredo J. Non and Josefina Patricia A. Magpale-Asirit, sent a letter to MERALCO's Ivanna G. Dela Pena, First Vice President and Head, Regulatory Management Office, advising the grant of clearance for the sought staggered implementation of its generation cost recovery.

A certified true copy of the letter dated December 9, 2013 sent by ERC to MERALCO is hereto attached and marked as Annex "H" hereof.

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36. Section 4 ( e) of Rule 3 of the IRR EPIRA having been amended by doing away with publication, which was originally required, the generation rate adjustment or increase intended by MERALCO now becomes automatic, without any mechanism that would apprise or notify the public of the reasonableness or justness of such adjustment or increase.

37. Further, ERC practically and deliberately resorted to a regulatory failure on its part when it conveniently surrendered its functions to MERALCO when it allowed the latter to automatically determine its rate adjustment or increase without even complying with the publication requirement and conducting the requisite public hearing thereto.

38. In the present Petition, class petitioners are of the position that the requirement of publication as an essential element of due process is inherently indispensable, even in the light of the amendment made in so far as Section 4 ( e) of Rule 3 of the EPIRA IRR is concerned. Thus, the related issuances of the ERC regarding the automatic electricity generation rate adjustment or increase are all null and void for being violative of the due process clause of the Constitution and for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

39. Hence, this Petition.

VII.

ARGUMENT

RESPONDENT ERC UNDENIABLY ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, WHEN IT GAVE CLEARANCE AND ALLOWED RESPONDENT MERALCO TO AUTOMATICALLY COLLECT, OR ABOUT TO DO SO, ALBEIT IN A STAGGERED AND UNLAWFUL

MANNER, ITS NOVEMBER 2013 SUPPLY MONTH GENERATION COSTS WITHOUT FIRST PUBLISHING IT AS REQUIRED BY LAW, AS WELL AS ALL OR ANY OTHER GENERATION COSTS IMPOSED BY RESPONDENT MERALCO WITHOUT DUE PROCESS OF LAW AGAINST ITS CONSUMERS AND SUBSCRIBERS IN OTHER INCLUSIVE SUPPLY MONTH PERIODS WHICH WERE LIKEWISE NOT PRIORLY PUBLISHED. ALL ACTS BEING CONSTITUTIONALLY INFIRMED.

VIII.

ISSUES

A.

The amendment made in Section 4 (e), Rule 3 of the IRR EPIRA is illegal per se for being violative of the declared State Policy of EPIRA and due process.

B.

Rate adjustments or increases cannot be done automatically without first complying with the publication requirements of the law.

c.

Respondent ERC and respondent MERALCO violated the

Page 20 of 43

due process clause when automatic rate adjustments or increases borne out by its alleged generation costs were allowed and subsequently collected against the electricity consuming public.

D.

The due process clause enshrined in the present Constitution is deemed to be written in every statute, contract, regulation, or undertaking.

E.

Automatic electricity rate adjustments or increases of MERALCO are not only violative of due process but also amount to a regulatory failure on the part of the ERC, an abject surrender of its regulatory functions, in violation of Section 25, EPIRA.

F.

The automatic rate adjustments or increases made and imposed by MERALCO against its consumers and subscribers being inherently and patently illegal for being violative of due process, a refund of all amounts collected by MERALCO from the petitioners is proper and the class must be ordered.

Page 21of43

IX.

Discussions

A.

The amendment made in Section 4 Ce), Rule 3 of the IRR EPIRA is illegal per se for being violative of the declared State Policy of EPIRA and due process.

B.

Rate adjustments or increases cannot be done automatically without first complying with the publication reguirements of the law.

c.

Respondent ERC and respondent MERALCO violated the due process clause when automatic rate adjustments or increases borne out by its alleged generation costs were allowed and subseguently collected against the electricity consuming public.

D.

The due process clause enshrined in the present

Page 22 of 43

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Constitution is deemed to be written in every statute, contract, regulation, or undertaking.

40. The above-stated issues, being materially relevant with each other, shall be discussed jointly herein.

41. Taking cue from the holding of the above-stated Resolution of this Honorable Court in the above-said case of "NASECORE, et. al. vs. ERC and MERALCO" to the effect that "[I]t should be made clear that, unless Section 4( e), Rule 3 of the IRR of the EPIRA is amended, the adjustments of rates based on purchased power or fuel adjustment costs shall not or in no case be "automatic"", the Department of Energy amended Section 4 (e), Rule 3 of the IRR EPIRA by exempting certain rate adjustment or increase mechanisms from the publication requirement. Thus, by doing away with the said requirement, it is believed that electricity rate adjustments or increases, as demonstrated by the herein assailed acts of respondents ERC and MERALCO, can be made and imposed automatically.

42. However, it is the firm position of the class petitioners that, even in the light of the aforesaid amendment introduced in Section 4 (e), Rule 3 of the IRR EPIRA, publication of electricity application for rate adjustments or increases is INDISPENSABLE and that its imposition cannot be made automatically. In fact, class petitioners are of the solid position that the amendment made is per se illegal for being violative of the intendments, provisions and the declared State Policy behind the EPIRA.

43. Settled is the rule that "[A]n implementing rule or regulation must conform to and be consistent with the provisions of the enabling statute; it cannot amend the law either by abridging or expanding its scope.5

"

5 Romarico J. Mendoza vs. People of the Philippines, G. R. No. 183891, October 19, 2011.

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44. More so, in the case of Luis K. Lakin, Jr. vs. COMELEc6 the Supreme Court held:

"The authority to make IRRs in order to carry out an express legislative purpose, or to effect the operation and enforcement of a law is not a power exclusively legislative in character, but is rather administrative in nature. The rules and regulations adopted and promulgated must not, however, subvert or be contrary to existing statutes. The function of promulgating IRRs may be legitimately exercised only for the purpose of carrying out the provisions of a law. The power of administrative agencies is confined to implementing the law or putting it into effect. Corollary to this is that administrative regulation cannot extend the law and amend a legislative enactment. It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation. Indeed, administrative or executive acts shall be valid only when they are not contrary to the laws or the Constitution." (Italics and underscoring supplied)

45. A mere cursory inspection of Section 2 ( c) of the EPIRA would readily reveal that the publication of electricity rate adjustments or increases is indispensable, and that its imposition on the consumers and subscribers cannot be effected automatically.

Section 2 (c) of the EPIRA provides:

"Section 2. Declaration of Policy. -- It is hereby declared the policy of the State:

(a) Xx x; (b) Xx x; ( c) To ensure transparent and reasonable prices of

electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market:

(d) Xx x; (e) Xx x; (f) Xx x; (g) Xx x;

6 G. R. No. 179431-32,

(h) Xx x; (i) Xx x; (j) Xx x;

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(k) X x x." (Italics and underscoring supplied)

46. Clearly, the amendment in Section 4 (e), Rule 3 of the IRR EPIRA, which effectively dispensed with the publication requirement of certain electricity rate adjustments or increase mechanisms, definitely makes it a total impossibility to enforce and implement the avowed State Policy of transparency in electricity rate fixing considering that rate adjustments and increases can now be effected automatically, without any way or method of apprising or informing the affected public as regards its justness or reasonableness. Needless to state, publication of the application for rate adjustments or increases is a means of ensuring "transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market."

47. Moreover, publication likewise is an effective tool in preventing the public from second-guessing the substance and merits of a particular rate adjustment or increase. Publication notifies and informs the public that a rate adjustment or increase is being applied for, as it encourages participative initiatives on the part of the public, thereby ruling out any arbitrary and oppressive electricity rate adjustments. Publication, therefore, is the concrete manifestation of due process which is essential in any application for any rate adjustment or increase.

48. Considering that the amendment on Section 4 (e), Rule 3 of the IRR EPIRA, which dispensed with the publication requirement, clearly runs afoul with the enabling law which it is supposed to implement, then such amendment can only be deemed and treated as illegal. Mere implementing rules and regulations cannot amend, supplement or substitute for the law itself. Indeed, "the river cannot rise higher than its source. 7 "

7 Paulo Ballesteros vs. Rolando Abion, G. R. No. 143361, February 9, 2006.

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49. The aforesaid amendment made on the IRR EPIRA being in itself illegal, all other subsequent issuances made on the basis thereof, particularly the ERC Resolution No. 10-01 and Resolution No. 10-04, both Series of 2004, as well as its latest letter dated December 9, 2013 clearing and allowing the staggered but automatic rate adjustment or increase of MERALCO's generation cost for November 2013 supply month, must in similar manner be deemed and declared illegal, null and void ab initio.

It must be struck down! And soon.

50. Incidentally, it bears stressing that no other than respondent MERALCO committed itself to be transparent and public in its rates. Thus, Section 5, R. A. 9209, otherwise dubbed as the MERALCO Mega Franchise, provides:

"Sec. 5. Rates for Services. -- The retail rates to its captive market and charges for the distribution of electric power by the grantee to its end-user shall be regulated by and subject to the approval of the ERC.

The grantee shall identify and segregate in its bill to the end-users the components of the retail rate pursuant to Republic Act No. 9136, unless otherwise amended. Such rates charged by the grantee to the end-users shall be made oublic and transparent. The grantee shall implement lifeline rate to end-users as mandated under Republic Act No. 9136." (Italics and underscoring supplied)

51. Additionally, MERALCO likewise committed to be responsible to the public by supplying electricity in the least cost manner, by charging reasonable, just and competitive power rates for its services, by not committing acts constituting abuse of market power, unfair trade practices, monopolistic schemes and other activities that will hinder competitiveness or business and industries.

Thus, Section 4, of the same MERALCO Mega Franchise provides:

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"Section 4. Resaonsibility to the Public. - The grantee shall supply electricity to its captive market in the least cost manner. In the interest of the public good and as far as feasible and whenever required by the ERC, the grantee shall modify, improve or change its facilities, poles, lines, systems and equipment for the purpose of providing efficient and reliable service and reduced electricity costs. The grantee shall charge reasonable, just and competitive power rates for its services to all types of consumers within its franchised area in order that business and industries shall be able to compete. The grantee shall have the obligation to provide open and nondiscriminatory access to its distribution system and services for any end-user within its franchise area consistent with Republic Act No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001 ". The grantee shall not engage in any activity that will constitute an abuse of market power such as but not limited to, unfair trade practices, monopolistic schemes and any other activities that will hinder competitiveness or business and industries." (Italics and underscoring supplied)

52. Noteworthy is the fact that the above-stated commitment of MERALCO to the public, as stated in its Mega Franchise, can only be done and realized by notifying the public through publication of its application for rate adjustments or increases and by encouraging public participation in the process of its approval, rather than embedding it automatically, albeit arbitrarily, in each of its consumer's monthly billing by reason of an instant rate imposition.

53. Viewed in another context, however, the automatic rate adjustments and increases promote a violation of Meralco's Mega Franchise, which is in itself a ground for its revocation.

54. Additionally, it must be emphasized that the amendment made on Section 4 (e), Rule 3 of the IRR EPIRA dispensing with the publication requirement of applications for rate adjustments or increases does not divest respondents ERC and MERALCO of the obligation under the law to publish and conduct public hearings or consultations thereon.

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55. Suffice it to state that the public in general, represented by the herein class petitioners, who shall be at the receiving end of the burden imposed by rate adjustments or increases, has the right to be notified and informed thereof, as well as the right to present its side and be heard. This is in accordance with the due process clause enshrined in the Constitution, which is deemed written in every statute, contract, regulation or undertaking. Thus, even if the requirement of publication had been deleted as a result of the amendment, such requirement, being essential to due process, is still deemed effectively written in the IRR EPIRA.

Thus, in the case of Ruben Serrano vs. NLRc8, the Supreme Court ruled that:

"Elementary is the doctrine that constitutional provisions are deemed written into every statute, contract or undertaking." (Italics and underscoring supplied)

56. Likewise, due process was simply and plainly described in the case of Jose R. Catacutan vs. People9 as:

"Due process simply demands an ooportunity to be heard." "Due process is satisfied when the parties are afforded a fair and reasonable opportunity to explain their respective sides of the controversy." (Italics and underscoring supplied)

57. Given the foregoing disquisition, it is more than clear that the assailed automatic rate adjustments and increases allowed by ERC and immediately implemented by MERALCO is violative of the declared State Policy stated in the EPIRA and of due process.

8 G. R. No. 117040, January 27, 2000; cited in the separate concurring opinion of then Chief Justice

Artemio Panganiban. 9 G. R. No. 175991, August 31, 2011.

E.

Automatic electricity rate adjustments or increases of MERALCO are not only violative of due process but also amount to a regulatory failure on the part of the ERC, an abject surrender of its regulatory functions, in violation of Section 25, EPIRA.

58. Section 25 of the EPIRA provides:

Page 29 of 43

"SEC.25. Retail Rate. - The retail rates charged by distribution utilities for the supoly of electricity in their captive market shall be subject to regulation bv the ERC based on the principle of full recovery of prudent and reasonable economic costs incurred, or such other orinciples that will promote efficiency as may be determined by the ERC.

Every distribution utility shall identify and segregate in its bills to end-users the components of the retail rate, as defined in this Act." (Italics and underscoring)

59. Clear from the above-quoted prov1s1on of the EPIRA that no other government agency or private entity is tasked and mandated to regulate the retail rates being charged by MERALCO to its captive market. However, when the ERC cleared and allowed said MERALCO to automatically adjust and increase its rate given the herein assailed Resolutions and letter, respondent ERC practically and conveniently surrendered and delegated its regulatory functions and office to MERALCO. Automatic rate adjustment or increase effectively defeated the regulatory authority of ERC, as mandated by law.

60. More than being a total regulatory failure on the part of the ERC, its act of allowing an automatic rate adjustment or increase amounts to a delegation of its authority and regulatory functions which is definitely

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violative of the above-quoted prov1s1on of the EPIRA. Settled is the rule that a delegated authority cannot further be delegated "potestas delegate non delegare potest."

Thus:

"The rule is that what has been delegated cannot be delegated, or as expressed in the Latin maxim: potestas delegate non delegare potest. This rule is based upon the ethical principle that such delegated power constitutes not only a right but a duty to be performed by the delegate by the instrumentality of his own judgment acting immediately upon the matter of legislation and not through the intervening mind of another.10

" (Italics and underscoring supplied)

61. Axiomatic in the act of ERC is the invalidity of its action.

F.

The automatic rate adjustments or increases made and imposed by M ERALCO against its consumers and subscribers being inherently and patently illegal for being violative of due process, a refund of all amounts collected by MERALCO from the petitioners and the class must be ordered.

62. The amount collected or imposed by MERALCO to its subscribers and consumers from the time the automatic rate adjustments or increases had been allowed by

10 William C. Dagan, et. al. vs. PHILRACOM, et. al., G. R. No. 175220, February 12, 2009.

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respondent ERC being patently illegal, the same should be returned by way of refund to them, with dispatch. Such illegal collection or imposition of automatic rate adjustment or increase amounts to unjust enrichment on the part of MERALCO, necessitating its return to the said subscribers and consumers11

•

63. Note must be made that the herein assailed ERC Resolutions date back to the year 2004 when automatic rate adjustment and increase was allowed by ERC. Thus, the year 2004 must be the reckoning year of the refund prayed for.

