LEARNING MODULE SURIGAO STATE COLLEGE OF TECHNOLOGY

Module in

EE LAWS, CODES,
STANDARDS AND ETHICS

Bachelor in Electrical Engineering Technology

RUDY C. DOCOY – Associate Professor I

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 LEARNING MODULE SURIGAO STATE COLLEGE OF TECHNOLOGY

Table of Contents

Module no. 1. The New Electrical Engineering Law…………………………………… 3 – 15

Module No. 2. Anti-Electricity Pilferage Act…………………………………………….. 16 – 28

Module No. 3. EPIRA Law………………………………………………………………... 29 – 83

Module No. 4 Code of Ethics for Electrical Engineers…………………………………. 83 – 86

Module No. 5. Magna Carta for Residential Electricity Consumer……………………. 87 – 95

Module No. 6. Grid Code………………………………………………………………….. 96 – 126

Module No. 7. National Building Code……………………………………………………127 - 139

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Module no. 1

I. Title: The New Electrical Engineering Law

II. Topic: Board of electrical engineering, examination and registration, sundry provisions relative to
the Practice of electrical engineering, and transitory provisions.
III. Time Frame: 5 hours

IV. Introduction:

This Act shall be known as the "New Electrical Engineering Law." As used in this Act, the following
terms shall mean:
(a) "Practice of electrical engineering" a person is deemed to be in the practice of electrical
engineering when he renders or offers to render professional electrical engineering service in the
form of:
(1) Consultation, investigation, valuation and management of services requiring electrical
engineering knowledge;
(2) Design and preparation of plans, specifications and estimates for electric power systems,
power plants, power distribution systems including power transformers, transmission lines
and network protection, switchgear, building wiring electrical machines, equipment and
others;
(3) Supervision of erection, installation, testing and commissioning of power plants, substations,
transmission lines, industrial plants and others;
(4) Supervision of operation and maintenance of electrical equipment in power plants, industrial
plants, watercrafts, electric locomotives and others;
(5) Supervision of the manufacture and repair of electrical equipment including switchboards,
transformers, generators, motors, apparatus and others;
(6) Teaching of electrical engineering professional subjects; and
(7) Taking charge of the sale and distribution of electrical equipment and systems requiring
engineering calculations or applications of engineering data.
(b) "Electric supply equipment" is any equipment which produces, modifies, regulates, or controls
the supply of electric energy.
(c) "Electric plant" is an establishment or a system for the production and modification of electric
energy.
(d) "Power plant design" refers to planning, specifying, coordinating layouting of electrical equipment
in power plants, substations and the like.
(e) "Substation" is any building, room or separate place which houses or encloses electric supply
equipment connected to transmission or distribution lines and the interior of which is accessible, as
a rule, only to properly qualified persons.
(f) "Electrical system design" refers to the choice of electrical systems, including planning and
detailing of requirements for protection, control, monitoring, coordination and interlocking of
electrical systems among others.
(g) "Voltage" is the highest effective potential difference between any two conductors of the circuit
concerned expressed in volts.
(h) "Kva" refers to the installed capacity of an alternating current (A.C.) electric plant or supply
equipment, or the connected load of industrial plants, commercial establishments, institutional
buildings expressed in kilovolt-amperes.
(i) "Kw" refers to the installed capacity of a direct current (D.C) electric plant on board watercraft
expressed in kilowatts.
(j) "Utilization equipment" refers to energy-consuming equipment including motors, heaters,
furnaces, light sources and other devices which utilize electric energy, for any purpose.
(k) "Industrial plant or factory" refers to manufacturing assembly plants, including engineering
shops, shipyards or other business endeavors where electrical machinery and equipment are
installed.

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(l) "Commercial establishments" are department stores, supermarkets, shopping malls, office
buildings, hotels, theaters, stadiums, condominiums, convention centers, restaurant and the like,
used for business or profit.
(m) "Institutional buildings" are school buildings, hospitals, museums, display centers, government
buildings and the like.
(n) "Watercraft" is any waterborne unit which is designed and built to have an electric plant.
(o) "Electric locomotive" refers to the power plant mounted on wheels as used in the railroad
transportation industry.

V. Objectives:
At the end of this course, the student shall be able to

1. Understand the New Electrical Engineering laws.

2. Understand the power and duties as an Electrical practitioners.
3. To discuss the practical applications of examination and qualification to a registered
electrical practitioners.

VI. Learning Activities:

ARTICLE II
BOARD OF ELECTRICAL ENGINEERING

Sec. 3. Composition of the Board. - The Board of Electrical Engineering, hereinafter referred to as
the Board, shall be created as a collegial body under the general supervision and administrative
control of the Professional Regulations Commission, hereinafter called as the Commission,
composed of a chairman and two (2) members to be appointed by the President of the Philippines
from among the recommendees of the Commissioner of the Professional Regulations Commission,
hereinafter referred to as the Commissioner, who were chosen from the nominees of the integrated
and
accredited association of electrical engineers and of other registered associations of electrical
engineers and allied fields.

Sec. 4. Powers and Duties of the Board. - The Board shall exercise executive/administrative or
quasi-legislative (rule-making) or quasi-judicial (investigative) powers in carrying out the provisions
of this Act. It shall be vested with the following specific powers, functions, duties and responsibilities:

(a) Supervise and regulate the practice of electrical engineering in the Philippines;
(b) Determine and evaluate the qualifications of the applicants for registration with or without
licensure examinations and for special permits;
(c) Prepare the examination questions in accordance with Section 19 hereof or modifications
thereof; prescribe the syllabi of the subjects and their relative weights for the licensure
examinations; formulate or adopt test questions and deposit them in a test question bank;
draw the test questions at random through process of computerization; conduct the
examination; correct and rate the examination papers manually or through process of
computerization; and submit the examination results to the Professional Regulations
Commission (PRC) within the period provided for by the rules of the Commission;
(d) Prescribe, amend or revise the requirements for professional electrical engineers and
subjects in the licensure examination for registered electrical engineers and registered
master electricians and their relative weights, subject to the approval of the Commission;
(e) Register successful applicants for professional electrical engineers and applicants who have
passed the licensure examinations for registered electrical engineers or registered master
electricians and issue the corresponding certificates of registration and professional

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licenses;
(f) Issue special permits to individual foreign electrical engineers and electricians for specific
projects and for a specific duration of time;
(g) Look into the conditions affecting the practice of the electrical engineering profession, adopt
measures for the enhancement of the profession and the maintenance of high professional,
technical, and ethical standards and conduct ocular inspection of places where
registrants practice their profession, such as, but not limited to: electric plants, substations,
industrial plants or factories, commercial establishments, institutional buildings, watercrafts,
electric locomotives, engineering offices, repair shops and similar places to determine and
enforce compliance with this Act. The Board shall authorize the duly integrated and
accredited electrical engineering association and other registered electrical engineering
associations to render assistance in this function;
(h) Promulgate rules and regulations including a code of ethics, administrative policies, orders
and issuances to carry out the provisions of this Act;
(i) Investigate violations of the Act and the rules and regulations, code of ethics, administrative
policies, orders and issuances promulgated by the Board. The rules on administrative
investigation promulgated by the Commission shall govern in such investigation;
(j) Issue subpoena or subpoena duces tecum, to secure the attendance of respondents or
witnesses or the production of documents at and relative to the investigation conducted by
the Board;
(k) Delegate the investigation of the case to the chairman, a member of
the Board or a Professional Regulations Commission attorney (PRC attorney). If the case
concerns strictly the practice of the profession, the investigation shall be presided by the
chairman or a member of the Board with the assistance of a PRC attorney;
(l) Render decision, order or resolution on preliminary investigation or inquiry, on undocketed
cases and on docketed administrative cases against examinees or registrants which shall
become final and executory unless appealed with the Commission within fifteen (15) days
from receipt of the copy thereof. The decision of the Commission may be appealed to
the Court of Appeals in accordance with the procedure provided in the Rules of Court;
(m) After due notice and hearing, cancel examination papers and/or bar any examinee from
future examination; refuse or defer his registration; reprimand the registrant with stern
warning; suspend him from the practice of his profession; revoke his certificate of
registration; delist his name from the roll of professional electrical engineers, registered
electrical engineers,
and registered master electricians for continuous non-payment of annual registration fees
and non-compliance with the Continuing Professional Education (CPE) requirements;
reinstate or reenroll his name in the said roll, reissue or return his certificate of registration.
A decision of suspension, revocation of the certificate of registration, or delisting from
the roll by the Board as provided herein, may be appealed initially to the Commission within
fifteen (15) days from receipt thereof. The decision of the Commission may be appealed to
the Court of Appeals in accordance with the procedure provided in the Rules of Court.
(n) Administer oaths in connection with the administration, implementation, or enforcement of
this Act;
(o) Submit an annual report on the proceedings and accomplishments during the year and on
recommendations of the Board to the Commission after the close of each fiscal year;
(p) Prosecute or institute criminal action against any violator of the Act and/or the rules and
regulations of the Board;
(q) Adopt an official seal;
(r) coordinate with the Commission and the Department of Education, Culture and Sports
(DECS) in prescribing, amending and/or revising the courses;
(s) Prescribe guidelines and criteria on the CPE program for professional electrical engineers,
registered electrical engineers and registered master electricians and renew their
professional licenses after compliance with the CPE requirements;
(t) Perform such other functions and duties as may be necessary to implement effectively this

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Act. The policies, resolutions, rules and regulations, orders or decisions issued or
promulgated by the Board shall be subject to the review and approval by the commission;
however, the Board's decisions, resolution or orders which are not interlocutory,
rendered in an administrative case, shall be subject to review only if on appeal.

Sec. 5. Qualifications of Board Members. - Each Board member must, at the time
of his appointment:
(a) Be a natural born Filipino citizen and a resident of the Philippines for at least five (5)
consecutive years;
(b) Be at least thirty-five (35) years of age, of proven integrity with high moral values in his
personal as well as his professional conduct;
(c) Be a person with no final conviction by the court of an offense involving moral turpitude;
(d) Be a holder of the degree of Bachelor of Science in Electrical Engineering (BSEE) from a
university, school, college, academy or institute duly constituted, recognized and accredited
by the Philippine government;
(e) Be a professional electrical engineer with a valid certificate of registration and a valid
professional license duly qualified to practice electrical engineering in the Philippines;
(f) Have practiced electrical engineering for a period of not less than ten (10) years prior to his
appointment, with a sworn statement as such; and
(g) Not be an official nor a member of the faculty of, nor have a pecuniary interest in, any
university, college, school or institution conferring a bachelor's degree in electrical
engineering for at least three (3) years prior to his appointment, and is not connected with a
review center or with any group or association where review classes or lectures in
preparation for the licensure examinations are offered or conducted at the time of his
appointment.
Sec. 6. Term of Office. - The members of the Board shall hold office for a term of three (3) years
from the date of appointment or until their successors shall have been appointed and qualified. They
may, however, be reappointed for a second term. Each member shall qualify by taking an oath of
office before entering upon the performance of his duties. Vacancies in the Board shall be filled by
the President from the list of recommendees by the Commissioner who were chosen from the list of
nominees submitted by the integrated and accredited association for the unexpired term
only.

Sec. 7. Removal of Board Members. - Any member of the Board may be removed by the President
of the Philippines, upon the recommendation of the Commissioner for neglect of duty,
incompetence, malpractice, commission or tolerance of irregularities in the examinations, or for
unprofessional, unethical, or dishonorable conduct, after having been given the opportunity to
defend himself
in a proper administrative investigation.

Sec. 8. Compensation of Chairman and the Board Members. - The chairman and members of the
Board shall receive a monthly compensation of no less than twelve thousand pesos (P12,000.00):
Provided, That the chairman shall receive a monthly compensation of ten percent (10%) more:
Provided, further, That such compensation shall be increased or modified pursuant to the General
Appropriations Act of the year: Provided, furthermore, That they shall receive other benefits that
may be provided for by law.

Sec. 9. Executive Officer of the Board. - The Commissioner shall be the executive officer of the
Board and shall conduct the examination given by the Board and shall designate any subordinate
officer of the Commission to act as secretary and custodian of all records including all examination
papers and
minutes of the deliberations of the Board.

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ARTICLE III:
EXAMINATION AND REGISTRATION

Sec. 10. Examination Required. - All applicants for registration for the practice of
electrical engineering in the Philippines shall be required to pass a technical examination as
hereafter provided except as otherwise specifically allowed under this Act.
Sec. 11. Registration and License Required. - A valid certificate of registration and a valid
professional license from the Commission are required before any person is allowed to practice
electrical engineering in the Philippines except as otherwise allowed under this Act.

Sec. 12. Examination Fees. - All applicants for oral examinations for professional electrical engineer
and written examinations for registered electrical engineer and registered master electrician shall be
subject to payment of fees prescribed by the Commission: Provided, That ninety percent (90%) of
the fees is to be treated as a special fund for the programs, projects and activities of the
Commission and the remaining ten percent (10%) shall be set aside as a trust fund for the
establishment and maintenance of the center for continuing education and research.

Sec. 13. Registration Fees, License Fees and Fines. - All applicants for registration and license to
practice as professional electrical engineer, and registered master electrician, shall be subject to the
payment of registration fees, license fees, and fines in case of violation of the pertinent rules and
regulations for the amounts prescribed by the Board and approved by the Commission:
Provided, That fifty percent (50%) from these collections are to be treated as a special fund for
programs, projects and activities of the commission and the other fifty percent (50%) shall be set up
in a separate special fund for the supervisory and regulatory functions of the Board.

Sec. 14. Exemption from Examination and Registration. - (a) Examination and registration shall not
be required of foreign electrical engineers, erection/commissioning/guarantee engineers employed
as technical consultants by the Philippine government or by private firms, for which the pertinent
professional society certifies that no qualified Filipino professional is available, or of foreign electrical
installers for the erection and installation of a special project or for any other specialized work,
subject to the following conditions:
(i) That the abovementioned foreign professionals are legally qualified to practice their
profession in their own country in which the requirements and qualifications for obtaining a
license or certificate of registration are not lower than those specified in this Act;
(ii) That the scope of work to be performed by said foreign professionals shall be limited only
to the particular work for which they were contracted;
(iii) That prior to commencing work, the foreign professional shall secure a special permit from
the Commission;
(iv) That said foreign professional shall not engage in private practice on their own account;
(v) That for every foreign professional contracted pursuant to this section, one Filipino
understudy who is registered under the provisions of this Act shall be employed by the
private firm utilizing the services of such foreign professional for at least the duration of the
alien expert's tenure with said firm; and
(vi) That the exemption herein granted shall be good only for six (6) months, renewable for
another six (6) months at the discretion of the Board: Provided, That in case the foreign
professional ceases to be employed in accordance with this section and engages in an
occupation requiring registration as electrical engineer such professional must be
registered under the provisions of this Act.

(b) No registration with the Board shall be required of the following:

(i) Engineering students, apprentices and other persons employed or acting as subordinates

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of, or undergoing training under a person holding a valid certificate of registration and a
valid professional license under this Act;
(ii) Persons in charge of or supervising the operation, tending and maintenance of an electric
generating set for private use employing voltages not exceeding two hundred fifty volts
(250 V) and capacity not exceeding fifty kilovolt amperes (50 kva): Provided, that the
owner or
operator shall be required to have the electric generating set periodically inspected at
intervals of not more than one (1) year by a professional electrical engineer, a registered
electrical engineer on a national, city, provincial or municipal government authority
exercising legal jurisdiction over electrical installations.
Sec. 15. Holding of Examinations. - Examinations for the practice of electrical engineering in the
Philippines should be given twice a year in the City of Manila and other places on dates that the
Board may recommend for determination of scheduling. The Board shall schedule interview/oral
examination of every applicant for registration as professional electrical engineer only at the office of
the Commission. To qualified applicants for examination, notice of admission shall be issued not
later than ten (10) days prior to the first day of examination.

Sec. 16. Qualifications of Applicant for Registration as Professional Electrical Engineer. - Any
person applying for registration as professional electrical engineer shall establish to the satisfaction
of the Board that on or before the date of registration, he possesses the following qualifications:

(a) He is a citizen of the Philippines;

(b) He is of good reputation with high moral values;
(c) He has not been finally convicted by the court of an offense involving moral turpitude;
(d) He is a holder of the degree of Bachelor of Science in Electric Engineering (BSEE) from a
university, school, college, academy or institute duly constituted, recognized and
accredited by the Philippine government; and
(e) He is a registered electrical engineer with valid certificate of registration and professional
license and with four (4) years or more of active practice reckoned from the date of his
registration as a registered electrical engineer.

Sec. 17. Qualifications of Applicants for Registered Electrical Engineer Examination. - Any person
applying for admission to the registered electrical engineering examination, as herein provided, shall
establish to the satisfaction of the Board that, on or before the date of the examination, he
possesses the following qualifications:

(a) He is a citizen of the Philippines;

(b) He is at least twenty-one (21) years of age;
(c) He is of good reputation with high moral values;
(d) He has not been finally convicted by the court of an offense involving moral turpitude; and
(e) He is a holder of the degree of Bachelor of Science in Electrical Engineering (BSEE) from
a university, school, college, academy or institute duly constituted, recognized and
accredited by the Philippine government.

Sec. 18. Qualifications of Applicants for Registered Master Electrician Examination. - Any person
applying for admission to the registered master electrician examinations, as herein provided, shall
establish to the satisfaction of the Board that, on or before the date of the examination, he
possesses the following qualifications:

(a) He is a citizen of the Philippines;

(b) He is at least eighteen (18) years of age;
(c) He is of good reputation with high moral values;
(d) He has not been finally convicted by the court of an offense involving moral turpitude; and
(e) He has any of the following technical backgrounds: (1) Has completed at least three (3)

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years of a five-year Bachelor of Science in Electrical Engineering (BSEE) program or a

three-year
course in electrical engineering technology from an engineering school recognized by the
Philippine government and, in addition, has a subsequent specific record of one (1) year
practice in electrical wiring and installation, operation and maintenance of utilization
devices and equipment; or (2) Has graduated from a two-year electrician's course of
instruction
from a vocational or trade school recognized by the Philippine government and, in addition,
has at least two (2) years of apprenticeship after completion of the course of instruction on
electrical installation, operation and maintenance of utilization devices and equipment; or
(3) Has completed a one-year electrician's course of instruction from a vocational school
recognized by the Philippine government and, in addition, has at least three (3) years of
apprenticeship after completion of the course of instruction on electrical installation,
operation and maintenance of utilization devices and equipment; or (4) Has completed a
four-year high school education or its equivalent and, in addition, has subsequent specific
record of at least five (5) years of apprenticeship in electric wiring, installation,
operation and maintenance of utilization devices and equipment.

Sec. 19. Scope of Examination. - As a prerequisite for registration as professional electrical

engineer, registered electrical engineer and registered master electrician, the applicant shall comply
with the following requirements:

(a) Professional electrical engineer: For the purpose of confirming the service record and clarifying
the technical report submitted by the applicant for registration as a professional electrical engineer,
an oral examination or interview shall be conducted on the following documents to be submitted to
the Board:

(1) Certified experience record from the date applicant took oath as a registered electrical
engineer indicating the inclusive dates, companies worked for, description of specific
responsibilities, significant accomplishments as well as the name and position of
immediate
supervisors;
(2) Technical paper covering an evaluation, an analysis, a study or a critical discussion of an
electrical engineering project or subject, on one or several technical aspects such as:
design, construction, installation, commissioning, testing, operation, maintenance, repair,
research and the like. The technical paper shall be supported by engineering principles
and
data. Published or unpublished scientific paper or treatise on electrical engineering
theories and applications may be considered as complying with the requirement;
(3) Three (3) certifications signed by three (3) professional electrical engineers to the effect
that the experience record submitted by the applicant is factual and that the technical
paper submitted was actually prepared by the applicant. The applicant must obtain passing
marks on the experience record and on the technical report in order to qualify for
registration as a professional electrical engineer.

(b) Registered electrical engineer: The applicant shall pass a written examination on different
subjects or group of subjects as follows:
(1) Mathematics, such as: algebra, trigonometry, analytic geometry, differential calculus,
integral calculus, differential equations, complex numbers, probability and statistics,
advanced engineering mathematics including matrices, power series, Fourier analysis,
Laplace transforms, and others. The weight is twenty-five percent (25%).
(2) Engineering sciences and allied subjects, such as general chemistry, college physics,
computer fundamentals and programming, engineering materials, engineering mechanics,
fluid mechanics, strength of materials, thermodynamics, electrical engineering law,

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engineering economics, engineering management, contracts and specifications, code of

professional ethics, Philippine Electrical Code, Parts 1 and 2 and others. The weight is
thirty percent (30%).
(3) Electrical engineering professional subjects, such as: electrical circuits, electronic theory
and circuits energy conversion, power transmission and distribution, instrumentation and
measurement, circuit and line protection, control systems, principles of communication,
electrical machines, electrical equipment, components and devices, electric systems,
power
plant, electronic power equipment, illumination, building wiring and others. The weight is
forty-five percent (45%). The passing general weighted average rating shall be seventy
percent (70%) with no grade below fifty percent (50%) in any group of subjects
listed above. The examination questions on the foregoing subjects shall cover only
basic theories and principles, and shall exclude questions based on
experience and trade practices. The number of questions shall be such
that the examination can be finished in three (3) consecutive eight-hour days. (c)
Registered master electrician: The applicant shall pass a written examination on the
different
subjects or group of subjects as follows:
(1) Technical subjects:
- Ohm's Law: Calculations for resistance, current, voltage and power for direct
current and alternating current circuits.
- Electrical machines: Description and operating principles of motors, generators
and transformers.
- Control equipment: Description and function of fuses, overload relays, safety
switches, magnetic switches, circuit breakers, star delta motor starters,
transformer-type motor starters, D.C. motor starters.
- Electrical components: Description of resistors, capacitors, inductors and semi-
conductors.
- Maintenance and repair: Description of the procedures in the maintenance of
electrical machinery.
- Test equipment: Types and uses of measuring instruments.
- Electrical engineering law provisions pertaining to registered
master electrician.
- Other related subjects as may be prescribed by the Board.
(2) Philippine Electrical Code, Parts 1 and 2:
- General requirements for installation of electric wiring and equipment.
- Approved wiring methods.
- Types of wiring materials and wiring devices.
- Installation of switchboard and panel boards.
- Installation in hazardous locations.
- Wiring diagrams of different types of motor starters with motor protection.
- Drawing symbols and wiring plants.
- Other related subjects as may be prescribed by the Board.
The number of test questions shall be such that the examinations can be finished
in one (1) eight-hour day. The relative weights shall be fifty percent (50%) for
technical subjects and fifty percent (50%) for Philippine Electrical Code. The
passing general average rating shall be seventy percent (70%) with no
grade below fifty percent (50%) in any subject.

Sec. 20. Report of Ratings. - The Board of Electrical Engineering shall, within one hundred fifty
(150) days after the date of completion of the examinations, report the ratings obtained by each
candidate to the Commission.

Sec. 21. Reexamination of Failed Subjects. - An applicant shall be allowed to retake, any number of

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times, only the subject/s in which he has obtained a grade below fifty percent (50%). When he shall
obtained an average grade of seventy percent (70%) in the subject/s repeated, he shall be
considered to have passed his licensure examination.

Sec. 22. Oath. - All successful candidates in the examination shall be required to take a professional
oath before the Board or any government official authorized to administer oaths prior to entering
upon the practice of professional electrical engineer, registered electrical engineer, and registered
master electrician.

Sec. 23. Issuance of Certificates of Registration and Professional Licenses. – The registration of
professional electrical engineer, registered electrical engineer or registered master electrician
commences from the date his name is entered in the roll of registrants or licensees for his
profession. Every registrant who has satisfactorily met all the requirements specified in this Act,
upon payment of the registration fee, shall be issued a certificate of registration as a professional
electrical engineer, a registered electrical engineer or a registered master electrician that shows the
full name of the registrant and with serial number, signed by the Commissioner and by the chairman
and members of the Board, stamped with the official seal, as evidence that the person named
therein is entitled to practice the profession with all rights and privileges appurtenant thereto. The
certificate shall remain in full force and effect until withdrawn, suspended, or revoked in A
professional license signed by the commissioner and bearing the registration number and date of
issuance thereof and bearing the registration number and date of issuance thereof and the month of
expiry or renewability shall likewise be issued to every registrant who has paid the annual
registration fees for three (3)
consecutive years and has complied with the requirements of the Continuing Professional Education
(CPE), unless exempted therefrom. This license will serve as evidence that the licensee can lawfully
practice his profession until the expiration of its validity.

Sec. 24. Continuing Professional Education Program. - The CPE guidelines shall be prescribed and
promulgated by the Board subject to the approval of the Commission, after consultation with the
integrated and accredited electrical engineering associations, other associations of the electrical
engineering profession, and other concerned sectors. The Board shall incorporate in the said
guidelines the creation of a CPE council that shall be composed of officers coming from the Board,
the Commission, the integrated and accredited electrical associations, and other concerned sectors.
It shall be vested with the functions, duties and responsibilities to implement the guidelines and shall
have the juridical personality that is distinct and separate from and independent of the Board, the
Commission, the integrated and accredited electrical engineering association, and other
associations of the electrical engineering profession.

Sec. 25. Integration of the Electrical Engineering Professions. - The electrical engineering
professions shall be integrated into one national organization which shall be recognized by the
Board as the one and only integrated and accredited association of professional electrical
engineers, registered electrical engineers and registered master electricians. Every professional
electrical engineer,
registered electrical engineer and registered master electrician upon registration with the Board as
such, shall ipso facto, become a member of the integrated national organization. Those who have
been registered with the Board but are not members of the said organization at the time of the
effectivity of this Act, shall be allowed to register as members of the said integrated organization
within three (3) years after the effectivity of this Act. Membership in the integrated organization shall
not be a bar to membership in the other associations of the electrical engineering profession.
The professional electrical engineer, registered electrical engineer, and registered master electrician
shall receive the benefits and privileges appurtenant to this listed membership in the duty integrated
and accredited electrical engineering association only upon payment of the required membership
fees and dues.

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Sec. 26. Seal of Professional Electrical Engineer. - All licensed professional electrical engineers
may obtain a seal of a design prescribed by the Board bearing the registrant's name, the certificate
number and the legend "Professional Electrical Engineer." Plans, specifications, reports and other
professional documents prepared by or executed under the immediate supervision of and issued by
a licensee, shall be stamped on every sheet with said seal when filed with government authorities or
when submitted or used professionally: Provided, however, That it is unlawful for anyone to stamp
or seal any document with said seal after the registrant's name has been delisted from
the roster of professional electrical engineers or after the validity of his professional license has
expired. The registrant shall be allowed again to use his seal or stamp in the documents
he prepares, signs or issues only after he is reinstated to the practice of his profession and reissued
a new professional license.

