Power Distribution[edit]

Main article: List of electric distribution utilities in the Philippines

Electricity line post in Tagaytay

The circulation of electricity to end-users is a controlled common carrier business requiring a

national franchise.[20] The power to grant national franchises is exclusively vested to
the Congress of the Philippines. Distribution of electric power to all end-users or consumers of
electricity may be handled by private distribution utilities, cooperatives, local government units
presently undertaking this function and other duly authorized entities, under the regulation of the
ERC.[21]
A distribution utility has the task to provide distribution services and connections to its system
for any end-user within its franchise area, as there are different distribution utilities available for
different areas, consistent with the distribution code. They are required to provide open and
non-discriminatory access to its distribution system to all users.
Retail rates charged by distribution utilities are subject to regulation of the ERC under the
principle of full recovery. Under full recovery, distribution utilities subdivide their retail rate into
two distinct categories, namely pass through charges and wheeling charges. Pass through
charge follows the principle of full economic recovery where a distribution utility may pass on all
the charges it incurred in the distribution of power such as the price of the power, transmission
charge, systems loss charge, etc. to its customers. The wheeling charge is an additional
premium charged to the customer akin to a mark-up on the cost of power acquired by the
distribution utility. The wheeling charge follows the principle of reasonable return on base
(RORB) which allows the distribution utility to operate viably as determined by the ERC.
According to the National Electrification Administration (NEA), the distribution sector is
composed of 119 electric cooperatives, 16 privately owned utilities and six local government-
owned utilities as of 2009.[22] These distribution utilities may acquire electricity from generation
companies or the WESM, when certified as the distribution of electricity requires a national
franchise, for distribution to residential, commercial, industrial and other users. NEA, the
government agency in charge of implementing programs to reinforce the technical capability
and financial viability of rural electric cooperatives, may act as guarantor for purchases of
electricity in the WESM by any electric cooperative or small distribution utility to support their
credit standing.
Currently, Meralco is the Philippines' largest distribution utility with a franchise area of 9,337
square kilometers covering Metro Manila, the entire provinces of Bulacan, Rizal and Cavite,
parts of the provinces of Laguna, Quezon and Batangas, and 17 barangays in Pampanga. The
franchise area is home to 23 million people, roughly a quarter of the entire Philippine population
of 89 million.
Power distribution outside the Metro Manila area is handled by private distribution utilities and
electric cooperatives.
PHILIPPINE DISTRIBUTION CODE

The Philippine Distribution Code establishes the basic rules and procedures that govern the
operation, maintenance, development, connection, and use of the electric distribution systems in
the Philippines. Compliance with the provisions of this Distribution Code is mandatory for all
participants in distribution system operations. These include the Distributors and the Users of the
distribution system including embedded generators, other distributors connected to the
distribution system, and large customers.

The restructuring of the electric power industry in the Philippines as envisioned in Republic Act
No. 9136, also known as the “Electric Power Industry Reform Act of 2001,” will result in
significant changes in distribution system operations and management. The Act allows end-use
consumers belonging to the contestable market to obtain power from independent suppliers who
are licensed by the ERC. Electricity consumers will have the option to purchase electric energy
from a variety of resources other than those selected by their local distributor.

Distributors must provide wheeling services to such customers. Distributors must also procure
energy supplies to serve the remainder of their customers from the Wholesale Electricity Spot
Market or through bilateral contracts.

The Act mandated the creation of the Energy Regulatory Commission (ERC). Section 43(b) of
the Act provides that the ERC promulgate and enforce a National Grid Code and a Distribution
Code which shall include, but not be limited to: (a) Performance Standards for TRANSCO O &
M Concessionaire, distribution utilities and suppliers, and (b) Financial Capability Standards for
the generating companies, the TRANSCO, distribution utilities and suppliers. The Act also
mandates the ERC to enforce compliance to the Grid Code, the Distribution Code, and the
Market Rules, and to impose fines and penalties for violations of their provisions.

The Distribution Code defines the technical aspects of the working relationship between the
distributors and all the users of the distribution system. Electric distributors must deliver electric
energy to the electricity users at acceptable levels of service quality. On the other hand, the users
of the distribution systems must comply with certain rules and standards to avoid adverse effect
on the distribution system. The reliability of the distribution system depends on the performance
of the various components of the distribution network. Thus, major components such as power
substations, primary lines, distribution transformers, secondary lines and service lines, must
perform satisfactorily.
The policies, decisions and actions of the Distributor on matters involving the operation,
maintenance and development of the distribution system will affect industry participants and the
users of the distribution system. It is important, therefore, that all affected parties have a voice in
making policies and decisions involving the operation, maintenance and development of the
distribution system. The Distribution Code provides this mechanism through the Distribution
Management Committee that will relieve the ERC from the tedious task of monitoring day-to-
day operations of the distribution system.

Combined with the Philippine Grid Code, the Distribution Code will ensure that the total electric
energy supply system of the Philippines operates efficiently to provide reliable and economic
service to all distribution customers.The Distribution Code is organized into eight (8) Chapters.
These are:

Chapter 1. Distribution Code General Conditions

Chapter 2. Distribution Management
Chapter 3. Distribution Connection Requirements
Chapter 4. Distribution Planning
Chapter 5. Distribution Operations
Chapter 6. Distribution Revenue Metering Requirements
Chapter 7. Distribution Code Transitory Provisions
Chapter 8. Performance Standards for Distributors & Suppliers

Chapter 1 of the PDC contains the general provisions that apply to all the other Chapters of the
Distribution Code. It specifies the authority of ERC to promulgate and enforce the Distribution
Code. It also contains articles on construction of references, definition of terms, and
abbreviations used in the Distribution Code.

Chapter 2 of the PDC provides the guidelines for Distribution Management, the procedures for
dispute resolution, the required Management Reports and the procedures for Distribution Code
revision and enforcement.

Chapter 3 of the PDC specifies the minimum technical, design and operational criteria and the
procedures to be complied with by any User who is connected or seeking connection to a
Distribution System. User data submission requirements are also included in this Chapter.

Chapter 4 of the PDC specifies the technical and design criteria and procedures to be applied in
planning the development or reinforcement of a Distribution System. Articles on demand
forecasts, planning data, and required technical studies are likewise included in this Chapter.

Chapter 5 of the PDC establishes the rules and procedures to be followed by all Users of the
Distribution System to ensure that reliable distribution services are achieved for all distribution
customers. Articles on Operational procedures and arrangements, Operational Liaison,
Operational Reports, Demand Control, Emergency Operations, Safety Coordination, Testing and
Monitoring, System Test, Maintenance Procedures, and Equipment Numbering and
Nomenclature are likewise included in this Chapter.
Chapter 6 of the PDC specifies the technical and design criteria associated with the
measurement of electric energy as well as the procedures for providing metering data for billing
and payment.

Chapter 7 of the PDC specifies the rules and procedures pertaining to compliance with the
provisions of the Distribution Code during the transition period from the existing industry
structure to the new industry structure. The procedures for the grant of exemption from specific
requirements of the Distribution Code are also addressed in this Chapter.

Chapter 8 of the PDC specifies the standards to ensure the quality, reliability and efficiency of
the Distribution System, as well as customer service standards for the protection of end-users in
both captive and contestable markets. This Chapter also addresses safety standards for the
protection of personnel in the power distribution environment.

Chapter 9 of the PGC specifies the standards to ensure the quality, reliability and efficiency of
the Transmission System, as well as safety standards for the protection of personnel in the power
transmission environment.