64. In order that the refund may be effected in a transparent manner, a committee headed by the Commission on Audit (COA), and joined by representatives of the electricity consuming public, through the herein class petitioners, must be created and its members appointed, for the sole purpose of conducting a diligent audit designed to ascertain the total amount of refund due to MERALCO consumers and subscribers.

65. Likewise, in the name of transparency, MERALCO must be made to deposit the amount of refund to an escrow account in favor of the class petitioners and the class itself of subscribers and consumers.

x.

GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION

66. In the case of Tri-Corp Land & Development, Inc. vs. Court of Appeals12

, the Supreme Court had the occasion to define grave abuse of discretion, to wit:

"As defined, grave abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to lack or excess of jurisdiction or, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal hostilitv,

11 Similar to what was ordered in the aforesaid case of NASECORE vs. ERC & MERALCO, infra.

12 G. R. No. 165742, June 30, 2009.

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and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law." (Italics and underscoring supplied)

67. In the case at bar, respondents clearly acted with grave abuse of discretion, sufficient to conclude that they acted in a whimsical, capricious, or arbitrary manner by reason of prejudice amounting to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law, when:

a. The DOE amended Section 4 (e), Rule 3 of the IRR EPIRA in violation of the provision and declared State Policy of the law;

b. Respondent ERC, following and basing on the illegal amendment made by the DOE, issued the herein assailed Resolutions and letter allowing the automatic rate adjustment and increase in favor of MERALCO, which resulted in the unlawful imposition of illegal electricity rate adjustment or increase and in clear violation of due process of law;

c. The ERC virtually surrendered its regulatory functions, as an undue advantage, in favor of MERALCO and against the general public.

XI.

ALLEGATIONS IN SUPPORT OF THE APPLICATION OF THE CLASS PLAINTIFFS

FOR A TEMPORARY RESTRAINING ORDER I STATUS QUO ANTE ORDER AND INJUNCTION

Class plaintiffs adopt and reiterate the herein-above allegations insofar as they are material hereto;

of 43

68. The issuance by respondent ERC of the herein assailed Resolution and Letter which is immediately executory on the part of MERALCO to automatically collect and impose electricity rate adjustment and increase leaves class petitioners without any other plain, speedy, immediate and available recourse under the law to prevent the execution thereof, upon its lapse into finality.

69. The threatened execution of the above-stated Resolutions and letter would definitely render nugatory and academic the relief and remedies herein prayed for, if the same will not be outrightly restrained and/or enjoined. It would definitely be promotive of the interest of substantial justice and public policy to restrain and/or enjoin the execution of the same issuances.

70. In the same manner, not only the class petitioners, but the public in general based on the perpetration of an injustice, would suffer grave and irreparable injury if the said Resolutions and letter are executed or carried out by MERALCO with the concurrence of DOE and ERC, as it would deprive the class petitioners and the class itself of their rights without due process of law.

71. Class petitioners are meritoriously entitled to the relief and remedies prayed for, and the whole or part of such relief and remedies consist in restraining the commission of the acts complained of, or the performance of an action or acts, either for a limited period or perpetually.

72. The commission or continuance of the acts complained of during the litigation or the non-performance thereof would work grave injustice to the herein class petitioners and the general public.

73. MERALCO, with the concurrence of DOE and ERC, is doing, threatening, is about to do or procuring to be done, some acts in violation of the petitioners' and the public's rights respecting the subject of the action herein and tending to render the judgment hereof ineffectual.

74. The threatened and actual implementation and execution of the said Resolutions and letter would serve no purpose but to tolerate unjust enrichment and injustice.

of 43

75. There is a need to place the parties in their respective status before the filing of the present case and before the issuance of the assailed Resolutions and letter by the ERC, necessitating the issuance of a Status Quo Ante Order.

76. The immediate issuance of the injunctive and ancillary relief of restraining and/or enjoining the implementation or execution of the afore-mentioned Resolutions and letter issued by respondent ERC in favor of MERALCO is highly in order.

77. Or if the acts complained of have already been commenced or accomplished, the immediate issuance of the injunctive and ancillary relief of restraining and/or enjoining the implementation or execution of the afore-mentioned Resolutions and letter issued by the ERC in favor of MERALCO is highly in order.

XII.

Prayer

WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court that:

Immediately upon Filing of the Petition

1. A Temporary Restraining Order (TRO) or a Status Quo Ante Order be issued ex-parte immediately and with extreme dispatch, restraining and enjoining respondents, their agents, representatives and all other persons, agencies or instrumentalities who may be acting under their direct and incidental control and supervision, from implementing, executing and carrying out the execution of its Resolution 10-01, Resolution 10-04, both Series of 2004, and the letter of ERC to MERALCO dated December 9, 2013 (Annexes "E", "F" and "H", respectively);

of 43

After Due Notice and/or Summary Hearing on the Issuance of Injunction

2. A Writ of Prohibitory Preliminary Injunction be immediately issued restraining and enjoining the respondents, and all other persons, agencies or instrumentalities who may be acting under their direct and incidental control and supervision, from implementing, executing and carrying out Resolution 10-01, Resolution 10-04, both Series of 2004, and the letter dated December 9, 2013, until the final disposition on the merits of the present petition;

After Hearing on the Merits

3. The Writ of Prohibitory Preliminary Injunction be declared permanent and perpetual;

4. Render a Decision declaring the respondents to have acted with grave abuse of discretion, amounting to lack or excess of jurisdiction, and consequently:

a. Declaring the amendment of Section 4 (e), Rule 3 of the IRR EPIRA made by the DOE to be illegal, null and void ab initio;

b. Declaring all resolutions, orders or any other issuances of respondent ERC authorizing, allowing, confirming and implementing the automatic power rate adjustments or increases imposed by MERALCO as inherently null and void on the ground of grave abuse of discretion, amounting to lack or excess of jurisdiction;

c. Declaring of all electricity rate adjustments or increases automatically imposed or collected by MERALCO from its subscribers and consumers as inherently and patently null, void and illegal;

of 43

d. Prohibiting the ERC from allowing MERALCO to impose and collect automatically rates adjustments and increases;

e. Ordering the audit and subsequent refund of all rate adjustments or increases automatically collected or imposed by respondent MERALCO to all of its consumers or subscribers by virtue of the assailed ERC resolutions, orders or issuances with utmost dispatch, reckoned from the year 2004;

f. Ordering the creation of a committee, appointing the Commission on Audit (COA) as head, and where consumer interests are sufficiently represented, that would conduct immediate audit and subsequent refund of all automatic electricity rate adjustments or increases illegally imposed and collected by MERALCO reckoned from the year 2004;

g. Ordering the deposit in an escrow account the aggregate amount of refund determined by the committee headed Commission on Audit (COA); and

h. Ordering the proportionate distribution of the determined amount of refund to all class members;

Other remedies appropriate under the premises are also prayed for.

Metro Manila, January 12, 2013.

RENE A. V. SAGUISAG Counsel for Petitioners 4045 Bigasan Street

Brgy. Palanan, Makati City

RENE A. V. SAGUISAG IBP Lifetime No. 03214122903

PTR No. 3671506-01.02.13-Rizal Roll of Attorneys No.19190

Page 37 of 43

MCLE Exemption No. 3-001432-6.28.10 Pasig

LEONARD S. DE VERA Counsel for Petitioners

Penthouse B, Windsor Tower 163 Legazpi St., Legazpi Village, Makati City 1229

Telefax No. (02) 8127739 PTR No. 4233296-01.07.14-Makati City IBP Lifetime Member Roll No. 000000

Roll of Attorneys No. 23534 MCLE Compliance No. IV-0019174-04.26.13

NELSON A. LOYOLA Counsel for Petitioners

Suite 201 Carreon Building 2746 Zenaida Street

Brgy. Poblacion, Makati City PTR No. 3676854-01.08.13-Makati

IBP Lifetime No. 0010-11.15.93 Roll of Attorneys No. 23649

MCLE Compliance No. V-0001091-11.12.13

RONNI!.:. ~~ ounse~rfp~~i~~~~s

No. 137 Libis Gochuico Street, Circumferential Road 3,

Caloocan City 1400 Tel. No. 3511718

Email: [email protected] IBP NO. 926338; 01-16-13-Calmana

PTR NO. 5534040; 01-14-13-Caloocan City Roll of Attorneys No. 48536

MCLE Compliance No. IV - 0018734, April 24, 2013

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Copy furnished: (By personal service)

DEPARTMENT OF ENERGY Energy Center, Rizal Drive Bonifacio City Taguig City 1632

ENERGY REGULATORY COMMISSION Pacific Centre Building San Miguel Avenue, Pasig City

MANILA ELECTRIC COMPANY Lopez Building, Ortigas Avenue Pasig City

THE SOLICITOR GENERAL 134 Amorsolo Street, Legaspi Village, Makati City

I hereby acknowledge receipt, by personal service, of the copies of the (1) Petition for Certiorari and Prohibition (Class Suit) dated December 18, 2013 and the (2) Compliance (with Attached Copy of the Amended Petition) dated January 12, 2014.

(Signature & Date Above Printed Name)

Impleaded Necessary Parties

PHILIPPINE ELECTRICITY MARKET CORP. 18/F Robinsons Equitable Tower, Ortiqas, Pasiq City

SEM-CALACA POWER CORPORATION 2/F DMCI Plaza Building 2281, Don Chino Races Extension, Bgy. Magallanes, Makati City

MASINLOC POWER PARTNERS CORP. Philamlife Tower 8767, Paseo De Roxas, Makati City 1200

SAN MIGUEL ENERGY CORPORATION 2/F 808 Building, Gen. Lim cor. Meralco Avenue, Ortigas Center, Pasio City 1600

SOUTH PREMIERE POWER CORPORATION 2/F 808 Building, Gen. Lim cor. Meralco Avenue, Ortigas Center, Pasio City

THERMA INCORPORATED

MOBILE

Ground Floor, Philippine Fisheries Development Authority Complex Building, Navotas City

FIRST GAS POWER CORPORATION 3/F Ben pres Building, Exchange Road car. Meralco Avenue, Ortiqas Center, Pasiq City

Page 39 of 43

QUEZON POWER PHILS. (LTD) COMPANY 14/F Zuellig Building Makati Ave. cor. Paseo De Roxas, Makati City 1225

THERMA LUZON, INCORPORATED NAC Tower, 32nd Street, Bonifacio Global City, Taguig City

FGP CORPORATION 3/F Ben pres Building, Exchange Road cor. Meralco Avenue, Ortigas Center, Pasig City

NATIONAL CORPORATION PHILIPPINES

GRID OF THE

Quezon Avenue cor. BIR Road, Diliman,Quezon City 1100

1590 ENERGY CORPORATION Unit 107 First Midland Office Condominium Building Gamboa St., Legaspi Village, Makati City

AP RENEWABLES INCORPORATED 15/F, NAC Tower, 32nd St., Bonifacio Global City, Taguig City

BAC-MAN ENERGY DEVELOPMENT CORPORATION I BAC-MAN GEOTHERMAL, INCORPORATED 38/F One Corporate Center Julia Vargas cor. Meralco Avenue, Ortigas Center, Pasig

Page 40 of 43

City 1605

FIRST GEN HYDRO POWER CORPORATION 3/F Ben pres Building, Exchange Road cor. Meralco Avenue, Ortigas Center, Pasig City

GN POWER MARIVELES COAL PLANT LTD., CO. 1905 Orient Square Building Don Francisco Ortigas, Jr. Road, Ortiqas Center, Pasiq City

PANASIA ENERGY HOLDINGS 2/F 808 Building, Gen. Lim cor. Meralco Avenue, Ortigas Center, Pasiq City

POWER SECTOR ASSETS & LIABILITIES MANAGEMENT CORP. 7/F Bankmer Building, 6756 Ayala Avenue, Makati City

SN ABOITIZ-BENGUET, INCORPORATED / SN ABOITIZ-MAGAT, INCORPORATED 10/F, NAC Tower, 32nd St., Bonifacio Global City Taguig City

STRATEGIC POWER DEVELOPMENT CORPORATION 2/F 808 Building, Gen. Lim cor. Meralco Avenue, Ortiqas Center, Pasig City

TRANS ASIA POWER GENERATION CORPORATION 11/F PHINMA Plaza, 39 Plaza

Page 41of43

of 43

Drive, Rockwell Center Makati City 1200

VIVANT STA. CLARA NORTHERN RENEWABLES GENERATION CORPORATION Unit 107, First Midland Office Condominium Building Gamboa St., Legaspi Village, Makati City

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REPUBLIC OF THE PHILIPPINES) Makati City ) SS. x----------------------------------x

VERIFICATION I CERTIFICATION

I, RODRIGO C. DOMINGO, one of the petitioners in the aboveentitled case, of legal age, Filipino citizen, with postal address located at 15/F LPL Center, No. 130 L. P. Leviste Street, Salcedo Village, Makati City, after having been duly sworn in accordance with law, hereby depose and state: That -

1. I am one of the petitioners in the present class action against respondents;

2. I caused the preparation of the foregoing Amended Petition for Certiorari and Prohibition;

3. I have read the contents thereof and affirm that the same are true and correct to the best of my personal knowledge and/or are based on authentic records;

4. Pursuant to and in compliance with Supreme Court Administrative Circular NO. 04-94, I hereby certify that I have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency; to the best of my knowledge, no such action or proceeding is pending with the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency; and if I should thereafter learn that a similar action or proceeding has been filed or is pending before the above tribunals or agency, I hereby undertake to report that fact within five (5) days therefrom.

~-"""'°"'------==- \ RODRIGO C. DOMINGO, JR.

Petitioner/ Affia nt OSCA ID No. 3677

issued by Makati City on April 27, 2005

~~A~ 1~1~\~ SUBSCRIBED AND SWORN to before me this_ January 2014, in

the City of Makati, the affiant exhibited to me his government-issued ID as stated above, bearing his photograph, as his competent evidence of his identity.

Doc. No. /~?; Page No. .((, Book No. lt.3 Series of 2014.

VERIFICATION a CERTIFICATfON

PETRONllO L ILAGAN, of legal age, FHipi110, married, with office and postal address at No. 10 Bayside Court Compound, 680 Quirino Avenue, Tambo, Paranaque City~ after being swor;;, deposes and states: THAT

1. He is the President of the Natfonal As.sodation of Electricity Consumers for Reforms, f nc. t who had caused the preparaUon of the foregoing Petition a copy of Secretary's Certificate authorizing Mr. Petronilc L . tlagan to file this Petition is attached as Annex «A"

2. He read and fully understood the allegations contafned in said Petition and that all the facts therein contained are true and ::orrect based on his personal knowledge and authentic records.