Sec. 27. Indication of Registration/Professional License Number. – The professional electrical

engineer, registered electrical engineer, or registered master electrician shall be required to indicate
his registration/professional license number, the date registered, and the date of its expiry in the
documents he signs, uses or issues in connection with the practice of his profession.

Sec. 28. Refusal to Issue Certificates. - The Board of electrical engineering shall not issue a
certificate of registration to any person convicted by the court of any criminal offense involving moral
turpitude or to any person guilty of immoral or dishonorable conduct or to any person of unsound
mind. In the event of refusal to issue certificates for any reason, the Board shall give the applicant a
written
statement setting forth the reasons for such action, which statement shall be incorporated in the
records of the Board. After no less than a year from the finality of the Board's decision, the Board,
out
of equity and justice, may recommend to the Commission the issuance of the certificate of
registration to the applicant.

Sec. 29. Revocation of Certificates of Registration and Suspension from the Practice of the
Profession. - The Board shall have the power, upon proper notice and hearing, to revoke any
certificate of registration of any registrant, to suspend him from the practice of his profession or to
reprimand him for any cause specified in the preceding section, or for the use of, perpetration of any
fraud or deceit in obtaining a certificate of registration, or for gross negligence or incompetence or
for unprofessional or dishonorable conduct; for violation of this Act, the rules and regulations and
other policies of the Board and the Code of Professional Ethics. It shall be sufficient ground for the
revocation of a certificate issued to a person under this Act, and his suspension from the practice of
his profession for unprofessional or dishonorable conduct, if:
(a) Being a professional electrical engineer, he has signed and affixed his seal on any plan,
design, technical reports, valuation, estimate, specification or other similar document or
work not prepared by him or not executed under his immediate supervision;
(b) He has represented himself as having taken charge of or supervised: any electrical
construction or installation; operation, tending and maintenance of any electric plant;
manufacture or repair of electrical equipment, teaching of electrical engineering subjects;
sale or distribution of any electric supply or utilization equipment requiring engineering
calculations or application of engineering principles and data, without
actually having done so. The decision of the board shall be final and executory unless it is
appealed by the respondent to the Commission within fifteen (15) days from the receipt of
such decision. The Board's or Commission's decision is appealable by the respondent to
the Court of Appeals in accordance with the procedure provided
under the Rules of Court. Any person, firm, association or corporation may file charges in
accordance with the provisions of this section against any licensee, or the Board may, on
its own initiative (motu propio) investigate and/or take cognizance of acts and practices
constituting cause for suspension or revocation of the certificate of registration by proper
resolution or order, such charges shall be in writing and shall be sworn to by the person

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making them and shall be filed with the Board. The rules and regulations of the
Commission on administrative investigation shall govern the procedure and conduct of
administrative investigation before the Board. The respondent shall have the right to a
speedy and public hearing and to confront and cross-examine witnesses against him.

Sec. 30. Re-issuance of Revoked Certificates and Replacement of Lost Certificates. - Subject to the
approval of the Commission, the Board may, after the expiration of one (1) year from the date of
revocation of a certificate, for reasons it may deem sufficient, entertain an application for a new
certificate in the same manner as application for an original one. It may exempt the applicant
from the necessity of undergoing an examination. A new certificate of registration to replace any
certificate that has been lost, destroyed or mutilated may be issued, subject to the rules of the
Board.

ARTICLE IV
SUNDRY PROVISIONS RELATIVE TO THE PRACTICE OF ELECTRICAL ENGINEERING

Sec. 31. Field of Practice. - The field of practice for professional electrical engineers, registered
electrical engineers, and registered master electricians shall be as follows:
(a) A professional electrical engineer's field of practice includes the sole authority to seal
electrical plans, etc., and to practice electrical engineering in its full scope as defined in
this Act;
(b) A registered electrical engineer's field of practice includes charge or supervision of
operation and maintenance of electrical equipment in power plants, industrial plants,
watercraft, electric locomotive, and others; manufacture and repair of electrical supply and
utilization equipment including switchboards, power transformers, generators, motors,
apparatus, and others; teaching of electrical subjects; and sale and distribution of
electrical equipment and systems requiring engineering circulations or application of
engineering data; and
(c) A registered master electrician's field of practice includes the installation, wiring,
operation, maintenance and repair of electrical machinery, equipment and devices, in
residential, commercial, institutional, commercial and industrial buildings, in power plants,
substations, watercrafts, electric locomotives, and the like: Provided, That if the
installation or the machinery is rated in excess of five hundred kilovolt-amperes (500 Kva),
or in excess of six hundred volts (600 V) the work shall be under the supervision of a
professional electrical engineer or a registered electrical engineer.

Sec. 32. Prohibition in the Practice of Electrical Engineering. - No person shall: (a) Practice or offer
to practice electrical engineering in the Philippines without having previously obtained a certificate of
registration and a professional license from the Board of Electrical Engineering except as
provided for in Section 14 hereof; (b) Use, or attempt to use as his own, certificate of registration,
professional license or the seal of another; (c) Give false or forged evidence of any kind to the
Board or to any member thereof in obtaining a certificate of registration or professional license; (d)
Falsely impersonate any registrant of like or different name; (e) Attempt to use a revoked or
suspended certificate of registration or an expired professional license; (f) Use, in connection with
his name or otherwise assume, use or advertise any title or description tending to convey the
impression that he
is a professional electrical engineer, registered electrical engineer, or registered master electrician
without holding a valid certificate or a valid license; and (g) Sign a document involving electrical
design, plan, technical specification, valuation and the like on behalf of a professional electrical
engineer.

Sec. 33. Personnel Required. - Except as otherwise provided in this Act, every electric plant,
industrial plant or factory, commercial establishment, institutional building, watercraft, electric

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locomotive or in any other installation where persons and properties are exposed to electrical
hazards shall not have less than the following complement of professional electrical engineer,
registered electrical
engineer, and registered electrical engineer, and registered master electricians: (a) Electric plants
with total installed generating capacity of any size and employing voltages of any standard rating -
one (1) professional electrical engineer or one (1) registered electrical engineer. However, for
capacities up to five hundred-kilovolt amperes (500 Kva) and employing voltages of up to six
hundred volts (600 V) - one (1) registered master electrician; (b) Industrial plants or factories,
commercial establishments, or institutional buildings having a connected Kva load of any size and
employing voltages of any standard rating - one (1) professional electrical engineer or one (1)
registered electrical engineer. However, for connected loads up to five hundred kilovolt-amperes
(500 Kva) and employing
voltages up to six hundred volts (600 V) - one (1) registered master electrician; (c) Watercrafts or
electric locomotives with installed generating capacity up to the maximum size and voltage available
for these units - one (1) professional electrical engineer or one (1) registered electrical engineer.
However, for generating capacities up to five hundred kilovoltamperes/kilowatt (500 Kva/Kw) and
employing voltages up to six hundred volts (600 V) - one (1) registered master electrician.
Provided, however, That in all the aforementioned cases, additional qualified personnel shall be
employed to ensure safe operation and safeguard public welfare, life and property: Provided,
further, That when the operation requires more than one shift of personnel every twenty-four (24)
hours, the minimum complement of qualified personnel shall be employed in each shift.
This section, however, shall not apply to any installation which has a connected load of fifty kilovolt-
amperes (50 Kva) or less and employs voltages of not more than two hundred fifty volts (250 v) and
for installations which are designed to be automatic and do not require resident personnel for their
safe operation: Provided, however, That their maintenance and repair shall be under the charge of a
duly registered personnel: Provided, further, That a yearly inspection will be conducted and certified
to be in a safe operating condition by a professional electrical engineer, a registered electrical
engineer, or a registered master electrician.

Sec. 34. Preparation of Plans, Supervision of Installation, Application of the Philippine Electrical
Code. - It shall be unlawful for any person not authorized under this Act to prepare plans, electrical
valuations or specifications for any electrical wiring, equipment or system; and no installation thereof
shall be
undertaken unless the plans, designs, valuations and specifications have been prepared by or
under the responsible charge of, and signed and sealed by a professional electrical engineer; and a
construction permit for the execution thereof is first secured; and unless the work is done in
accordance with the Philippine Electrical Code and is executed under the responsible charge or
supervision of a professional electrical engineer, a registered electrical engineer, or a registered
master electrician, as the case may be, and the routinary fiscal and ministerial requirements of the
government agency, if any, exercising jurisdiction over the particular installation have been complied
with.

Sec. 35. Practice Not Allowed for Firms and Corporations. - The practice of electrical engineering is
a professional service admission to which is based on individual and personal qualifications. Hence,
no firm or corporations may be registered or licensed as such for the practice of electrical
engineering.
However, persons properly qualified and licensed as professional electrical engineers may, among
themselves, form a partnership or association and collectively render electrical engineering service.
Individual members of such partnerships or associations shall be responsible for their own
respective acts.

Sec. 36. Posting of Certificates. - The owner, manager or the person in charge of an electric plant,
industrial plant or factory, commercial establishment, institutional building, watercraft, or electric
locomotive shall post or cause to be posted in a conspicuous place within such plant or

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establishment the certificate of registration of the engineers or electricians employed in such plant or
establishment, in a frame protected by transparent glass or equivalent.

Sec. 37. Certificate of Specialty. - Certificates of specialty shall be issued by the Board, subject to
the approval of the Commission, to professional electrical engineers who have been screened and
recommended by the integrated and accredited electrical engineering association. These are for
specific fields in which the applicants have specialized knowledge, training and experience and
have demonstrated their competence and expertise. The Board shall, subject to the approval of the
Commission, and after consultation with the said association, prescribe and issue the necessary
guidelines for the issuance of these certificates.

Sec. 38. Foreign Reciprocity. - No foreign engineer shall be admitted to take a board examination,
be given a certificate of registration, or be entitled to any of the rights and privileges under this Act
unless the country of which he is a subject or citizen specifically permits Filipino engineers to
practice within its territorial limits on the same basis as the subjects or citizens of such country.

Sec. 39. Enforcement of the Act by Officers of the Law. - It shall be the duty of all constituted
officers of the law of the national government, or any provincial, city or municipal government or of
any political subdivision thereof to prosecute any person violating the provisions of this Act. The
Secretary of Justice or his assistant shall act as legal adviser of the Board and render such legal
assistance
as may be necessary in carrying out the provisions of this Act.

Sec. 40. Penalty Clause. - Any person who shall violate any of the provisions of this Act shall be
guilty of misdemeanor and shall, upon conviction, be sentenced to a fine of not less than Ten
thousand pesos (P10,000.00) nor more than Fifty thousand pesos (P50,000.00) or imprisonment for
a period not less than six (6) months nor more than five (5) years or both at the discretion of the
court.

ARTICLE V
TRANSITORY PROVISIONS

Sec. 41. Terms of Office of Board Members. - Upon approval of this Act, the incumbent chairman
and two (2) members of the Board shall continue to serve until their terms of office expire or until
their replacements have been appointed by the President and shall have been duly qualified.

Sec. 42. New Certificates of Registration and Professional Licenses. - (a) Associate electrical
engineers and assistant electrical engineers with valid certificates of registration and professional
license issued under Republic Act No. 184 shall register within two (2) years from the effectivity of
this Act and be issued new certificates of registration and new professional license as registered
electrical engineers under this Act to replace their original ones. Their serial numbers shall be
provided by the registration division of the Commission. (b) Master electricians with valid certificates
of registration and professional licenses under Republic Act No. 184 shall register within two (2)
years from the effectivity of this Act and be issued new certificates of registration and new
professional licenses as registered master electricians with the same serial numbers as their old
ones to replace their original certificates and licenses.

ARTICLE VI
FINAL PROVISIONS
Sec. 43. Repealing Clause. - Republic Act No. 184 and existing provisions of provincial, city or
municipal ordinances or regulations pertaining to examinations for electrical contractors, electrical
inspectors, or electricians, and all other laws, part of laws, orders, ordinances or regulations in
conflict with this Act are hereby repealed or amended accordingly.

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Sec. 44. Separability Clause. - If any part of this Act or the application of such provision or
circumstance is declared unconstitutional, the remainder of this Act or the application of such
provision to other persons or circumstances shall not be affected by such declaration.

Sec. 45. Effectivity Clause. - This Act shall take effect after thirty (30) days following its full
publication in the Official Gazette or newspaper of general circulation.

VII. Self-Evaluation:

1. What are qualifications of Applicant for Registration as Professional Electrical Engineer?

2. What are qualifications of Applicant for Registration as Registered Electrical Engineer?
3. What are qualifications of Applicant for Registration as Master Electricians?
4. Who are qualified to be a member of the board?
5. What are the power and duties of Electrical Engineering?

VIII. Review of Concepts:

1. ARTICLE II- BOARD OF ELECTRICAL ENGINEERINGA; Sec. 3. Composition of the Board;

Sec. 4. Powers and Duties of the Board; Sec. 5. Qualifications of Board Members; Sec. 6.
Term of Office; Sec. 7. Removal of Board Members; Sec. 8. Compensation of Chairman and
the Board Members; Sec. 9. Executive Officer of the Board.

2. ARTICLE III - EXAMINATION AND REGISTRATION. Sec. 10. Examination Required; Sec.
11. Registration and License Required; Sec. 12. Examination Fees; Sec. 13. Registration
Fees, License Fees and Fines; Sec. 14. Exemption from Examination and Registration; Sec.
15. Holding of Examinations; Sec. 16. Qualifications of Applicant for Registration as
Professional Electrical Engineer; Sec. 17. Qualifications of Applicants for Registered
Electrical Engineer Examination; Sec. 18. Qualifications of Applicants for Registered Master
Electrician Examination; Sec. 19. Scope of Examination; Sec. 20. Report of Ratings; Sec.
21. Reexamination of Failed Subjects; Sec. 22. Oath; Sec. 23. Issuance of Certificates of
Registration and Professional Licenses; Sec. 24. Continuing Professional Education
Program; Sec. 25. Integration of the Electrical Engineering Professions; Sec. 26. Seal of
Professional Electrical Engineer; Sec. 27. Indication of Registration/Professional License
Number; Sec. 28. Refusal to Issue Certificates; Sec. 29. Revocation of Certificates of
Registration and Suspension from the Practice of the Profession; and Sec. 30. Re-issuance
of Revoked Certificates and Replacement of Lost Certificates.

3. ARTICLE IV - SUNDRY PROVISIONS RELATIVE TO THE PRACTICE OF ELECTRICAL

ENGINEERING. Sec. 31. Field of Practice; Sec. 32. Prohibition in the Practice of Electrical
Engineering; Sec. 33. Personnel Required; Sec. 34. Preparation of Plans, Supervision of
Installation, Application of the Philippine Electrical Code; Sec. 35. Practice Not Allowed for
Firms and Corporations; Sec. 36. Posting of Certificates; Sec. 37. Certificate of Specialty;
Sec. 38. Foreign Reciprocity; Sec. 39. Enforcement of the Act by Officers of the Law; Sec.
40. Penalty Clause.

4. ARTICLE V - TRANSITORY PROVISIONS. Sec. 41. Terms of Office of Board Members;

Sec. 42. New Certificates of Registration and Professional Licenses.

5. ARTICLE VI - FINAL PROVISIONS. Sec. 43. Repealing Clause; Sec. 43. Repealing Clause;

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and Sec. 45. Effectivity Clause.

IX. References:

1. Philippine Electrical Code Handbook.

2. Republic Act No. 7920 Handbook

Module No. 2

I. Title: Anti-Electricity Pilferage Act

II. Topic: General Provisions, Illegal Use of Electricity and Theft of Electric Power Transmission
Lines and Materials, Prima Facie Evidence, Incentives, Disconnection of Electric Service,
Penalties, Billings and Surcharges, Issuance of Restraining Orders or Writs of Injunction,
Rationalization of System Loss, Recovery of Pilferage Losses, and Information
Dissemination.
III. Time Frame: 4 hour

IV. INTRODUCTION

Electricity pilferage act is one of a crime in electrical department, in this module it gives you how to
perform anti program to this case. This topic teach you about An act penalizing the pilferage of
electricity and theft of electric power transmission lines/materials, rationalizing system losses by
phasing out pilferage losses as a component thereof and for other purposes.

V. Objectives:
At the end of this topic, the student shall be able to;
1. To protect the honest electricity users from the burden of paying the cost of pilferage
passed on to them.
2. To ensure the smooth, uninterrupted and viable operations of the electric utilities and
cooperatives.
3. To assure the government that the electric utilities and cooperatives will provide adequate,
safe and reliable service and impose fair and reasonable electric rates on end-users by
rationalizing system losses.

VI. Learning Activities:

RULE I
General Provisions

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SECTION 1. Title. — These Rules shall be known as the Implementing Rules and Regulations of
the Anti - Pilferage of Electricity and Theft of Electric Transmission Lines/Materials Act of 1994.

SECTION 2. Construction. — These Rules shall be strictly construed to attain the efficient and
effective implementation of R.A. 7832.

SECTION 3. Definition of Terms. — As used in this Rules:

a) "ERB" means the Energy Regulatory Board;
b) "DOE" means the Department of Energy;
c) "NEA" means the National Electrification Administration;
d) "NPC" means the National Power Corporation;
e) "Utility" means the Private or Investor-owned Electric Utility and that owned and/or
operated by the Municipal, City, Provincial or National Government;
f) "Cooperative" means the Rural Electric Cooperative;
g) "Electric power transmission line/material" refers to electric power transmission steel
towers, wood-poles, cables, wires, insulators, line hardwares, electrical conductors and
other related items with minimum voltage of sixty-nine kilovolts (69 kv), such as the
following: (1) Steel transmission line towers made of galvanized steel angular members
and plates or creosoted and/or tannelized woodpoles/concrete poles and designed to
carry and support the conductors; (2) Aluminum conductor steel reinforced (ACSR) in
excess of one hundred (100) MCM; (3) Overhead ground wires made of 7 strands of
galvanized steel wires, 3.08 millimeters in diameter and designed to protect the electrical
conductors from lightning strikes; (4) Insulators made of porcelain or glass shell and
designed to insulate the electrical conductors from steel towers or woodpoles; and
(5) Various transmission line hardwares and materials made of aluminum alloy or malleable
steel and designed to inter-connect the towers, conductors, ground wires, and insulators
mentioned in subparagraphs (1), (2), (3) and (4) above for the safe and reliable operation
of the transmission lines. h) "Differential billing" shall refer to the amount to be charged to
the person concerned for the unbilled electricity illegally consumed as determined through
the use of methodologies outlined in Section 6 of R.A. 7832; i) "Apprehension" shall be
understood to mean the discovery of the presence of any of circumstances enumerated in
Section 4 of R.A. No. 7832 in the establishment or outfit of the consumer concerned as
personally witnessed and attested to by the consumer concerned or a duly authorized
ERB representative or any officer of the law, as the case may be. j) "Power sold by NPC
or any other entity that supplies power directly to a consumer" is deemed to be sale
directly to the consumer if: (1) the point of metering by the NPC or any other utility is less
than one thousand (1,000) meters from the consumer, or (2) the consumer's electric
consumption is three (3%) or more of the total load consumption of all the customers of
the utility, or (3) there is no other consumer connected to the distribution line of the utility
which connects to the NPC or any other utility point of metering to the consumer meter;
k) "Current bill" shall mean the latest monthly bill served by the utility or cooperative which
does not include any period before the time of apprehension;
l) "Current rate" shall mean the average rate of electricity per kilowatthour as reflected in the
current bill.

RULE II
Illegal Use of Electricity and Theft of Electric Power Transmission Lines and Materials

SECTION 1. Illegal Use of Electricity. — It shall be unlawful for any person, natural or juridical,
private or public to:
(a) Tap, make or cause to be made any connection with overhead lines, service drops, or
other electric service wires, without previous authority or consent of the private electric
utility or rural electric cooperative concerned;
(b) Tap, make or cause to be made any connection to the existing electric service facilities of

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any duly registered consumer without the latter's or the electric utility's consent or
authority;
(c) Tamper, install or use a tampered electrical meter, jumper, current reversing transformer,
shorting or shunting wire, loop connection or any other device which interferes with the
proper or accurate registry or metering of electric current or otherwise results in its
diversion in a manner whereby electricity is stolen or wasted;
(d) Damage or destroy an electric meter, equipment, wire or conduit or allow any of them to
be so damaged or destroyed as to interfere with the proper or accurate metering of
electric current; and
(e) Knowingly use or receive the direct benefit of electric service obtained through any of the
acts mentioned in subsections (a), (b), (c) and (d) above.

SECTION 2. Theft of Electric Power Transmission Lines and Materials. — It shall be unlawful for
any person, natural or juridical, public or private to:

(a) Cut, saw, slice, separate, split, severe, smelt or remove any electric power transmission
line/material or meter from a tower, pole, any other installation or place of installation or
any other place or site where it may be rightfully or lawfully stored, deposited, kept,
stocked, inventoried, situated or located, without the consent of the owner, whether or
not the act is done for profit or gain;
(b) Take, carry away or remove or transfer, with or without the use of a motor vehicle or
other means of conveyance, any electric power transmission line/material or meter from
a tower, pole, any other installation or place of installation, or any place or site where it
where it may be rightfully or lawfully stored, deposited, kept, stocked, inventoried,
situated or located, without the consent of the owner, whether or not the act is done for
profit or gain;
(c) Store, possess or otherwise keep in his premises, custody or control, any electrical
power transmission line/material or meter without the consent of the owner, whether or
not the act is done for profit or gain; and
(d) Load, carry, ship or move from one place to another, whether by land, air or sea any
electrical power transmission line/material, whether or not the act is done for profit or
gain, without first securing a clearance/permit for the said purpose from its owner or the
NPC or its regional office concerned, as the case may be.

RULE III
Prima Facie Evidence

SECTION 1. Prima Facie Evidence of Illegal Use of Electricity. — The presence of any of the
following circumstances shall constitute prima facie evidence of illegal use of electricity by the
person benefited thereby:

(a) The presence of a bored hole on the glass cover of the electric meter or at the back or
any part of said meter;

(b) The presence of salt, sugar and other elements inside the electric meter that could
result in the inaccurate registration of the meter's internal parts to prevent its accurate
registration of consumption of electricity;

(c) The existence of any wiring connection which affects the normal operation or registration
of the electric meter;

(d) The absence of an ERB/NEA seal or the presence of a tampered, broken or fake seal

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on the meter or mutilated, altered or tampered meter recording chart or graph or

computerized chart, graph or log;

(e) The presence of a current reversing transformer, jumper, shorting and/or shunting wire
and/or loop connection or any other similar device in any part of a building or its
premises which is subject to the control of the consumer or on the electric meter;

(f) The mutilation, alteration, reconnection, disconnection, bypassing or tampering of

instruments, transformers and accessories;

(g) The destruction of or attempt to destroy any integral accessory of the metering devise
box which encases an electric meter or its metering accessories; and

(h) The acceptance of money and/or other valuable consideration by any officer or
employee of the electric utility concerned or the making of such an offer to any such
officer or employee for not reporting the presence of any of the circumstances
enumerated in subparagraphs (a), (b), (c),(d), (e), (f ), or (g), hereof.

A prima facie evidence of illegal use of electricity shall be the basis for: (a) immediate disconnection
by the electric utility or cooperative to such person after due notice; (b) the holding of preliminary
investigation by the prosecutor and the subsequent filing in court of the pertinent information; and
(c) the lifting of any temporary restraining order or injunction which may have been issued against a
utility or cooperative.

In order to constitute prima facie evidence, the discovery of any of the circumstances enumerated in
Section 1 hereof, must be personally witnessed and attested to by the consumer concerned or a
duly authorized ERB representative or any officer of the law, as the case may be.

An ERB authorized representative is one who is assigned to conduct testing of electric meters or
inspection of electric lines and facilities of any distribution entity or one who may be specially
authorized by the duly authorized head of the main or regional ERB offices.

An officer of the law is any person who, by direct provision of law or by election or by appointment
by competent authority, is charged with the maintenance of public order and the protection and
security of life and property, such as barangay captain, barangay chairman, barangay councilman,
barangay leader, officer or member of Barangay Community Brigades, barangay policeman, PNP
policeman, municipal councilor, municipal mayor and provincial fiscal.

SECTION 2. Prima Facie Evidence of Theft of Electric Power Transmission Lines and Materials. —
The possession, control or custody of electric power transmission line/material by any person,
natural or juridical, not engaged in the transformation, transmission or distribution of electric power,
or in the manufacture of such electric power transmission line/material shall be prima facie evidence
that such line/material is the fruit of the offense defined in Section 2, Rule II hereof, and such
line/material may be confiscated from the person in possession, control or custody thereof.

RULE IV
Incentives

SECTION 1. Incentive Scheme. — An incentive scheme by way of a monetary reward in the

minimum amount of Five Thousand Pesos (P5,000) shall be given to any person who shall report to

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the NPC or police authorities any act which may constitute a violation of Section 2, Rule II hereof.
The Department of Energy (DOE), in consultation with the NPC, shall issue the necessary
guidelines for the proper implementation of this incentive scheme within thirty (30) days from the
effectivity of R.A. 7832.

RULE V
Disconnection of Electric Service

SECTION 1. Right to Disconnect and its Requirements. — The utility or cooperative concerned shall
have the right and authority to disconnect immediately the electric service of any person, natural or
juridical, without the need of a court or administrative order and deny restoration of the same, in the
following circumstances:

(a) When the owner/occupant of the house or establishment concerned or someone acting in
his behalf shall have been caught in flagrante delicto doing any of the acts enumerated
in Section 1, Rule III hereof, Provided: that a written notice or warning to that effect has
been served by the utility or cooperative concerned to the owner of the
house/establishment or his duly authorized representative, prior to such disconnection.

(b) When any of the circumstances enumerated in Section 1, Rule III shall have been
discovered for the second time, Provided: that a written notice or warning shall have
been issued upon the first discovery.

The written notice or warning being referred to herein shall be served prior to such disconnection
and shall indicate the name and address of the consumer, consumer account number, date of
apprehension, findings of fact, amount of energy pilfered in kilowatthour, the amount representing
the differential billing and the method used in computing the differential billing as determined herein,
which shall indicate the following:

(a) Computation of the unbilled consumption in kilowatthour.

(b) The period to be used in computing the differential billing.

(c) The latest Inspection Report prior to apprehension.

SECTION 2. Deposit. — The utility or cooperative concerned shall not immediately disconnect or
shall immediately restore the electric service upon the deposit by the person denied the service with
the utility or the cooperative concerned or with the competent court, as the case may be, of the
amount representing the differential billing.

