A RESOLUTION ADOPTING THE RULES FOR THE AUTOMATIC RECOVERY OF MONTHLY FUEL AND PURCHASED POWER COSTS AND FOREIGN-EXCHANGE RELATED COSTS BY THE NATIONAL POWER CORPORATION (NPC)

WHEREAS, Section 43 of Republic Act No. 9136, otherwise known as the
Electric Power Industry Reform Act of 2001 (EPIRA) empowers the Energy
Regulatory Commission (Commission), in the public interest, to establish
and enforce a methodology for the recovery of fuel and purchased power
costs and incremental foreign exchange adjustments by the National
Power Corporation (NPC).

WHEREAS, on February 24, 2003, the Commission adopted the
Implementing Rules for the Recovery of Fuel and Independent Power
Producers (IPP) Costs: Generation Rate Adjustment Mechanism (GRAM) and
Incremental Currency Exchange Rate Adjustments (ICERA).

WHEREAS, on August 14, 2008, the Power Sector Assets and Liabilities
Management Corporation (PSALM) filed an application for approval of the
“Proposed Rules for the Automatic Recovery of PSALM Generation Assets’
Monthly Fuel Purchased Power and Foreign Exchange-Related Costs”
docketed as ERC Case No. 2008-019 RM;

WHEREAS, on October 21, 2008, the Commission issued an Order setting
the PSALM’s proposed Rules for public consultation on November 13,
2008;

WHEREAS, during the November 13, 2008 public consultation, several issues and concerns were raised by the parties;

WHEREAS, in its Notice dated December 17, 2008, the
Commission proposed a separate “Rules for the Automatic Recovery of
Monthly Fuel, Purchased Power Costs and Foreign Exchange Related Costs
of the National Power Corporation (NPC),” which was set for public
consultation on January 26, 2009;

WHEREAS, at the January 26, 2009 public consultation, the
stakeholders raised several issues pertaining to the following: a)
Clarification on the definition of terms; b) Unit of measurement of the
reference prices of fuel; c) Relaxation on the limit of adjustments for
reference prices; d) Other Fuel Cost Adjustment (OFCA) and Other
Purchased Power Cost Adjustment (OPPCA); and e) Test period of filing
the adjustments;

WHEREAS, on February 11, 2009, the Commission ’s proposed Rules was posted on its website, and a Notice was issued directing all interested parties to submit their comments thereon on or before February 25, 2009;

WHEREAS, on various dates, the Commission received several comments from the stakeholders;

WHEREAS, the Commission considered all the comments submitted by the parties in the finalization of the said proposed Rules;

NOW THEREFORE, the Commission, after thorough and due deliberation,
RESOLVED as it hereby RESOLVES to ADOPT the Rules for the Automatic
Recovery of Monthly Fuel and Purchased Power Costs and Foreign-Exchange
Related Costs by the National Power Corporation (NPC),” hereto attached
as ANNEX “A”^[*]

This Resolution shall take effect fifteen (15) days following its
publication in a newspaper of general circulation in the Philippines.

Let copies of this Resolution be furnished the University of the
Philippines Law Center-Office of the National Administrative Register
(UPLC-ONAR), National Grid Corporation of the Philippines (NGCP),
Philippine Chamber of Commerce and Industry (PCCI) and all distribution
utilities.

Adopted: 3 Aug. 2009

(SGD.) ZENAIDA G. CRUZ-DUCUT Chairperson
(SGD.) RAUF A. TAN Commissioner	(SGD.) ALEJANDRO Z. BARIN Commissioner
(SGD.) MARIA TERESA A.R. CASTAÑEDA Commissioner	(SGD.) JOSE C.REYES Commissioner

---

^[*] Text Available at Office of the National Administrative Register, U.P. Law Complex, Diliman, Quezon City.