3. · . He hereby certify that he have not commenced nor caused the commencement of any other action or proceeding involving the issues raised herein before the Regional Trial Court, the Supreme Court or .ctifferent Divisions thereof, or any other tribunal or agency, and that to the best of his· knowledge~ no such action or proceedings is pending before the Regional Trial Cour( the Supreme ·court, or different Dlvisions ther,.=of, or any other tribunal or agency; and that if he should Learn that a similar action or proceeding has been filed or pending before the Supreme Court, or different Divisions thereof> or any other tribunals or agency, he shall notify this Honorable Commission within five (5) days from such notice.

IN WITNES.S WHEREOF, he has hereunto o.fffxed his .:s~gnature th1s 19th day of December 2013 at ParaFiaque City.

·~ • ILAGAN nt

SUBSCRIBED AND SWORN to before me this -- day of ~·oEC 2 0 2ui3 2013, by affiant who showed me his Drivers License N10-74-012320 issued by LTO - East Avenue) ei.-id ~piri ttj bot ~.bu f, :Wflf.

Doc. No._ f ; Page No._.,... ; Beak No. ltJ · - ·~--•

Sertes of 2013

...----ATT U"UZ:

~

U.i~il DP.~:r:ber J1 ;;;!)1 '..\ .11.?pt rlc M-J:;-, !·,.~;::;k.:!t. City

I 3P ;';'8'.19 i'!D VAv :?.2 201'~-i<.S~Ji f'.' ~·R 11~·65.7;.tP."i J;:in 1~. J .. ~:)1:2-.l>.l~~

SC Ho!C !'i~) :.959·r ~,1ct..:=: Com~1:·.<' :}(>'; No :v .o•: ! 1 :?.30

Lk:<t~ Of: : .. ::tfiA.(•a r-;e:re:.a T.:;1~"tfttr ~3 R':.i~·''J ;·~t r;nr './alaro $t Sw:r.J..q.i-.~ ~..11~.:-~'i' ~ 'tk.,:-:t (;:!J..~

1

VERl.FICATION & CKRTrFfCA TION

STRGFRIF..DO A,. VELOSO, of legal age, Fi1ipino, married. with office and postal address at ff 19 Tagaytay .SL .Afabang Hills Vi Hage. Cupang, Mu.o:tinlupa City. after being sworn. deposes and state.s: THAT

·1 , He is a Dire<.iOr of the Federation of Village A~socialions, who had caused the preparation of the foregoing Petition a copy of Secretary's Ce1tificate authorizing ~"NGR_ SlliG.F.R.IEDO A VELOSO 10 flle this Peiiiion is attuched as Annex"~~'

2_ He read and fully understood till: allegatfons contal.ned in said Petition and that all the fa'-1S therein contained arc true and correcL ha'led on h1~ personal k.nowledge and authentic records_

3. He hereby certify- that he have not commenced nor caused. the commencement of any other action or proceeding it~volving the issues raised herein before the R.cgiorutl Trial Court, the Supreme Court or different Ohir;ions thereof.. or any other tribunal or agency, and that to the best of his knowledge. no such action or proceedings. is pending hefore the .Regional Trial Court, tho;; Supreme Court. or different Divisions thereof, or any olher tribunai or agency; anri ihat if he shoujd learn that a simllar. action or proceeding has been filed or pcntling before the Supreme Court, or different Divisions thereof, or any other tribunals or agency, he ,(tha1J notify this Honorable Commission Viithin five (5) days from such notice_

TN WITNESS WHERF.OF~ he has hcreunLc aff'1Xed his s.ignature this 17lh day of December 2013 at \4UN11}.."1.,L"PA CITY_

<iFRIEDO A. VELOSO Affianb

. nc\~ 1 a inu SUBSCRTRF.D AND S\VORN to before me on this __ ·'1 day oi 2013, by affiar.t who showed me his OSCA ID No_ 19263 j~~ued a.L Munlin1upa City ()1i

November 20, 2007_

~.~.~r Page No. Book.No_ , ___ _

Series of2013"'- ·

VER.IFICA TIOH a i;_ERTIF!_CA TIO~

OONIFACIO C. DAZO of Eegai age~ Filipino_, widower, with office and postal address at Myrna Panlilio St.i B.f.Resort Vitlage~ La~ Pinas City~ after ~ng sworn, deposes and states: THAT

1. He Is th€ President of the Federation of Las Pinas Homeowners Association, toe.~ who had caused the pr:eparatfon of the foregoing Petition a copy of Sec-.retary»s Certificate authorizlng BONlFACIO C. DAZO to fite this Petition is attached as Annex~- ~

2. He read and fully understood th~ allegations contained in said Petition and that an the facts therefn contained are true and c..orrect based on his persooat knowledge and authentic records.

3~ He hereby certify that he have not commenc~d oor caused the commencement of any other action or prot:eeding invob1ing the issues ralsed herein before the Regionat Trial Court~ the Supreme Couft or different Of.visions thereof~ or any other tribunal or agency, and that to the best of his knowledge~ no such action or proceedings is pending before the Regional Trial Court, the Supreme Court~ or different Divisions thereof1 or any other trtbe.mal or agency; and that ff he should !~am that a similar action or proceeding has been filed or pending before the Supreme Cou~ or different ·DMSions thereof, or any other tribunals or agency,. he !Shall notify this Honorable Commission within five (5) days from such notice.

~N WITNESS WHEREOF) he has hereunto affixed his signature this 16th .day of December 2013 at las Pma'i C1ty.

-f?~~ BONtf' ACIO C. DAZO

Afflant

SUBSCRIBED AND SWORN to before me thi5 -~day of JlEf: 2 0 2013 20131 by affiant who showed me ms Communtt:y Certifkate No. 06133462 issued on Froruary 2~ 2013 at las Pinas City. cs ~A 10 No. {:f.3v3'4.! f~SIA:~ b' . k~ p~ . e,..'ry .t'l'l N.n • 14, ~

Doc. No.±, · ?age No. ; Book No. · ;

Series of 2013

... ·- -·---------~~--------

REPUBLIC OF THE PHILIPPINES ) MAKA TI CITY ) S.S.

AFFIDAVIT OF SERVICE (In compliance with Section 12. Rule 13 of the Rules qj"Court, as amended by Supreme Court Resolution dated April 8. 1997)

I, ALLEN D. BUG-ATAN, Filipino, of legal age, with office address at 15111

Floor, LPL Center, 130 L. P. Leviste Street, Salcedo Village. Makati City, after having been duly sworn in accordance with law. hereby depose and state: That -

1. I am a liaison officer of Domingo Dizon Adre & Leonardo - A Law Partnership, of which petitioner Rodrigo C. Domingo. Jr. is one of the partners;

2. On January 13, 2014, I served by personal service, in so far as can be done, the foregoing "Compliance (With Attached Copy qf the Amended Petition for Certiorari and/or Prohibition)" dated January 12, 2014, in the case entitled "National Association ~f Electricity Consumers/hr Re_fimns (NASECORE). et. al. vs. Afanila Electric Company, et. al." G. R. No. 210255. pending with the Supreme Comi, Manila. to the following respondents:

1. Manila Electric Company Lopez Building, Ortigas A venue Pasig City

2. Energy Regulatory Commission Pacific Centre Building San Miguel Avenue, Pasig City

3. Department of Energy Energy Center, Rizal Drive Bonifacio City Taguig City 1632

4. The Solicitor General 134 Amorsolo Street Legaspi Village, Makati City

5. Philipine Electricity Market Corporation 18/F Robinsons Equitable Tower 01iigas Center, Pasig City

6. Sem-Calaca Power Corporation 2/F DMCI Plaza Building 2281 Don Chino Roces Extension Brgy. Magallanes. Makati City

7. Masinloc Power Paiiners Corporation Philamlife Tower 8767 Paseo de Roxas Makati City

8. San Miguel Energy Corporation 2/F 808 Building Gen. Lim corner Meralco A venue Ortigas Center, Pasig City

9. South Premiere Power Corporation 2/F 808 Building Gen. Lim corner Meralco A venue 01iigas Center, Pasig City

10. Therma Mobile Incorporated Ground Floor Philippine Fisheries Development Authority Complex Building Navotas City

11 . First Gas Power Corporation 3/F Benpress Building Exchange Road corner Meralco A venue Ortigas Center, Pasig City

12. Quezon Power Phi ls. (LTD) Company 14/F Zuellig Building Makati A venue corner Paseo de Roxas Makati City

13. Therma Luzon Incorporated NAC Tower, 3211


14. FGP Corporation 3/F Benpress Building Exchange Road corner Meralco A venue Otiigas Center, Pasig City

15. National Grid Corporation of the Philippines Quezon Avenue corner BIR Road Diliman, Quezon City

16. 1590 Energy Corporation Unit 107 First Midland Office Condominium Building Gamboa Street, Legaspi Village, Makati City

17. AP Renewables Incorporated 15/F NAC Tower, 3211


18. Bae-Man Energy Development Corporation/ Bae-Man Geothermal Incorporated 38/F One Corporate Center Julia Vargas corner Meralco Avenue Ortigas Center, Pasig City

2

19. First Gen Hydro Power Corporation 3/F Benpress Building Exchange Road corner Meralco A venue Otiigas Center, Pasig City

20. GN Power Mariveles Coal Plant Ltd., Co. 1905 Orient Square Building Don Francisco Otiigas, Jr. Road 01iigas Center, Pasig City

21. Panasia Energy Holdings 2/F 808 Building

" Gen. Lim corner Meralco A venue 01iigas Center, Pasig City

22. Power Sector Assets & Liabilities Management Corporation 7/F Bankmer Building 6756 Ayala A venue, Makati City

23. SN Aboitiz-Benguet Incorporated/ SN Aboitiz-Magat Incorporated I O/F NAC Tower, 3211

d Street Bonifacio Global City, Taguig City

24. Strategic Power Development Corporation 2/F 808 Building Gen. Lim corner Meralco A venue 01iigas Center, Pasig City

25. Trans Asia Power Generation Corporation 11 IF Phinma Plaza 39 Plaza Drive, Rockwell Center Makati City

26. Vivant Sta. Clara Northern Renewables Generation Corporation Unit I 07 First Midland Office Condominium Building Gamboa Street Legaspi Village, Makati City

or their respective counsel of record. Service on the other respondents shall be made today, as far as practicable, on the following working day.

3. I am executing this Affidavit in order to attest to the truth of the foregoing statements.

SUSCRIBED AND SWORN TO before me this 13th day of .January 2014 in Makati City, affiant exhibiting to me his Philhealth Card No. 01-051485921-9 with his picture attached thereon as a competent of proof his identity.

Doc. No. _jgg__; Page No. .2,(, ; Book No.~ __ ; Series of2014.

3

TABLE OF ANNEXES

AMENDED PETITION NASECORE, ET. AL. VS. MERALCO, ET. AL.

G.R. NO. 210255 SUPREME COURT, MANILA

ANNEXES DESCRIPTIONS

"A" Secretary's Certificate of National Association of Electricity Consumers for Reform (NASECORE) dated December 19, 2013.

"B" Secretary's Certificate of Federation of Village Associations (FOVA) dated December 16, 2013.

"C" Secretary's Certificate of Federation of Las Piiias Homeowners Associations (FOLPHA) dated December 20, 2013.

"D" Guidelines for the Automatic Adjustment of Generation Rates and System Loss Rates by Distribution Utilities.

"E" Certified True Copy of Resolution No. 10-01, Series of 2004 entitled In The Matter of Amending the Guidelines for the Automatic Adjustment of Generation Rates and System Loss Rates by Distribution Utilities.

"F" Certified True Copy of Resolution No. 10-04, Series of 2004 entitled In The Matter of amending the Guidelines for the Automatic Adjustment of Generation Rates and System Loss Rates by Distribution Utilities.

"G" Resolution No. 16, Series of 2009 entitled A Resolution Adopting the Rules Governing the Automatic Cost Adjustment and True-Up Mechanisms and Corresponding Confirmation Process for Distribution Utilities.

"H" Certified True Copy of the letter dated December 9, 2013 sent by ERC to MERALCO.

4NNEX A

ANNEX A

SECRETARY'S CERTIFICATE

I, Rot~ALD G. GOZUN, a duly elected, qualified and incumbent Corporate Secretary of National Association of electricity Consumers for Reforms, Inc (NASECORE), a non-stock corporation duly organized and existing under and by virtue of the laws of the Philippines, do hereby certify that:

At the special meeting of the Board of Directors of the NASECORE duly convened and held on December 13, 2013 at which meeting a quorum was present, acted throughout and voted, the following resolutions were approved:

"RESOLVED, that the Board of Directors of NASECORE approve, as it hereby approves, the filing of ti1e Petition with the Supreme Court of the Philippines.

RESOLVED, that Mr. Petronila L. Ilagan, President of NASECORE was empowered, and is hereby empowered to sign, execute, verify and deliver on behalf of NASECORE the said Petition, any papers and instruments that he may deem appropriate and necessary, for the furtherance of NASECORE's interest.

WITNESS THE SIGNATURE of the undersigned as such officer of the Association and its corporate seal hereunto affixed on this 13th day of Dece , er 2013 at Paraiiaque City.

~of OP te Secretary

itin SUBSCRIBE'~ AND SWORN to before me this of 2013, affiant exhibiting to me his Driver's License No. NOJ-01.-3082 J6 issued at LTD - East Avenue.~

Doc. No. _J_J,£_ Page No._!lL_ Book No. &J

Series of 2013

0ypi"r""j N~b;... 3,413 .

ATTY~ Until December 31 2'013

Appt No M-5:? 1 M~t<at1 City IBP #8CJ9i'(l M21y D Z\J12-W;M

PTR #Jti85,1;·:~, .J.3n 111 )0"13-M;ik;iti S C H·rJll Nfl :·J~Jri':f/

MCLE Com pl 1;,rn'.Y' i'io I \I -001 1330 Unit nf· Cityl~rnd l-1erri~ra Tower #98 Huf1no St cor Valero SL Salc:Rdo V1ila(~e. fl.'la~lJ CAit

2


1, MELANlE ~- ROSAS, a duly elected, qualifi(";d ~d incumbent C'.orporatc Secretary of Federation of Village Associations (l;OVA), a non-stock corporation duly orga:nit.ed and ex1~iiug under and by virtue oftbe laws of the Philippines, do hereby certify that:

At ihe regular m~ting of the Board of Directon; of FOVA duly convened and held on October 12, 2013 at v,.tiich meeting a. quorum was present, acted throughout a..-,d voted, the follo'\\ing resolutions. were approved.

"RESOLVED, that the lloard of Directors ofFOVA approve, a.~ it hereby approves, the fi1ing of the Petition with the Sttpreme court of the Philippines_

RESOLVED, that Engr. 51egfriedo A. Veloso, Director for External Affairs of .FOY A was empowered, and is hereby empowered to ~ign, execute, verify and deliver on behalf of YOVA the said Peiiliotr, any papers and instruments that he may deem appropriate and necessary, for the furtherance of 1''0Y A's inLer~sr.