RULE VI

Penalties

SECTION 1. Liability of the Utility/Cooperative. — If the court finds by final judgment that the
person has not committed illegal use of electricity, the amount deposited shall be credited against
future billings, with legal interest thereon chargeable against the utility or cooperative. ADEacC

Likewise, the utility or cooperative shall be made to immediately pay such person double the value
of the payment or deposit with legal interest, which amount shall be creditable against immediate

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future billings.

The foregoing remedies are without prejudice to any criminal, civil or administrative action that such
person may be entitled to file under existing laws, rules and regulations.

SECTION 2. Liabilities Under Section 1, Rule II Hereof. — If the person has been found by
final judgment to have violated Section 1, Rule II hereof, he shall be made to pay the utility or the
cooperative concerned double the value of the estimated electricity illegally used which is referred to
in this section as differential billing, in addition to the penalty of prision mayor or a fine of Ten
Thousand Pesos (P10,000.00) to Twenty Thousand Pesos (P20,000.00) or both, at the discretion of
the court.

(a) If the offense is committed by, or in connivance with, an officer or employee of the power
company, electric utility or rural electric cooperative concerned, such officer or employee
shall, upon conviction, be punished with a penalty one (1) degree higher than the penalty
provided herein, and forthwith be dismissed and perpetually disqualified from
employment in any public or private utility or service company and from holding any
public office.

(b) If in committing any of the acts enumerated in Section 1, Rule II hereof, any of the other
acts enumerated is also committed, then the penalty next higher in degree as provided
herein shall be imposed.

(c) If in committing any of the acts enumerated in Section 1, Rule II hereof, any of the other
acts enumerated is also committed by, or in connivance with an officer or employee of
the power company, utility or cooperative concerned, such officer or employee shall,
upon conviction, be punished with a penalty of one (1) degree higher than the penalty
provided herein, and forthwith be dismissed and perpetually disqualified from
employment in any public or private utility or service company. Likewise the electric utility
concerned which shall have knowingly permitted or having knowledge of its commission
shall have failed to prevent the same, or was otherwise guilty of negligence in connection
with the commission thereof, shall be made to pay a fine not exceeding triple the amount
of the "differential billing" subject to the discretion of the courts.

(d) If the violation is committed by a partnership, firm, corporation, association, or any other
legal entity, including a government-owned or controlled corporation, the penalty shall be
imposed on the president, manager, and each of the officers thereof who shall have
knowingly permitted, failed to prevent or was otherwise responsible for the commission
of the offense.

SECTION 3. Liabilities Under Section 2, Rule II Hereof. — A person found by final

judgement to have violated Section 2, Rule II hereof, shall be meted the penalty of reclusion
temporal or a fine ranging from Fifty Thousand Pesos (P50,000.00) to One Hundred Thousand
Pesos (P100,000.00) or both, at the discretion of the court.

(a) If the offense is committed by, or in connivance with, an officer or employee of the power
company, utility or cooperative concerned, such officer or employee shall, upon
conviction, be punished with a penalty one (1) degree higher than the penalty provided

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herein, and forthwith be dismissed and perpetually disqualified from employment in any
public or private utility or service company and from holding any public office.

(b) If in committing any of the acts enumerated in Section 2, Rule II hereof, any of the other
acts enumerated is also committed, then the penalty next higher in degree as provided
herein shall be imposed.

(c) If in committing any of the acts enumerated in Section 2, Rule II hereof, any of the other
acts enumerated is also committed by, or in connivance with an officer or employee of an
electric utility concerned, such officer or employee shall, upon conviction, be punished
with a penalty of one (1) degree higher than the penalty provided herein, and forthwith be
dismissed and perpetually disqualified from employment in any public or private utility or
service company. Likewise, the utility concerned which shall have knowingly permitted or
having knowledge of its commission shall have failed to prevent the same, or was
otherwise guilty of negligence in connection with the commission thereof, shall be made
to pay a fine not exceeding triple the amount of the "differential billing" subject to the
discretion of the courts.

(d) If the violation is committed by a partnership, firm, corporation, association, or any other
legal entity, including a government-owned or controlled corporation, the penalty shall be
imposed on the president, manager, and each of the officers thereof who shall have
knowingly permitted, failed to prevent or was otherwise responsible for the commission
of the offense.

RULE VII

Billings and Surcharges

SECTION 1. Testing of Watthour Meter Standard Equipment. — The NPC, the NEA and all
electric utilities shall submit all their working watthour meter standard equipment (which are used in
the testing of their respective consumers' watthour meters) for testing and sealing by the ERB within
thirty (30) days following the publication of this Implementing Rules and Regulations and every year
thereafter.

The NEA shall likewise furnish the ERB, within the same period above prescribed, with copies of the
test reports on the calibration of the watthour meter standard equipment of all the electric
cooperatives.

SECTION 2. Testing of Meters. — All electric utilities and cooperatives, as the case may be,
shall cause the calibration of the meters of their respective customers at least once every two (2)
years. The said utilities and cooperatives shall likewise furnish the ERB with copies of the test
reports within thirty (30) days after each calibration.

SECTION 3. Computation of the Differential Billing. — The differential billing shall be

determined by multiplying the unbilled consumption in kilowatthour, the period covered by the
differential billing and the current rate of electricity at the time of apprehension.

SECTION 4. Computation of the Unbilled Consumption in Kilowatthour. — The unbilled

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consumption in kilowatthour may be computed by using the following methodologies:

4.1. For cases falling under paragraphs (a), (e), (f) and (g) Section 1, Rule III hereof, the
following methodologies shall be used:

(a) The estimated monthly consumption as per report of load inspection conducted during
the time of discovery;

(b) The highest recorded monthly consumption within the five-year period preceding the time
of the discovery;

(c) The higher consumption between the average consumptions before or after the highest
drastic drop in consumption within the five-year billing period preceding the discovery;

(d) The highest recorded monthly consumption within four (4) months after the time of the
discovery.

4.2. For cases falling under paragraphs (b), (c) and (d) Section 1, Rule III hereof, the
following methodologies shall be used:

(a) The result of the ERB test during the time of the discovery;

(b) The higher consumption between the average consumptions before or after the highest
drastic drop in consumption within the five-year billing period preceding the discovery;

(c) The estimated monthly consumption as per report of load inspection conducted during
the time of discovery;

(d) The highest recorded monthly consumption within four (4) months after the time of the
discovery; or

(e) The highest recorded monthly consumption within the five-year period preceding the time
of the discovery.

4.3. For cases falling under paragraph (h) Section 1, Rule III hereof, any of the foregoing
methodologies may be used, whichever is applicable.

SECTION 5. Period to be Recovered. — In determining the period to be recovered under the

differential billing, the following shall be considered:

a. When there was change in the customer's service connection, such as change of meter,
change of seal or reconnection, or replacement of parts, the period to be recovered under
the differential billing shall be reckoned from the time of the last inspection.

b. In the absence thereof, the period to be recovered under the differential billing shall start
from the time the electric service of the person concerned recorded an abrupt or abnormal
drop in consumption; or In the absence of both, a maximum of sixty (60) billing months,
up to the time of the discovery may be used as basis for the consumption; Provided,
however, that if the person concerned presents adequate and indubitable proof showing
that the period to be recovered by the differential billing is less than sixty (60) billing
months, the utility or cooperative may recompute the amount of the differential billing
based on the established period for recovery. The period to be used shall, in no case, be

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less than one (1) year preceding the date of discovery of the illegal use of electricity. In
cases where the affected period is less than one (1) year, the utility or cooperative may be
allowed to compute for the differential billing using one (1) year as the minimum basis for
computation.

SECTION 6. Discovery of Prima Facie Evidence. — The electric utility or rural electric
cooperative, upon discovery of any of the circumstances mentioned in Rule III hereof, shall notify in
writing the owner/occupant of the house or establishment concerned or someone of suitable age
and discretion residing therein and acting in behalf of the owner/occupant of the incident.

In case the apprehension is witnessed by an officer of the law and not by an ERB authorized
representative, the tampered electric meter subject of the offense must be placed in a suitable
container, properly identified and sealed, and shall be opened only for testing in the ERB's meter
laboratory by the duly authorized representative of the Board.

SECTION 7. Inspection Report. — An Inspection Report must be accomplished by the utility

or cooperative concerned after every inspection, monitoring of meter installation or apprehension,
indicating the following:

a. Date and time of the inspection;

b. Condition of the meters, instrument transformers and metering installations;

c. Changes made with the connections during the time of the inspection;

d. Replacement made on the metering installations, if there is any;

e. Signature over the printed name of the inspector; and

f. Signature over the printed name of the consumer or his duly authorized representative.

The accomplished Inspection Report shall be attested to by the authorized ERB representative or by
the officer of the law, as the case may be.

The original copy of the Inspection Report shall be kept by the electric utility or electric cooperative
concerned and shall not be destroyed without prior authority from the ERB. A duplicate of the said
report shall likewise be furnished to the owner/occupant of the establishment concerned or
someone of suitable age and discretion residing therein and acting in behalf of the owner/occupant.

SECTION 8. Imposition of Surcharges. — An electric utility or rural electric cooperative may

impose surcharges in addition to the value of electricity pilfered, on the bills of any consumer
apprehended for tampering with his electric meter/metering facility installed on his premises, as well
as other violations of contract like direct connection, use of jumper and other means of illicit usage
of electricity found installed in the premises of the consumer. The surcharge for the violation of
contract shall be collected from and paid by the consumer concerned as follows:

a. First apprehension — twenty-five percent (25%) of the current bill;

b. Second apprehension — fifty percent (50%) of the current bill;

c. Third and subsequent apprehensions — one hundred percent (100%) of the current bill.

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The electric utility or rural electric cooperative is authorized to discontinue electric service in case
the consumer is in arrears in the payment of the above imposed surcharges.

RULE VIII

Issuance of Restraining Orders or Writs of Injunction

SECTION 1. Issuance of the Writ of Injunction. — Unless there is a prima facie evidence that
the disconnection was made with evident bad faith or grave abuse of authority, no writ of injunction
or restraining order shall be issued by any court against any utility or cooperative exercising the right
and authority to disconnect electric service as provided in this Rules.

SECTION 2. Filing of Bond/Counterbond. — A writ of injunction or restraining order issued

by a court in the absence of evident bad faith or grave abuse of authority on the part of the utility or
cooperative concerned shall be effective only when the affected person/customer files a bond with
the court in the form of cash or cashier's check equivalent to the differential billing, penalties and
other charges in cases of illegal use of electricity. Such writ of injunction or restraining order shall
automatically be refused or, if already granted, shall be dissolved upon the filing by the utility or
cooperative concerned of a counterbond similar in form and amount as that above registered.

SECTION 3. Report to the Supreme Court. — Whenever a writ of injunction or restraining

order is granted, the court which issued the same shall submit a report to the Supreme Court within
ten (10) days from its issuance, setting forth in detail the grounds or reasons therefor.

RULE IX

Rationalization of System Loss

SECTION 1. Caps on Recoverable System Loss Allowed to Private Electric Utilities. — The
maximum rate of system loss that the utility can pass on to its customers shall be as follows:

1. Fourteen and a half percent (14 1/2%) effective on February 1996 billing.

2. Thirteen and one fourth percent (13 1/4%) effective on February 1997 billing.

3. Eleven and three-fourths percent (11 3/4%) effective on February 1998 billing.

4. Nine and a half percent (9 1/2%) effective on February 1999 billing.

SECTION 2. Automatic Cost Adjustment Formula. — Each and every utility shall file with the
ERB, on or before September 30, 1995, an application for approval of an amended Generation
Charge or Power Cost Adjustment formula that would reflect the new system loss cap to be included
in its schedule of rates.

The automatic cost adjustment clause of every utility shall be guided by the following formula:

Generation Charge

Subsidizing consumption shall be charged a generation charge per KWH equal to:

A 1
𝑥 −𝐸
𝐵 − (𝐶 + 𝐷) 1 − 𝐹𝑇

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Where:
A = Cost of electricity purchased and generated for the previous month less revenue from
subsidized Kwhrs on generation charge as applicable
B = Total KWH purchased and generated for the previous month
C = The actual system loss but not to exceed the maximum recoverable rate of system loss in
Kwh plus actual company use in Kwhrs but not to exceed 1% of total KWHRS purchased
and generated a DECHI
D = KWH consumed by subsidized consumers
E = Applicable base cost of the amount incorporated into their basic rate per KWH
FT = Franchise tax rate

SECTION 3. Fixing the Level and Effectivity of the New System Loss for the Utility. — Each
and every utility shall file with the ERB, before the end of the fourth year following the effectivity of
this Rules, an application for the purpose of determining the following:

a) whether the caps fixed shall be reduced further which shall in no case be lower than nine
percent (9%) after taking into account the viability of the private electric utilities and the
interest of the consumers;

b) the date of the effectivity of the new caps; and

c) the permissible levels of recovery of system loss in areas that may be added to the
franchise area of the private electric utility after the date of the effectivity of R.A. No. 7832.

SECTION 4. Caps on System Loss Allowed to Rural Electric Cooperatives. — The maximum
rate of system loss that the cooperative can pass on to its customers shall be as follows:

a. Twenty-two percent (22%) effective on February 1996 billing.

b. Twenty percent (20%) effective on February 1997 billing.
c. Eighteen percent (18%) effective on February 1998 billing.
d. Sixteen percent (16%) effective on February 1999 billing.
e. Fourteen percent (14%) effective on February 2000 billing.

SECTION 5. Automatic Cost Adjustment Formula. — Each and every cooperative shall file
with the ERB, on or before September 30, 1995, an application for approval of an amended
Purchased Power Adjustment Clause that would reflect the new system loss cap to be included in
its schedule of rates.

The automatic cost adjustment of every electric cooperative shall be guided by the following
formula:

Purchased Power Adjustment Clause

𝐴
𝑃𝑃𝐴 = −𝐸
𝐵 − (𝐶 + 𝐷)

Where:

A = Cost of electricity purchased and generated for the previous month

B = Total Kwh purchased and generated for the previous month

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C = The actual system loss but not to exceed the maximum recoverable rate of system loss
in Kwh plus actual company use in Kwhrs but not to exceed 1% of total KWHRS
purchased and generated
D = KWH consumed by subsidized consumers
E = Applicable base cost of power equal to the amount incorporated into their basic rate per
kwh

SECTION 6. Fixing the Level and Effectivity of the New System Loss Cap. — Each and
every cooperative shall file an application with the ERB, before the end of the fifth year following the
effectivity of this Rules, to determine the following:

a. whether the caps fixed shall be reduced further which shall in no case be lower than nine
percent (9%) after taking into account the viability of the electric cooperatives and the
interest of the consumers;

b. the date fixed for the effectivity of the new caps; and

c. the permissible levels of recovery of system loss in the areas that may be added in the
area of coverage of the rural electric cooperative after the date of the effectivity of R.A.
No. 7832.

SECTION 7. Authority of the Energy Regulatory Board. — Nothing in this Rule shall impair
the authority of the ERB to reduce or phase out technical or design losses as a component of
system losses.

RULE X

Recovery of Pilferage Losses

SECTION 1. Submission of Report. — A utility or cooperative which recovers any amount of

pilferage losses shall submit to the ERB, within thirty (30) days from said recovery, a written report
under oath, which shall contain the following:

a. the fact of recovery

b. the date of recovery
c. the name of consumer concerned
d. the amounts recovered including the amounts resulting from compromise agreement and
surcharges imposed, if any
e. the amount of pilferage loss claimed
f. the explanation for the failure to recover the whole amount claimed
g. itemized expenses incurred, if there is any
h. the amount passed on to the consumer

The utility or cooperative shall not accept payment from the consumer during the pendency of the
case for the recovery of a pilferage loss, unless so provided in a compromise agreement duly
executed by the parties and approved by the Court.

SECTION 2. The full amount recovered by the utility or cooperative under the preceding
section shall be reflected as a reduction in the customer's electric bill through the automatic cost
adjustment formula abovementioned, the application of which shall be verified and confirmed by the

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Board through an Order.

VII. Self - Evaluation:

Explain the following;

1. RULE VII. Section 1.

2. RULE VI
3. RULE III. Section 2.
4. RULE II
5. RULE V. Section 1.

VIII. Review of Concepts:

1. RULE I. General Provisions. Tills about the title, construction of the law, and definition of
terms.
2. RULE II. Illegal Use of Electricity and Theft of Electric Power Transmission Lines and
Materials. This rule is all about Illegal Use of Electricity, and Theft of Electric Power
Transmission Lines and Materials.
3. RULE III. Prima Facie Evidence. This is all about Prima Facie Evidence of Illegal Use of
Electricity, A prima facie evidence of illegal use of electricity shall be the basis for: (a)
immediate disconnection by the electric utility or cooperative to such person after due
notice; (b) the holding of preliminary investigation by the prosecutor and the subsequent
filing in court of the pertinent information; and (c) the lifting of any temporary restraining
order or injunction which may have been issued against a utility or cooperative. And
Prima Facie Evidence of Theft of Electric Power Transmission Lines and Materials.
4. RULE IV. Incentives. Talk about incentives schemes.
5. RULE V. Disconnection of Electric Service. Right to Disconnect and its Requirements, and
Deposit.
6. RULE VI. Penalties. Covers about Liability of the Utility/Cooperative, Liabilities Under
Section 1, Rule II Hereof, and Liabilities Under Section 2, Rule II Hereof.
7. RULE VII. Billings and Surcharges. Testing of Watthour Meter Standard Equipment,
Testing of Meters, Computation of the Differential Billing, Computation of the Unbilled
Consumption in Kilowatthour, Period to be Recovered, Discovery of Prima Facie
Evidence, Inspection Report and Imposition of Surcharges.
8. RULE VIII. Issuance of Restraining Orders or Writs of Injunction. Issuance of the Writ of
Injunction, Filing of Bond/Counterbond and Report to the Supreme Court.
9. RULE IX. Rationalization of System Loss. Caps on Recoverable System Loss Allowed to
Private Electric Utilities, Automatic Cost Adjustment Formula, Fixing the Level and
Effectivity of the New System Loss for the Utility, Caps on System Loss Allowed to Rural
Electric Cooperatives, Fixing the Level and Effectivity of the New System Loss Cap, and

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Authority of the Energy Regulatory Board.

10. RULE X. Recovery of Pilferage Losses. Submission of Report. — A utility or cooperative
which recovers any amount of pilferage losses shall submit to the ERB, within thirty (30)
days from said recovery and the full amount recovered by the utility or cooperative under
the preceding section shall be reflected as a reduction in the customer's electric bill
through the automatic cost adjustment formula abovementioned, the application of which
shall be verified and confirmed by the Board through an Order.

IX. Reference:

1. Anti-Electricity Pilferage Act (RA 7832) of 1994 handbook

Module No. 3

I. Title: EPIRA Law

II. Topic: Title and scope, declaration of policy, responsibilities of the DOE, ERC, NPC, NEA and
PSALM, definition of terms, PART II - STRUCTURE AND OPERATION OF THE
ELECTRIC POWER INDUSTRY. Generation sector, transmission sector, distribution
sector, supply sector, WHOLESALE ELECTRICITY SPOT MARKET (WESM), structural
and functional unbundling of electric power industry participants, cross ownership, market
abuse and anti-competitive behavior, retail competition and open access, missionary
electrification, provision of electricity by qualified third parties, removal of cross subsidies,
stranded debts and contract costs recovery, the universal charge, mandated residential
rebate, lifeline rate, Power Sector Assets and Liabilities Management Corporation
(PSALM), and National Transmission Corporation (TRANSCO).
III. Time Frame: 7 hours

Introduction:

Pursuant to Sections 37 and 77 of Republic Act No. 9136, an Act Ordaining Reforms in the
Philippine Electric Power Industry, otherwise known as the “Electric Power Industry Reform Act of
2001” (Act), the Department of Energy (DOE), in consultation with the appropriate government
agencies such as the Energy Regulatory Commission (ERC), Department of Finance (DOF),
National Electrification Administration (NEA), National Power Corporation (NPC), Department of
Trade and Industry (DTI), Department of Justice (DOJ), Department of Budget and Management
(DBM), Power Sector Assets and Liabilities Management Corporation (PSALM), the Electric Power
Industry Participants, and with the approval of the Joint Congressional Power Commission (Power
Commission), hereby issues, adopts and promulgates the following rules and regulations to
implement the provisions of the Act.

The succeeding rules and regulations shall include the general provisions to be followed in
implementing the major structural reforms for the electric power industry and the Privatization of the
state-owned NPC.

Objectives:

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At the end of this course, the student shall able to;

1. Understand the law in electric power industries.
2. Apply RA No. 9136 in the field of electrical engineering.

Learning Activities

RULE 1.
TITLE AND SCOPE

Section 1. Title. These rules and regulations shall be referred to as the "Implementing Rules and
Regulations of Republic Act No. 9136” (Rules) otherwise known as the ”Electric Power Industry
Reform Act of 2001” (Act). "

Section 2. Scope. These Rules are promulgated under the authority of the DOE to formulate, in
consultation with relevant government agencies, Electric Power Industry Participants, non-
government organizations, End-users and consumers, such rules and regulations as may be
necessary to implement the objectives of the Act and pursuant to the exercise of such other powers
as may be necessary or incidental to attain the objectives of the Act. These Rules shall govern the
relation and responsibilities of Electric Power Industry Participants and governmental authorities,
including but not limited to: the DOE, NPC, NEA, ERC, and PSALM.

RULE 2.
DECLARATION OF POLICY

It is hereby declared the policy of the State:

(a) To ensure and accelerate the total electrification of the country;
(b) To ensure the quality, reliability, security and affordability of the supply of electric power;
(c) To ensure transparent and reasonable prices of electricity in a regime of free and fair competition
and full public accountability to achieve greater operational and economic efficiency, promote
consumer choice and enhance the competitiveness of Philippine products in the global market;
(d) To enhance the inflow of private capital, participation in the attendant risks, and broaden the
ownership base of the power generation, transmission and distribution sectors;
(e) To ensure fair and non-discriminatory treatment of public and private sector entities in the
process of Restructuring the electric power industry;
(f) To protect the public interest as it is affected by the rates and services of electric utilities and
other providers of electric power;
(g) To assure socially and environmentally compatible energy sources and infrastructure;
(h) To promote the utilization of indigenous and new and renewable energy resources in power
generation in order to reduce dependence on imported energy;
(i) To provide for an orderly and transparent Privatization of the assets and liabilities of the NPC;
(j) To establish a strong and purely independent regulatory body and system to ensure consumer
protection and enhance the competitive operation of the electricity market; and
(k) To encourage the efficient use of energy and other modalities of Demand Side Management
(DSM).

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RULE 3.
RESPONSIBILITIES OF THE DOE, ERC, NPC, NEA
AND PSALM

Section 1. Responsibilities of the DOE. In addition to its existing powers and functions, the
DOE shall supervise the Restructuring of the electricity industry and perform the following functions:

(a) Formulate policies for the planning and implementation of a comprehensive program for the
efficient supply and economical use of energy consistent with the approved national economic
plan and with the policies on environmental protection and conservation and maintenance of
ecological balance, and provide a mechanism for the integration, rationalization, and
coordination of the various energy programs of the Government;

(b) Develop and update annually the existing Philippine Energy Plan, hereinafter referred to as PEP,
which shall provide for an integrated and comprehensive exploration, development, utilization,
distribution, and conservation of energy resources, with preferential bias for environment-
friendly, indigenous, and low-cost sources of energy. The PEP shall include a policy direction
towards the Privatization of government agencies related to energy, deregulation of the power
and energy industry, and reduction of dependency on oil-fired plants. Said PEP shall be
submitted to Congress not later than the fifteenth (15th) day of September and every year
thereafter;

(c) Prepare and update annually a Power Development Program (PDP) and integrate the same into
the PEP. The PDP shall consider and integrate the individual or joint development plans of the
transmission, generation, and distribution sectors of the electric power industry which are
submitted to the DOE: Provided, however, That the ERC shall have exclusive authority covering
the Grid Code and the Distribution Code; and the pertinent rules and regulations it may issue.
The DOE, following its approval of the Transmission Development Plan (TDP) prepared by the
National Transmission Corporation (TRANSCO) or its Buyer or Concessionaire, shall integrate
the TDP with the annual development plans of Distribution Utilities and NPC, and other relevant
data as are available to DOE, which shall be incorporated in the PEP;

(d) Ensure the reliability, quality and security of supply of electric power;

(e) Following the Restructuring of the electricity sector, the DOE shall, among others:

(i) Encourage private sector investments in the electricity sector and promote development
of indigenous and Renewable Energy Sources including small-scale renewable energy
generating sources;

(ii) Facilitate and encourage reforms in the structure and operations of Distribution Utilities
for greater efficiency and lower costs;

(iii) In consultation with other government agencies, promote a system of incentives to

encourage Electric Power Industry Participants, including new Generation Companies
and Endusers, to provide adequate and reliable electric supply; and

(iv) Undertake, in coordination with the ERC, NPC, NEA and the Philippine Information
Agency (PIA), information campaigns to educate the public on the Restructuring of the
electricity sector and Privatization of NPC assets;

(f) Jointly with the Electric Power Industry Participants, establish the Wholesale Electricity Spot
Market (WESM) and formulate the detailed rules governing the operations thereof;

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(g) Establish and administer programs for the exploration, transportation, marketing, distribution,
utilization, conservation, stockpiling, and storage of energy resources of all forms, whether
conventional or non-conventional;

(h) Exercise supervision and control over all government activities relative to energy projects in
order to attain the goals embodied in Section 2 of Republic Act No. 7638;

(i) Develop policies and procedures and, as appropriate, promote a system of energy development
incentives to enable and encourage Electric Power Industry Participants to provide adequate
capacity to meet demand including, among others, reserve requirements;

(j) Monitor private sector activities relative to energy projects in order to attain the goals of the
Restructuring, Privatization, and modernization of the electric power sector as provided for
under existing laws: Provided, That the DOE shall endeavor to provide for an environment
conducive to free and active private sector participation and investment in all energy activities;

(k) Assess the requirements of, determine priorities for, provide direction to, and disseminate
information resulting from energy research and development programs for the optimal
development of various forms of energy production and utilization technologies;

(l) Formulate and implement programs, including a system of providing incentives and penalties, for
the judicious and efficient use of energy in all energy-consuming sectors of the economy;

(m) Formulate and implement a program for the accelerated development of non-conventional
energy systems and the promotion and commercialization of its applications;

(n) Devise ways and means of giving direct benefit to the province, city, or municipality, especially
the community and people affected, and equitable preferential benefit to the region that hosts
the energy resource and/or the energy-generating facility: Provided, however, That the other
provinces, cities, municipalities, or regions shall not be deprived of their energy requirements;

(o) Encourage private enterprises engaged in energy projects, including corporations, cooperatives,
and similar collective organizations, to broaden the base of their ownership and thereby
encourage the widest public ownership of energy-oriented corporations;

(p) Formulate such rules and regulations as may be necessary to implement the objectives of the
Act;

(q) As part of the reportorial requirements of the Act, the DOE shall prepare and submit to the
Power Commission a semi-annual report on the status of the implementation of the Act on or
before the last week of April and October of each year. Towards this end, the DOE may require
reports or documents from the Electric Power Industry Participants as necessary to facilitate
compliance with this mandate and subject to appropriate measures to preserve the
confidentiality of proprietary or commercially sensitive information; and

(r) Exercise such other powers as may be necessary or incidental to attain the objectives of the Act.

