HIGHLIGHTS ON THE IMPLEMENTATION OF REPUBLIC ACT NO. 9136,
ELECTRIC POWER INDUSTRY REFORM ACT OF 2001

For the Period October 2002 - April 2003

Wholesale Electricity Spot Market (WESM)

The Asian Development Bank (ADB) has approved the loan to finance the “Electricity Market and Transmission Development Project.” A portion of this loan will be used to finance the following projects: (1) Project Management Consultancy of the Philippine WESM, and (2) Procurement and Installation of the WESM Market Management System (MMS).

The ADB has also approved the bid documents and short listed firms for the Project Management Consultancy Project on 14 April 2003.

Further, the WESM Special Bid and Award Committee (SBAC), created on December 2002 to undertake bid evaluation and selection process for all WESM-related projects, has completed the review and approval of bid documents prepared by the National Transmission Corporation (TRANSCO) for the WESM Turnkey Project.

TRANSCO Privatization

Relative to the TRANSCO privatizatio, PSALM has issued and published in newspapers of general circulation on 27, 28, and 29 January 2003 the Public notice for Bidding of Concessionaire. Moreover, PSALM has distributed to interested parties the Information Memorandum last March 2003.

Power Rates

The ERC has rendered its decision on the rate unbundling applications of the NPC Small Power Utilities Group (SPUG) on 20 December 2002 and twelve (12) distribution utilities from November 2002 to April 2003, namely: PELCO I, PANELCO I, SORECO II, BATELEC I, SIARELCO and QUIRELCO. The ERC has previously approved NPC’s unbundling rate application on September 2002.

The ERC has likewise rendered its decision on the petition of the NPC-SPUG for the missionary electrification component of the Universal Charge (UC) on 20 December 2002 and petition of NPC for the environmental charge component of the UC on 02 April 2003.

Philippine Grid and Distribution Codes

The ERC has appointed the members of the Grid Management Committee (ERC Case No. 2002-204) and Distribution Management Committee (ERC Case No. 2002-205) on 02 December 2002 and 31 March 2003.

Condonation of EC’s Rural Electrification Loans

Pursuant to Section 5(g) of Executive Order No. 119, the NEA has issued the Guidelines for the submission of EC Performance Improvement Program (PIP) and/or Rehabilitation and Efficiency Plan (REP). Consistent with these guidelines, NEA approved a total of 117 PIPs/REPs on December 2002.

As a pre-requisite to PSALM assumption of Es’ rural electrification loans, the ERC has issued form March to April 2003 Provisional Authorities to 28 ECs directing to reduce rates as a result of the condonation of their rural electrification loans, to wit: CAPELCO, ANTECO, ILECO I, ILECO II, BATELEC II, TIELCO, ORMECO, QUEZELCO, BANELCO, BOHECO I, CEBECO III, NORECO II, LUELCO, INEC, ISECO, PANELCO I, CANORECO, CASURECO I, CASURECO II, CASURECO IV, ANECO, ASELCO, SIARELCO, SURSECO I, FIBECO, MOELCI I, MOELCI II, MORESCO II

Missionary Electrification Development Plan (MDCP)

The DOE has formulated the 2003 MEDP which will be used by the NPC-SPUG in updating its 2002-2006 Missionary Electrification Plan (MEP) and, in turn, will be the basis of ERC’s determination and fixing of the appropriate share of missionary electrification in the Universal Charge. The DOE submitted the 2003 MEDP to ERC on 07 March 2003.

The 2003 MEDP provided, among other things, the following:

• • 1. Levels of priority Universal Charge (UC) funding;
    2. Subsidy policy for new projects. This policy provides one time up-front capital subsidy or CapEx only since these projects new projects are assumed to be undertaken by the private sector or “Qualified Third Parties” or “QTPs”;
    • Criteria and weights for projects in unviable and unenergized areas. Said weights were agreed to b a balance between economic efficiency and the socio-political components.

Below is the proposed UC for Missionary Electrification under the 2003 MEDP.