WITNESS THE SIGNATURE of the underl'l.igned as t>uch officer ofJ Ass wlation and it8 corpornre seal hereunto affix.ed on this l 7tJ' day ofDecemher 2013 at M:u.¢inl City.

SURSCRIBRD Al{O SWORN to before me th1s ffitar of December 2013, affiant ex.hibit.ing to me her Community Tax Ccriiticate No. 07889794 issued at Muntinlupa CiLy on Fehrua.ry 1, 2013.

Doc.N~ ~ Pa·No_ ~· R~ No~· ::.--r Tt · Sert.es of 201v-

}. t, .!·

ANNEX C ANNEX A


I, EDWARD COLOBONG , a duly elected, qualified and incumbent Corporate Secretary of the FEDERATION OF LAS PINAS HOMEOWNERS ASSOCIATION (FOLPHA), a non-stock corporation duly organized and existing under and by virtue of the laws of the Philippines, do hereby certify that:

At the special meeting of the Board of Directors of the FOLPHA duly convened and held on December 14, 1013 at which meeting a quorum was present, acted throughout and voted, the following resolutions were approved:

"RESOLVED, that the Board of Directors of FOLPHA approve, as it hereby approves, the filing of the Petition with the Supreme Court of the Philippines.

RESOLVED, that BONIFACIO C. DAZO, President of FOLPHA was empowered, and is hereby empowered to sign, execute, verify and deliver on behalf of FOLPHA the said Petition, any papers and instruments that he may deem appropriate and necessary, for the furtherance of FOLPHA's interest.

WITNESS THE SIGNATURE of the undersigned as such officer of the Association and its corporate seal hereunto affixed on this L6th day of December 2013 at Las Pinas City.

EDWA~OLOBONG Corporate Secretary

oEC 2 O 2013 SUBSCRIBED AND SWORN to before me this day of 2013, affiant exhibiting to me his Driver's License No. _N 1Ml•Dll41 lu ... I ,.. J .. '-J t•1 •H al ~tl

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Series of 2013

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ANNEX 0 ~co. \ERCJ -~

Republic of the Philippines ENERGY REGULATORY COMMISSION

San Miguel Avenue, Pasig City

GUIDELINES FOR THE AUTOMATIC ADJUSTMENT· OF GENERATION RA TES AND SYSTEM LOSS RA TES BY

DISTRIBUTION UTILITIES

Pursuant to Section 43 (f} of Republic Act No. 9136 or the Act. 'Rule 7 of its Implementing Rules and Regulations (IRR) and Section 10 of Republic Act No. 7832, the Energy Regulatory Commission (ERC) hereby adopts and promulgates these Guidelines to establish a process for the automatic adjustment of Generation Rates and System Loss Rates by Distribution Utilities.

ARTICLE I

GENERAL PROVISIONS

These Guidelines shall have the following objectives:

a) To ensure and maintain the quality, reiiability. security and affordability of the supply of electric power;

b) To ensure transparent and reasonable prices of electric power service in a regime of free and fair competition and to achieve greater operational and economic efficiency:

c) To ensure full recovery of all allowable Generation Costs and other costs associated with the System Loss Caps in an efficient and timely manner; and

d} To protect the public interest as it is affected by the rates and services of Distribution Utilities.

ED "1•0fi"la!ll'

F.NERGY P.ii:GUtATORY f;:OA{M.~

Page I of7

(

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ARTICLE II

SCOPE AND DEF1NlTlON Of TERMS

Section 1. Scope - These Guidelines shall apply ~o all Distribution Utilities.

Section 2. Definition of Terms - As used in these Guidelines, the following tenns shall have the following respective meanings:

a)

b)

c)

d)

e)

f)

·Act" un!ess otherwise· stated, shall refer to Republic Act No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001 ".

"Average Transmission Rate (ATR)" shall mean the transmission costs approved per unbundling divided by the annualized kWh sales per unbundling.

"Deferred Accounting Adjustment (DAA)" shall mean the component of the. generation rate, calculated in accordan~ with the Generation Rate Adjustment Mechanism (GRAM), intended to recover the deferred accounting balance.

"Distribution Utility {DU)" shall refer to any electric cooperative, private corporation, government-owned utility or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with the Act.

.. Energy Regulatory Commission" or "ERC" shall refer to the regulatory agency created by Section 38 of the Act.

"Generation Cost" shall mean costs associated with the acquisition of purchased power. Generation costs include only those costs that are reasonable, prudently incurred, and are eligible for recovery in accordance.with the current practice of the ERC.

g) "Generation Rate" shall mean the cost of power generated and sold to the distribution utility by the National Power Corporation (NPC) as well as the Independent Power Producers (IPPs), which shall be passed on to the OU's customers, as calculated in the fonnula prescribed in these Guidelines.

h) "Ineligible Supply Co.ntracts" shall mean power supply agreements entered into by the DUs with the IPPs, which were not approved by the then Energy Regulatory Board or by the ERC. .

Page 2 of7

i)

j)

k)

I)

m)

'"Other Generation Rate Adjustments (OGA)" shall refer to under(over)-recoveries in generation costs, recoveries from violation of contracts and other pilferages, as well as other adjustments deemed necessary by the ERC, subject to the provisions of these guidelines. The OGA shall not be subject to any carrying charge.

"Prompt Payment Discount (~PO)" shall· mean the three percent (3%) discount that electric distribution utilities get from NPC for paying their power bills on or before the tenth (10th) day of the month following the billing period.

"System Loss" shall mean the difference between {kilowatt-hour) k\Nh purchased and/or generated and kVVh sold by a Distribution Utility expressed as a percentage of kWh purchased and/or generated.

"System Loss Cap" shall mean the level of System Loss recoverable from customers as estabnshed by the ERC in accordance with Section 43 (t) of the Act.

"System Loss Rate" shall mean the rate determined in accordance with the formula set forth in Article IV hereof. Individual System Loss Rates may be calcuf ated for different customer classes if the Distribution Utility maintains records on the individual customer class System Loss.

ARTICLE Ill

MONTHLY ADJUSTMENT OF THE GENERATION RATE '"' - ---

Section 1. Adjustment Formula - On the tenth {10) day of each calendar month, Distribution Utilities shall calculate new Generation Rates based on the following formula: .

. GR = AGC + OGA

VVhera:

GR = Generation Rate to be charged per kWh

AGC = Adjusted Generation Cost, automatically computed without need of prior ERC verification and confirmation, as follows:

[(GC; + GCi; + ..... + GC0)-(PPD * 50%)] = ~~~~~~~~-~~~~~~~.~~-

T P

Page 3 of7

(

GC i 10 n = The Generation Cost in Pesos from source of power 1 through source of power n for the previous month, ·excluding power sourced from self-generating facilities

PPD = Prompt Payment Discounts availed by the Distribution Utility, net of the Prompt Payment Discounts passed on to the end customers relative to the previous month's gene.ration cost

TP· =Total Purchases in kWh for the previous month

OGA = Other Generation Rate AdjustmentsT refer to adjustments deemed necessary by the Commission after prior verification and confirmation, which shall include, but shall not be ·limited to, under(over)-recoveries in generation costs and recoveries from violation of contracts and other pilferages_ The OGA sharl not be subject to any carrying charge_

.,..,,-.., .. ~ "In the case of ineligible supply contracts, generation costs from such contracts shall not be included in the calcufation of recoverable generation costs. In the event, however, that a DU inadvertently or willfully recovers the same, the ERC shall automaticalty order the refund thereof through the "OGA" without prejudice to the imposition of appropriate penalties. ·

Section 2. Billing of New Generation Rate - The Distribution Utilities shall bill their customers the Generation Rates calculated in accordance with the immediately preceding Section effective on the tenth (10) day of each month.

ARTICLE IV

MONTHLY ADJUSTMENT OF THE SYSTEM LOSS RA TE

Section 1. Adjustment Formula - On the tenth (1 O} day of each calendar monthT Distribution Utilities shaU calculate new System Loss Rates based on the following formula:

SLR= (GR* U) + (ATR * U)

lNhem: ....

SLR== System Loss Rate

GR = Generation Rate calculated in accordance with Article llf

Page 4 of7

ATR =Average Transmission Rate based on the most recent unbundling decision in Peso per kWh, computed as . Transmission Costs per unbundling divided by the Annualized Sales in kWh per unbundling

U =Gross Up Factor=(% System Loss I [1-%System LossJ)

The % System Loss is based on the actual System Loss or the System Loss cap whichever is lower plus actual company use or the company use cap of 1 % whichever is lower. The actual System Loss and company use are based. on the preVious month figures to be submitted by the DU. Actual System Loss can be calculated on an individual customer class level if the Distribution. Utiljty has the requisite information to support individual System Loss Rates.

Section 2. Billing of System Loss Rate - The Distribution Utilities shall bill their customers on the tenth (10) day of each month the System Loss Rates calculated in accordance with the immediately preceding Section.

ARTICLE V

VERIFICATION PROCESS

Section 1. Monthly Reporting Requirements - On or before the twentieth (20th) day of each month, the Distribution Utilities shall provide the ERC with all calculations related to Articles Ill and IV along with supporting documentations, which shall include, but riot limited to, the following:

• Invoices from power suppliers; • Sample bills to end-users; • Official receipts of payment of power supplier invoices • ERG Forms·M-001 & M-002; and • Other documents deemed relevant by the ERC.

Section 2. Post Verification - At least every six (6) months. the ERC shall verify the recovery of Generation Costs by comparing the actual allowable costs incurred for the period with the actual revenues for the same period generated by the Generation Rates and the portion of the Systems Loss Rates attributable to Generation Costs.

Shoufd the ERC fail to verify the Generation Rate (including the OGA) and System Loss Rate within six (6) months from the submission of calculation and supporting documentations in accordance with the immediately preceding-; Section, the rates shall be deemed final and Confirmed.

Page 5 of7

(

Upon completion of the semi-annual verification process, the ERC shall issue an Order establishing the adjustments to be included in the OGA resulting from 5aid semi-annual verification. These adjustments shall be implemented in the succeeding six (6) month period to reflect any over or under recovery.

Section 3. Prior Verification of Other Generation Rate Adjustments (OGA). OGA other than those included in Article V, Section 2 shall be verified and confirmed by the ERC -within forty five (45) days from date of its filing and only thereafter shall they be recoverable.

ARTICLE VI

FINAL FILING UNDER THE GENERATION RATE ADJUSTMENT MECHANISM

Section 1. Effectivity of the Generation Rate Adjustment Mechanism (GRAM} - Upon the effectivity of these Guidelines, the GRAM shall no longer be applicable to Distribution Utilities.

Section 2. Final filing under GRAM - Distribution Utilities that are using the GRAM to recover Generation Costs shall file their final GRAM applications within si:it;ty (60) days from the effectivity of these Guidelines. ' Ttteifr'Tat13RAM filing shall include the period from their last approved GRAM filing to the effectivity of these Guidelines for purposes of calculating the final Deferred Accounting Adjustment (DAA).

ARTICLE VII

Section 1. Fines and Penalties. Violation of any provision of these Guidelines shall be subject to the imposition of fines and penalties in accordance with the Guidelines to Govern the Imposition of Administrative Sanctions in the Fann of Fines and Penalties Pursuant to Section 46 of Republic Act No. 9136 promulgated by the ERC on May 17, 2002.

ARTICLE VIII

FINAL PROVISIONS

Section 1. Exception Clause. Where good cause appears, the ERC may allow an exception from any provisions of these Guidelines, if such

··-"'.!l!f'·

Page 6 of7

exception is found to be in the public interest and is not contrary to law or any other related rules and regulations.

·Section 2. Separability Clause - If for any reason, any part or section of these Guidelines is declared unconstitutional or invalid, the other parts or sections hereof which are not affected thereby shall continue to be in tun force and effect.

Section 3. Effectivity - These Guidelines shall take effect on the fifteenth (15th) day following its publication in two (2) newspapers of general circulation.

Paslg City, October 13, 2004.

,,.. RODOLFO 8. ALBANO, JR.

(On Official Travel) OLIVER B. BUTAUD

Commissioner · /'

~(.;~ Commissioner

Page 7 of7

Chairm n ·

Commissioner

.L4~ Commissioner

.-'99f

ANNEXE-Republic of the Philippines

ENERGY REGULATORY COMMISSION San Miguel Avenue, Pasig City

RESOLUTrON No.10...01, Serles of 2004

IN. "lliE MATTER OF AMENDING THE GUIDELINES FOR lliE AUTOMATIC ADJUSTMENT OF GENERATION RATES AND SYSTEM LOSS RATES BY DISTRJBUTION UTIUTI.ES

This is to AMEND Secfions 1 and 2 of Artides Ill and IV of the GUfDEUNES FOR THE AUTOMATIC ADJUSTMENT OF GENERATION RAl"ES AND SYSiEM LOSS RATES BY DISTRIBUTION UTILITIES rGuidelines") approved on 13 Ociober 2004 which read as forlows:

.ARTlCLE Ill

MONTHLY ADJUSTMENT OF THE GENERATION F<A I:::

Section 1. Adjustment Formula - On the tenth (10) day of each cafendar m6ntli. Distribution Utilities shaU calculate new Generation Rates based on the following formula:

xxx xxx xxx

Section 2. Billing of New Generation Rate - · The Disttibu1:i:on ummes shal1 bill their customers the Generation Rates calculatoo in accordance with the fmmediately preceding Section effective on the tenth (10) day of each month."

mARTICLE IV

MONTHLY ADJUSTMENT OF THE SYSTEM LOSS RATE

. Section ·1. Adjustment Formula - On the ten1h (10) day of each ca1e11dar month, Di.stributlon ·vtHlties· shall calculate new System Loss Rates based on the following formula~

xxx xxx :xxx

Section 2. BilJlng of System Loss Rate -- The Distribution Utilities shall bfH their customers on the tenth (10) day of eacti month trre System Loss Rates calculated rn accordance with the

;~ernareJy pre~ing Section." J (

The Commission, after due deliberation, RESOLVED, as it hereby RESOLVES. to amend the aboVG-4UOted portion of the Guidelines. to now read as fo41ows:

"ARTICLE Ill

MONTHLY ADJUSTMENT OF "fHE GENERATION RA TE

Section 1. Adjustment Formula - On or.befo..-e the te11th (10} day of each calendar month. Distribution Util~es shall calculate new Generation Rates based on the following formula:

xxx xxx

Section 2. Billing of New Generaticm Rate - The Dfstribution Utilities shall bill their customers the Generation Rates calculated in accordance with tf'le immediately preceding Section effecUve on or before tl1e tenth (10) day of each monl11."