Section 2. Responsibilities of the NPC.

(a) Pursuant to Section 70 of the Act, notwithstanding the divestment and/or Privatization of NPC
assets, IPP contracts and spun-off corporations, NPC shall remain as a National Government-
owned and –controlled corporation to perform the missionary electrification function through the
Small Power Utilities Group (SPUG) and shall be responsible for providing power generation
and its associated power delivery systems in areas that are not connected to the transmission

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system. The missionary electrification function shall be funded from the revenues from sales in
missionary areas and from the Universal Charge to be collected from all electricity End-users as
determined by the ERC.
(b) Consistent with Section 34(d) of the Act, the NPC shall manage under existing arrangements, an
environmental charge equivalent to P0.0025 per kilowatt-hour (kWh) sales, intended solely for
the rehabilitation and management of watersheds nationwide.
(c) Pursuant to Section 47(f) of the Act, NPC shall continue to operate Agus and Pulangui
complexes, which shall be owned by PSALM.
(d) Pursuant to Section 47(j) of the Act, NPC/PSALM may continue to generate and sell electricity
only from the undisposed generating assets and IPP contracts of PSALM. NPC/PSALM shall not
incur any new obligations to purchase power through bilateral contracts with Generation
Companies or other Suppliers.

Section 3. Responsibilities of the NEA.

(a) NEA shall continue to be under the supervision of the DOE and shall exercise its functions under
Presidential Decree No. 269, as amended by Presidential Decree No. 1645 insofar as they are
consistent with the Act. To this end, NEA shall develop and implement programs:
(i) To prepare Electric Cooperatives (ECs) in operating and competing under the deregulated
electricity market within five (5) years from the effectivity of the Act, specifically in an
environment of Open Access and retail wheeling and Retail Competition;
(ii) To strengthen the technical capability and financial viability of ECs, through the following
activities:
(1) NEA may offer services to the ECs other than those related to its lending functions,
for a fee duly approved by the NEA Board of Administrators; and
(2) NEA may consider hiring qualified external industry management experts and shall
provide their services to the ECs: Provided; That such services will not increase
Retail Rates.
(iii) To review and upgrade regulatory policies with a view to enhancing the viability of the
ECs as electric utilities.

(b) NEA may, in exchange for adequate security and a guarantee fee, act as a guarantor for
purchases of electricity in the WESM by any EC or small Distribution Utility to support their credit
standing consistent with the provisions of the Act. For this purpose, the authorized capital stock of
NEA is hereby increased to Fifteen Billion Pesos (P15,000,000,000.00).
(c) NEA shall submit the report of ECs on their outstanding uncollected billings due from any local
government unit (LGU) to the Department of Budget and Management (DBM) pursuant to Executive
Order (E.O.) No. 190 issued on 21 December 1999. The DBM shall effect withholding from the
Internal Revenue Allotment (IRA) of the concerned LGU: Provided; That there is a Memorandum of
Agreement (MOA) executed between the LGU and NEA: Provided, further, That the uncollected
billings are supported by a certification issued by the Municipality/City or Provincial Treasurer.

Section 4. Responsibilities of the ERC.

(a) Pursuant to Section 43 of the Act, the ERC shall have the responsibility of promoting
competition, encouraging market development, ensuring customer choice, and penalizing abuse
of market power in the electric power industry.
(b) Pursuant to Sections 43 and 45 of the Act, the ERC shall promulgate such rules and regulations
as authorized thereby, including but not limited to Competition Rules and limitations on recovery
of system losses, and shall impose fines or penalties for any non-compliance with or breach of
the Act, these Rules and the rules and regulations which it promulgates or administers
(c) The ERC shall review and approve any plan for the expansion or improvement of transmission
facilities submitted by TRANSCO or its Buyer or Concessionaire with due regard to the TDP.
(d) To promote efficiency and non-discrimination, the ERC, after the conduct of public hearings,

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shall determine, fix and approve Transmission and Distribution Wheeling Charges, and Retail
Rates through an ERC established and enforced methodologies setting the same. It shall fix and
regulate the rates and charges to be imposed by Distribution Utilities on their Captive Market as
well as the Universal Charge to be imposed on all electricity End-users including selfgenerating
entities.
(e) Any application or petition for rate adjustment or for any relief affecting the consumers must be
verified, and accompanied with an acknowledgement of receipt of a copy thereof by the LGU
Legislative Body of the locality where the applicant or petitioner principally operates together
with the certification of the notice of publication thereof in a newspaper of general circulation in
the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy five (75)
calendar days from the filing of the application or petition, based on the same and the supporting
documents attached thereto and such comments or pleadings the consumers or the LGU
concerned may have filed within thirty (30) calendar days from receipt of a copy of the
application or petition or from the publication thereof as the case may be. Thereafter, the ERC
shall conduct a formal hearing on the application or petition, giving proper notices to all parties
concerned, with at least one public hearing in the affected locality, and shall decide the matter
on the merits not later than twelve (12) months from the issuance of the aforementioned
provisional order.

This Section 4(e) shall not apply to those applications or petitions already filed as of 26
December 2001 in compliance with Section 36 of the Act.

(f) Amend or revoke, after due notice and hearing, the authority to operate of any Person or entity
which fails to comply with the provisions of the Act, these Rules or any order or resolution of the
ERC. In the event a divestment is required, the ERC shall allow the affected party sufficient time
to remedy the infraction or for an orderly disposal, but shall in no case exceed twelve (12)
months from the issuance of the order. (g) In order to facilitate the provision of an efficient,
reliable and quality service to End-users, the ERC shall promulgate a Grid Code and a
Distribution Code that shall include performance standards and the minimum financial capability
standards and other terms and conditions for access to and use of the transmission and
distribution facilities within six (6) months from the effectivity of the Act.

(h) Act on applications for cost recovery and return on DSM.

(i) The ERC shall set the criteria for eligibility and authorize eligible Generation Companies,
Distribution Utilities, Suppliers, IPP Administrators, End-users and other entities authorized by
ERC in accordance with the Act for membership in the WESM. For the purposeof ensuring a
greater supply and rational pricing of electricity, the ERC shall enforce the rules and
regulations governing the operations of WESM and the activities of the WESM Operator and
other WESM Participants. In cases of national and international security emergencies or
natural calamities, it can suspend spot market operations within the WESM.
(j) The ERC shall ensure that Electric Power Industry Participants and NPC functionally and
structurally unbundle their respective business activities and rates and determine the levels of
cross subsidies in the existing Retail Rates until the same is removed in accordance with the
sectors as identified in and as required by Sections 5, 36 and 74 of the Act. ERC shall set a
Lifeline Rate for the Marginalized End-users. In particular, the distribution rates should unbundle
at least the following business activities or assets: supply, distribution, and such
other services as the ERC may determine.
(k) The ERC shall promulgate rules and regulations prescribing the qualifications of Suppliers, which
shall include among others their technical and financial capability and credit worthiness.
(l) The ERC shall determine the electricity End-users comprising the Contestable and Captive
Markets. The ERC shall also seek to foster competition in credit, collection and metering
services in Contestable Markets. It shall likewise license Suppliers to Contestable Markets.

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(m) The ERC shall perform such other regulatory functions as are appropriate and necessary in
order to ensure the successful Restructuring and modernization of the electric power industry,
such
as, but not limited to, the rules and guidelines under which Generation Companies, Distribution
Utilities, which are not publicly listed, shall offer and sell to the public a portion not less than
fifteen
percent (15%) of their common shares of stocks: Provided, however, That Generation
Companies, Distribution Utilities or their respective holding companies that are already listed in
the Philippine Stock Exchange (PSE) are deemed in compliance. For existing companies, such
public offering shall be implemented not later than five (5) years from the effectivity of the Act.
New companies shall implement their respective public offerings not later than five (5) years
from the
issuance of their Certificate of Compliance (COC);
(n) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees,
fines and penalties imposed in the exercise of its powers, functions and responsibilities and over
all cases involving disputes between and among participants or players in the energy sector
relating to the foregoing powers, functions and responsibilities.
(o) It shall also be empowered to issue such other rules that are essential in the discharge of its
functions as an independent quasi-judicial body.
(p) All actions taken by the ERC pursuant to the Act are subject to judicial review and the
requirements of due process and the cardinal rights and principles applicable to quasi-judicial
bodies.
(q) The ERC may require reports or documents from the Electric Power Industry Participants as
necessary to facilitate compliance with the Act, subject to appropriate measures to preserve the
confidentiality of proprietary or commercially sensitive information.
(r) All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be
published at least twice for two (2) successive weeks in two (2) newspapers of nationwide
circulation.
(s)The ERC shall conduct rate application hearings in the locality where the applicant is conducting
its operations: Provided, That this requirement shall not apply to applications filed pursuant to
Section 36 of the Act.

Section 5. Responsibilities of the PSALM.

(a) Consistent with Section 49 of the Act, PSALM shall take ownership of all existing NPC
generation assets, liabilities, IPP contracts, real estate and all other disposable assets. All
outstanding obligations of NPC arising from loans, issuances of bonds, securities and other
instruments of indebtedness shall be transferred to and assumed by PSALM.
(b)The PSALM shall formulate and implement a program for the sale and Privatization of the NPC
assets and IPP contracts and the liquidation of NPC Debts and Stranded Contract Costs in
accordance with the Act.
It shall calculate the amount of the Stranded Debts and Stranded Contract Costs of NPC, which
amount shall form part of the Universal Charge to be determined, fixed, and approved by the
ERC.
(c) Pursuant to Section 60 of the Act, the PSALM shall assume all outstanding financial obligations
of ECs to NEA and other government agencies arising from their respective Rural Electrification
Program. This shall be done in accordance with the program duly approved by
the President of the Philippines.

RULE 4.
DEFINITION OF TERMS

As used in these Rules, the following terms shall have the following respective meanings:
(a). “Act” unless otherwise stated, refers to, Republic Act No. 9136, otherwise known as the

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“Electric Power Industry Reform Act of 2001”;

(b). “Accredited Facility” refers to a facility granted the certificate of accreditation by NPC or DOE
pursuant to Executive 0rder No. 215
and its implementing rules and regulations;
(c). “Affiliate” means any Person which, alone or together with any other Person, directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common
Control with another Person. Affiliates shall include a subsidiary company and parent company
and subsidiaries, directly or indirectly, of a common parent;
(d). “Aggregator” refers to a Person or entity duly licensed by the ERC to engage in consolidating
electric power demand of End-users in a Contestable Market for the purpose of purchasing and
reselling electricity on a group basis;
(e) “Ancillary Services” refer to those services that are necessary to support the transmission of
capacity and energy from resources to loads while maintaining reliable operation of the
transmission system in accordance with good utility practice and the Grid Code to be adopted
in accordance with the Act;
(f) “Bureau of Internal Revenue” or “BIR” refers to an attached agency of the Department of
Finance (DOF);
(g) “Board of Investments” or “BOI” refers to an attached agency of the Department of Trade and
Industry (DTI) created under Republic Act No. 5186, as amended;
(h) “Bonafide Member” refers to a Person that has met all the requirements set forth under the
applicable EC by-laws and has been enlisted as such, with voting rights under the “one-man-
one-vote” cooperative principle;
(i) “Build-Operate-Transfer” or “BOT” shall have the meaning specified by Republic Act No. 6957,
as amended, otherwise known as “BOT Law” and its implementing rules and regulations;
(j) “Buyer or Concessionaire” refers to a qualified party awarded the sale agreement or
Concession Contract for transmission assets;
(k) “Captive Market” refers to electricity End-users who do not have the choice of a Supplier of
electricity, as may be determined by the ERC in accordance with the Act;
(l) “Central Dispatch” refers to the process of issuing direct instructions to Electric Power Industry
Participants by the grid operator to achieve the economic operation and maintenance of quality,
stability, reliability and security of the transmission system;
(m) “Competition Rules” refer to the rules promulgated by ERC to promote and ensure competition
in the electric power industry pursuant to the Act and these Rules;
(n) “Concession Contract” refers to the award by the government to a qualified private entity of the
responsibility for financing, operating, expanding, maintaining and managing specific
Government-owned transmission assets; (o) “Condonation” refers to the setting aside or
suspension from the ECs’ books of accounts of all their financial obligations to NEA and other
government agencies as a result of PSALM’s assumption of the same, subject to their
compliance with the Program approved by the President of the Philippines;
(p) “Contestable Market” refers to the electricity End-users who have a choice of a Supplier of
electricity, as may be determined by the ERC in accordance with the Act;
(q) “Contiguous Area” refers to areas which are within the same boundaries such as subdivisions,
villages, Economic Zones, business districts and other similarly situated End-users in which
Supply of Electricity can be measured through metering devices;
(r) “Control” shall mean the power to direct or cause the direction of the management policies of a
Person by contract, agency or otherwise;
(s) “Cooperative Development Authority” or “CDA” refers to an entity created under Republic
Act No. 6939;
(t) “Corporation Code” refers to Batas Pambansa Bilang 68, otherwise known as “The Corporation
Code of the Philippines;”
(u) “Demand Side Management” or “DSM” refers to measures undertaken by Distribution Utilities
to encourage End-users in the proper management of their load to achieve efficiency in the
utilization of fixed infrastructures in the system;
(v) “Department of Budget and Management” or “DBM” refers to the government agency created

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pursuant to Executive Order No. 25, as amended;

(w) “Department of Energy” or “DOE” refers to the government agency created pursuant to
Republic Act No. 7638 whose expanded functions are provided in the Act;
(x) “Department of Finance” or “DOF” refers to the government agency created pursuant to
Executive Order No. 127, as amended; (y) “Distribution Code” refers to a compilation of rules
and regulations governing electric utilities in the operation and maintenance of their
Distribution Systems, which includes, among others, the standards for service and
performance, and defines and establishes the relationship of Distribution Systems with facilities
or installations of parties connected thereto;
(z) “Distribution of Electricity” refers to the conveyance of electric power from transmission
facilities or Embedded Generators to Endusers by a Distribution Utility through its Distribution
System pursuant to the provisions of the Act and these Rules;
(aa) “Distribution System” refers to the system of wires and associated facilities belonging to a
franchised Distribution Utility extending between the delivery points on the transmission or
Subtransmission System or generator connection and the point of connection to the
premises of the End-user;
(bb) “Distribution Wheeling Charge” refers to the cost or charge regulated by the ERC for the use
of a Distribution System and/or the availment of related services;
(cc) “Distribution Utility” refers to any EC, private corporation, government-owned utility or existing
local government unit which has Page 12 of 100 an exclusive franchise to operate a
Distribution System in accordance with its franchise and the Act;
(dd) “Economic Zones” or “EZs” refer to selected areas which are being developed into agro-
industrial, industrial, tourist, recreational, commercial, banking, investment and financial
centers. An EZ may refer to any of the following: Industrial Estates (IEs), Export Processing
Zones (EPZs), Free Trade Zones (FTZs), Information Technology Parks and
Tourist/Recreational Centers, such as those managed, administered, or operated by the Bases
Conversion Development Authority (BCDA), Cagayan Economic Zone Authority (CEZA), Clark
Development Corporation (CDC), Philippine EconomicZone Authority (PEZA), Phividec
Industrial Authority (PIA), and Zamboanga City Economic Zone Authority (ZCEZA);
(ee) “Electric Cooperative” or “EC” refers to a Distribution Utility organized pursuant to Presidential
Decree No. 269, as amended or as otherwise provided in the Act;
(ff) “Electric Power Industry Participant” refers to any Person or entityengaged in the generation,
transmission, distribution or Supply of Electricity;
(gg) “Embedded Generators” refer to generating units that are indirectly connected to the Grid
through the Distribution Utilities’ lines or industrial generation facilities that are synchronized
with the Grid;
(hh) “End-user” refers to any Person or entity requiring the supply and delivery of electricity for its
own use;
(ii) “Energized Area” refers to a geographical area enjoying dependable and adequate electric
service;
(jj)“Energy Regulatory Board” or “ERB” refers to the independent,quasi-judicial regulatory body
created under Executive Order No. 172, as amended;
(kk) “Energy Regulatory Commission” or “ERC” refers to the regulatory agency created by
Section 38 of the Act;
(ll) “Financing for Rural Electrification” refers to those loans and grants extended to ECs, for the
construction or acquisition, operation and maintenance of distribution, generation, and
subtransmission facilities for the purpose of supplying electric service, and those loans
for the restoration, upgrading and expansion of such facilities, in areas which are considered
rural at the time of the grant of such loans;
(mm) “Franchise Area” refers to a geographical area exclusively assigned or granted to a
Distribution Utility for Distribution of Electricity;
(nn) “Generation Company” refers to any Person or entity authorized by the ERC to operate
facilities used in the Generation of Electricity;
(oo)“Generation Facility” refers to a facility for the production of electricity;

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(pp) “Generation of Electricity” refers to the production of electricity by a Generation Company or

a co-generation facility pursuant to the provisions of the Act;
(qq) “Grid” refers to the high voltage backbone system of interconnected transmission lines,
substations and related facilities, located in each of Luzon, Visayas and Mindanao, or as may
otherwise be determined by the ERC in accordance with Section 45 of the Act;
(rr) “Grid Code” refers to the set of rules and regulations governing the safe and reliable operation,
maintenance and development of the high voltage backbone transmission system and its
related facilities;
(ss) “Independent Market Operator” or “IMO” refers to a person who is financially and technically
capable, with proven experience an expertise of not less than two (2) years as a leading
independent market operator of similar or larger size electricity markets endorsed
jointly by the DOE and Electric Power Industry Participants to assume the functions, assets and
liabilities from the Autonomous Group Market Operator (AGMO), pursuant to Section 30 of the
Act;
(tt) “Independent Power Producer” or “IPP” refers to an existing power generating entity which is
not owned by NPC as of the effectivity of the Act;
(uu) “Inter-Class Cross Subsidy” refers to an amount charged by Distribution Utilities to industrial
and commercial End-users as well as to other subsidizing customer sectors in order to reduce
electricity rates of other customer sectors such as the residential End-users, hospitals, and
streetlights;
(vv) “Inter-Regional Grid Cross Subsidy” refers to an amount embedded in the electricity rates of
NPC charged to its customers located in a viable regional grid in order to reduce the electricity
rates in a less viable regional grid;
(ww) “Intra-Regional Grid Cross Subsidy” refers to an amount embedded in the electricity rates of
NPC charged to Distribution Utilities and non-utilities with higher load factor and/or delivery
voltage in order to reduce the electricity rates charged to Distribution Utilities with lower load
factor and/or delivery voltage located in the same regional grid;
(xx) “IPP Administrator” refers to qualified independent entities appointed by PSALM who shall
administer, conserve and manage the contracted energy output of NPC IPP contracts,
including selling the contracted energy output of these contracts and offering Ancillary
Services, where applicable;
(yy) “Lifeline Rate” refers to the subsidized rate given to Marginalized/low-income Captive Market
End-users who cannot afford to pay at full cost;
(zz) “Marginalized End-users” refer to low-income, captive, household electricity consumers who
cannot afford to pay at full cost and have levels of electricity consumption below a threshold
level to be determined by the ERC;
(aaa) “Market Fees” refer to the charges imposed on all market members by the Market Operator to
cover the cost of administering and operating the WESM, as approved by the ERC;
(bbb) “Market Operator” refers to either the “Autonomous Group Market Operator” or “AGMO”
constituted by the DOE under Section 30 of the Act, with equitable representation from Electric
Power Industry Participants, initially under the administrative supervision of the
TRANSCO, which shall assume the functions, assets and liabilities of the AGMO or the IMO,
the entity jointly endorsed by the DOE and Electric Power Industry Participants to assume the
functions, assets and liabilities from AGMO pursuant to Section 30 of the Act;
(ccc) “Merit Order Dispatch Instructions” refer to the dispatch schedule that will be submitted by
the Market Operator to the Grid/system operator for the purpose of providing Central Dispatch;
(ddd) “Missionary Electrification” refers to the provision of basic electricity service in Unviable
Areas with the ultimate aim of bringing the operations in these areas to viability levels;
(eee) “National Electrification Administration” or “NEA” refers to the government agency created
under Presidential Decree No. 269, as amended, with additional mandate set forth in the Act;
(fff)“National Power Corporation” or “NPC” refers to the government corporation created under
Republic Act No. 6395, as amended;
(ggg) “National Transmission Corporation” or “TRANSCO” refers to the corporation organized
pursuant to the Act to acquire all the transmission assets of the NPC;

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(hhh) “Open Access” refers to the system of allowing any qualified Person the use of transmission,
and/or Distribution System and associated facilities subject to the payment of transmission
and/or distribution retail wheeling rates duly approved by the ERC. For this purpose,
qualified Persons shall include all WESM Participants;
(iii) “Person” refers to a natural or juridical person, as the case may be;
(jjj) “Philippine Energy Plan” or “PEP” refers to the overall energy program formulated and updated
yearly by the DOE and submitted to Congress pursuant to Republic Act No. 7638;
(kkk) “Philippine Stock Exchange” or “PSE” refers to the corporate body duly organized and
existing under Philippine law, licensed to operate as a securities exchange by the Securities
and Exchange Commission (SEC);
(lll)"Power Commission” refers to the Joint Congressional Power
Commission created pursuant to Section 62 of the Act;
(mmm) “Power Development Program” or “PDP” refers to the indicative plan for managing
electricity demand through energyefficient programs and for the upgrading, expansion,
rehabilitation, repair and maintenance of power generation and transmission facilities,
formulated and updated yearly by the DOE in coordination with the generation, transmission
and Distribution Utility companies;
(nnn) “Power Sector Assets and Liabilities Management Corporation” or “PSALM Corp.” or
“PSALM” refers to the corporation created pursuant to Section 49 of the Act;
(ooo) “Privatization” refers to the sale, disposition, change and transfer of entire ownership and
control of all assets and IPP contracts from the Government or a government corporation to a
private Person or entity;
(ppp) “Qualified Distribution Utilities” refer to Distribution Utilities that are technically and
financially capable of owning, operating, maintaining, upgrading and expanding
subtransmission facilities in accordance with the requirement of the Act;
(qqq) “Referendum” refers to an electoral process which Bonafide Members of ECs register their
respective vote on the issue of conversion, through secret balloting, in designated voting
centers, the conduct of which shall be under the supervision of NEA;
(rrr) “Related Group” refers to a Person and any business entity Controlled by that Person, along
with the Affiliates of such business entity, and the directors and officers of the business entity or
its Affiliates, and relatives by consanguinity or affinity, legitimate or common law, within
thefourth civil degree, of the Person or any of the foregoing directors or officers;
(sss) “Renewable Energy Resources” refer to energy resources that do not have an upper limit on
the total quantity to be used. Such resources are renewable on a regular basis and the
renewable rate is rapid enough to consider availability over an indefinite time. These include,
among others, biomass, solar, wind, hydro and ocean energy; (ttt) “Restructuring” refers to the
process of reorganizing the electric power industry in order to introduce higher efficiency,
greater innovation and End-user choice. It shall be understood as covering a range of
alternatives enhancing exposure of the industry to competitive market forces;
(uuu) “Retail Rate” refers to the total price paid by End-users consisting of the charges for
generation, transmission and related Ancillary Services, distribution, supply and other related
charges for electric service;
(vvv) “Retail Competition” refers to the provision of electricity to a Contestable Market by
Suppliers through Open Access;
(www)“Return-On-Rate-Base” or “RORB” refers to the rate setting methodology as determined by
the ERC whereby TRANSCO or its Buyer or Concessionaire and Distribution Utilities are
allowed to recover just and reasonable costs and earn a reasonable return so as to enable
such entities to operate viably;
(xxx) “Rural Electrification” refers to the delivery of basic electric services, consisting of power
generation, subtransmission and/or extension of associated power delivery system that would
bring about important social and economic benefits to the countryside;
(yyy) “Rural Electrification Loan” refers to financial obligations strictly incurred for Rural
Electrification;
(zzz) “Rural Electrification Program” refers to the National Government plan to achieve total

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electrification of the countryside for the purpose of fostering economic development and
uplifting the living standards of the Filipino people;
(aaaa)“Self-Generation Facility” refers to a power Generation Facility owned and constructed by
an End-user for such End-user’s own consumption or internal use excluding Generation
Facilities for use by households, clinics, hospitals and other medical facilities;
(bbbb) “Small Power Utilities Group” or “SPUG” refers to the functional unit of NPC created to
pursue Missionary Electrification function;
(cccc) “Small Distribution Company” refers to a Distribution Utility whose peak demand is equal
to or less than ten (10) megawatts;
(dddd) “Stock Cooperative” refers to a duly-registered association of Persons with a common
bond of interest, who have voluntarily joined together to achieve a lawful common social or
economic end, making equitable contributions to the capital required and accepting a fair share
of the risks and benefits of the undertaking in accordance with the universally-accepted
cooperative principles as defined under Article 4, Chapter 1 of Republic Act No. 6938,
otherwise known as the “Cooperative Code of the Philippines;”
(eeee) “Stock Corporation” refers to an artificial being created by operation of law with capital
stock divided into shares and authorized to distribute to its shareholders dividends out of its
surplus profits, having the right of succession and the powers, attributes and properties
expressly authorized by law or incident to its existence;
(ffff) “Stranded Contract Costs of Eligible Contracts of Distribution Utilities” refer to the
excess of the contracted cost of electricity under eligible contracts of Distribution Utilities over
the actual selling price of the contracted energy output of such contracts that would be incurred
upon Retail Competition and Open Access. For this purpose,Page 17 of 100 “eligible contracts”
are contracts which have been approved by the ERB as of 31 December 2000;
(gggg) “Stranded Contract Costs of NPC” refer to the excess of the contracted cost of electricity
under eligible contracts of NPC over the actual selling price of the contracted energy output of
such contracts in the market. Such contracts shall have been approved by the ERB as of 31
December 2000;
(hhhh) “Stranded Debts of NPC” or “Stranded Debts ” refer to any unpaid financial obligations of
NPC which have not been liquidated by the proceeds from the sales and Privatization of NPC
assets: Provided, however, That such obligations include any of such obligations refinanced by
PSALM: Provided, further, That such refinancing of such unpaid obligations shall not result in
increasing the Universal Charge burden;
(iiii) “Subtransmission Assets” refer to the facilities related to the power delivery service below the
transmission voltages and based on the functional assignment of assets including, but not
limited to stepdown transformers used solely by load customers, associated
switchyard/substation, control and protective equipment, reactive compensation equipment to
improve customer power factor, overhead lines, and the land where such facilities/equipment
are located. These include NPC assets linking the transmission system and the Distribution
System which are neither classified as generation nor transmission;
(jjjj) “Subtransmission System” refers to systems comprised of Subtransmission Assets;
(kkkk) “Supplier” refers to any Person licensed by the ERC to sell, broker, market or aggregate
electricity to End-users;
(llll) “Supplier’s Charge” refers to the charge imposed by Suppliers for the sale of electricity to
End-users, excluding the charges for generation, transmission and distribution wheeling;
(mmmm) “Supply of Electricity” refers to the sale of electricity by a party other than a Generation
Company or a Distribution Utility in the Franchise Area of a Distribution Utility using the wires of
such Distribution Utility;
(nnnn) “Technical Constraints” refer to line, equipment, and other limitations as defined in the
WESM Rules, Grid Code and Distribution Code;
(oooo) “Transmission Charge” refers to the regulated cost or charges for the use of a
transmission system which may include the availment of Ancillary Services;
(pppp) “Transmission Development Plan” or “TDP” refers to the program for managing the
transmission system through efficient planning for its expansion, upgrading, rehabilitation,

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repair andPage 18 of 100 maintenance, to be formulated by DOE and implemented by the

TRANSCO or its Buyer or Concessionaire pursuant to the Act;
(qqqq)“Transmission of Electricity” refers to the conveyance of electricity through the high
voltage backbone system;
(rrrr) “Universal Charge” refers to the charge, if any, imposed for the recovery of the Stranded
Debts, Stranded Contract Costs of NPC, and Stranded Contract Costs of Eligible Contracts of
Distribution Utilities and other purposes pursuant to Section 34 of the Act;
(ssss) “Unviable Area” refers to a geographical area within the Franchise Area of a Distribution
Utility where immediate extension of distribution line is not feasible;
(tttt) “Wholesale Electricity Spot Market” or “WESM” refers to the Wholesale Electricity Spot
Market to be created in accordance with the Act;
(uuuu) “WESM Participants” refer to all Generation Companies, Distribution Utilities, Suppliers,
Aggregators, End-users, the TRANSCO or its Buyer or Concessionaire, IPP Administrators,
and other entities authorized by the ERC to participate in the WESM in accordance with the
Act; and
(vvvv) “WESM Rules” refer to the detailed rules that govern the administration and operation of the
WESM.

