PROVIDING FOR THE SEGREGATION AND UNBUNDLING OF ELECTRICAL POWER TARIFF COMPONENTS OF THE NATIONAL POWER CORPORATION AND THE FRANCHISED ELECTRIC UTILITIES

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WHEREAS, Section 28 of Article II of the Constitution provides that “the
State adopts and implements a policy of full public disclosure of all its
transactions involving public interest”;

WHEREAS, Section 5 of Article II of the Constitution provides that “the
protection of x x x property, and the promotion of the general welfare are
essential for the enjoyment by all the people of the blessings of democracy”;

WHEREAS, wholesome and constructive competition promotes satisfaction and
efficiency in the management and operation of the public service;

WHEREAS, the generation, transmission, and distribution of electric power
are separate and distinct fields of activity with different cost
considerations;

WHEREAS, the National Power Corporation (NPC) and franchised electric
utilities have been traditionally providing electric power service to customers
whereby the generation, transmission, and distribution of electric power are
integrated or combined and charged as a single tariff;

WHEREAS, Executive Order No. 215, series of 1987, and its implementing
rules and regulations allowing private sector participation in power generation
prescribes the transmission or wheeling of power to electric utilities and
mandates the NPC and franchised electric utilities with transmission and/or
distribution facilities of 69 kilovolts (KV) or above to file with the Energy
Regulatory Board (ERB) standard interconnection policies and procedures, and
wheeling tariffs for the ERB’s approval;

WHEREAS, in the interest of transparency and accountability and consistent
with Executive Order No. 215, series of 1987, and its implementing rules and
regulations and to rationalize the economic and efficient generation,
transmission and distribution of electricity, there is a need to identify,
segregate and “unbundle” the different components of the electricity tariff
that NPC and the franchised electric utilities are charging their respective
customers;

WHEREAS, in the decision in ERB Case No. 96-118, dated June 11, 1997, the
ERB approved an open access transmission tariff and tariff for ancillary
services to allow non-discriminatory use of NPC’s transmission grid by private
sector generating facilities and electric utilities;

WHEREAS, pursuant to Republic Act No. 7638, series of 1992, the Department
of Energy (DOE) is mandated, among others, to provide for an environment
conducive to free and active private sector participation and investment in all
energy activities; and

WHEREAS, ERB is mandated to determine, fix and prescribe the electric power
rates of NPC, private electric utilities, and rural electric cooperatives.

NOW THEREFORE, I, FIDEL V.
RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by law, consistent with the
foregoing Constitutional policies and legal mandates, do hereby order the ERB,
to formulate and adopt the necessary guidelines to identify the different types
of services provided and the corresponding tariffs charged to customers,
hereinafter referred to as unbundled tariffs, by NPC and franchised electric
utilities, within a period of sixty (60) days from the effectivity of this
order.

For this purpose, unbundled
tariffs shall include, as applicable but not limited to, generation charges,
transmission, sub-transmission and distribution charges, ancillary service
charges and service cost for supply of electricity.

This Executive Order shall take
effect immediately.

Done in the City of Manila, this
17th day of April in the year of our Lord, nineteen hundred and
ninety-eight.

(Sgd.) FIDEL V.
RAMOS
President of the Philippines

By the President:

(Sgd.) ALEXANDER P. AGUIRRE
Executive Secretary

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