''ARTICLE IV

MONTHLY AbJUSTMENT OF THE SYSTEM LOSS RATE

Section 1. Adjustment Formula - On or before the tenttl {10) day of each calendar month, Distribution Utirities shaU cafculate new System Loss Rates based on the folfowing formula:

x J( x x .x: x xxx

Section 2. BllUng of System loss Rate - The Dls~ribution UWities shall bfll their customers on or before 1ha tenth {10) day of each month the System Loss Rates calculated in accordance wlih the imrnedlate!y preceding Section.~

( ,. •:

This Resolution shall take effect on the eighth (8lh) day roilowing. its publication in two (2) daily newspapers of general circulation in the Phflippines.

_Pasig City, October 20, 2004.

(On Official RODOLFO B.

~;;("~ .r - RAuf A. TAN Commissioner

JESUS N. ALCOR:DO Commissioner·

Commissioner

·~ .....

- ·-- ~~--............ ,,. ... ~~~···--·- ----· -·:--"'·-

ReptJbHc of the PMippines ENERGY REGULATORY COMMISSION

San Miguel Avenue. Paslg City

. ANNEX. f RESOLUTJON NO. 10-04. Series of 20fl4

~~--~f I f~J&f.. ~--. IN THE MATTER OF .AMENDING THE GWDEUNES FOR

lHE AUTOMATIC ADJUSTMENT.Of GENERATION RATES AND SYSTEM LOSS RATES SY DISTRIBUTION lfTJUTIES

. -. .; .,,.,._

This is to AMEND Sectian 1 of Article IV of the GUIDELINES FOR ll-IE AUTOMATrc ADJUSTMENT OF GENERAilON RATES AND SYSTEM LOSS RATES BY OlSTRJBUTION UTILITIES {MGuidefine~q approved on 13 October

_::::.::::;:..:-::.~ ::~:::- :- · 2004 which read as follows:

·ARTICLE IV

MONTHLY ADJUSTMENT OF THE SYSTEM LOSS RA.TE

Section 1. A~justment Formula ~ On the tenth {10) day of each calu11dar month. Distribution Utilities shall calculate new System Loss Rates based on the following furmula~

. SLR= (GR"' U)-+- (Alf{* U)

Where_-

SLR"" System Loss Rato

GR= Generation Rate calcvlatcd in accordance with Article HI

ATR ""Averag~ Transmission Rate basAd on the most recent unbundfinu decision iri Pe.so per k.Wh. computed as Transmission CosL<;; per unbu ndUng divided by the Annualized Sales in kWh per unbundling

U :; Gross Up Factor"'"(% System Loss I [1-%System Loss])

The % System Loss is based on th~ actual System loss or tha Sysrom Loss cap whichever is lower plus actual company use or the '90mpany use cap of .

· 1 % whichever is lower. The actual Sy~em loss and oompany use are bas~d on .. -~-~~ tha previous month figures to be submJtted by the OU. Actual System-Loss can ~~·.:-·t"~ be calculated on an indMdual customer cl.ass levef if the Distribution Utility has · ·- ···· · the requisite information to $upport individual System Loss Rates." ·-:-.:~,..,,

The Commission. after due deliberation, RESOLVED. as it hereby RESOL,VES. to amend the above-quoted portion of the Guidelines, to now read as follows:

KARTICLE IV

MONTHLY ADJUSTMENT OF THE SYSTEM LOSS RATE

Section 1. Adjustment Fonnula - On or be~ore the tenth (10) day or each calendar month. Distribution UtiHties shall calculate new System Loss Rates based on the following fonnula:

SLR== (GR'* U) + (ATR • U)

V'tlhero:

SLR = System Loss Rate

GR ~ Generation Rate calculated in accordance with Article m

ATR:;:: Average Transmission Rafe based on the·most recent unbundling decision in Peso per kWhT computed as Transmission Costs per unbundling divided by the Annualized Sales in kWh per unbundiing

U = Gross Up Factor = (% System Lass I [1- %System Loss])

·The % System. Loss is based on the actual System loss or the System Loss cap whichever is lower plus actual company use or the company use cap of 1 % whichever is tower. The actual System Loss and company use are based on the average of the most recent twelve ( 12) month period for which information ts available. Acb.lal System Loss can be calculated oo an individual customer class level if the Distribution Utility has the requisite information to support i11dfvidual System Loss Rates. ·

..

i ,. t;

This Resolution shaJf take-effect on thEdhird (311'.!lday following ;ts publication in two {2) newspapers pf general circulation fn the Philippines.

Pasig Clty. October 27. 2~-

~;'(.~ c AAfJF ,&z;l

Co . . \

m miss.ion er Commissioner

. ~ ... ~.iJ

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r. ~~'{:r~.,~.:.:· . Republic of the Philippines \ !'.".~;~.<.'.,..;;.~·; ·::: _'

ENERGY REGULATORY C<:1M~ISSION \_-~-=-~- ./. _ Sao M~ucl A>eou~ Pas1g ANNEXtr'

RESOLUTION NO.~ Series of 2009

A RESOLUTION ADOPTING THE RULES GOVERNING THE AUTOMATIC COST ADJUSTMENT AND TRUE:-UP MECHANISMS

AND CORRESPONDING CONFIRMATION PROCESS FOR DISTRIBUTION

UTrLITIES

WHEREAS: pursuant to Section 43 (t) or Republic /\ct No. 9136, the Energy Regul.3tory Commission (ERC} is mandated to promulgate rules and regulations and perform such other regulatory functions as are ~ppropliate and neces.sary in order to ensure the sttC':Cf.?ssfur restructuring aml moderni7::ition of the eredric power indua.try:

WHEREAS, the F.RC hA$ adopted seveL"'.o,11 aut.ornatic oost adjustment mechanisms in separate issuances. and tt is deemed ideal 1D consolid~te, update, :m<f ration;;tliza 1he requirements und.er all thes.e separate is~uances;

WHEREAS, the ERC finds it necessary to establish a syslernatized confirmation prot::Qss that conforms to the due pror.ess requitoemerit of the law for the foJlowirig automatic cost adjustment and true-up mechanisms:

1. Automatic Generation Rate and Systern 1.oss Adjustment Mechanism;

2. Transrnis:sion R<itc Adjustmenl Machanism; 3. Lifeline Rate Recovery Mechanisrn; 4. locar franciii:se Tax: Recovery Mecihanism; !:>. locaJ Business To:.x Recovery Mechanism; 5_ Guidellnes for Ure Ci'il<."1.Jlation or tl1c Over or Under

Recovery in the lmplemcntaHon <if Lifeline Rates b:y rn stribution Utilities:

7. GtsidelinAs fur a True-Up Mechanism of the Over or Under Recovery in the lmplemenfation of lnler-Class Cross Subsidy Re1noval by Dis11ibution Utilities;

8. ERC Resolution No. 12, Series of 2005, ·A Resolution Approving a New Policy on the Treatme11t of Prompt Payment Discount (PPDt:

9. Guidelines for the Calculation of the Over nr Under Recovery ill ~he Implementation of System Los~ Rate by Distribution Utilities; and

10. Rules for fhe Calculation of the Over or Under Recovery in the Implementation of Transmission Rates.

of u

WHEREAS, on November 22 and 25, 2008, the ERC conducted public consultations for !he adoption of the proposed Rules Governing 1he Automatic Cost Adjustment and True-up Mechanisms and Corresponding Confirmation Process for Distribution UfillliP-S;

NOW THEREFORE, the ERC, after oonsiderlng the various views and commcnbi submitted by.all interested parties, hereby RESOLVES, as Lt is hereby RESOLVED, to APPROVE and ADOPT, the Rules Goll6ming the Automatic Cast Adjus:tmont and T me-up Mechanisms and Correspond;ng C-Onnrmation Process for Distributfon Ufilmes herein attached as Annex ~A" and made an integral part of this Resolution.

This Resolution shail take effect fifteen (15) days following its p11blicaUon in a newspaper of general circulation in the country.

Pasig City, July 13, 2009.

TANEOA

RULES GOVERNING THE AUTOMATIC COST ADJUSTMENT AND TRUE-UP MECHAN•SMS AND CORRESPONDJNG

CONFIRMATION PROCESS FOR DISTRIBUTION UTILITlES

Pursuant to Section 43 (f} amt {t} of Republic Act Na_ g136 or the Act. Rule 7 of its lmpTementing Rules and Regulations (IRR) and Section 10 of Republic Act No_ 7832, the Energy Regulatory Commis.sion (ERG) hereby adopts and promulgates these Rules to establish a procedure for the automatic recovery or refund af pass through costs and the confirmation process that would govern the automatic cost adjustment a.nd 1n1e-up mechanisms approved by the F,RC.

Section 1. ObjeetJves

ARTICLE 1

GENERAL PROVISIONS

Th~ Rurss shalr '1ave the fo[fowing objectives:

1.1 To ensure appropriate recovery of various pass. through costs in 3n efficient manner;

1.2 To put in ptace a fair and transparent proceS$ for the confirmation of the automatic cost adjustments impre~nted by the Distribufton Utilities (DUs} and the true-up of other pags-through charges as ;:1pproved by the ERC;

1.J To ensure and mafntain the qualrty, reltabllity, security and affordability uf the supply of electric power; and

1-4 To protect the publk; intemst as ii ls affected by the rate~~ and services of the Dus.

Section 2. Scopa

These Rules shall apply to all DUs, and shall govern the recovery of the following pass through costs~

21 Generation:

2.2 Trdnsmission;

2.3 Systern Loss;

2.A Lifeline Suhsidy; and

2.5 local Franchise and Business Taxes.

Section 3. Definitton of Terms

Unless the context otherwise providP-S.. the fotlowiog worrls and tcl'TTls used herein shall have the fallowing meanings:

3.1 "Act" unress otherwise stated, shall refer to Republic Act No. 9136, otherv1ri:so known as 111e a8eciric PoW€lr Industry Refurm Act. of 2fl01~.

3.2 "Business Tax .. shall refer to the tax levied by f:he cities and municipalities pursunnt to Soclions 143 arld 161 of the Local Government Code of 1991.

J..3 ''Captive Market'' shall refer to electricity end-users who do not have the choice of a Supplier of el~cmcity, ~s may be determined by the ERC in accordance with the Ad.

3.4 "Commission" shall refer to the Energy Regulatory Commission created unde.- Section 38 of Republic Act No. 913fi.

3.5 "Company Uso" shall fefer to the Energy used by the Oistribution Utility in fhe proper operation of the Distribution System (e.g. substation ser"\/lce and Distr!butron Uti!Tty'$ offices, warohouses, workshops and other essentil'!I electrical Loads).

3.6 "msb'ibution Charge$" shafl rsfer to the distribution, supply, metering 1'!.nd other reJated chargcsJadfustments.

3.7 "Distribution Utility (DU)" shall refer to any electric cooperative, pnvate corporation, government-owned utility or existing local gcivernment unit which has an exclusive franchise to operate a distribution system in accordance wrth the Act

3.8 "Electrlc Cooperative {EC}" shall refer to a Distribution Utility organized and incorporated pursuant to Presidential Decree No. 269, as amendoo by Presidential Oeetee·No. 1645 and Republic Acl No. 6938, otherwise known as the Cooperative Code of the Philippines.

3.9 "Fmnchrse Tax" shall refor to the tax levied by the province and cities an businesses enjoying a franchise pursuant to Sections 137 and 151 of Republic Act No. 7160, otheiwi!-\e known as the Locaf Govemment Code of 1991.

~~2of33

<

i .

3.10

3.11

"Goneration Rate (GR}" shall refe~ to the rat_e ~ss~c.ia~. with the purchase of power from power supplierls and d1smbution utility-owned generation facifity as incorporated in the approved unbundred rates or as subsequently authorized by tho Commission.

"Gross Sales or RQc9ipb;" shall, as defined in SectJon 131(n) o1' the Local Government Code of 1991, fnclude the total amount of tnoney or it~ equivalent representing the contract price, componsation or service fee, including the amount charged or materials supplied with the services and deposits or advance payments actually ar constructively received during the taxable quarter for the services perfomied or to be performed for another person excluding discounts if determinable at the ti~ of Mies. sales return, exc;s~ tax, and valuo-added fa)( (VAT).

3.12 "Ineligible Supply Contracts" shall refer to power supply agreements entered into by the OU(S; with the IPPs or other DUs, which were net approved by the then Energy Regulatory Board or by fhP. Commissjon.

3.13 "LifelinE! Subsidy Rate (LSRJ" shall refer to the rate charged to nonfife!ine customers to cover the lifelil"l'e discount provided to marginalized/low income captive market end-users.

J.14 .. MarginaJrzod End-Ul?;ars" shall refer to low-income ~plive, household electricity consumers who cannot afford to pay at full (;Ost and have levels of electricity consumption below a threshofd level as determined by the Commission_

3.15 "'National Grid Co1pora.tion of the PhHipph1es (NGCPr shafl rater to the private consortium which had been awarded the concession tu as:;:vme the power transmission functions of the National Transmi~ion Corporation (iRANSCO). '

3.16 "National Power Corporation (NPC)" shaU mfer to lh~ government corporation created under Republic Ad No. 6395, as amettdcd_

3.17 "N:1tional Transmission Corporation (TRANSCO)" shall refer to Corporation organized pursuant to the Act whfch assul"l1$d the electrical transmission function of the NPC.

3.18 "Net Settlement Surplus (NSSJ" shaJI ~efer to the settrement surplus remaining after all market transactions have bee11 accounted for, including the assignment of transmiMlon line rentals to Network Servioo Providers. This remainder is assumed to be attributed to eoonomrc rentals arising from other binding constraints, and accounted for irt :qccordance with dause 3.13.16 cf the WESM Rules_

P;ige 3 of 3.3

-~----···--------· ..

3.19 "~hilippine Electricity Markel Corporation (PEMC}" shall refer 10 the entity responslble for the operafions or the spot market, g~emed by the Philippine l:.lectricity Market (PEM) Board in accordanco W1th clause 1.4 of the WESM Rules.

3.20 "Pilferage Cost Recoverlos {PCR)" shall refer to oosts recovered 1Tom illegal tapping, tampering of meter, use of jumper, and other means of illlclt usage afelectricity.

J.21 ''Power Factor Discount (PFO}" shall refer to the discount extended to OUs having maintained their power factor above the set ilireshold which maximi:zes the capacity of TRANSCO's facilities thereby resulting to real savings in power costs, improvement of voltage regufation and rele.a~e in system capacity.

3.22 "Prompt P2ymellt Diseount <PPD}" shatl refer to the discount that OUs get from power supplier/s for paying their bills within 1he dis.cm mt pP.riorl

3.23 "Power Supplicr/s" shall refer to an entityfies selling power to a DU which may indude the following: a) National Power Corporation (NPC); b} Independent Power Producers (IPPs), either through bilateral power supply contracts or through the Wholesare Electricity Spot Market; and c) Other DUs.

3.24 "Recovery Period" shal! gen~r'ally refer to the period whP-n the cost adjustments are implemented.