PART II - STRUCTURE AND OPERATION OF THE ELECTRIC POWER INDUSTRY

RULE 5. GENERATION SECTOR

Section 1. Guiding Principle. Pursuant to Section 6 of the Act, generation of electric power, a
business affected with public interest, shall be competitive and open to all qualified Generation
Companies.

Generation shall not be considered a public utility operation. For this purpose, any Person engaged
or intending to engage in Generation of Electricity shall not be required to secure a national
franchise.
No Person may engage in the Generation of Electricity as a new Generation Company unless such
Person has received a COC from the ERC to operate facilities used in the Generation of Electricity.

A Person that demonstrates compliance with the standards and requirements of this Rule 5, and
such other terms and conditions as determined by the ERC to be appropriate to ensure that
Persons comply with all applicable legal and regulatory requirements, shall be issued a COC.

Section 2. Scope of Application. This Rule shall apply to all facilities used or to be used for the
Generation of Electricity, including but not limited to the following:

(a) Existing Generation Facilities. Existing Generation Facilities shall include:

(i) Spin-off Facilities of NPC or their transferees, including Generation Facilities owned by
NPC transferred to PSALM and subsequently privatized pursuant to the Act;
(ii) Agus and Pulangui Complexes;
(iii) Facilities owned and operated by SPUG;
(iv) Accredited facilities under BOT arrangement and other variants with NPC, SPUG,
National Irrigation Administration (NIA), Philippine National Oil Company-Energy
Development Corporation (PNOC-EDC) and other government agencies;
(v) Accredited facilities under BOT arrangement and other variant with Distribution Utilities;
(vi) Facilities Owned or Operated by a Distribution Utility;

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(vii) Facilities under Contract with a Distribution Utility;

(viii) Self-Generation Facilities;
(ix) Facility operating in EZs; and
(x) Facility operating in isolated areas.
(b) Generation Facilities Under Construction. Generation Facilities under construction shall include:
(i) DOE-Accredited Facility under BOT arrangement and other variants with NPC, SPUG,
PNOC-EDC, NIA and other government agencies; (ii) DOE-Accredited Facility under
BOT arrangement and other variants with Distribution Utilities;
(iii) Non DOE-Accredited Facility under contract with Distribution Utilities;
(iv) Self-Generation Facility;
(v) Facility locating in EZs; and
(vi) Facility operating in isolated areas.
(c) New Generation Facilities New Generation Facilities shall include:
(i) Any newly-constructed facility with appropriate health, safety and environmental
clearances connected to the Grid;
(ii) Any facility currently under BOT arrangement and other variants with NPC, SPUG,
PNOC-EDC, other government agencies, and government- owned and- controlled
corporations; and
(iii) Any facility that shall operate in an isolated area.
(d) This Rule shall also apply to the PSALM-appointed IPP Administrators.

Section 3. Ownership Limitation. No Generation Company, Distribution Utility, or its respective

subsidiary or Affiliate or stockholder or official of a Generation Company or Distribution Utility, or
other entity engaged in generating and supplying electricity specified by ERC within the fourth civil
degree of consanguinity or affinity, legitimate or common law, shall be allowed to hold any interest,
directly or indirectly, in TRANSCO or its Buyer or Concessionaire. Likewise, the TRANSCO or its
Buyer or Concessionaire or any of its stockholders or officials or any of their relatives within the
fourth civil degree of consanguinity or affinity, legitimate or common law, shall not hold any interest,
whether directly or indirectly, in any Generation Company or Distribution Utility. Except for ex officio
government-appointed representatives, no Person who is an officer or director of the TRANSCO or
its Buyer or Concessionaire shall be an officer or director of any Generation Company, Distribution
Utility or Supplier. This section shall not apply to PSALM during the period that its generation assets
are being privatized pursuant to Section 47 of the Act.

Section 4. Obligations of a Generation Company.

(a) A COC shall be secured from the ERC before commercial operation of a new Generation
Facility. The COC shall stipulate all obligations of a Generation Company consistent with this
Section and such other operating guidelines as ERC may establish. The ERC shall establish
and publish the standards and requirements for issuance of a COC. A COC shall be issued
upon compliance with such standards and requirements.
(i) A Person owning an existing Generation Facility or a Generation Facility under
construction, shall submit within ninety (90) days from effectivity of these Rules to ERC,
when applicable, a certificate of DOE/NPC accreditation, a three (3) year operational
history, a general company profile and other information that ERC may require. Upon
making a complete submission to the ERC, such Person shall be issued a COC by the
ERC to operate such existing Generation Facility.
(ii) A Generation Facility which has been previously issued a COC shall not be required to
secure a COC even if acquired by a new owner: Provided, That such new owner shall
register with ERC as specified above. Upon registration, such Person shall be deemed
authorized to operate such Generation Facility.

(b) A Generation Company shall comply with the following operating standards:
(i) Technical Standards. A Generation Company shall ensure that all its facilities connected

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to the Grid meet the technical design and operational criteria of the Grid Code and
Distribution Code promulgated by ERC, Philippine Electrical Code, and the TRANSCO
or its Buyer or Concessionaire including, among others, standards for voltage
fluctuation, frequency, harmonics, security, reliability, unplanned outages and provision
of Ancillary Services and shall operate in accordance with such operational criteria.
(ii) Financial Standards. A Generation Company with facilities connected to the Grid shall
conform to the financial standards provided in the Grid Code. These standards shall
take into consideration the nature and function of a Generation Facility. Furthermore,
such standards are set to ensure that the Generation Company meets the minimum
financial standards to protect the public interest and any customer procuring services
from the said Generation Company.
(iii) Environmental Standards. A Generation Company shall ensure that its facilities comply
with applicable environmental laws, rules and regulations.

(c) A Generation Company operating a Generation Facility in isolated areas shall meet the technical
and financial standards to be issued by the ERC using applicable and practicable criteria within
two (2) years, or such other period as may be specified by the ERC, from the issuance of such
technical and financial standards.

(d) A Generation Company shall structurally and functionally unbundle its generation business
activities and rates from its distribution and supply businesses as provided in Rule 10 on
Structural and Functional Unbundling of Electric Power Industry Participants and Rule 15 on
Unbundling of Rates.

(e) Prior to the implementation of Open Access and Retail Competition, the prices charged by a
Generation Company for the Supply of Electricity shall be subject to ERC regulation on the
Retail Rates charged by Distribution Utilities and transition supply contracts (TSCs) as specified
in Section 67 of the Act. Upon introduction of Open Access and Retail Competition or
establishment of WESM, whichever comes first, the rates of Generation Company shall not be
subject to regulation by the ERC except as otherwise provided by the Act. However, for a
Generation Company operating a facility in SPUG areas and isolated areas, the generation
rates for such facility shall be fixed and determined by ERC as set forth in Rule 13 on
Missionary Electrification.

(f) A self-generation company not connected to a Distribution Utility, unless otherwise provided
under these Rules, shall remit directly to TRANSCO the corresponding Universal Charge set by
ERC. In relation to this, TRANSCO or its Buyer or Concessionaire or the appropriate
Distribution Utility, when connected to the self-generation company, shall have access to the
customer side of the meter in order to determine the utilization of such Generation Facility for
the purpose of assessing the corresponding Universal Charge as provided in Rule 18 on
Universal Charge.

(g) A Generation Company shall comply with Rule 29 on Benefits to Host Communities.

(h) Upon the establishment of the WESM by the DOE, jointly with Electric Power Industry
Participants, a Generation Company shall comply with the membership criteria as prescribed
under the WESM Rules as set forth in Rule 9 on WESM.

(i) Pursuant to Section 9(e) of the Act, a Generation Company with facilities connected to a Grid
shall make information available to the Market Operator to enable the Market Operator to
implement the appropriate dispatch scheduling and shall comply with the said scheduling in
accordance with the WESM Rules. A Generation Company shall likewise make information
available to the grid operator to facilitate Central Dispatch by the grid operator. Subject to
Technical Constraints, the grid operator of the TRANSCO or its Buyer or Concessionaire shall

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provide Central Dispatch to a Generation Facility connected, directly or indirectly, to the

transmission system in accordance with the dispatch schedule submitted by the Market
Operator, which schedule shall take into account outstanding bilateral contracts.

(j) A Generation Company shall comply with Rule 11 on Cross Ownership, Market Abuse and Anti-
Competitive Behavior.

(k) A Generation Company that owns a dedicated point-to-point limited transmission facility shall
transfer ownership of such facility to the TRANSCO at a fair market price in the event that such
facility is required for competitive purposes as prescribed in Section 5 (b) of this Rule.

(l) A Generation Company shall submit to DOE any information as may be required by the DOE for
the preparation of the PDP, subject to appropriate measures to preserve the confidentiality of
proprietary or commercially sensitive information.

(m) A Generation Company that fails to comply with any of these obligations, including compliance
with technical standards, shall be subject to fines and penalties as may be imposed by the
ERC.

Section 5. Dedicated Point-to-Point Limited Transmission Facility of a Generation Company.

(a) Subject to prior authorization from ERC, TRANSCO or its Buyer or Concessionaire may allow a
Generation Company to develop, own and/or operate dedicated point-to-point limited
transmission facilities: Provided, That:
(i) Such dedicated point-to-point limited transmission facilities are required only for the
purpose of connecting to the Grid which will be used solely by the Generation Facility, and
are not used to serve End-users or Suppliers directly;
(ii) The facilities are included and consistent with the TDP as certified by TRANSCO or its
Buyer or Concessionaire; and
(iii) Any other documents that may be required by the ERC.
(b) In the event that such assets are required for competitive purposes, ownership of the same shall
be transferred to the TRANSCO at a fair market price. In case of disagreement on the fair
market price, the ERC shall determine the fair market value of such asset, either directly or
through such dispute resolution mechanisms as ERC may specify.

Section 6. Generation Charges and VAT.

(a) Within ninety (90) days from the effectivity of these Rules, the ERC shall issue guidelines for the
regulation of power sales by Generation Companies applicable prior to the implementation of
Retail Competition and Open Access or establishment of WESM, whichever comes first.
(b) Pursuant to the policy of reducing electricity rates to End-users, sales of generated power by a
Generation Company shall, from the effectivity of the Act, be zero-rated for the purpose of
imposition of value-added tax. Towards this end, the imposition of zero percent (0%) VAT shall
apply to the sale of generated power by a Generation Company through all stages of sale until it
reaches the End-user. The DOF, through the BIR, shall issue the necessary revenue regulation
within sixty (60) calendar days from effectivity of these Rules.

RULE 6. TRANSMISSION SECTOR

Section 1. Guiding Principle. The transmission of electric power is affected with public interest and
shall be a regulated common electricity carrier business, subject to the ratemaking powers of the
ERC.

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Section 2. Scope of Application. This Rule shall apply to TRANSCO or its Buyer or Concessionaire
and any other successor-in-interest thereto.

Section 3. Ownership Limitation. The TRANSCO or its Buyer or Concessionaire or any of its
stockholders, directors, officers or any of their relatives within the fourth civil degree of
consanguinity or affinity, legitimate or common law, shall not hold any interest, whether directly or
indirectly, in any Generation Company, Distribution Utility, IPP Administrator and Supplier.

Section 4. Separation Between Transmission and Subtransmission. The ERC shall set the
standards of the transmission voltages and other factors that shall distinguish transmission assets
from Subtransmission Assets. Towards this end, ERC shall issue appropriate guidelines to
distinguish between these categories of assets according to voltage level and function. The ERC
shall take into account the objective of allowing nondiscriminatory Open Access to the transmission
and Subtransmission Systems. The technical and functional criteria to be considered in
distinguishing
transmission assets from Subtransmission Assets shall include, but not limited to:

(a) Subtransmission Assets are normally in close proximity to retail customers;

(b) Subtransmission Assets are primarily radial in character;
(c) Power flows into Subtransmission Assets; it rarely, if ever, flows out;
(d) When power enters Subtransmission Assets, it is not reconsigned or transported on to some
other market;
(e) Power entering Subtransmission Assets is consumed in a comparatively restricted geographic
area;
(f) Meters are based at the interface of transmission and Subtransmission Assets to measure flows
into the Subtransmission Assets; and
(g) Subtransmission Assets will be of reduced voltage.
Section 5. Initial Classification of Transmission Assets. Pending the issuance of the new standards
for classification of transmission assets by ERC, transmission assets shall be defined as follows:

(a) For the Luzon Grid, transmission facilities rated 230 kV and above shall generally be considered
transmission assets;
(b) For the Visayas Grid, transmission facilities rated 69 kV and above shall generally be considered
transmission assets;
(c) For the Mindanao Grid, transmission facilities rated 138 kV and above shall generally be
considered transmission assets; and
(d) Notwithstanding the foregoing provisions, any line at the specified level for each Grid that serves
an End-user or customer shall be considered a subtransmission line, and any line below the
specified level for each Grid that serves a transmission function shall be considered a
transmission line.
Section 6. Initial Classification of Subtransmission Assets. Step-down transformers used solely by
load customers are considered Subtransmission Assets. .

In the case of step-down transformer banks serving a single Distribution Utility, the Distribution
Utility or Distribution Utilities shall have the option to purchase said facility, provided, it will
guarantee the reliable Supply of Electricity to grid control equipment.

Section 7. Functions and Responsibilities of TRANSCO or it Buyer or Concessionaire. The

TRANSCO or its Buyer or Concessionaire shall have, among others, the following functions and
responsibilities:

(a) Act as the system operator of the nationwide electrical transmission and Subtransmission
System, transferred to it by NPC;
(b) Provide open and non-discriminatory access to its system to all electricity users;

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(c) Ensure and maintain the reliability, adequacy, security, stability and integrity of the Grid in
accordance with the performance standards for the operation and maintenance of the Grid, as
set forth in the Grid Code and the Distribution Code. The performance indicators for reliability,
security, adequacy, integrity and stability shall include but are not limited to the following:
(i) Number of Interruption Events;
(ii) Sustained Average Interruption Frequency Index;
(iii) Momentary Average Interruption Frequency Index;
(iv) Sustained Average Interruption Duration Index;
(v) System Interruption Severity Index;
(vi) Frequency of tripping per 100 c-km;
(vii) Average Forced Outage Duration;
(viii) Accumulated Time Error;
(ix) Frequency Limit Violation; an
(x) Voltage limit Violations.

(d) Improve and expand its transmission facilities, consistent with the TDP and the Grid Code, to
adequately serve Generation Companies, Distribution Utilities and Suppliers requiring transmission
service and/or Ancillary Services through the transmission system.
TRANSCO or its Buyer or Concessionaire shall submit any plan for expansion or improvement of its
facilities for approval by the ERC; and

(e) Provide Central Dispatch, through its grid operator, to all Generation Facilities and loads
connected, directly or indirectly, to the transmission system in accordance with the dispatch
schedule submitted by the Market Operator, taking into account outstanding bilateral contracts
and subject to Technical Constraints.

Section 8. Obligations of TRANSCO. The TRANSCO shall have, among others, the following
obligations:

(a) Prepare the TDP in consultation with Electric Power Industry Participants.

(b) Submit an updated TDP for approval to the DOE on a timely basis each year for integration with
the PDP and PEP.
(c) Remit its net profit, if any, to the PSALM not later than ninety (90) days after the immediately
preceding quarter subject to annual reconciliation when the audited and certified annual financial
statements are finally made available. Net profit is defined as:

Net Profit = Total Utility Revenue – (Total Operating Expenses – Other Income + Interest &
Other Charges)
Net proceeds from the Privatization of TRANSCO shall be immediately remitted to PSALM.

(d) TRANSCO shall secure approval of its Transmission Charges from the ERC pursuant to Section
43(f) of the Act.
(e) TRANSCO shall sell its Subtransmission Assets to qualified Distribution Utilities pursuant to the
Act and, Part IV, Section 13 of Rule 22 on National Transmission Corporation. In the event that
a Distribution Utility is not qualified or a qualified Distribution Utility refuses to acquire such
assets, then TRANSCO shall be deemed in compliance with this obligation. The Buyer or
Concessionaire shall be responsible for the obligations under Subsections (a), (b), and (d)
hereof.

Section 9. Compliance with Grid Code. TRANSCO or its Buyer or Concessionaire shall comply with
the provisions of the Grid Code in the process of improving and expanding its transmission

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facilities in order to ensure and maintain the reliability, adequacy, security, stability and integrity
of the Grid and adequately serve Electric Power Industry Participants requiring transmission
service or Ancillary Services through the Grid.

Section 10. Transmission Development Plan.

(a) The TDP refers to a plan for managing the transmission system through efficient planning for
expansion, upgrading, rehabilitation, repair and maintenance, to be prepared and implemented
by TRANSCO or its Buyer or Concessionaire.

(b) TRANSCO or its Buyer or Concessionaire shall be responsible for the preparation of the TDP, in
consultation with the Electric Power Industry Participants. TRANSCO or its Buyer or
Concessionaire shall submit the TDP for approval by DOE for integration into the PDP and
PEP.

(c) Any plan for expansion or improvement of transmission facilities shall be approved by the ERC:
Provided, That such approval shall not be unreasonably withheld.

Section 11. TRANSCO Related Businesses. The TRANSCO or its Buyer or Concessionaire shall be
primarily responsible for maintaining and operating the Grid pursuant to this Rule.

(a) TRANSCO or its Buyer or Concessionaire may engage in any related business which maximizes
utilization of its assets;

(b) A portion of the annual net income of not more than fifty percent (50%) derived from such
undertaking utilizing assets which form part of the rate base shall be used to reduce the
transmission wheeling charges as determined by ERC; and (c) Separate audited accounts shall
be maintained for each business undertaking to ensure that the transmission business shall
neither subsidize in any way such business undertaking nor encumber its transmission assets
in any way to support such business.
Section 12. Transmission Charges.

(a) Transmission Charges shall be paid to TRANSCO or its Buyer or Concessionaire for the use of
the transmission system. Transmission users shall also pay charges for the use of Ancillary
Services. The WESM Rules shall provide for the methodology for the price and cost recovery of
Ancillary Services that are to be provided by the Generation Company.

(b) Transmission Charges and fees for Ancillary Services shall be fixed by the ERC.

RULE 7.
DISTRIBUTION SECTOR

Section 1. Guiding Principles.

(a) Pursuant to Section 22 of the Act, the Distribution of Electricity to End-users shall be a regulated
common carrier business, requiring a national franchise. For purposes of these Rules,
distribution franchise shall mean the privilege of a Distribution Utility to convey electric power
through its Distribution System in a given geographical area granted by the Congress of the
Republic of the Philippines. The Distribution of Electricity is a business affected with public
interest.

(b) The following rules shall apply to the Distribution of Electricity.

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Section 2. Scope of Application. This Rule shall apply to an entity that owns, operates, or Controls
one or more Distribution Systems such as but not limited to:

(a) ECs;
(b) Privately-Owned Distribution Utilities;
(c) Local Government Unit Owned-and-Operated Distribution Systems;
(d) Entities duly authorized to operate within the EZs; and
(e) Other duly authorized entities engaged in the Distribution of Electricity.

Section 3. Ownership Limitation.

(a) A Distribution Utility and any of its subsidiaries, Affiliates, stockholders, directors, officers or their
relatives within the fourth civil degree of consanguinity or affinity, legitimate or common law,
shall not hold any interest, directly or indirectly, in the TRANSCO or its Buyer or
Concessionaire, or the IMO.
(b) The holdings of any Person, natural or juridical, including its directors, officers, stockholders, and
their related interests in a Distribution Utility and their respective holding companies shall not
exceed twenty-five percent (25%) of the total voting shares of stock. This shall not apply to a
Distribution Utility or the company holding the shares or its controlling stockholders whose
shares are listed in the PSE. Implementation of this provision shall be in accordance with the
rules and regulations issued by ERC. This section shall not apply to ECs in accordance with
Section 28 of the Act.
(c) A Distribution Utility shall be required to sell to the public a portion of not less than fifteen percent
(15%) of its common shares of stock not later than five (5) years from the effectivity of the Act,
except those Distribution Utilities or its respective holding companies listed in the PSE, subject
to the rules and regulations of the ERC to be issued for this purpose.

Section 4. Obligations of a Distribution Utility.

(a) A Distribution Utility shall provide distribution services and connections to its systems for any
End-user within its Franchise Area consistent with the Distribution Code. Any existing End-user
within the Franchise Area of a Distribution Utility that is connected to TRANSCO facilities shall
be served by the franchised Distribution Utility upon acquisition of the subtransmission facilities:
Provided, however, That the Distribution Utility which acquired the subtransmission facilities
shall be paid by the End-user the corresponding subtransmission rates or wheeling charge
imposed by NPC in accordance with its contract to the End-user as approved by ERC.
(b) A Distribution Utility shall structurally and functionally unbundle its distribution business activities
and rates from its wires, generation and supply businesses. A Distribution Utility shall comply
with Rule 10 on Structural and Functional Unbundling of Electric Power Industry Participants.
(c) A Distribution Utility shall provide open and non-discriminatory access to its Distribution System
to all End-users, including Suppliers and Aggregators.
(d) A Distribution Utility shall comply with the technical specifications and financial standards
prescribed in the Distribution Code and the performance standards prescribed in these Rules.
To this end, ERCshall issue submission requirements for Distribution Utilities to comply with the
technical specifications, financial and the performance standards after the effectivity of these
Rules and the Distribution Code.

(i) A Distribution Utility shall submit to ERC a statement of compliance.

(ii) A Distribution Utility that does not comply with the technical specifications, performance
standards and financial capability standards as prescribed in the Distribution Code shall
submit to ERC a plan to comply within three (3) years therewith. The ERC shall, within
sixty (60) days from receipt of such plan, evaluate the same and notify the Distribution
Utility concerned of its action.
(iii) A Distribution Utility is required to implement the ERCapproved plan to comply with the

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said technical specifications prescribed in the Distribution Code and the performance
standards of these Rules within three (3) years from the approval of said plan. (iv) Failure
by the Distribution Utility to submit a feasible and credible plan or failure to implement the
same shall serve as ground for the imposition of appropriate sanctions, fines or penalties
as may be prescribed by ERC.

(e) A Distribution Utility shall comply with the requirements in the Grid Code, WESM Rules and all
applicable laws.
(f) A Distribution Utility shall provide universal service within its Franchise Area, over a reasonable
time, including Unviable Areas, as part of its social obligations. This obligation shall be
performed in a manner that shall allow such Distribution Utilities to collect different rates in
Unviable Areas to sustain its economic viability, subject to approval by the ERC.
(g) A Distribution Utility shall file with the ERC its petition to allow another Distribution Utility to
provide electricity to areas that it does not find viable, pursuant to Section 6 of this Rule.
(h) A Distribution Utility shall supply electricity in the least cost manner to the Captive Market within
its Franchise Area, subject to the collection of Retail Rates duly approved by ERC.
(i) A Distribution Utility shall file for review and approval by the ERC its unbundled rates reflecting
the true costs of service pursuant to Rule 15 on Unbundling of Rates, and the proposal for the
removal of cross subsidies among the customers it serves pursuant to Rule 16 on Removal of
Cross Subsidies.
(j) A Distribution Utility shall file with the ERC its petition on the Lifeline Rate to be applied to its
Marginalized End-users, pursuant to Rule 20 on Lifeline Rate.
(k) A Distribution Utility shall recover Stranded Contract Costs under eligible contracts approved by
ERB as of 31 December 2000, subject to review by ERC pursuant to Rule 17 on Stranded
Debts and Contract Costs Recovery.
(l) A Distribution Utility shall collect on a monthly basis from all Endusers a Universal Charge set by
ERC, to be remitted to PSALM on or before the fifteenth (15th) of the succeeding month, net of
any amount due to the Distribution Utility.
(m) A Distribution Utility shall identify and segregate in its customer billing statements the
components of the Retail Rate.
(n) A Distribution Utility shall comply with Rule 11 on Cross Ownership, Market Abuse and Anti-
Competitive Behavior.
(o) A Distribution Utility shall file for review and approval by the ERC any changes in the terms and
conditions of services to its Franchise Areas.
(p) A Distribution Utility shall prepare and submit to the DOE an annual 5-year distribution
development plan not later than the fifteenth (15th) of March of every year, for integration with
the PDP and PEP. In the case of the ECs, such plans shall be submitted through NEA for
review and consolidation. To this end, NEA shall submit to the DOE the National Electric
Cooperatives Distribution Development Plan not later than the 15th of March of every year.
(q) A Distribution Utility shall pay a franchise tax only on its distribution wheeling and Captive Market
supply revenues. To this end, the DOF shall issue the necessary guidelines.
(r) A Distribution Utility shall comply with the reportorial requirements as may be prescribed by the
ERC and the DOE.
(s) A Distribution Utility that fails to comply with any of these obligations shall be subject to fines and
penalties as imposed by the ERC.

