RESOLUTION ADOPTING THE RULES FOR APPROVAL OF REGULATED ENTITIES’ CAPITAL EXPENDITURE PROJECTS

WHEREAS, Section 43(f) of Republic Act No. 9136, otherwise known as
the Electric Power Industry Reform Act of 2001 (EPIRA) provides that any
significant operating costs or projects investments of the National
Transmission Corporation (TRANSCO) and Distribution Utilities (DUs)
which shall become part of the rate base shall be subject to
verification by the Commission to ensure that the contracting and
procurement of the equipment, assets and services have been subjected to
transparent and accepted industry procurement and practices to protect
the public interest;

WHEREAS, on March 8, 2006, the Commission adopted Resolution No. 13,
Series of 2006 entitled “A Resolution Adopting the Guidelines to Govern
the Submission, Evaluation and Approval of Electric Distribution Capital
Projects”, which provided the DUs with a uniform system of filing
applications for approval of their respective proposed capital projects.

WHEREAS, in two (2) years of its implementation, several
suggestions/comments were brought to the attention of the Commission to
further improve said Guidelines;

WHEREAS, on May 29, 2003, the Commission adopted Resolution No. 04,
Series of 2003 entitled “Adopting an Alternative Rate Setting
Methodology for the National Transmission Corporation (TRANSCO) and Any
Future Concessionaire Thereof” and the annex attached thereto entitled
“Guidelines on the Methodology for Setting of Transmission Wheeling
Rates” (TWRG);

WHEREAS, on April 11, 2006, the Commission adopted Resolution No. 16,
Series of 2006 entitled “Adopting a Policy That Entry to the
Performance Based Regulation (PBR) by Private Utilities Under the
Distribution Wheeling Rates Guidelines (DWRG) be Made Mandatory”.

WHEREAS, on July 26, 2006 and December 13, 2006, the Commission
adopted Resolution No. 39, Series of 2006 entitled “Adopting the Rules
for Setting the Distribution Wheeling Rates (RDWR) for Privately Owned
Distribution Utilities Entering Performance Based Regulation (First
Entry Point)” and Resolution No. 54, Series of 2006 entitled “Adopting
the Rules for Setting the Distribution Wheeling Rates (RDWR) for
Privately Owned Distribution Utilities Entering Performance Based
Regulation (Second and Later Entry Points)”, respectively;

WHEREAS, the Commission is in the process of formulating a new
rate-setting methodology for Electric Cooperatives (ECs) which is
envisaged to be implemented by 2009.

WHEREAS, the Commission deems it necessary to adopt a new set of
rules that would address the suggested improvements and to make it
consistent with the provision of the TWRG, RDWR and the benchmarking
methodology;

WHEREAS, on May 14, 2008, the Commission approved the first (1^st)
draft of the proposed Resolution Adopting the Rules for Approval of
Regulated Entities’ Capital Expenditure Projects and was posted in its
official website at www.erc.gov.ph;

WHEREAS, on May 16, 2008, the Commission issued a Notice informing
the public where they can secure a copy or access said proposed Rules
and set the same for public consultation on June 16, 2008 at the ERC
Visayas Field Office in Cebu City for all Visayas and Mindanao
stakeholders and June 17, 2008 at the ERC Main Office in Pasig City for
all Luzon stakeholders;

WHEREAS, in the same Notice, interested parties were directed to file
their written comments/inputs on the said proposed Rules not later than
June 12, 2008;

WHEREAS, on various dates, several regulated entities submitted their
respective written comments/inputs on the said proposed Rules;

WHEREAS, during the said public consultations, various stakeholders
(privately owned DUs, commercial, industrial and residential consumers)
were present and given opportunity to manifest their respective
positions orally or in writing on the matters or issues presented in the
proposed Rules;

WHEREAS, on November 10, 2008, the Commission approved the second (2^nd) draft of the proposed Resolution Adopting the Rules for Approval
of Regulated Entities’ Capital Expenditure Projects and was posted in
its official website;

WHEREAS, on November 11, 2008, the Commission issued a Notice
directing all interested parties to file their written comments/inputs
on the said 2^nd revision of the proposed Rules not later than November
27, 2008;

WHEREAS, on various dates, the following entities filed their
respective comments: Association of Mindanao Rural Electric Cooperatives
Incorporated (AMRECO), Northeast Luzon Electric Cooperative Association
(NELECA), Philippine Chamber of Commerce and Industry (PCCI) and
Cagayan Electric Light and Power Company Incorporated (CEPALCO);

WHEREAS, the public consultations were held in preparation for
issuance of the Rules for Approval of Regulated Entities’ Capital
Expenditure Projects;

NOW, THEREFORE, be it RESOLVED, as the Commission hereby RESOLVES to
APPROVE and ADOPT the Rules for Approval of Regulated Entities’ Capital
Expenditure Projects, hereto attached and made an integral part of this
Resolution as Annex “A”^[*].

This Resolution shall take effect fifteen (15) days upon its publication in a newspaper of nationwide circulation.

Let copies of this Resolution be furnished the University of the
Philippines Law Center-Office of the National Administrative Register
(UPLC-ONAR), all DUs and TRANSCO.

Adopted: 15 Dec. 2008

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

 

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