:3.25 .. System Loss" shall refer to the difference between kilowatt-hour (kWtT} purchased and/or genorated and kWh sold plus company use.

3.2~ ··system Loss Cap" shall refer lo the level of System Loss recoverab'e from customers, as provided for under Republ!c Act No. 7832 or the Antielectricity and Electric Transmissjon lir'!cs/Matetials Pjlferage Act of 1994, until a different cap is determined, as established by the Commission in accordance with Sectiofl 43 (f) of the Act.

3.27 "System Loss Rate (SLR.)" shall refer to the rate determined in acoordance with the formula set forth in Article II hereof. For DU::; where different system fos$ charges were granted for each of their respective customer classes in the Unbundling Decisions, SLR shaCI be calculated based on an indiVidual customer class level with the re-qursim reliable information to support individual System Loss Rates.

3.28 "Transmission Rate (TR}'1 shall refor to the rate as~mciated with the cost incurred in the transmission of electricity from the genera.tors to the distribution utilities· system

3.29 "Wholes:1lc Eloctrlcity Spot Market ~WESM)" shall refer to the market whore trading of electncity is made, established purnuarrt to Section 30 ofRA 9136.

ARTICL.E2

CALCULATION OF THE ADJUSTED RETAIL RATES

Section 1. Generation Rate. The Generation Rate (GR) of the DU shall be determined as follows:

1.1. For a DU sourcing 100% of Its pOWer requirement Fram NPC:

1.1.1. forTOU customers, the GR shall be the NPC TOU rates pfus adjustments on GRAM, !CERA and franchise and Benerrts to Host Communities as approved by the Commission~

1.1.2. For customers under special programs of the OU, the GR shall be based on their contracts; and

1. 1.3. f'or ofhe.- customers, the GR ::shall be computed using the formula prov[ded under Section 2 hereof.

1.7. For a DU sourcing its power requirement from sources ather than NPC:

1.2.1. For TOU customers, the GR shall be the OU's TOU rates as approved by the Commission;

1.2.2. For customers under srecral programs of the DU, the GR shall be b~sed on their contracts;

1.2.3. For customers of a Buying DU under a Sale for Resale Agr~ement, if the customers being supplied are no\ connected v..ith the niai11 distribution grid and the oost is dttferent from those for other regular customers, the GR shall lm:[ude the Generation, Transmission, System Loss. Distribution. Supply and Metering Charges uf the SB!ling DU: and

1 2.4. For other customers, the GR shall be computed using tht'! formula provided under Section 2 hereof.

P;ige 5 oS 33

Section 2. Generation Rat.a Formula. The GR applicable to customer.:; refem:d to in Sections 1.1.3 and 1.2-4 shall be calculated and billed each calendar month by the DU using the foUowing formula:

FORMULA 1

GR::= AGR+OGA

Where:

GR = Generation Rats expressed in Pesa.lkV\fh;

AGR "" Adjusted Generation Rate cafculaied. as follows:

AGR = TGC

TPG G.~

!Nbcro:

TGC= r(GC, +GC,, 1 ··-+GC.)--~0% (PPD, + PPD. -t-···-t-- rrD.)-PCR l

GCi ton The Generation Costs in Pesos from source of power i through source of power n for the previous month coming from Transition Supply Contracts (excluding Mandated Rate Reduction and penalties), Power Supply Agreements, WESM purchases, and distribuflon utility-owned generation facility, as incorporated in the approved unbundled rates or as subsequently authorized by the Commission, less the following:

a. Generation revenues from TOU customers;

b_ Cost of power distributed to customers under OU's special programs:

c. Cost of power distributed to customers under a Sale fur Resare Agreement, ii the customers being suppriecl .are not connected with the main distribution grid arid the cost is different from those for other regt1lar customers: al"!d

Page0 of 53

-----------··

PPDitan

PCR.

TPGr:n

d. Net Settlement Surplus amount as determined in Article 5, Section 5.4 of the Rules for the Dlsfribufion of Nat Settlement Surplus, if any_

Prompt Payment Discounts availed by the DU from souroe of power i through source of power n for the previous month, net of the Prompt Paymf':nl Discounts passed on to the eJld customers., where di:soount passed on to c1Jstomers can not be higher than the discount availed from the power suppllerfs, relative to the previous month's generaiion cost;

Pilferage cost recoveries during the prevfous rnonth: and

= Total kWh Purchased and (;Qmnllted for lhe preYiOIJEl month net of l<Wh sold to customers under TOlJ, and kWh dfstnbuted to sped.al proararm and Sale for Resale Agreements, if the customers being supplied are not connected with fh@ main distribution grid and the cost is different from those fur other regular customers_

OGA = Other Generation Rate Adjustmenf.s, refer to adjustments deemed necessary by the Commission after prior verification and confinnation, and the GOUR determined using the formuJa provided in Article 4, Seciion 2 heraof. The OGA shalr not be subject to any carrying charge_

ln the case of ineligible supply contracts, generation oosts from such contracts shall indude the kUowatt-hours pertaining to ineligible contracts pcgg!:!d at the OU's load weighted average NPC TOU rates or fhe 9ctuaf rate as billed by the IPP, whichever is lower.

Section 3. Tr~nsmission Rate. The Transrnissicn Rate (iR) shall be calculated and billed each calendar month by the DUs u~ng 1he following formulae;

3.1. For Customer classes with TR expressed in Peso/kWh:

~ge7of~

. C~:··r-•J fii'°P"i[ r;;- .~·1 ~ ---:~~I.AN:~~~~ - ~

-·-·---··--·-----

FORMULA?.A

TRN lransmisslon Rate expressed iti Peso/kWh;

fN PTC .x. CP.~·;

OTCA,.,

VVhere:

ITC = Refers to the previous month's ach.Jal tran~miMron c06.f, not of fifty percent {50%) of PFD av<o1ileLI,

11\lhere:

PFD = Power Factor Discounts availed by the OU, net of the Power Factor Discounts {liven to customers arid Third Parties for the month, whero: Oiscoun1 passed on to customers and Third Partie$ ~discount avail~d from TRANSCOJNGCP for tile month; and

Ci'~ Actual or computed Coincident Peak Demand Allor-.ation Factor fur customer class N corresponding to the previous month's period or the CP demand allocation factor as reflected in the last approved unbundled rates of the f)U_

= Total kWh Purchased end Generated forthe previous month;

= Other Transmission Cost Adjustments, refer lo adjustments deemed necessary by the Comm;ssion after prior verification and confitmaUon, and the TOUR. determined using 1he funnura provided tn /\rtfc!e 4, Section 3 hereof; and

N "" Refers to a specific customer class (ex. N'="1,2, .... , Vllhere 1= Residential, 2"" Comrrercial, etc.).

Page8of33

-- -·--··-·--------···-·---- -

3.2. Cu~tomer Glasses with TR 0xpressed in Pesa/kW:

FORMULA2.B

TR.:-:: (_ti)' \) t OTCA,. ·' D .

A'

WtJere:

TR Transmission rate expressed in PesolkW; ·"

t"!o. "" FTC. .r CP,.·;

l.Nhere:

l'TC "' Refers to the previous month's actual transmission cost, net of nfty percent (50%} of PFO availed;

l.r\l'here:

PFD = Pov.rer Factor Discounts. availed by the DU, net of the Power Factor Discounts given to customer$ and

Third Parties for the month, where: Discount passed on to customers and Third Parties <;" discount availed from TRANSCO/NGCP for the month; and

CI',. "' Actual or computed Coinc;:ident Peak Demand Allocation Factor for customer class N corresponding to the previous month's period or (he CP demand allocation factor as reflected in the last approved unbundled rates afthe DU.

OTCA~ = Other Transmission Cost Adjustments, refer to adjustments deemed necessary by the Commission after prior verification and confirmation, and the TOUR detenninecl using the formula provided in Article 4, Section 3 hereof

Page 9<lf 33

N

3.3

kW billing detn.and for lhe previous month for customer dassN:; and

Refers ta a specific customer class (ex. N=1,2 •.... , where 1"' Rosidcntial, 2=- Commercial, etc.).

Customer classes v1Jith TR e:xpressed in both Peso/kWh and Peso/kW.

The component expressed rn Peso/kWh shall remain c::mstanl The component expressed •n Peso/kW shall be adju~ted using the following fonnula:

FORMULA2.C

111/ht'!'rc:

'J']{,, = Transmission rate eio:pfessed in Peso/kW;

Lt\11Jere:

I'TC = Refera to th<J previous month's actual transmission cost. net of fifty percent (50%} of PFD availed, by the corresponding kWh purchased;

!Nhem:

PFO Power Factor Discounts availed by the OU, net of the Power Faci:or Disoounts given to customers and Third Parties for the month, where: Discount passed on to customers and Third Parties ~ discount availed from TRANSCO/NGCP for the month; and

Page 10 of 3.'3

s'T'P. .•

TKR.,.

OJ'CA,.,

CP .• ,. = Actuai or computed Coincident Peak Demand Allocation Factor for customer crass N corresponding to 1hl'\ previous month's period or the GP demand allocatkm factor as reflected in the last approv-ed unbundled rates {lf me ou _

= kWh sales for the previous month for custo~r class N;

Current TR component expressed in Peso/kVllh for customer class N;

- Other Tr:ilnsmission Cost Adjustments. refer to ~djustments deemed necessary by the Commission after prior verification a11d oonfirmaticn, and ihe TOUR determined using the formula proVided rn Article 4. Sec:fion 3 hereof;

D,,, ... !<.VI billfny t.lemantl for the previous month for customer class N; and

N Refers to a specifTc customer class (e.Jc N=1,2, ____ 1

where 1'= Residential, 2= Comrnerdal, etc_),

Section 4. System Loss Rate. The System Loss Rate {SLR) .$hall be calculated and billed e:ach calendar month by the DUs usfng tile following fannula:

FORMUlA3

.SLR= (TGR + ATR) U + OSLA

lr'Vhere.-

Sf,R "' S}"$tern loss Rate expressed in Peso/kWh;

n;R Total Generation Rare including custornern under 1he DU's TOU program calculatea as follows:

TUR GTGC

PlllQe 11of33

lNhero:

c;u;<.: ~[(CC, -1-(.i(.:_,.;. ·---'--GC.)-50%( PPJJ. + PPD. + --- + )'/~D.) I'C.R l

CC i ton The C"-.e11eration Co:sts in Pesos from source of power i through source of power n for the previous month coming from TtansrUon Supply Contracts (excluding Mandated Rate Reduction and penalties), Power Supply Agreements, WESM purcl1ases. and distribufior; utility--0wned generation facility, as Incorporated in the approved unbundled rates or .as subsequently authorized by the Commission, less the following:

a. Cost of power distributed to customers under DU's speccal programs;

ti,_ Cost of power distributed to custoniers under a Sale for Resale Agreement, if the customers berng supplied are not connected with the main disfribtrtion grid and tile cost is different from tf'lose for other regulGr custornors; and

c Net Settlement Surpr11s amount as determined itr Article 5, Section 5.4 of the Rules for the Distribution of Net Settlement Surplus, if any;

PPTJ,,,,., Prompt Payment Discounts availed by lhe Distribution Utility from source nf power i 1hrough source of power- n for the previous month, net of the Prompt Payment Discounts passed on 1o the end customers, where discount passed on to customers cannot be higher than the discount availed from the power supplier/s, relafi\le to the pre•1ious month's gener~tion cost, anr:!

I'CR Pilferage cost recoveries during the previour:> month.

TPGs; R "' Total kWh Purchased and Generated fo: the pre'llious rnonth nat kWh distributed to special programs and Sale .for Resale Agreements, if such sales have different system loss charge rates from regular customers_

P;:ige 12 of J3

A1'R Average Transmission Rate expressed in Peso/kWh, compt1ted

as follows:

t _~· ATR - --'-'--TPG ID!

Whore:

t:: = Total Transmission Cost far the previous month;

INhere:

If SLR is a uniform r;h;nge to an ctJStorner classes:

t,,. = PTC as d~ftn"'d in Article 2, s~r.;liut I ~ hP.reaf;

If SLR varie$ per each customer class:

\IVhero:

PTC ==As defined in Articie 2, SF.clion 3 flereof;

and

CP:,·""- A.$ dcfinad in Article 2, Section 3 hereof.

Total kWh Purchased and Generated for the previous month net of kWh distributed to special programs aM Sale for Resale Agreements. if such sales have different system loss ci'large rates from regul;:i,r customers.

U Gross Up ~actor~{% SL I (1- Actual % System lo..o;s);

The %SL. is based on:

a} the Acttia[ Systems Loss for the most recent 12-month period or the Systems loss Cap, whichever is lower; plus

Page 13 Of33

-~·- ....

b) the Actual Company Use for the most recent 12-month period or 1 %, whichever is lower.

The Achlal % Sys'lem LoM, on the other hand. is based on:

a) -the Actual System Loss for the most recent 12-month period; plus

b) the Actual Company Use for the most recent 12-month period.

The kWh Sales to be used in determining the 5';stem loss shall be net of kWh distributed to 5peGial programs .and Sale for Resale Agreements, if such sales have different sysfP.m ln~~ charge r;Jtcs from regufar ~ustamers.

If SLR vartes per customer class, the DU shall COJ'Tl'ute the applicable Gross Up Factor per customer Class.

Pursuant to ERG Resolution No. 17, Series of 2G08, upon the Commission's approval of the DU's Operation and Maiotenance E)(penses, wherein !:he Company Use shall have been indudod, the sanie shall no longer form oart of the %8L and Actual % SL as defined above: and

OST.A == Other System Loss Cost Adjustments. refer to adjustments deemed neces.$ary by the Commrssion after prior verification and confirmation, and the SLOUr{ determined using the formula provided in Article 4, Section 4 heteof.

Section S_ Lifeline Subsldy Ra.ta Fommla. The Ufeline Subsidy Rate {LSR) shall be calculated and bifled each CEilendar month by the OU u~ing the fortowing formula:

FORMULA 4

TD ( '\

L~R. ~ s,,:: J +OT.RA

Page14of J3

f.Sli == Lifeline Subsidy Rate expressed in Peso/kWh

TD Total Discount amount given to Ufeline customers in the previous month computed as follows:

OLRA

L msfSR ')( TRateJ+ [Neu.st x Fi..xed I Cu.s-t]D]

IM"lore:

j =: Lifeline level bracket 1 to lifelrne bracket n;

f)

Fixi!d/Ctl!.1

"' Tota! k\Nh for the previous month of lifeline bracket j~

"' Total PhP/kWh ralo subject lo lifeUne discount which include generation, transmission, system loss. distribution, supply, meterin~ and loan c.n llrl o nation;

Total number of custorne~ for the previous montti for lifeline bracket j;

Disr:nunt rate for lifeline bracket i: and

"' Fixed metering charge for residential customers_

Total kWh of non-lifeline customers for the previous monlh; and

Other Lifeljne Rate Cost Adjustments, refer to adjustments deemed neoossaiy by the Commission after prior verification and confirmation, and' LSOUR determined using the formula provided in Article 4, Section 5 hereof.