Section 5. Privileges of a Distribution Utility.

(a) A Distribution Utility shall be entitled to impose and collect Distribution Wheeling Charges and
connection fees, Retail Rates and other charges as approved by the ERC from the End-user
and other qualified customers.
(b) A Distribution Utility may exercise the power of eminent domain subject to the requirements of
the Constitution and existing laws.
(c) A Distribution Utility may, directly or indirectly, engage in any related business undertaking that

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maximizes the utilization of its assets: Provided, That quality of service shall not deteriorate
pursuant to the standards provided in the Grid Code and Distribution Code and Rule 10 on
Structural and Functional Unbundling of Electric Power Industry Participants. To this end, the
Distribution Utility shall submit to the ERC the appropriate documents to effect the following:
(i) A portion of the net annual income derived from such undertaking utilizing assets which
form part of the rate base shall be used to reduce its Distribution Wheeling Charges:
Provided, That, such portion shall not exceed fifty percent (50%) of the net income
derived from such undertaking.
(ii) Separate accounts shall be maintained for each business undertaking to ensure that the
distribution business shall neither subsidize in any way such business undertaking nor
encumber its distribution assets in any way to support such business.

Section 6. Provision of Service in Unviable Areas.

(a) Unenergized areas that a Distribution Utility does not find viable may be transferred to another
Distribution Utility, if any is available, which will provide the service, subject to approval by
ERC. In cases where a Distribution Utility failed or refused to service any area within its
Franchise Area and allows another utility to service the same, the arrangements between the
Distribution Utilities shall not affect their respective Franchise Areas. The ERC shall issue the
appropriate guidelines to implement this provision.
(b) In remote and Unviable Areas where the Distribution Utility is unable to serve for any reason as
authorized by ERC in accordance with the Act, the areas shall be opened to other qualified
third parties that may provide the service pursuant to Rule 14 on Provision of Electricity by
Qualified Third Parties.

Section 7. Structural and Operational Reforms Between and Among Distribution Utilities.

(a) Pursuant to Section 23 of the Act, the ERC shall issue the appropriate guidelines for the
structural and operational reforms of a Distribution Utility. Such reforms shall include, but not
limited, to merger, consolidation, integration, bulk procurement and joint ventures.
(b) With respect to ECs, the DOE through NEA shall facilitate and encourage reforms in the
structure and operations of a Distribution Utility for greater efficiency and lower costs.
(c) Pursuant to Section 57 of the Act, ECs are given the option to convert into Stock Cooperatives
under the CDA or Stock Corporations under the Corporation Code. Nothing contained in the
Act shall deprive ECs of any privilege or right granted to them under Section 39 of Presidential
Decree No. 269, as amended, and other existing laws. The conversion and registration of ECs
shall be implemented in the following manner:

(i) ECs shall, upon approval of a simple majority of the required number of turnout of voters
as provided in the Guidelines in the Conduct of Referendum (Guidelines), in a referendum
conducted for such purpose, be converted into a Stock Cooperative or Stock Corporation
and thereafter shall be governed by the Cooperative Code of the Philippines or the
Corporation Code, as the case may be. The NEA, within six (6) months from the effectivity
of these Rules, shall promulgate the guidelines in accordance with Section 5 of
Presidential Decree No. 1645.
(ii) ECs converted into Stock Corporations shall be registered with the SEC in accordance
with the Corporation Code, while those converted into Stock Cooperatives, shall be
registered with the CDA: Provided, however, That the ECs which opt to remain as non-
Stock Cooperatives shall continue to be registered with the NEA and shall be governed by
the provisions of Presidential Decree No. 269, as amended.
(iii) An EC heretofore converted, regardless of the corporate form, or its successor entity,
shall retain its franchise rights: Provided, further, That its operations shall be regulated by
the ERC and other Government instrumentalities insofar as practicable and consistent
with the Act.

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Section 8. Franchise for a Distribution Utility.

(a) Pursuant to Section 27 of the Act, a franchise to a Person intending to engage in Distribution of
Electricity shall be granted exclusively by the Congress of the Philippines.
(b) All existing franchises shall be allowed to their full term.
(c) In the case of ECs, renewals and cancellations of franchise shall remain with the National
Electrification Commission (NEC) under the NEA for five (5) more years after the effectivity of
the Act.

RULE 8.
SUPPLY SECTOR

Section 1. Guiding Principles.

(a) Pursuant to Section 29 of the Act, the Supply of Electricity to Endusers is a business affected wit
public interest.
(b) The Supply of Electricity to End-users in Contestable Market requires a license from the ERC
except for the Supply of Electricity by Distribution Utilities within their Franchise Areas and
Persons authorized to supply electricity within their respective EZs.

Section 2. Scope of Application.

(a) This Rule shall apply to all Suppliers.

(b) Subject to the qualifications set by the ERC, any of the following may obtain a license to become
a Supplier:
(i) A Generation Company or Affiliate thereof;
(ii) An Affiliate of a Distribution Utility with respect to the latter’s Contestable Market within or
outside its Franchise Area;
(iii) Aggregators;
(iv) An IPP Administrator; and
(v) Any other Person authorized by the ERC to engage in the selling, brokering or marketing
of electricity to the Contestable Market, consistent with the Act and these Rules.

Section 3. Ownership Limitation and Restrictions.

(a) A Supplier or Affiliate thereof or any stockholder, director or officer or any of their relatives within
the fourth civil degree of consanguinity or affinity, legitimate or common law, shall not own any
interest, directly or indirectly, in TRANSCO or its Buyer or Concessionaire, or IMO.
(b) Except for ex-officio government-appointed representatives, no Person who is an officer or
director of the TRANSCO or its Buyer or Concessionaire shall be an officer or director of any
Supplier.

Section 4. Obligations of a Supplier.

(a) A Supplier shall secure a license from the ERC prior to engaging in the Supply of Electricity to
End-users in any Contestable Market.
(b) A Supplier, where applicable, shall functionally and structurally unbundle its supply business
activities and rates from its generation and distribution businesses, if any, as presented in Rule
10 on Structural and Functional Unbundling of Electric Power Industry Participants.
(c) A Supplier shall identify and segregate the components of its Supplier’s Charge, as required by
the Act and further provided in Rule 15 on Unbundling of Rates.
(d) A Supplier shall comply with the WESM Rules.
(e) A Supplier shall comply with any reportorial requirements prescribed by the ERC for monitoring

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purposes.
(f) A Supplier shall comply with the Competition Rules to be prescribed by the ERC concerning
abuse of market power, cartelization, and any other anti-competitive or discriminatory behavior.
(g) A Supplier that fails to comply with any of these obligations shall be subject to fines and
penalties imposed by the ERC and, as so required to protect the public interest, may have its
license suspended, revised or revoked.

Section 5. Licensing of Suppliers. The ERC shall issue the appropriate licensing rules, guidelines
and procedures for the issuance of licenses to Suppliers, which shall include but not limited to
the following:

(a) General Procedures for License Applications and Monitoring.

(i) The applicant shall submit all pertinent information and documents required by ERC for
purposes of evaluating the application for a license to supply electricity to End-users in a
Contestable Market.
(ii) Upon receipt of all the information required to evaluate compliance with the requirements
applicable to obtaining a license to supply electricity to End-users in a Contestable
Market, and upon demonstration of compliance with such requirements, the ERC shall
issue the necessary resolution, order, and/or the appropriate license as a Supplier. (iii)
The ERC shall monitor the compliance of Suppliers with the requirements of their
respective licenses and the rules and regulations applicable to Suppliers.

(b) Qualification Criteria

(i) Compliance with Section 3 of this Rule 8.
(ii) Technical and Financial Standards, Creditworthiness Criteria and such financial security
to secure proper performance as a Supplier as may be determined by the ERC to protect
the interests of End-users in Contestable Markets.
(iii) Such other qualification or criteria as may be determined by the ERC to protect the public
interest.

RULE 9.
WHOLESALE ELECTRICITY SPOT MARKET (WESM)

Section 1. Guiding Principle. Pursuant to Section 30 of the Act, all WESM Participants shall comply
with the WESM Rules.

Section 2. Scope of Application. This Rule shall apply to the Market Operator and all WESM
Participants.

Section 3. Organization. Within one (1) year from the effectivity of the Act, the DOE shall establish a
WESM composed of the WESM Participants. For this purpose, the DOE shall, jointly with
Electric Power Industry Participants, promulgate the WESM Rules, and undertake actions
including but not limited to the following:

(a) Organize and establish the appropriate market design and governance structure of the WESM;
(b) Pursuant to Section 30 of the Act, constitute the AGMO, which shall undertake the preparatory
work and initial operation of the WESM;
(c) Oversee the development of the WESM organization and necessary supporting infrastructure,
including the funding requirements.

Section 4. Membership. Subject to compliance with the membership criteria specified in the WESM
Rules, the following Persons shall be eligible to become members of the WESM:

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(a) Generation Companies;

(b) Distribution Utilities;
(c) Suppliers;
(d) IPP Administrators;
(e) End-users; and
(f) Other similar Persons authorized by the ERC eligible to become members of the WESM.

Section 5. The WESM Rules.

(a) The WESM Rules shall provide the mechanism for identifying and setting the price of actual
variations from the quantities transacted under contracts between sellers and purchasers of
electricity. The WESM Rules shall include rules governing the central scheduling and dispatch,
and settlement of quantities sold and purchased under bilateral contracts in order to identify
variations therefrom. The WESM Rules shall also reflect accepted economic principles and
provide an open, competitive market for all WESM Participants.
(b) Jointly with the Electric Power Industry Participants, the DOE shall formulate the detailed rules
for the WESM, in accordance with the following principles:

(i) Provide an efficient, competitive, transparent and reliable spot market;

(ii) Ensure efficient operation of the WESM by the Market Operator in coordination with the
system operator in a way which:
(1) Minimizes adverse impacts on system security;
(2) Encourages market participation; and
(3) Enables access to the market.

(iii) Subject to the provisions of Section 43(u) of the Act, provide a cost-effective framework
for resolution of disputes among WESM Participants, and between WESM Participants
and the Market Operator;
(iv) Provide for adequate sanctions in cases of breaches of the WESM Rules; and
(v) Provide efficient, transparent and fair processes for amending the WESM Rules.

(c) The WESM Rules shall provide, among others, procedures for:

(i) Establishing the Merit Order Dispatch Instructions for each time period for Central
Dispatch;
(ii) Determining the market-clearing price for each time period;
(iii) Administering the market, including criteria for admission to and termination from the
market which includes security or performance bond requirements, voting rights of the
participants, surveillance and assurance of compliance of the participants with the rules
and the formation of the WESM governing body;
(iv) Prescribing guidelines for the market operation in system emergencies;
(v) Amending the WESM Rules; and
(vi) Establishing the transition to full implementation of the WESM.

(d) Methodology for Price Determination. The WESM Rules shall provide the mechanism for
determining the price of electricity not covered by bilateral contracts between sellers and
purchasers of electricity. The price determination methodology contained in the WESM Rules
shall be subject to the approval of the ERC.

Section 6. The Market Operator.

(a) A Market Operator in accordance with the WESM Rules shall implement the WESM. Not later
than one (1) year after the implementation of the WESM, an independent entity, the IMO, shall
be formed and the functions, assets and liabilities of the AGMO shall be transferred to such

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entity with the joint endorsement of the DOE and the Electric Power Industry Participants:
Provided, That the IMO shall be financially and technically capable, with proven experience and
expertise of not less than two (2) years as a leading independent market operator of similar or
larger size electricity market.
(b) Subject to Technical Constraints, the grid operator of the TRANSCO or its Buyer or
Concessionaire shall provide Central Dispatch of all Generation Facilities connected, directly or
indirectly, to the transmission system in accordance with the dispatch schedule submitted by
the Market Operator, which schedule shall take into account outstanding bilateral contracts.
(c) The Market Operator shall have the following functions and responsibilities:
(i) Operate and administer the WESM and allocate resources to enable it to operate and
administer the market, in accordance with the WESM Rules;
(ii) Determine the dispatch schedule of all facilities in accordance with the WESM Rules.
Such schedule shall be submitted to the grid operator of the TRANSCO or its Buyer or
Concessionaire;
(iii) Monitor daily trading activities in the market;
(iv) Oversee transaction billing and settlement procedures; and
(v) Maintain and publish a register of all WESM Participants and must update and publish
the register whenever a Person becomes or ceases to be a WESM Participant.

Section 7. Constitution of the AGMO. The DOE shall, within one (1) year from the effectivity of the
Act, constitute the AGMO which shall undertake the preparatory work and initial operation of
the WESM.

(a) AGMO Governing Board. The AGMO shall be governed, and its powers and functions exercised,
by a governing body with equitable representation from Electric Power Industry Participants.
The representatives of the AGMO governing body shall be selected, in accordance with the
WESM Rules. The DOE Secretary shall chair the AGMO.
(b) Composition. Any sectoral representation on the AGMO governing body should as far as
possible meet the following criteria:
(i) Representatives of each sector of the Philippine electric power industry on the governing
body should be reflective of that sector’s size in relation to the electric industry as a
whole;
(ii) The number of representatives of each sector of the Philippine electric power industry
should be such that no one sector of the industry can dominate proceedings or decision-
making by the governing body; and be selected in such a way that deadlocks in decision
making will be avoided; and
(iii) There should be independent members on the governing body.

(d) Powers and Duties. The following are the powers and duties of the AGMO governing body:
(i) Govern the operation of the WESM until the formation or the selection of an IMO;
(ii) Develop and adopt guidelines for the efficient, competitive, transparent and reliable
management and operation of the market in accordance with WESM Rules;
(iii) Adopt and set internal procedures for the conduct of meetings and determination of a
quorum; and
(iv) Perform the preparatory work (information technology system development, testing, and
trial operation) and initial operation of the WESM with support from the DOE.

(e) Not later than one (1) year after the implementation of the WESM, the AGMO shall transfer its
functions, assets and liabilities to the IMO.

Section 8. Functions and Responsibilities of TRANSCO with respect to the WESM. The TRANSCO
shall provide administrative supervision to AGMO.

Section 9. Market Fees.

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(a) The cost of administering and operating the WESM shall be recovered by the IMO through a
charge imposed on all WESM Participants or WESM transactions, provided such charge shall
be filed with and approved by the ERC, consistent with the WESM Rules.
(b) The structure of Market Fees should be transparent and should not discriminate against a
category or categories of WESM Participants.
(c) Upon the approval of ERC, the Market Operator shall publish the structure of Market Fees, the
methods used in determining the structure and an assessment of the extent to which the
structure complies with the principles specified above, at least three (3) months prior to the
implementation of WESM.

Section 10. Market Suspension. In cases of national or international security emergencies or natural
calamities, the ERC is empowered to suspend the operation of the WESM or declare a
temporary WESM failure in accordance with the procedures set out in the WESM Rules.

RULE 10.
STRUCTURAL AND FUNCTIONAL UNBUNDLING OF ELECTRIC POWER INDUSTRY
PARTICIPANTS

Section 1. Guiding Principle. Consistent with the last paragraph of Section 36 of the Act, any Electric
Power Industry Participant shall structurally and functionally unbundle its business activities in
accordance with Section 5 of the Act, namely: generation, transmission, distribution and supply.
Structural unbundling shall mean the separation of different activities through the creation of
separate divisions or departments within a single company or, at the option of any Electric
Power Industry Participant, a separation into different juridical entities, with a clear separation
of accounts between regulated and non-regulated business activities. Functional unbundling
shall mean the separation of functions into different components. For this purpose, business
activities resulting from the initial unbundling process may be further unbundled to widen the
scope for competitive activities. The ERC shall formulate the appropriate guidelines and shall
ensure full compliance with this provision.

Section 2. Scope of Application. This Rule shall apply to all Electric Power Industry Participants that
are currently engaged or will be engaged in any of the following business activities:

(a) Power generation;

(b) Transmission;
(c) Distribution;
(d) Supply of Electricity including collection and metering;
(e) Related businesses which utilize the generation, transmission, distribution or supply assets for
non-electricity related services; and
(f) Other electricity related services that may be identified and authorized by the ERC. The ERC
may relax or eliminate the unbundling requirements for specified business activities if such
activity operates in a competitive market.

Section 3. Procedures for the Structural and Functional Unbundling of Business Activities. The
following shall govern all Electric Power Industry Participants in undertaking the structural and
functional unbundling of its business activities:

(a) An Electric Power Industry Participant shall identify its business activities according to each
major business function as defined in Section 2 of this Rule.
(b) An Electric Power Industry Participant shall prepare and submit for approval by the ERC its
Business Separation and Unbundling Plan (BSUP) on or before 31 December 2002.
(c) The BSUP shall contain among others, the following information:

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(i) A complete description of the separation of books and records, including but not limited to,
sources of revenues, costs as allocated, asset transferred, and information systems
separation;
(ii) A comprehensive description of the functional, structural or juridical separation of
generation, distribution and supply as provided for in the BSUP;
(iii) Milestones and highlights of the planned structural and functional unbundling of the
business activities in which the Electric Power Industry Participant is currently engaged:
Provided, That in any case, no Electric Power Industry Participant that has not
completed structural and functional unbundling of the business shall be eligible to
participate in Retail Competition and Open Access;
(iv) A plan for complying with all Code of Conduct provisions specified by ERC, including
training or developmental programs for its employees to help ensure compliance; and
(v) Other documents or information as may be required by the ERC.

(d) The ERC may adopt the Electric Power Industry Participant's BSUP, recommend modifications
to the BSUP, or reject the BSUP for revision and direct the concerned Electric Power Industry
Participant to file a new BSUP based on its comments. In any case, ERC shall render its
decision within six (6) months from filing of the BSUP.
(e) Upon receipt of the ERC decision, the Electric Power Industry Participant shall implement said
decision fully and promptly.
(f) The ERC shall provide for appropriate fines and penalties for any Electric Power Industry
Participant that fails to comply with its decision in full.

Section 4. Guiding Principles for Business Separation of Distribution Utilities.

(a) Once a Distribution Utility has separated and unbundled its business activities, the Distribution
System portion of its business shall no longer provide competitive energy services, i.e.
generation and supply. A Distribution Utility, which has not structurally and functionally
unbundled its business activities shall be prohibited from operating in a Contestable Market.
(b) ECs shall follow the structural and functional unbundling procedures set forth in these Rules
except that such unbundling shall be implemented no later than 26 June 2006, the start of
Retail Competition and Open Access in the Franchise Areas of ECs.
RULE 11.
CROSS OWNERSHIP, MARKET ABUSE AND ANTI-COMPETITIVE BEHAVIOR

Section 1. General Principle. No Electric Power Industry Participant or any other Person may
engage in any anti-competitive behavior including, but not limited to, crosssubsidization, price
or market manipulation, false or deceptive marketing, or other unfair trade practices detrimental
to the encouragement and protection of Contestable Markets or the WESM.

Section 2. Scope of Application. This Rule shall apply to all Persons, including all Electric Power
Industry Participants, such as but not limited to Generation Companies, subsidiaries and
Affiliates of Generation Companies, stockholders and officials of Generation Companies, IPP
Administrators, Distribution Utilities, Suppliers, NPC, and the TRANSCO or its Buyer or
Concessionaire.

Section 3. Prohibition of Cross Ownership.

(a) Pursuant to Section 45 of the Act, no Generation Company, IPP Administrators, Distribution
Utility or Supplier, their respective subsidiaries, Affiliates, stockholders, directors or officers or
other entity engaged in generating and supplying electricity specified by ERC, shall hold any
interest, directly or indirectly, in the TRANSCO or its Buyer or Concessionaire, or the Market
Operator.
(b) TRANSCO or its Buyer or Concessionaire and any of its stockholders, directors or officers or any

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of their relatives within the fourth civil degree of consanguinity or affinity, legitimate or common
law, shall not hold any interest, whether directly or indirectly, in any Generation Company, IPP
Administrators, Distribution Utility or Supplier.
(c) Except for ex officio government-appointed representatives, no Person who is an officer or
director of the TRANSCO or its Buyer or Concessionaire shall be an officer or director of any
Generation Company, IPP Administrators, Distribution Utility or Supplier.
(d) This Section shall not apply to PSALM in the course of its Privatization of NPC assets pursuant
to Sec. 47 of the Act.

Section 4. Limits on Concentration of Ownership, Operation or Control of Installed Generating

Capacity.

(a) No company, Related Group or IPP Administrator, singly or in combination, can own, operate or
Control more than thirty percent (30 %) of the installed generating capacity of a Grid and/or
twenty-five percent (25%) of the national installed generating capacity: Provided, That such
restrictions shall not apply to PSALM or NPC during the time that its assets are being privatized
pursuant to Section 47 of the Act and isolated grids that are not connected to the high voltage
transmission system. The ERC shall determine the installed generating capacity in a Grid and
the national installed generating capacity.
(b) The capacity of such facility shall be credited to the entity controlling the terms and conditions of
the prices or quantities of the output of such capacity sold in the market in cases where
different entities own the same Generation Facility. In cases where different Persons own,
operate or Control the same Generation Facility, the capacity of such facility shall be credited to
the Person controlling the capacity of the Generation Facility.

Section 5. Limits on Bilateral Supply Contracts by a Distribution Utility.

(a) A Distribution Utility may enter into bilateral power supply contracts subject to the provisions of
Section 5 of Rule 30 on NPC Offer of Transition Supply Contracts and a review by the ERC:
Provided, That such review shall only be required for a Distribution Utility whose level of Open
Access has not reached household demand level.
(b) No Distribution Utility shall be allowed to source from bilateral power supply contracts more than
fifty percent (50%) of its total demand from an Affiliate engaged in generation, but such
limitation shall not prejudice contracts entered into prior to the effective date of the Act. This
limitation shall apply regardless of whether demand is expressed in terms of capacity or
energy.

Section 6. Encouragement of Participation in the WESM. For the first five (5) years from the
establishment of the WESM, no Distribution Utility shall source more than ninety percent (90%)
of its total demand from bilateral power supply contracts.

Section 7. ERC Responsibilities.

(a) ERC shall enforce the competitive safeguards specified in this Rule in order to promote true
market competition and prevent harmful monopoly and market power abuse. However, ERC
shall not apply the limitations specified in this Rule to isolated grids that are not connected to
the Grid.
(b) ERC shall have the authority to determine the appropriate Grid or Grids to use in the application
of this Rule when two or more of the three separate Grids become sufficiently interconnected to
constitute a single Grid or as conditions may otherwise permit.
(c) ERC shall, within one (1) year from the effectivity of the Act, promulgate Competition Rules to
ensure and promote competition, encourage market development and customer choice and
discourage or penalize abuse of market power, cartelization and any anticompetitive or
discriminatory behavior, or unfair trade practice that distorts competition or harms consumers.

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Such Rules shall define relevant markets for the purpose of establishing abuse or misuse of
market power, areas of isolated grids that are not connected to the high voltage transmission
system, and the reportorial requirements of Electric Power Industry Participants as may be
necessary to enforce the provisions of Section 45 of the Act.
(d) ERC shall, motu proprio, monitor and penalize any market power abuse or anti-competitive or
unduly discriminatory act or behavior, or any unfair trade practice that distorts competition or
harms consumers, by any Electric Power Industry Participant. Upon a finding of a prima facie
case that an Electric Power Industry Participant has engaged in such act or behavior, the ERC
shall after due notice and hearing, stop and redress the same. Such remedies shall, without
limitation, include the separation of the business activities of an Electric Power Industry
Participant into different juridical entities, the imposition of bid or price controls, issuance of
injunctions in accordance with the Rules of Court, divestment or disgorgement of excess
profits, and imposition of fines and penalties pursuant to Section 46 of the Act.
(e) ERC shall, within one (1) year from the effectivity of the Act, promulgate rules and regulations
providing for a complaint procedure that, without limitation, provides the accused party with its
rights to due process

Section 8. Anti-Competitive Behavior and Other Unfair Trade Practices. The ERC shall promulgate
Competition Rules prohibiting, and specifying appropriate penalties and other remedies for, any
contract, combination or conspiracy that unreasonably restricts competition in any market for
electricity, or any conduct that constitutes an abuse of market power or an attempted
monopolization of any market for electricity, including but not limited to the following:

(a) Fixing prices of products or services: Electric Power Industry Participants that are competitors
shall not enter into any agreement or understanding, tacit or explicit, to fix, peg or stabilize the
price of any product or service. Price fixing shall be deemed to include agreements on bids,
price floors, price ceilings, pricing formulas and resale prices, and agreements on credit or any
other terms of a transaction between a buyer and a seller.
(b) Fixing output of products or services: Electric Power Industry Participants that are competitors
shall not enter into any agreement or understanding, tacit or explicit, to fix, limit or otherwise
determine their output of any product or service.
(c) Customer, Product, Service or Territorial Divisions: Electric Power Industry Participants that are
competitors shall not enter into any agreement or understanding, tacit or explicit, as to the
customers or the geographic territories they will serve, or the products or services they will sell.
(d) Tying: Electric Power Industry Participants shall not use a position of market power to condition
the sale of one product or service on the purchase of another product or service. No
Distribution Utility shall make access to its Distribution System contingent upon the purchase of
generation, metering, billing or other services.
(e) Physical or Economic Withholding: Electric Power Industry Participants shall not use physical
operating practices or bidding strategies that limit the market participation of a generation unit
under conditions that will result in significant increases in market prices.
(f) Discriminatory provision of regulated distribution or transmission services: Regulated distribution
and transmission services shall be provided on a basis that is not unduly discriminatory.
Examples of unduly discriminatory behavior include, but not limited to the following:

(i) A Distribution Utility or TRANSCO or its Buyer or Concessionaire refuses to interconnect

Generation Company, IPP Administrator, or Supplier other than for reasons of system
security or reliability or reasonable financial or credit considerations pursuant to the Grid
or Distribution Codes or commission of acts constituting grounds for suspension of the
service under any applicable rule and regulation.
(ii) A Distribution Utility or TRANSCO or its Buyer or Concessionaire gives a Generation
Company, IPP Administrator, or Supplier, including without limitation any of the
Distribution Utility’s Affiliates, any preference or advantage over any other Generation
Company, IPP Administrator, or Supplier in processing a request for Transmission or

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Distribution of Electricity.
(iii) A Distribution Utility or TRANSCO or its Buyer or Concessionaire gives a Generation
Company, IPP Administrator, or Supplier, including without limitation any of the
Distribution Utility’s Affiliates, any preference or advantage in the dissemination or
disclosure of customer or transmission or Distribution System information, and any such
information that has not been made available to all Electric Power Industry Participants at
the same time and in a non-discriminatory manner.
(iv) A Distribution Utility or TRANSCO or its Buyer or Concessionaire provides any
preference or advantage to any Supplier in the disclosure of information about operational
status and availability of the Distribution System and transmission system.
(v) A Distribution Utility does not provide all regulated services, and does not apply
Distribution Wheeling Charges to any Supplier that is not an Affiliate, in the same manner
as it does for itself or its Affiliates. TRANSCO or its Buyer or Concessionaire shall provide
all regulated services and shall apply Transmission Charges to any Electric Power
Industry Participant in the same manner as it does for PSALM or NPC.

(g) Misrepresentation or false advertising of a Distribution Utility: A Distribution Utility or its Affiliat
shall not state or imply that any distribution service provided to an Affiliate is inherently
superior, solely on the basis of Affiliate’s relationship with the Distribution Utility, to that
provided to any other Supplier.
(h) Cross-Subsidization: Consistent with Section 26 of the Act, a Distribution Utility shall not use its
revenues or resources from regulated distribution services to reduce the cost or price of its
competitive services (generation or supply).

RULE 12.
RETAIL COMPETITION AND OPEN ACCESS

Section 1. Guiding Principle. Pursuant to Section 31 of the Act, Retail Competition and Open
Access shall be implemented no later than three (3) years from the effectivity of the Act.

Section 2. Scope of Application. The provision of open and non-discriminatory access to the
transmission system and Distribution Systems shall apply to the following:
(a) WESM Participants;
(b) TRANSCO or its Buyer or Concessionaire;
(c) Distribution Utilities;
(d) EZs;
(e) Suppliers;
(f) IPP Administrators;
(g) Market Operator; and
(h) End-users in Contestable Markets.

Section 3. Conditions for Declaring Initial Implementation of Open Access. The ERC shall, after due
notice and public hearing, declare initial implementation of Open Access not later than three (3)
years from the effectivity of the Act, subject to the following conditions:

(a) Establishment of the WESM. For this purpose, the “establishment” of the WESM shall be
deemed to have occurred upon the effectivity of the Market Rules by the DOE and initial
operation of the AGMO pursuant to Rule 9 on the Wholesale Electricity Spot Market (WESM).
(b) Approval of unbundled Transmission and Distribution Wheeling Charges. The ERC shall
approve the unbundled rates of NPC and Distribution Utilities, which shall include the
transmission and wheeling charges, within one (1) year from the effectivity of the Act.
(c) Initial implementation of the Cross Subsidy Removal scheme. For this purpose, initial
implementation of the cross subsidy removal scheme shall occur on the next billing period after

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the issuance of ERC approval. The scheme for cross subsidy removal shall include guidelines
or a schedule for the removal of each type of cross subsidy and may be altered, modified
and/or amended by the ERC pursuant to Rule 16 on Removal of Cross Subsidies.
(d) Privatization of at least seventy (70%) percent of the total capacity of generating assets of NPC
in Luzon and Visayas.
(e) Transfer of the management and control of at least seventy percent (70%) of the total energy
output of power plants under contract with NPC to the IPP Administrators.

Section 4. Specification of the Contestable Market for Open Access. Upon the initial implementation
of Open Access, the ERC shall allow all electricity End-users with a monthly average peak
demand of at least one megawatt (1 MW) for the preceding twelve (12) months to be the
Contestable Market. Two (2) years thereafter, the threshold level for the Contestable Market
shall be reduced to seven hundred fifty kilowatts (750 kW). At this level, Aggregators shall be
allowed to supply electricity to End-users whose aggregate monthly average peak demand
within a Contiguous Area is at least seven hundred fifty kilowatts (750 kW). Subsequently and
every year thereafter, the ERC shall evaluate the performance of the market. On the basis of
such evaluation, it shall gradually reduce the threshold level until it reaches the household
demand level. In the case of ECs, Retail Competition and Open Access shall be implemented
not earlier than five (5) years from the effectivity of the Act.

RULE 13.
MISSIONARY ELECTRIFICATION

Section 1. Guiding Principle.

(a) Pursuant to Section 70 of the Act, the SPUG shall be responsible for providing power generation
and its associated power delivery systems in areas that are not connected to the transmission
system.
(b) The Missionary Electrification function of SPUG shall be funded from the revenues from sales in
the missionary areas and from the Universal Charge to be collected from all electricity End-
users as determined by the ERC.
(c) The DOE’s Missionary Electrification Development Plan (MEDP) shall include capital investment
and operations regarding capacity additions in existing missionary areas and the facilities to be
provided in other areas not connected to the transmission system.
(d) The DOE shall, no later than ninety (90) days from the promulgation of these Rules, issue
specific guidelines on how to encourage the inflow of private capital and the manner whereby
other parties, including Distribution Utilities and qualified third parties, as provided for in Section
23 and Section 59 of the Act, can participate in the Missionary Electrification projects set forth
in the MEDP.
(e) The SPUG shall continue to endeavor to privatize its power generation facilities and the
necessary associated power delivery systems.

Section 2. Scope of Application. This Rule shall apply to all entities and areas identified in the
MEDP.

Section 3. Obligations of SPUG.

(a) SPUG shall be responsible for providing power generation and its associated power delivery
systems in areas that are not connected to the Grid and cannot be serviced by Distribution
Utilities and other qualified third parties.
(b) SPUG shall periodically assess the requirements and prospects for bringing its functions to
commercial viability on an area-by-area basis at the earliest possible time, including a program
to encourage private sector participation.

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(c) Whenever feasible, SPUG shall utilize Renewable Energy Resources.

(d) SPUG shall file for review and approval its unbundled rates following Rule 15 on Unbundling of
Rates.
(e) SPUG shall file a petition to the ERC with respect to the Missionary Electrification portion of the
Universal Charge as prescribed in Rule 18 on Universal Charge.
(f) PSALM shall ensure that SPUG conducts proper monitoring, accounting and control of
expenditures, and efficient utilization of the Missionary Electrification funds from the Universal
Charge.

Section 4. Source of Funds.

(a) The Missionary Electrification shall be funded from the revenues from sales in missionary areas
and from its appropriate share in the Universal Charge.
(b) SPUG may also draw on other funding sources including appropriations from Congress, the
utilization of private capital, multilateral aids or grants, Official Development Assistance (ODA)
Funds and others.
(c) SPUG shall source all the cost differentials between the sales revenues and operating expense
and capital expense for expansion, rehabilitation and facilities for new areas of development
based on the approved MEDP from its share from the Universal Charge and/or other sources
as it may obtain.
(d) In accordance with DOE’s MEDP, the proposed five- (5) year annual budget for operating and
capital expenditures of SPUG shall be submitted to ERC.

Section 5. Reliability Improvement.

(a) To improve systems reliability, the SPUG shall install transmission systems in all qualified areas
under the coverage of SPUG. Priority will be given to areas showing big growth in its electricity
demand.
(b) SPUG shall also collect revenues in providing power delivery and Ancillary Service to
Generation Companies or Distribution Utilities at a rate to be filed with and approved by ERC.
In the absence of such rate, SPUG shall use the applicable major Grids’ rate.
(c) SPUG shall cease providing Missionary Electrification to areas interconnected to the
transmission system.

RULE 14.
PROVISION OF ELECTRICITY BY QUALIFIED THIRD PARTIES

Section 1. Guiding Principle. Pursuant to Section 59 of the Act, the provision of electric service in
remote and Unviable Areas that the Distribution Utility is unable to service for any reason shall
be opened to other qualified third parties. The provision of electricity in Unviable Areas by
qualified third parties shall be a regulated business.

Section 2. Scope of Application. This Rule shall apply to third parties qualified and authorized by
ERC in accordance with the Act to undertake the provision of electric service in remote and
Unviable Areas that a Distribution Utility is unable to serve.

Section 3. Determination of Remote and Unviable Areas. Every September, the DOE shall issue a
declaration of all the remote and Unviable Areas that cannot be served by a Distribution Utility
within the following three (3) years. The declaration shall be consistent with the PDP and made
in consultation with the NEA and Distribution Utilities. The remote and Unviable Areas specified
in the declaration shall be open for participation by qualified third parties.

Section 4. Determination of Qualified Third Parties. The DOE shall set criteria for determining
qualified third parties that may participate in providing electricity to remote and Unviable Areas.

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These criteria may include financial, technical, environmental, and other indices of
performance. The criteria shall give preference to parties that would utilize least-cost new
Renewable Energy Resources in providing electricity.

Section 5. Rights and Obligations of Qualified Third Parties.

(a) Any Distribution Utility that fails to provide electricity to an Unviable Area shall be required by the
ERC to enter into a contract with a qualified third party to provide electric service in such an
Unviable Area.
(b) A qualified third party shall comply with all applicable provisions of the Distribution Code,
including the requirement to obtain a COC for its Generation Facilities and other permits the
ERC may require.
(c) A qualified third party shall charge rates in Unviable Areas according to ERC rules for cost
recovery of Generation Facilities and associated power delivery systems.
(d) A qualified third party shall submit annual financial statements to ERC for determining the
effectiveness of the approved rate.
(e) A qualified third party shall report annually to DOE the rate of electrification of its coverage
areas.

Section 6. Obligations of the ERC.

(a) The ERC shall set guidelines for the issuance of permits to qualified third parties that serve a
remote or unserved and Unviable Area within the Distribution Utility’s Franchise Area.
(b) The ERC shall set the rules in computing rates that allow full cost recovery of the Generation
Facilities and delivery systems built to serve remote or unserved and Unviable Areas.

PART III - ELECTRICITY RATE AND CHARGES

RULE 15.
UNBUNDLING OF RATES

Section 1. Guiding Principle. Consistent with Section 36 of the Act and Rule 10 on Structural and
Functional Unbundling of Electric Power Industry Participants, this Rule on the Unbundling of
Rates shall result in the identification and separation of the individual charge for providing a
specific electric service to any End-user for generation, transmission, distribution, and supply.
[Consistent with Sec. 36]

Section 2. Scope of Application. This Rule shall apply to all Electric Power Industry Participants that
are currently engaged or will be engaged in any of the business activities as stated in Section 5
of the Act.

Section 3. Parameters for Unbundling Rates and Costs of Service.

(a) An Electric Power Industry Participant shall identify, separate and unbundle its rates, charges,
and costs in accordance with Rule 10 on Structural and Functional Unbundling of Electric
Power Industry Participants.
(b) In the determination of eligible costs of service to be charged to the End-users, the ERC shall
establish the minimum efficiency standards covering the technical, financial, and customer
service performance criteria including systems losses, and interruption frequency rates
parameters among others.
(c) The rate base of the TRANSCO or its Buyer or Concessionaire or any Distribution Utility shall
exclude management inefficiencies, such as but not limited to cost of project delays not due to
any force majeure, and penalties and related interest during construction and other
disallowances to be determined by ERC.

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(d) Interest expenses shall not be allowed as deductions from permissible Return on Rate Base
(RORB).Page 51 of 100
(e) TRANSCO or its Buyer or Concessionaire and Distribution Utilities may directly or indirectly
engage in any related business which maximizes the utilization of their assets.

Section 4. Method of Rate Unbundling The ERC shall prescribe the methodology for rate
unbundling.

Section 5. Ratemaking Design and Methodology.

(a) The ERC shall, in the public interest, establish and enforce a methodology for setting
transmission and distribution wheeling rates and Retail Rates for the Captive Market of a
Distribution Utility, taking into account all relevant considerations, including the efficiency or
inefficiency of the regulated entities, as well as the expansion or improvement of the
Transmission facilities pursuant to a plan approved by the ERC under Section 10 of Rule 6 on
Transmission Sector, and the Distribution Utilities under Rule 7 on Distribution Sector. The
rates must be such as to allow the recovery of just and reasonable costs and a reasonable
RORB to enable the entity to operate viably. The ERC may adopt alternative forms of
internationally-accepted rate-setting methodology as it may deem appropriate. The rate-setting
methodology so adopted and applied must ensure a reasonable price of electricity. The rates
prescribed shall be non-discriminatory and shall take into consideration, among others, the
franchise tax. To achieve this objective and to ensure the complete removal of cross subsidies,
the cap on the recoverable rate of system losses prescribed in Section 10 of Republic Act No.
7832, is hereby amended and shall be replaced by caps which shall be determined by the ERC
based on load density, sales mix, cost of service, delivery voltage and other technical
considerations it may promulgate. The ERC shall determine such form of rate-setting
methodology, which shall promote efficiency. In case the rate setting methodology used is
RORB, it shall be subject to the following guidelines:
(i) For purposes of determining the rate base, the TRANSCO or its Buyer or Concessionaire
or any Distribution Utility may be allowed to revalue its eligible assets not more than
once every three (3) years by an independent appraisal company: Provided, however,
That ERC may give an exemption in case of unusual devaluation: Provided, further,
That the ERC shall exert efforts to minimize price shocks in order to protect the
consumers;
(ii) Interest expenses are not allowable deductions from permissible RORB;
(iii) In determining eligible cost of services that will be passed on to the End-users, the ERC
shall establish minimum efficiency performance standards for the TRANSCO or its
Buyer or Concessionaire and Distribution Utilities including systems losses, interruption
frequency rates, and collection efficiency;
(iv) Further, in determining rate base, the TRANSCO or its Buyer or Concessionaire or any
Distribution Utility shall not be allowed to include management inefficiencies like cost of
project delays not excused by force majeure, penalties and related interest during
construction applicable to these unexcused delays;
(v) Any significant operating costs or project investments of the TRANSCO or its Buyer or
Concessionaire and Distribution Utilities which shall become part of the rate base shall
be subject to verification by the ERC to ensure that the contracting and procurement of
the equipment, assets and services have been subjected to transparent and accepted
industry procurement and purchasing practices to protect the public interest; and
(vi) The interest incurred during construction may be capitalized and included in the rate
base upon commissioning of the asset. (b) The Retail Rates charged by Distribution
Utilities for the Supply of Electricity in their Captive Market shall be subject to regulation
by the ERC based on the principle of full recovery of prudent and reasonable economic
costs incurred, or such other principles that will promote efficiency as may be
determined by the ERC. Every Distribution Utility or Supplier to the Contestable Market,

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whichever is applicable, shall identify and segregate in its bills to Endusers the
components of the Retail Rate as follows: generation, transmission, distribution, supply
and other related charges for electric service.
(c) In the case of isolated, remote and Unviable Areas serviced by a qualified third party as defined
in Rule 14 on Provision of Electricity by Qualified Third Parties, the ERC shall set the rules for
rates computation and determination.
(d) The ERC shall recognize the different cost structures in serving isolated areas.

Section 6. Unbundled Rate Filing Requirements.

(a) As required by the Act, NPC and Distribution Utilities shall file within six (6) months from the
effectivity of the Act for revised rates with costs and other relevant accounts unbundled by
business activity.
(b) The ERC shall within six (6) months from the date of submission of revised rates by the
Distribution Utility, notify the Distribution Utility of the action taken on the application.
(c) The rate filing petition shall commence with the unbundling the cost components of the historical
test year costs, from which the new Retail Rates and unbundled rates or charges are to be
developed. The historical test year, for this purpose, shall be the twelve (12) months ending 31
December 2000.
(d) Each rate filing petition for unbundled cost of service shall contain detailed schedules, data, and
other relevant information deemed necessary by the ERC.

RULE 16. REMOVAL OF CROSS SUBSIDIES

Section 1. Guiding Principle. Pursuant to Section 74 of the Act, cross subsidies within a Grid,
between Grids, and/or classes of customers shall be phased out in a period not exceeding
three (3) years from the establishment by the ERC of a Universal Charge which shall be
collected from all electricity End-users. Such level of cross subsidies shall be made transparent
and identified separately in the billing statements provided to End-users by the Suppliers.

Section 2. Scope of Application. This Rule shall apply to NPC, TRANSCO or its Buyer or
Concessionaire, Distribution Utilities and PSALM.

Section 3. Calculation of Cross Subsidies.

(a) The ERC may extend the period for the removal of cross subsidies for a maximum period of one
(1) year upon finding that cessation of such mechanism would have a material adverse effect
upon the public interest, particularly the residential End-user; or would have an immediate,
irreparable, and adverse financial effect on Distribution Utility.
(b) The cross subsidy between Grids in the rates of NPC shall be calculated on a net basis for each
Grid as the difference between:

(i) The total revenues that would have been collected on the Grid under the rates in effect
during a historical test year that is adjusted for differences between actual and forecast
consumption and other factors as ERC may specify; and
(ii) The total unbundled true cost of service on the Grid as submitted in accordance with Rule
15 on Unbundling of Rates and the rate filing requirements that the ERC may issue
pursuant to Rule 15, using the same historical test year.

(c) The cross subsidy within each Grid in the rates of NPC shall be calculated on a net basis for
each customer class within the Grid as the difference between:

(i) The total revenues that would have been collected from a customer class under the rates
in effect during a historical test year that is adjusted for differences between actual and

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forecast consumption and other factors as ERC may specify; and

(ii) The total unbundled true cost of service for the same customer class as submitted in
accordance with Rule 15 on Unbundling of Rates and the rate filing requirements that
ERC may issue pursuant to Rule 15, using the same historical test year.

(d) The cross subsidy between customer classes within each Distribution Utility shall be calculated
on a net basis for each customer class as the difference between:

(i) The total revenues that would have been collected from a customer class under the rates
in effect during a historical test year that is adjusted for differences between actual and
forecast consumption and other factors as ERC may specify; and
(ii) The total unbundled true cost of service for the customer class as submitted in
accordance with Rule 15 on Unbundling of Rates and the rate filing requirements that
ERC may issue using the same test year.

Section 4. Procedures for Handling Cross Subsidies.

(a) Pending the complete removal of cross subsidies, each subsidy rate level shall be shown as a
separate item in customer billing statements.
(b) The ERC shall establish a cross subsidy charge to account for all forms of cross subsidies that
remain during the phase out period as described in Section 5 of this Rule, to be recovered from
all electricity End-users through the Universal Charge pursuant to Rule 18 on the Universal
Charge.

Section 5. Scheme for Phasing Out Cross Subsidies.

(a) The ERC shall issue a scheme for phasing out all cross subsidies, including subsidies within
Grids, between Grids, and between classes of customers. The phasing out period shall not
exceed three (3) years from the establishment of the Universal Charge pursuant to Rule 18 on
Universal Charge. The initial implementation of the phase out scheme shall occur on the next
billing period after issuance of ERC approval.
(b) The phase out scheme shall be designed to mitigate the effects of the removal of the cross
subsidies. The ERC shall determine which Endusers shall continue to receive subsidies and
the level of subsidies such End-users shall receive during the phase out period.
(c) Together with their filings of unbundled rates reflecting the true costs of service, pursuant to Rule
15 on Unbundling of Rates, NPC and the Distribution Utilities shall file with ERC their proposals
for the removal of cross subsidies among the End-users they serve to be considered by ERC in
the formulation of the phase out scheme.
(d) The ERC may extend the period for the removal of cross subsidies for a maximum period of one
(1) year upon finding that cessation of such mechanism would have a material adverse effect
upon the public interest, particularly the residential End-user; or would have an immediate,
irreparable, and adverse financial effect on a Distribution Utility. Distribution Utilities shall
submit to ERC such information as ERC may specify to help it determine if the cross subsidy
removal mechanism should be extended under this provision.

(e) If ERC does not extend the period for removal of cross subsidies, the cross subsidies between
regions, within regions, and between customer classes shall cease to exist at the end of the
three (3) year period from the establishment of the Universal Charge.

Section 6. Exemption from Cross Subsidy Removal for Distribution Utilities. The threshold
consumption levels and the Lifeline Rates determined by the ERC shall be exempted from the
prohibition on cross subsidies between classes of customers of a Distribution Utility for a period
of ten (10) years, unless extended by law.

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RULE 17. STRANDED DEBTS AND CONTRACT COSTS RECOVERY

Section 1. Guiding Principle. Pursuant to Sections 32 and 33 of the Act, there are three (3) types of
stranded costs recoverable through the Universal Charge:

(a) Stranded Debts;

(b) Stranded Contract Costs of NPC; and
(c) Stranded Contract Costs of Eligible Contracts of Distribution Utilities.

Section 2. Scope of the Application. This Rule shall apply to NPC, PSALM and Distribution Utilities
with IPP contracts approved by the ERB as of 31 December 2000. Section 3. Procedures and
Methodology for Stranded Cost Determination.

(a) PSALM and any Distribution Utility that has an eligible contract shall file with ERC their
respective petitions for cost recovery under the Universal Charge and include therewith the
methodology in determining stranded costs. The ERC shall review the methodology submitted
by PSALM and such Distribution Utility to determine, fix, and approve the level of stranded
costs.
(b) At the end of the first year of the implementation of stranded cost recovery and every year
thereafter, the ERC shall conduct a review to determine whether there is an under- or over
recovery and adjust (true-up) the level of stranded cost recovery charge accordingly. In
determining whether there is an under- or over recovery and in determining the stranded cost
recovery portion of the Universal Charge for the subsequent period, the ERC shall base the
calculationPage 56 of 100 on the following information submitted by the PSALM and the
Distribution Utility which has an eligible contract:
(i) a report of the amounts recovered for stranded costs during the past year; and
(ii) revised stranded cost amounts based on current market information.

Section 4. NPC Stranded Debt and Stranded Contract Cost Recovery.

(a) Consistent with Section 32 of the Act, the National Government shall directly assume a portion of
the financial obligations of NPC transferred to PSALM in an amount not to exceed Two
Hundred Billion Pesos (P200,000,000,000.00).
(b) The following guidelines shall govern the recovery by the PSALM of the Stranded Debts and
Stranded Contract Costs of NPC:
(i) PSALM shall calculate the amount of the Stranded Debts and Stranded Contract Costs of
NPC that shall form part of the Universal Charge to be determined, fixed, and approved
by the ERC and reviewed by the same body annually. In determining the amount of
Stranded Contract Costs of NPC, PSALM may include in such calculation the principal
amount and interest expenses of any such debt raised by PSALM to finance the buyout
or buy-down of any eligible IPP contract, i.e. contracts approved by the ERB as of 31
December 2000 as well as any other costs and expenses incurred in connection with
such buyout or buy-down: Provided, That the amount recoverable by PSALM from the
Universal Charge fund shall not exceed the estimated Stranded Contract Costs of such
eligible IPP Contract, assuming that such buy-out or buy-down never occurred:
Provided, further, That PSALM demonstrates to the ERC’s satisfaction that such buy-
out or buy-down will benefit electricity consumers by reducing that component of the
Universal Charge attributable to such IPP contract.
(ii) The ERC shall verify the reasonable amounts of claims petitioned by PSALM and
determine the manner and duration by which full recovery of Stranded Debt and
Stranded Contract Costs of NPC is attained: Provided, That the duration for such
recovery shall not be shorter than fifteen (15) years nor longer than twenty-five (25)
years.
(iii) Any amount to be included for stranded cost recovery shall be reflected as a separate

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item in the consumer billing statement. The ERC shall monitor and ensure that there is
a separate item in the consumer billing statement for stranded cost recovery.

Section 5. Recovery of Stranded Contract Costs of Eligible Contracts of Distribution Utilities.

(a) Within one (1) year from the start of Retail Competition and Open Access, a Distribution Utility
that seeks to recover stranded contract costs arising from its eligible contracts shall file with the
ERC a notice of such intent together with an estimated amount of such obligations. The
Distribution Utility shall provide all pertinent information as may be required by the ERC. Failure
of the Distribution Utility to file within the date specified shall mean non-eligibility for such
recovery.
(b) A Distribution Utility shall recover stranded contract costs: Provided, however, That such costs of
the IPPs of Distribution Utilities are subject to review by ERC in order to determine fairness and
reasonableness in relation to the average price of land-based IPP projects entered into by NPC
at the time they were contracted. The ERC shall take into consideration all factors that affect the
total cost of NPC IPP generation projects, including direct or indirect subsidies or incentives
provided by the Government.
(c) Any Distribution Utility which seeks to recover stranded costs shall have the duty to mitigate its
potential stranded costs by exerting reasonable best efforts to:

(i) Reduce the costs of its existing eligible contracts with IPPs to a level not exceeding the
average buying price of other land-based electric power generators; and
(ii) Submit to an annual earnings review by the ERC and use its earnings above its
authorized rate of return to reduce the book value of contracts until the end of the
stranded cost recovery period.

(d) The Distribution Utility shall submit to the ERC, during its filing for stranded contract cost
recovery, its detailed plan and strategy to mitigate stranded contract costs. Other mitigating
measures that are reasonably known and generally accepted within the electric power industry
shall be utilized. The ERC shall not require the Distribution Utility to take a loss to reduce
stranded contract costs or divest assets, unless the divestiture is imposed as a penalty as
provided herein.
(e) Within three (3) months from the submission of the application for stranded cost recovery by the
relevant Distribution Utilities, the ERC shall verify the reasonable amounts and determine the
manner and duration for the full recovery of the Stranded Contract Costs of Eligible Contracts of
Distribution Utilities: Provided, That the duration for such recovery shall not be shorter than
fifteen (15) years nor longer than twenty-five (25) years. For this purpose, “full recovery of
Stranded Contract Costs of Eligible Contracts of Distribution Utilities” shall mean recovery of
Stranded Contract Costs of Eligible Contracts of Distribution Utilities authorized by the ERC after
its pertinent review. Any amount to be included for the recovery of Stranded Contract Costs of
Eligible Contracts of Distribution Utilities shall be reflected as a separate item in the consumer
billing statement.
(f) In the case of an over-recovery, the ERC shall ensure that any excess amount shall be remitted
to the Special Trust Fund (STF) created pursuant to Section 34 of the Act. A separate account
shall be created for this purpose that shall be held in trust for any future claims of Distribution
Utilities for the recovery of their respective Stranded Contract Costs of Eligible Contracts of
Distribution Utilities. At the end of the stranded cost recovery period, any remaining amount or
balance in this account shall be used to reduce the electricity rates to the End-users.
(g) A Distribution Utility, which has an eligible contract, duly authorize by the ERC, shall submit to
ERC quarterly reports showing the amount of stranded contract costs recovered and the
balance remaining to be recovered from the Universal Charge. Quarterly shall mean the
calendar quarters of January 1 to March 31 (first quarter), April 1 to June 30 (second quarter),
July 1 to September 30 (third quarter), and October 1 to December 31 (fourth quarter). The
relevant Distribution Utility shall submit to the ERC the quarterly reports within thirty (30) days

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from the end of each calendar quarter.