SGction 6. The Franchiso and Bu~iness Ta~s Rates shall be calculated using the following formulae:

6.1. For franchise Taxes that a OU is required to pay the LGU/s that shall be tm;luded in its customers' bills, recovery shall be b::ised on the tax rate multipli~ against the total distribution charges in Peso (Distribution, Supply, Metering

Page 15 of33

6.2.

and other charye5ladjustmerrts, i.e. subsldy on li"felioe charge. lifeline subsidy oiscount and inter-dass crass subsidy charge, exc~uding Reinvestment Fund oolloctions in the case of an EC). For transparency, the EC shall reflect as a s~parate fine ilem in its monthly billing:!\ to its customers lhe approved R.einv~stment Fund rate/kWh and corresponding revenues

For Business Taxes that a DU is requlretl to pay 1he LGU/s that shall be included in its customers' bills, recovery shafl be based on the fulfowing formula

FORMULAS.A

VI/hem:

ill"

OlJTA

r Bta J BT= -_--- + OBT/I ',S P;.<r

Business T<iJ<es Charge expressed in Pe~otkWh representing busines:s ta.ices that a DU is requjred to pay the LGU/s ;

Business Tax (excluding penalty and surr::harge) other than those already GOnsidered in the di~tribution rates, paid for the preceding calendar year;

Actual kWh S::iles for the preceding C31endar yea.-; and

Other Business Ta:~es Cost Adjustments, refer to adjustments deemed necessary by tile Commission after prior verifiGation and confirmation, and the BTOUR determined using the formura. provided in Artide 4, Section 6.1 hereof_

The computation af lo~I busines:.s taxes shall be based on the DU's talal dfstribution ch~rges, excluding the penalties and surctiarges paid by the DU. For an EC, Reinvestment Fund shall be excluded from the total distribution charges_ For transparency, the EC shalf reflect as a separate line item in its monthly bi!lings to its customers lhe apprnved Reinvestment Fund rate/kWh and corresponding revenues.

A DU that intends to include in its retail rates the franchise and business laxes imposed on it by the LGUIS- where it operates must first submit lo the ERC the certified true copies of the valid

Page 16 of 33

tax ordinanc::els subjecting it lo such taxes. In t~e case of Business l"axes, .submissions shall incfude tax receipts for the payments made for the preoec.tlng year, data o~ its kWh sales ~r the previous year, and other relevant data. l he DU shall await the ERC's clearance before the inclusion and imriosition of such taxes in its customers' retail rotes.

~.3. For Franchise and Business Taxes that a DU had already paid lo the conoemed LGU/s prior to the implementalion of recovery of current Franchise and Business Taxes shall bill! arlrnN'ad recovery based on the following formula:

FORMULA5.B

( " Lji + Bt TRAC ·~ -- · -"--" l + OFBA

S,R~C ,

1Nhere:

TRAC "" Tax Recovery Adjustment Charge expressed in Pesolk'!Nh applied to ttte customer's monthly billing until such time the total franchise and business taxes paid to the local govemment shall have been fully recovered:

I-ft~ "'

Rt~

S1;u..ir:

OFR-4.

Local franchise lax {excluding penalty and surcharge} paid prfar to the irrrplementation of the approved franchise tax rate;

Business Tax {excluding penalty and surchaTges) paid prior to fhe irnpleme11tatiorl ofthe apprt1ved bu$ines.s tax formula;

Projected kWh sales for a particular proposed recovery period or as dc1ermined by ERC; and

Other Franchise and Business Ta1<es Cost Adjustments, refer tu adjustments deemed necessary by the Commission after prior veriftcation and confinnation, and the TROUR determined using the formul3 provided in Article 4, 5ection 6.'.2 hereof

Page Uof :)3

··-·· --·-·------·- ------

Before incruding the TRAC in its customers' brll, the DU shall submit to the ERC rts calculation thersof using the TRAC_ formula provided abOlo'e, together with the following it"lformat1on and

supporting documents:

a. Proposed recovery period;

b_ Certified true copy of prior years Tax Assessments i:ssuoo hy the conr.erni:!d LGU!s;

c. Certified true copies of Local Tax OrdinanCf'!~;

d. Certified true copies of Official Receipts;

e. Projected kilowalt-hour5 sales for the particular proposed rerovery; and

t other relevant documents <rs may be required by ihe ERC.

Upon receipt of the complete documents, tha ERC shall verify and determine from the submissions the apprupriate TRAC that the DU snail be allovved to impose on its customers.

The DU shaU await the ERC's cleara.noo before the inciusion a11d imposition of such taxes in its ct1stomers' retail rates and shall impose !he TRAC allowed until such time that its franchise and business tax i:;ayments. as may be adjui;;;ted by the ERC during its prior verification, have been fully recovered.

ARTJCLEJ

REPORTORIAL REQUIREMENTS

Section 1. Submission of Reportorial ·Requirements. S1artin9 on the month foflowitig the fndusion fn the cuslomers' bills, the DU shall provide the ERC with all calculations and information relative to the adjustment mechanisms provided for hereln through the prescribed Uniform Reportoria' Requirements along with supporting documentations, which shaU lnciude. but not !imited to, the following:

Paae 1B of 33

1.1 Baslc Supporting Documents

1.1.1 Invoice$ from Power Supplicr/s and National Transmis.-;ion Corporation {TRANSCO}/N.ational Grid Corporation of the Philippines {NGCP);

1.1.2 Debit/Credit Memos from Power Supplier/s and TRANSCO/NGCP, if any;

1.1.3 Official Reooip~ of payments to Power SuppliP.r/s and 1-RANSCO/NGCP; and

1 .1.4 Actual consumer bills per class (3 bPUs per class).

1.:2 For Generation Rat:es and svstem Loss Rates

1.2.1 Sworn statement of DU if it has fts own generation fa~illty {one-time submission only, if applicable};

1.2.2 Monthry Generation Report for DU-Owned generation facility, if appfiGable; and

1.2.3 Svvorn and ootanzed statement on PPD availed from power supplier/s, PPO extended to end-users and pilferage recoveries enjoyed by the DU_

1.3 For Tr.msmiS$ion Rates

1.3.1 Sworn and notlrized st~tement on PFD availed from TRANSCO/NGCf• and PFD extended to end-users and Third Parties by thP- DU.

1.4 For Franchise Tax and Businoss Tax {FTBT) Rates

1 A.1 Actual consumer bills per class (3 bills per ciass) iri the area where FTIJT rate/s is/are leVied; and

1.4.2 Summary of the tax imposition and collection for every locality with;n its franchise area relative to taxes COl"flluled in accordance with Article 2, Section 7 of these Rules.

1.5 For Tax Recovery Adjustment Che1rge (TRAC)

1 .5.1 Actual collections from the ifr4Jl>i!meniation of TRAC; and

1.S.? Actual consumer bilr$ per ciass (3 bills per class) in the area where TRAC rate/s isfi:ire fevied; and

ARTICLE4

CALCULATrON OF THE OVER OR UNDER RECOVERY IN THE IMPLEMENTATION OF ADJUSTMENT MECHANISl'WS

Section 1. Calcufatlon of Over/Under RecoveriDs. The DU shall calculate the over or under recoveries on ihe Generation Rate. Transmission Rate, ::>ystem Loss RateT Lifeline Subsidy Rate and Franchise and Busiriess Truces Rate brought about by the variance between the allOW"1blo cost and the revem•es billed using the applicable fommlae.

Section 2. Generation R<1te OverlUnde.- Recovery. The Generation R1:1te Over/Under Recovery (GOUR) applicable to customers being referred to in Article 2, Sub-$eclions 1. t.3 and 1.2.4 sh~rr be carculated based on the fo!lowirig formula:

FORMULAS

GOUR

llGC =

GOUR , _((.AGC - GRR )+ r_GOUR J SG(J'.".', ho:I

Refers to under/oV?.r-recoveries in generation costs during the recovery period expressed in Peso/kWh;

Total Allowable Generation Cost, computed as foJlaws:

Pf=19C 20 of 33

Wf1ere:

GC i ton = Tue Generation Costs in Pesos from source of power i through source of power n for month 1 to f1l coming from Transition Supply Contracts (excluding Mandated Rate Reduction and penalties), Power Supply Agreements, WESM purchases, and distribution ulility-owned generation facUrty, as incorporated in Uie approved unbundled rates or as subsequently authorized by the Commission, less the following'.

a. Generation revenues from TOU customers~

b. Cost of power distribut~d to customers under DU's special programs;

c. Cost or power distributed to custorners under a Sale tor Resale Agreement, if the customers being supplied are not ooOrJecied with the main distribution grid and the CO!;t is different from tht:is~ fur otner regular customen;; and

d. Net Settlement Surplus amount as determined In Article 5, Sociion 5.4 of 1he Roles for the Distributron of Net SetUement Surplus, ff any;

PPD,,.,~ = Prompt Payment.O~scount availed by the DU, net of the Prompt Payment Dfsooul'1ts passed on to the end customers for month 1 tom, whsre disoounts passed Qfl fo customers Qtrmot be higher than the discount avaired from tho power supplierfs, relative tn

generation cost;

Pc.R,;,.~'/f Pilferage recoveries fur month 1 torn:

TPG,",,.,~ Total l<V\/h Purchased and Generated for month 1 to m ncl of kWh sold to wstorners under TOU, kWh distributed to speciai programs and Sale for Resale Agreements, if the customers be1ng suppfied are not connected with the main disbiblf1ron grfd and the cost is different from those for other regurar custoniorn; and

S,,,,r.;~ Actual kWh Sales for month 1 lo m net of kWti sold tu cu3tomers underTOU, kWh distributed to special

progtams and Sale for Resale Agreement.s, if thr:'l customers being suppliE)d are not connected wlth the main distribution grid and the cost is dirEerent from those for other regular customers_

111 the case of irie!igible supply contracts, genp.ration uosts from such contracts shan in(:!Ude the kilO'luatt-hours pertaining to ine!igibte contracts but the oosts shall be peuged at the DU's load weighted averayo NPC TOU rates or the a~al rate as billed by the IPP, whichever is lower_

GRl? = Total ganmalion revenues billed to customers exoept those associated with TOU, special progr~ms and Sale for Resare Agreements, if the area is not connected with the main distribution grid and thP- crn;t i!l. [email protected] fn:im thosG for other regurar custorners, computf!<I ~s follows:

r<iOUR

Whero.-

AGR.c,R As defined in Section 2, Article 2 hereof ;and

SGOu.~ = Adtlal kWh Sares for month 1 tom, net or kWh sold to cus!omers under TOU, and kWti di:;fribu!ed to special programs and Sale for Resale Agreements, if the customers belng supplied are not connected With lhe main distribution grid and the oost is. different from lhose for other regufl'!'r customers.

= lhe tot.al running balance of the refund/mlleG! as a result of any prior ocmftrmafion/s; and

"" Tota[ actual kWh Sales. for the recovery period net of kWh sold to customers under TOU, and kWh distributed to specia! programs ancf Sale for Resare Agreements, if tire customer$ be;ng suppUed are not connected with tf1e main distribl.Jlian grid and the cost is dmerent from th.osa for other regufar customers

Section 3. Trartsrnissron Rate Over/Under Recovery. Trie Tratlsmission Rate Over/Under Recovery (TOUR) shall be c:;i[culated pm customer c:rass based on the following formula:

-· -·. ·---·---------··· ··--

3.1. For Customer ciasses with TR e><pressad in Pewlk.Wh:

FORMULA 7

_ l(ATC,. -TRRJ + rTOUR,.} TOUR .. = · ·· · .. · .

. ·• srozm,.

3.2. Customer cl:aS$CS with TR expressed in Peso/kW and Customer dassos with TR e.icpressed in both Peso/k\/Vh and Peso/kW.

FORMULAS

TOUR,,., =- Refers tc over/under recoveries in transmission cost during the recovery period expressed in Pcso/kVl/h for class N;

ATCh = Refers to the a!!ttJ:ill transmission cost during the recovery

VWiero:

period computed as follows:

, r(TC ·-so% J>fD ' ] ATC ,, - L l --· . -. -. ·-- ls rur:N CP ,.

' · "' \ f'P(J mvN }

1'(-: .. The actual !rans.mission cost 111 Peso f.or month 1 to m;

PFD "' Power Factor Discounts availed by the DU, net of the Power F-actor Discounts given to customers and Third Parties for momh 1 to m , where: Disrount passed on to customers and Third Parties ::s; disr::aunt availed from iRANSCOINGCP for month 1 to m;

TPGmu11 = Total Purchased and Generated in kWh for month 1 to m corresponding to the transmission cost;

P:iga23 of 33

~' -·

= Actual kWh &!!es for month 1 to m corresponding to the transmission cost;

"" Actual or oomputed Coincident Peak Demand Allocafion Fac::tor for customer class N corresponding to the recovery period or the CP demand allocation factor as reflected in the fast approved unbundl~rl rates of the DU; and

Refern to a specific cus1oTTl(lr class {ex. N= 1,2,-.. where 1"' Residential, 2= Commercial, etc.).

TRR,,. Transmission CM! RecoveliM during the recovery period, to bP. cnrnputed as follows:

TRJ?. . .: 2:J(FJ\,. fr1Php/ kWhx Sh) +(TR.., in Ph Pl kWx Bl~v)J i.~

.'tR1o1 "" Transmission Rate in PhP/kWh and/or PhPJkW as applicable to customer class N as implemented by the OU for morrth 1 to rn. lf the transmission rate for customer N is e)(pressed in PhPlkWh arily, thf'ln the Transmission Charge in PhP/kW .in the formula should be squaf to zero {O) and vice-versa;

S,.. Total kWh sales for customer class N for month 1 to m;

llD.·; Total kW billing demand for customer class N for month 1 tom; end

N = Refers to a specific ct1stomer ciass (eir. N=1,2, .. _ ., where 1= Residential, 2"" Commercfal. etc.)_

rTOUR "' The total running balance of the refund/roflect as a result of prior com'irmafa:m/s_

"" Total kWh Sales for the recovery pl'!riod fur aJstorner class N.

Total kW bflling demand the recovery period for customer Giass N.

•j·

Section 4. systetn Loss Rate Over/Under Recovery. The System l.os.s Rale OvF!r/Under Recovery {SLOUR) shall be Ci'Jlculated based on the following formula:

FORMULAS

SLOUJ?,,, ((ASLC - • 1SU0.:t.: ,..~~.OUR] TPG,,,;r."'

1-Vhcro:

.S'f,OUR :o Refers 1o over/under recoveries in system loss during fhP. recovery period cxrm:eaed in r~~nt'kWh;

AS! . .<:' Allowable System Loss Cost Jncurred during the recovery period computed as follows:

l>WJere:

ASlC = L l(GTCC +TC - 50%PFD)U] t...,.,

GTGC = As defined in Section 4, Article 2 horeof;

TC = The acttml transmission cost in Peso for month 1 to m:

l'FD Power Factor Discount$ availed by the DU, net of the Power Factor Discmmts given to customers and Third Parties for month 1 to m • whero: Discount passed on to customers and Thlrd Parties ~discount availed ftom TR.l\NSCOINGCP for morrth 1 to m; and

U - Gross Up Factor=% SL/ (1- Actual% .System L~s};

The %SL is based on:

Cl) the Actuat Systems Los:s for month 1 to rn or the Systems Loss Cap, whichever is ICJ1Ner; plu.s

Page 2S of33

b} the Actval Campany use for month 1 tom or 1%, whichever is tower.

The ActL1al "lo System Loss. on the other hand, rs based on:

a} the Actual System Loss for month 1 tom; plus

b) the Actual Company Use for month 1 tom.

The kV'Jh Sales to be used in determining the System lo:s:. shall be net of kWfl distributed to special programs and Sal?. fnr RAs~IP. .AQreeiments, ;f such sales have different system loss charge rates from regular customers.

lf SLR varies per customer class, the DU shall compute tho applfcable Gross Lip Factor per customor class.

Pursuant lo ERG Resolution No. 17, Series of 2008, 1Jpon the Commission's appro~I of the OU's Operation and Maintenance Expen~s. wherein th"' Company Use shall have been Included, the same shafl no longer furm part of the %SL and Actual % SL as defined above.

ASLR "' Tol;;ll actual system loss revenues for generation and transmission billed to customers except those associated with special programs and Sale for Resale Agreements, if such sales have different system loss charge mtes from regular customers, computed as foHows:

Asr.R. --= ,L {SLR x s_tu), .. ~ J J,,IN

Where:

SLR. = As defined in Seci,ion 4, Artit:le 2 hereof: and

rST.OUR

Actual kWh Safes for month 1 to tn, net of kWh distributed to speci;:d programs. and Sale for Resafe Agreemen~, if sucti sale$ have different system lOM charge rates from regular customers;

The total running balance. of the rerund/coUecl as a result of prior coniirmation/s; and

Total kWh Purchased and Generated for the recovery period net kWh di~tributed t.o customers under special programs end Sale for Resare Agreement:s. if such sales have diffurent system loss <-.harge rates from regular customers_

Section 5. Lifeline Subsidy OvertUllder Rt1covery. The Lifeline SUb.5idy Over/Under Recovery (LSOUR} to be charged to non-lifeline customers shall be C<:1lc;ulatel'.I !Ja$ed on trm tolfowing:

FORMULA 10

LSOl!l? .,,,. LD

W'hern:

LSOUR = Refers to over/under recoVerics on lifeline subsidy during the recovery period e)(pressed in Peso/l<Wn;

LD = Difference between the Total Discounts givon to lifeline customers and Totar Subsidy corlected ffom non-lifeline custom5rs, computed as follows:

LI) - L (TS - .TD) !'·-·tU

TS lifeline subsidy amount collected from non-lifeline custr.Hners for month 1 to m. computed as follows:

Where:

S 1.SOrJ!!.1.,.

ISR

--- -------- ----

total kWh consumption of norHifeHne customers for the month; and

lifeline subsfdy rate per ~Wh collected ftom non-llf~!ine custome~ for the month.

tD total diswunt amount given to lifeline customers for month 1 to m, computed a.o;; follows:

TD, - L l\(S,_"""'·· >< TRurrr)+(NCusl '·'· >< Ftxeil /C~t))x Dj i-1· ..

Where·

j = Lifeline level bracket 1 to lifefine bracket n;

fl"rw// Clut

D

= Total kWh consumption of lifeline customers for tile month of life~in~ .bracket j;

Total PhPll<\'Vh rate subject to lifeline discount which include generation. tran:smlssion, system loss. distribution, supply, metering and loan oondon:rtion;

Total number of customers for the month for lifeline bracket j;

"' Fixed metering charge for residential custome~; a.nd

Dlscount rate for lffefine :bracket j.

Total kWh consumption of 110!"1-lifeline customers for the recovery period.

Section G. Franchise and Business Truces Over/Under Recovery. The Franchise and Business Taxes Over/Under Recovery to be charged to custome~ sh<11f be ~!curated based on tfHi.• folloWing formulae:

rage2aof 33

.·~····'i)" ... , ·····r;,···A-· . . .

I

.-,

... ----------------- -----

6_ L f--or BT Over/Under Recovery (BTOUR) to be charged to customers 8hafl be calrulated baserj on thP. following formula:

FORMULA 11

] ·o [(BTR.+/fl."'Rd 1- ... BrR )-(BT..4,+ BT,(+ ... BTA,,)j B l 'R - -' --- · - • · ··· · -

~ 8 ... .lllT'Olf1\-Y1n.oi;

Mlhern:

f11VUR = Refers to over/under recoveiie,s business tax~s during the recovery p1;1riod express.~d in Peso.lk\Nh;

HTR,"'" "" Business tax revenue tor the recow~ry period i to n oomputed as follows:

RTA,,,,,,

6.2.

JJTR ~ u~ r x L: s """'"A···· ) ;~ ·• ..

l11horo:

BT ERC Approved Annual Busine~s Tax- Rate; and

= Actu~I kWh Saras for month i to month m durrng the recovery period.

"" ERC verified business t3:xes paid by tho DU tor ttic recovery p-eriod I to n; and

Total actual kWh Gares for the recovery periocl.

For TRAC Over/Under Recovory (TROUR) to be charged to custome~ shall be calcola!ed based on the following formula:

FORMULA 12

_ ((TRAC x ,LS1"RO(!J1,n-· )- J-tllTA J TROUR = - __ i..,1---nr ------

SHl()ll~ • • (oo' .... d

TR OUR

TRAC

s T.'lOUR,,,.~.;

f'JJ"fA

,.. Refers to over/under recoveries franchise and busine5s taxe$ during the recovery period expres$ed in Peso/k\Nh for dass N;

= Tax Recovery Adjustment Charge implemented by the DU;

Actual kWh Sales for month i to month m during the recovery period;

"" ERG verified Franchise i3nd Business Tax payments paid by the DU; and

ARTICLE5

FILING AND RESOLUTION OF THE APPLICJ\ TION S

Sect.ion 1. Filing. The DUs ~hall file their respective consofidateo aprli~tions within 1he penod as prescribed hereunder:

•.. ·- - ---Distribution Period of Filing Covered Adjustments

UUlities o-----·--· -

Luzon OUs Octoher 30, 2009 Adjustments implemented until ttiP. billing month of December 2008

-- -- _,__ ·--· ·-- --··--· --- ...

Vi:;ayas OUs October 30, 2010 Adjustments implemented until the billing month of December 2009

,___ - ·-Mindanao DUs October 30, 2011

Adjustments implemented until the bflllng month of December 2010

r

Page 30 of 3~

Thereafter. the OUs shall file their re~pective consofidated appliC3tions within the period as prescribed hereunder:

... I

-·--

Di stti butio n Utilities Period of Fmng Covered Adjitslments ·----

Luzon DUs October 30, 2012. Jan. 2009 - oec. 2011 J

·---··· -- .. -~ - ..

Visayas UU s October 30, 201:'1 Jan. 2010- Dec. 2012 ----·

Mindanao DUs October 30, 2014 Jan. 2011 - Dec. 2013

Subsequently, the DUs shail file their respective com;olidated applications every thre~ (3) years foflowing the sequenoo of period of filrng prescribed above.

Section 2. True Up Mtlchanisms Approved by th9 .ERC. The filing of c.alcutaltons of over or under recoveries from adjustments implemented by the OUs referred to in the prcoeding Section shall indude the Ufelfne Rate Recovery Mechanism, Inter-class Cross Subsidy Recovery Mechanism, Recovery Mechanism of Under Recoveries in the Reinstatement of Prompt Payment Discounts, Recovery Mechanism in the Implementation of System Loss Rates, Recovery Mechanisrn in the lmpfemeniation of Transmission Rates a11d such other mechanisms that the ERC may adopt.

Section 3. Applfc:1bility of Rules Governing the True-Up lllloc:hani:srns. The specffic rules fur the calcuration of over and under recoveries and such other pertinent provislans as provided in the following:

3.1 Guidelines for the Calculation of the Over or Under Recovery in the lmprementation of Lifeline Rates by Distribution UtHitiett; ·

3.2 Guidelines for a True-Up Mechanism of the Over or Under Reoovery rn the Implementation of Inter-Class Cross S1ibSidy removal by Distribllfion Vtmfies;

3.3 ERC Resolution No. 12, Series of 2005, A Resolution Approving a New Poficy on the Treatment of Prompi Payme11t Discount {PPD);

f'age 31 of 3."'l

3_4 GuideHnes for the Calculation of the Over or Un<ler Recovery ir. the lmplementation of System Loss Hate by Distribution Utilities; and

3.5 Rules for the Calculation of tile Over or Under Recovery in lhe Implementation of Tran~mission Rates_

sh..i.ll continue to be in force and shall be used in the verification -of any over and under reooveries of the DUs and the determination and implementation of the rates for reoovery or refund of such over or under recoveries as may be ordered by lhe ERC.

Section 4. Fonn of Application and Supporting Documents. The applications and supporting documents therewith shall adopt the templates to be prescribed by the ERC.

Section 5. Referral to External Auditors. At its disc.rc1ion, the ERG tn~ refer the appticalion to an accredited ext:ema[ auditor for audit lhe cost of hiring such accredited auditor ~s stipulated in 1hc contract for the service$ of such accredited auditor approvP.d by the ERC shall be borne by the ooricerned DU_ Such cost shall he treated. upon proof of actuat payment. thereof as l"I

recoverable expense and shall be considered in the calculation of over or under recoveries for the tost period covered_

Section 6. Applicability of the ERC Rures of Practice and Procedure. - The t=.RC Rules of Practice ancf Procedure shall apply st1ppretorily to the vcrificatton process outlined in these Rules insofar as 1hny are not inconsistent herewith.

ARTICLE6

VlOLA TION Of THE RULES

Section 1 _ Fines and Penaltios - ViolaUon of any provision of these Rules shall

b~ subject to the imposition cffiries and penafties in accordance with the Rules to Govern the Imposition of Adrncnistrative SancUot'ls in tho form of Hnas and Penaflies Pursuant 10 $ec;lion 46 of Republic Act No_ 9136 promufgated by tho ERC on May 17, 2002, as amended_

P;:i.ge 32 of 3.1

ARTICLE 7

FINAL PROVISIONS

Section 1. Exception Cfa.u~e - Where good cause appears, the Commission may allow a11 exemption from any provision of lhese Rule.s, if such is found to be in the public interest and is not contrary to I~ or any other related nilcs arid regulations_

Soction 2. Separability Clause - If for any reason. <iny part or section of theso Rules is declared unconstitutional or invalid, the o!h6r parts or secUons hereof which are not affected thereby shall continue to be in full force and effect

3cl0lion 3. Repea:nng Clausa - All previous Commission issuances not consistent with these Rules are horeby ar:;cordingly repealed or deemed modified.

Soction 4. Effectlvily - The$e Rules a.hall take effect fifteen (15) days following rts publication in a newspaper of general circulation.

Pasig City, July 13, 2009.

Pl'lse 33 ot 33

--~·..: -- EB·' .c;··,. ....... . • - "' lu!iot . s. .

K>$ 0 . . . . ;r-r· BlllEllGY Ur.lULJLTOll't (<)11041- ol'tllUH'RllU

9 December 2013

lVANNA G. DEi.A PENA First Vice Presi dcpJ and H cad Regulc::itozy Management Office . MANlLA ELECTRIC CQ.M.PANY Orti~gas, Pasig City

Dear Ms. Dela Pena:

.4NNEX H

In the letter- dated 5 December 2013, MER.ALCO s:ought the Energy Regul;:.rtory Commission's (ERC) clearance to stagger collection of its generation costs for the Novemher 2013 supply mori:th, invoking Artide VlII, Section l of the AGRA (Automatic Gener<Jtion Rate Adjustment) Rules,

. which provides thnt the "ERC may allow- an exception from any pro\risions of these Guidelines, if sucb exception is found ·to be in the public: interest and is not contrary Lo lc::rw or any other related rule.s and regulations." Specifically, MERALCO proposed to impose a .generation charge of P.hP7.90/kWh 1n its Decemher 2013 hil)ing, iristead_ of the calculated PhP9.1070/kWh, and collect the deferred amounl of cihci'ut Phl'3 Billion in its Ft•bruary 2014: biIIing.

At todny's presentation of MERALCO before the ERC of it.c; December gQ:Heration chrlrge and its proposed cost. recovery deferment, it suggested DA!o oUier options, which involve capping the generation charge for tl-r~' December billing ilt PhP7.6 7 /kWh a11<l implementing the deferred cost recovery in the February 2011· hilling for Option 2 and in tbe February and March 2014 billi11gs for Option 3.

Th~ ERC is wcl1-a\.va1·e of the huge impact that MERALCO's generation ch<J.rge adjustment ~I! have 0n -the retail r~:rtes to it<> customers. GJven that there are a.lso re.ported increases in the pvices of other commodjtiE's. MERALCO's proposal to: stagger the imp[ementation of it5 ge,neration cost is timely, as il will cushion t:he impact on the eieclridty consumers.

The ERC therefore grants MERALCO the clearance it seeks to stagger -Ml1plemcnLation of fL'i generalion cost recovecy by way of an exception to the AGRA Rules. Accordingly, MERAT·.CO is auLhorized to implement a

:1

generation charge of PhP7.67 /kWh in its December 2013 billing and add to its cakufate<l generation charge for Fchru.:ny 2014 billing the gcncr;:ition r<ite of PhP1 .00/k'Wh. The halance on the deferred generntion amount 'l:Vithout any carrying costs shaH he included in MERALCO's generation charge {or March 2.01-1·. Shqufd MERi\.LCO seek to recover its carrying costs on the. _entire deferred amount, it shall file a form;:il application for this. -

The foregoing should n0t in any way be constn1erl as· ;:i confirm;:ition of MEHALCO's generation costs incurre<l in November 2013, which shall rcmilin subject of the confirmation and posl-verificalion proceedings in accordance wilh the applicible'ERC ri:>soh1tion on the m8tter.

We hope this ::iddresses your concerns.

Very trn 1 y yours,

/I . /] . . l ( ifl 'jf'(!_,,vl<,)....'r_,~ //- ij!_){,'f5p.,

/iZENAIDA G. CRH:i.~DUCUT t/' Chairperson and CEO

/""'\ \ Nl~ty··

AL~.J;~ J. NON .

Commissioner

Page 2 of 2

amended nasecor

Documents

gas power corporation

fgp corporation

gen hydro power corporation

semcalaca power corporation

san miguel energy corporation

national grid corporation

petitioner rodrigo

said petitioner