(h) Upon a finding by the ERC that a Distribution Utility which seeks to recover stranded contract
costs has failed to comply with its mitigation obligation under Section 33 of the Act, the ERC
may not allow the recovery of stranded contract costs: Provided, That if there is any fraud or
misrepresentation by the Distribution Utility, the ERC may impose appropriate penalties in
accordance with Section 46 of the Act.

RULE 18.
THE UNIVERSAL CHARGE

Section 1. Guiding Principle. Within one (1) year from the effectivity of the Act, there shall be a
Universal Charge to be determined, fixed and approved by the ERC that shall be imposed on
all electricity End-users, including self-generation entities.

Section 2. Scope of Application. This Rule shall apply to the following:

(a) Petitioners for availments from the Universal Charge.

(i) PSALM for the Stranded Debts and Stranded Contract Costs of NPC;
(ii) Distribution Utilities with respect to their Stranded Contract Costs of Eligible Contracts;
(iii) Missionary Electrification;
(iv) Qualified Generation Companies with respect to the equalization of taxes and royalties
between indigenous or Renewable Energy Resources and imported fuels;
(v) NPC, with respect to the environmental charge of P0.0025 per kilowatt-hour sales to be
used for the rehabilitation and management of watershed areas; and (vi) NPC/PSALM
and Distribution Utilities with respect to the mitigation of the removal of cross subsidies.

(b) Electricity End-users such as but not limited to:

(i) All End-users of Distribution Utilities such as residential, commercial, and industrial
including government and/or public buildings, irrigation systems, and special lightings;
(ii) Directly-connected End-users of NPC such as but not limited to government agencies
and institutions, and industrial enterprises;
(iii) Persons using Self-Generation Facilities;
(iv) Locators, developers, operators and facilities operating in EZs; and
(v) Other entities identified by the ERC pursuant to the intent of the Act.

Section 3. Mitigation on the Removal of Cross Subsidies.

(a) Unbundled rates of the NPC and the Distribution Utilities as approved by the ERC in accordance
with Section 36 of the Act, shall reflect the respective costs of providing service to End-users
without any type of cross subsidy. The removal of cross subsidies to the End-users of
Distribution Utilities will however be mitigated and done gradually in accordance with Section
74 of the Act. ERC shall issue a phase out scheme to gradually remove the cross subsidies.
Any amount of subsidy provided to End-users during the phase out period shall be recovered
through the Universal Charge.
(b) With respect to SPUG, rates for Missionary Electrification shall be in accordance with Rule 15 on
Unbundling of Rates.

Section 4. Procedures for Petitions Against the Universal Charge.

(a) For the first year after the effectivity of the Act, the following rules shall apply:
(i) The petitioners identified in Section 2 of this Rule shall file their availments from the
Universal Charge with the ERC on or before 15 March 2002 and submit all pertinent

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documents in support of such availments made and the basis for their computation.
(ii) The ERC shall evaluate the petitions and thereafter issue the corresponding order no
later than 26 June 2002 which shall prescribe the following:
(1) The Universal Charge on a per kWh basis to be included in the billing statements to
the End-users;
(2) Breakdown of the applicable Universal Charge for each of the intended purposes:
(a) Stranded Debts and Stranded Contract Costs of NPC;
(b) Missionary Electrification;
(c) Equalization of taxes and royalties between indigenous or renewable sources of
energy vis-à-vis imported energy fuels;
(d) Environmental Charge of P0.0025 per kilowatt-hour sales for the rehabilitation
and maintenance of watershed areas; and
(e) Mitigation Fund for the removal of cross-subsidies of NPC and Distribution
Utilities.
(3) Period of disbursement by each of the beneficiaries as well as submission of
reportorial requirements prescribed by the ERC.
(b) Petitions for availment under the Universal Charge for the succeeding years shall be submitted
to the ERC on or before March 15 of every year.
(c) A Distribution Utility that seeks to recover Stranded Contract Costs of its Eligible Contracts shall
submit a petition for availment under the Universal Charge to the ERC within one (1) year from
the start of Open Access. Within three (3) months from the submission of the petition by such
Distribution Utility, the ERC shall verify the reasonable amounts and determine the manner and
duration for the full recovery thereof, as approved by the ERC.
(d) With respect to the equalization of taxes and royalties applied to indigenous or renewable
sources of energy, qualified Generation Companies shall be entitled to make claims against
STF created for this purpose. The STF shall be constituted out of the proceeds from the
Universal Charge specified under Section 34 of the Act: Provided, That said claims shall only
be to the extent of the additional cost or reduction in the cost of generating electricity. For this
purpose, qualified Generation Companies making said claims shall submit a detailed statement
of their sales and costs of operation, including a breakdown of how their claims are estimated
and the impact thereof on generation rates, the corresponding assumptions and justification
therefor and such other information as may be required by the PSALM. Only those claims that
meet the foregoing documentation requirements shall be evaluated and acted upon by PSALM.
(e) Failure by any petitioner to submit its petition within the periods specified above shall result in a
forfeiture of such petition for the period in question.
(f) In case of over- or under-recovery by beneficiaries, true-up adjustments shall follow the rules and
regulations to be prescribed by the ERC, except as otherwise provided in these Rules.

Section 5. Collection of the Universal Charge.

(a) The Universal Charge shall be a non-by passable charge that shall be collected from all End-
users on a monthly basis by the Distribution Utilities or Suppliers in case of Contestable
Markets. Any End-user or self-generation entity not connected to a Distribution Utility shall remit
its corresponding Universal Charge directly to the TRANSCO. Collections by the Distribution
Utilities shall be remitted to the PSALM on or before the fifteenth (15th) day of the succeeding
month, net of any amount due to the Distribution Utility.
(b) Separate books of accounts shall be maintained by the Distribution Utility and made available to
the ERC for purposes of monitoring, verifying and accounting of amounts collected from the
Universal Charge and remitted to the PSALM.

Section 6. Administration of the Universal Charge.

(a) Pursuant to the last paragraph of Section 34 of the Act, PSALM shall act as the administrator of
the funds generated from the Universal Charge. For this purpose, the PSALM shall create a
STF to be established in the Bureau of Treasury (BTr) or in a Government Financing Institution

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(GFI) that is acceptable to the DOF. Separate STFs shall be established for each of the
intended purposes of the Universal Charge. Funds shall be disbursed in an open and
transparent manner and shall only be used for the intended purposes specified in Section 3 of
this Rule.
(b) All qualified availments shall be approved and certified by the ERC. In this regard, PSALM, in
consultation with the DOF, shall promulgate, within one (1) year from the effectivity of the Act
and subject to the approval of the ERC, procedures and guidelines that shall govern all
remittances to and disbursements from the STF.
(c) The PSALM shall transfer funds from the STF and shall distribute to the beneficiaries on or
before the twentieth (20th) day of each month.
(d) The PSALM shall submit to the DOF and ERC a report on the remittances and disbursements
against the fund on a quarterly basis.
(e) Separate Books of accounts shall be maintained by the PSALM for over-recovery of the
Distribution Utility stranded cost component and made available to the ERC for purposes of
monitoring and accounting for sums collected from the Universal Charge.
(f) In the event that the total amount collected for the Universal Charge is greater than the actual
availments against the Universal Charge, the PSALM shall retain the balance within the STF to
pay for periods where a shortfall occurs.
(g) In determining the amount which a Distribution Utility can net off from its remittance of the
Universal Charge to PSALM, the Distribution Utility shall not discriminate in its own favor at the
expense of other beneficiaries in the event that actual collections differ from expected
collections based on the level of kilowatt-hour sales used by ERC in setting the Universal
Charge per kilowatt-hour (kwh). In such cases, the Distribution Utility shall only retain its
proportionate share in the actual collection.

Section 7. Deferment.

All Self-Generation Facilities whether new, existing or under construction

shall not be covered by the imposition of Universal Charge for a period of
four (4) years from its imposition: Provided, That, such Self-Generation
Facilities shall register with the ERC and PSALM.

Section 8. Fines and Penalties.

(a) In cases where the TRANSCO or its Buyer or Concessionaire or a Distribution Utility collects
funds earmarked for the Universal Charge but fails to remit the same to PSALM on or before
the fifteenth (15th) day of the succeeding month, the ERC may impose the appropriate fines
and penalties prescribed in Section 46 of the Act including, but not limited to, assessed interest
charges.
(b) In cases where a Self-Generation Facility refuses to pay the Universal Charge, the ERC may
impose the appropriate fines and penalties prescribed in Section 46 of the Act, including but not
limited to, assessed interest charges.

RULE 19. MANDATED RESIDENTIAL REBATE

(a) The ERC shall monitor and ensure the implementation of its Resolution No. 2001-04 issued on
26 July 2001 and any amendments thereto. The ERC shall impose fines and penalties on
parties who fail to comply with said Resolution.
(b) The reduction shall be reflected as a separate item in the consumer billing statement.

RULE 20. LIFELINE RATE

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Section 1. Guiding Principle Pursuant to Section 73 of the Act, a socialized pricing mechanism
called a Lifeline Rate for the Marginalized End-users shall be set by the ERC.

Section 2. Scope of Application. The provision of Lifeline Rate shall be applied to all Marginalized
End-users of all Distribution Utilities pursuant to the Act. It is the responsibility of the ERC to
monitor compliance to specific guidelines it shall issue pursuant to the implementation of
Lifeline Rate.

Section 3. Application.

(a) The Lifeline Rate shall be exempted from the cross subsidy removal under the Act for a period of
ten (10) years, unless extended by law.
(b) Each Distribution Utility shall file a petition with the ERC recommending the level of consumption
(kWh per month) to be qualified for the Lifeline Rate.
(c) The ERC shall determine and approve different levels of consumption and cross-subsidy support
for each Distribution Utility or classification of Distribution Utilities.

PART IV – PRIVATIZATION OF NATIONAL POWER CORPORATION

RULE 21. POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION

(PSALM)

Section 1. Creation of PSALM. Pursuant to Section 49 of the Act, a government-owned and –

controlled corporation known as the “Power Sector Assets and Liabilities Management
Corporation”, hereinafter referred to as the “PSALM Corp.” or “PSALM,” was created to take
ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate and all
other disposable assets. All outstanding obligations of the NPC arising from loans, issuances of
bonds, securities and other instruments of indebtedness shall be assumed by the PSALM,
within one hundred eighty (180) days from the approval of the Act. NPC and PSALM shall take
such measures and execute such documents to effect the transfer of the ownership and
possession of all the assets, rights, privileges, and liabilities required by the Act to be
transferred by NPC to PSALM.

Section 2. Purpose and Objective. The principal purpose of the PSALM is to manage the orderly
sale, disposition, and Privatization of NPC generation assets, real estate and otherPage 64 of
100 disposable assets, and IPP contracts with the objective of managing and liquidating all
NPC financial obligations and stranded contract costs in an optimal manner.

Section 3. Domicile. The PSALM shall have its principal office and place of business within Metro
Manila.

Section 4. Term of Existence. Unless otherwise provided by law, PSALM shall exist for a period of
twentyfive (25) years from the effectivity of the Act, and all assets held by it, all moneys and
properties belonging to it, and all its liabilities outstanding upon the expiration of its term of
existence shall revert to and be assumed by the National Government. Upon expiration of the
term of PSALM, the administration of the STF shall be transferred to the DOF or any of the
DOF attached agencies as designated by the DOF Secretary.

Section 5. Powers. PSALM shall, in the performance of its functions and for the attainment of its
objectives, have the following powers:

(a) To formulate and implement a program for the sale and Privatization of the NPC assets and IPP
contracts and the management and liquidation of Stranded Debts and Stranded Contract Costs

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of NPC such liquidation to be completed within the term of existence of the PSALM;
(b) To take title to and possession of, administer and conserve the assets transferred to it, including
the execution of bilateral contracts to sell power from undisposed assets and contracts
transferred by NPC;
(c) To sell or dispose the transferred assets at such price and under such terms and conditions as it
may deem necessary or proper, subject to applicable laws, rules and regulations;
(d) To take title to and possession of, and assume all rights and obligations of NPC under IPP
contracts, and to appoint, after public bidding in a transparent and open manner, qualified
independent entities who shall act as IPP Administrators in accordance with the Act;
(e) To calculate the amount of the Stranded Debts and Stranded Contract Costs of NPC which shall
form part of the basis of the ERC in the determination of the Universal Charge;
(f) To liquidate Stranded Contract Costs of NPC utilizing proceeds from appropriations, sales and
other property contributed to it, including the proceeds from the Universal Charge;
(g) To adopt rules and regulations as may be necessary or proper for the orderly conduct of its
business or operations;
(h) To sue and be sued in its name;
(i) To appoint or hire, transfer, remove and fix the compensation of its personnel and such advisors
or other Persons as may be necessary in the sale, Privatization and disposition of NPC assets
and IPP contracts: Provided, however, That PSALM shall hire its own personnel only if
absolutely necessary, and as far as practicable, shall avail itself of the services of personnel
detailed from other government agencies;
(j) To own, hold, acquire, or lease real and personal properties as may be necessary or required in
the discharge of its functions;
(k) To borrow money and incur such liabilities, as may be required to service all obligations
transferred from NPC and loans from ECs assumed from NEA in accordance with the relevant
sections of these Rules, including the issuance of bonds, securities or other evidence of
indebtedness utilizing its assets as collateral and/or through the guarantees of the National
Government: Provided, That all such debts or borrowings shall have been paid off or settled
before the end of its corporate life;
(l) To restructure existing loans of the NPC;

(m) To collect, administer, and apply NPC’s portion of the Universal Charge;
(n) To issue other forms of financial instruments such as warrants, options, convertibles and to
create Special Purpose Vehicles (SPVs) to maximize proceeds and value, as well as efficiently
manage its liabilities;
(o) To structure the sale, Privatization or disposition of NPC assets and IPP Contracts and/or their
energy output based on terms and conditions which shall optimize the value and sale prices of
said assets;
(p) To create and administer STFs under Section 34 of the Act and these Rules;
(q) To operate the generation assets, directly or through NPC, prior to Privatization of such assets.
Towards this end, while PSALM operates the generation assets, it shall be considered a
Generation Company;
(r) To mitigate its potential stranded costs by making reasonable best efforts to reduce the cost of
existing contracts with IPPs;
(s) To ensure that SPUG conduct proper monitoring, accounting and control of expenditures, and
efficient utilization of the missionary electrification funds from the Universal Charge; and
(t) To do any act necessary or proper to carry out the purpose for which it was created, including the
formation of one or more subsidiaries to maximize Privatization proceeds, enter into
compromise agreements, or take such other acts as may be determined by the PSALM Board
to be necessary, useful, incidental or auxiliary to accomplish its purposes and objectives as
specified in the Act.

Section 6. PSALM Board of Directors. PSALM shall be administered, and its powers and functions
exercised, by a Board of Directors which shall be composed of the Secretary of the DOF as the

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Chairman, and the Secretary of the DOE, the Secretary of the DBM, the Director-General of the
NEDA, the Secretary of the DOJ, the Secretary of the DTI and the President of the PSALM as
ex-officio members thereof.

Section 7. Powers of PSALM Board. All the powers and functions of PSALM shall be vested in and
exercised by its Board of Directors.

Section 8. PSALM Board Meetings and Quorum. The Board of Directors shall meet regularly and as
frequently as may be necessary to enable it to discharge its functions and responsibilities. The
presence at a meeting of four (4) members shall constitute a quorum, and the decision of the
majority of three (3) members present at a meeting where there is quorum shall be the decision
of the Board of Directors.

Section 9. Powers of the PSALM President.

(a) The President of PSALM shall be appointed by the President of the Philippines. In the absence
of the Chairman and the Vice-Chairman, the PSALM President shall preside over Board
meetings.
(b) The PSALM President shall be the Chief Executive Officer of PSALM and shall have the
following powers and duties:
(i) To execute and administer the policies and measures approved by the Board, and take
responsibility for the efficient discharge of management functions;
(ii) To oversee the preparation of the budget of PSALM;
(iii) To direct and supervise the operation and internal administration of PSALM and, for this
purpose, may delegate some or any of his administrative responsibilities and duties to
other officers of the PSALM;
(iv) Subject to the guidelines and policies set up by the Board, to appoint and fix the number
and compensation of subordinate officials and employees of the PSALM; and for cause,
to remove, suspend, or otherwise discipline any subordinate employee of PSALM;
(v) To submit an annual report to the Board on the activities and achievements of PSALM at
the close of each fiscal year and upon approval thereof, submit a copy to the President
of the Philippines and to such other agencies as may be required by law and under
these Rules;
(vi) To represent PSALM in all dealings and transactions with other offices, agencies and
instrumentalities of the National Government and with all Persons and other entities,
private or public, domestic or foreign; and
(vii) To exercise such other powers and duties as may be vested in him by the Board from
time to time.

Section 10. Exemption from the Salary Standardization Law. The salaries and benefits of
employees in the PSALM shall be exempt from Republic Act No. 6758 and shall be fixed by the
PSALM Board.

Section 11. Property of PSALM. The following funds, assets, contributions and other properties shall
constitute the property of the PSALM:

(a) The generation assets, real estate, IPP Contracts, other disposable assets of NPC, proceeds
from the operation or disposition of such assets and the residual assets from BOT, ROT, and
other variations thereof. The proceeds from the operation and disposition of NPC assets shall
include:
(i) Net profit of NPC;
(ii) Earning before interest, taxes, depreciation and amortization of the Pulangui and Agus
Complexes;

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(iii) Net profit of TRANSCO;

(iv) Proceeds from the disposition and Privatization of PSALM’s generation, other disposable
assets, and TRANSCO, net of all transaction costs and fees associated with such
disposition and Privatization; and
(v) Net profit arising from the administration of IPPs.

(b) Transfers from the National Government;

(c) Proceeds from loans incurred to restructure or refinance NPC’s transferred liabilities: Provided,
That all borrowings shall be fully paid for or settled by the end of the life of the PSALM;
(d) Proceeds from the Universal Charge allocated for Stranded Debts and Stranded Contract Costs
of NPC;
(e) Official assistance, grants and donations from external sources;
(f) Repayment by ECs of such ECs loans assumed by PSALM. Such repayments must be made
within five (5) years from such assumption of loans by PSALM by ECs who have transferred
ownership or Control of its assets, franchise or operations pursuant to Section 60 of the Act;
(g) Proceeds from insurance claims corresponding to assets transferred to PSALM by NPC; and
(h) Other sources of funds as may be determined by PSALM necessary for the above-mentioned
purposes.

Section 12. Claims Against PSALM. The following shall constitute the claims against PSALM:

(a) NPC liabilities transferred to PSALM;

(b) Transfers from the National Government;
(c) New loans, such as, but not limited to those in the form of bonds, convertible instruments,
warrants, leases and similar structures;
(d) Obligations under IPP contracts transferred by NPC to PSALM;
(e) Loans of ECs that are to be assumed by PSALM under Section 60 of the Act; and
(f) Expenses for rehabilitation and maintenance of Agus and Pulangi Complexes.

RULE 22.
NATIONAL TRANSMISSION CORPORATION (TRANSCO)

Section 1. Creation of TRANSCO. Pursuant to Section 8 of the Act, TRANSCO, which shall be
wholly owned by PSALM, has been created to assume the transmission facilities of NPC, all
other assets related to transmission operations, including nationwide franchise of NPC for the
operation of the transmission system and the Grid, and to assume the electrical transmission
functions of the NPC, including among others, the planning, construction and centralized Grid
operation and maintenance of high voltage transmission facilities, Grid interconnections,
ancillary and other allied facilities

Pursuant to and in accordance with the requirements of the Act, NPC, PSALM and TRANSCO
shall take such measures and execute such documents to effect the transfer of the ownership
and possession of the transmission and subtransmission facilities of NPC and all other assets
related to transmission operations. Upon such transfer, the nationwide franchise of NPC for the
operation of the transmission system and the Grid shall transfer from NPC to TRANSCO.
Section 2. Transmission Ownership and Management.

(a) For the purpose of Section 1 of this Rule, “all other assets” related to transmission and
subtransmission facilities shall include, but not be limited, to the following:
(i) System operations facilities such as telecommunications and Supervisory Control and Data
Acquisition (SCADA) systems including offices and laboratory buildings housing these
equipment; and
(ii) TRANSCO offices and real estate properties, vehicles, laboratory and test equipment, spare
parts and other physical structures.

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(b) The assets of NPC related to the transmission/subtransmission function shall be transferred by
NPC directly to TRANSCO on or before 26 December 2001.
(c) Subtransmission Assets transferred to TRANSCO shall be operated and maintained by
TRANSCO or its Buyer or Concessionaire, until their disposal to Qualified Distribution Utilities.

Section 3. Corporate Powers of the TRANSCO. As a corporate entity, TRANSCO shall have
the following corporate powers:

(a) To have continuous succession under its corporate name until otherwise provided by law;
(b) To adopt and use a corporate seal and to change, alter or modify the same, if necessary;
(c) To sue and be sued;
(d) To enter into contracts, leases and execute any instrument necessary or convenient for the
purpose for which it is created;
(e) To borrow funds from any source, whether private or public, foreign or domestic, and issue
bonds and other evidence of indebtedness: Provided, That in the case of the bond issues, it
shall be subject to the approval of the President of the Philippines upon recommendation of the
Secretary of Finance: Provided, further, That foreign loans shall be obtained in accordance with
existing laws, rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
(f) To pledge, grant a security interest in or otherwise encumber its assets;
(g) To maintain a provident fund which consists of contributions made by both the TRANSCO and
its officials and employees and their earnings for the payment of benefits to such officials and
employees or their heirs under such terms and conditions as it may prescribe;
(h) To create subsidiaries for purposes such as the disposition of Subtransmission Assets to
Qualified Distribution Utilities and the operation thereof prior to disposal;
(i) To do any act necessary or proper to carry out the purpose for which it is created, or any act
which, from time to time, may be declared by the TRANSCO Board as necessary, useful,
incidental or auxiliary to accomplish its purposes and objectives;
(j) Generally, to exercise all the powers of a corporation under the Corporation Code insofar as they
are not inconsistent with the Act; and
(k) The TRANSCO may exercise the power of eminent domain on behalf of itself, the Buyer or
Concessionaire or any successor-in-interest thereto, subject to the requirements of the
Constitution and other laws. Except as provided in the Act, no Person, company or entity other
than TRANSCO shall own any transmission facilities.

Section 4. TRANSCO Board of Directors. All the powers of the TRANSCO shall be vested in and
exercised by a Board of Directors. The Board shall be composed of a Chairman and six (6)
members. The Secretary of the DOF shall be the ex-officio Chairman of the Board. The other
members of the TRANSCO Board shall include the Secretary of the DOE, the Secretary of the
DENR, the President of TRANSCO, and three (3) members to be appointed by the President of
the Philippines, each representing Luzon, Visayas and Mindanao, one of whom shall be the
President of PSALM. The members of the Board so appointed by the President of the
Philippines shall serve for a term of six (6) years, except that any Person appointed to fill-in a
vacancy shall serve only the unexpired term of his/her predecessor in office. All members of the
Board shall be professionals of recognized competence and expertise in the fields of
engineering, finance, economics, law or business management. No member of the Board or
any of his relatives within the fourth civil degree of consanguinity or affinity, legitimate or
common law, shall have any interest, either as investor, officer or director, in any Generation
Company or Distribution Utility or other entity engaged in transmitting, generating and supplying
electricity specified by ERC.

Section 5. Powers and Duties of the Board. The following are the powers of the Board:

(a) To provide strategic direction for TRANSCO, and formulate medium and long-term strategies
pursuant to the vision, mission and objectives of TRANSCO;

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(b) To develop and adopt policies and measures for the efficient and effective management and
operation of TRANSCO, including the formation of one or more subsidiaries;
(c) To organize, re-organize, and determine the organizational structure and staffing pattern of
TRANSCO; abolish and create offices and positions; fix the number of its officers and
employees; transfer and re-align such officers and personnel; and fix their compensation,
allowance, and benefits;
(d) To fix the compensation of the President of TRANSCO and to appoint and fix the compensation
of other corporate officers;
(e) For cause, to suspend or remove any corporate officer appointed by the Board;
(f) To adopt and set guidelines for the employment of personnel on the basis of merit, technical
competence and moral character;
(g) Any provision of the law to the contrary notwithstanding, to write-off bad debts; and
(h) Other powers not inconsistent with the Act.

Section 6. Board Meetings. The Board shall meet as often as may be necessary upon the call of the
Chairman of the Board, or in his absence, the Vice-Chairman, or in the latter’s absence, by a
majority of the Board members.

Section 7. Board Per Diems and Allowances. The members of the Board shall receive a per diem
for each regular or special meeting of the Board actually attended by them and, upon approval
of the Secretary of the DOF, such other allowances as the Board may prescribe.

Section 8. Quorum. The presence of at least four (4) members of the Board shall constitute a
quorum, which shall be necessary for the transaction of any business. The affirmative vote of a
majority of the members present in a quorum shall be adequate for the approval of any
resolution, decision or order, except when the Board shall otherwise agree that a greater vote is
required.

Section 9. Powers of the President of TRANSCO.

(a) So long as TRANSCO remains wholly owned by PSALM, the President of TRANSCO shall be
appointed by the President of the Philippines. In the absence of the Chairman and Vice-
Chairman, the President of TRANSCO shall preside over Board meetings.
(b) The President of TRANSCO shall be the Chief Executive Officer of TRANSCO and shall have
the following powers and duties:
(i) To execute and administer the policies and measures approved by the Board, and take
responsibility for the efficient discharge of management functions;
(ii) To oversee the preparation of the budget of TRANSCO;
(iii) To direct and supervise the operation and internal administration of TRANSCO and, for
this purpose, may delegate some or any of his administrative responsibilities and duties
to other officers of TRANSCO;
(iv) Subject to the guidelines and policies set up by the Board, to appoint and fix the number
and compensation of subordinate officials and employees of TRANSCO; and for cause,
to remove, suspend or otherwise discipline any subordinate employee of TRANSCO;
(v) To submit an annual report to the Board on the activities and achievements of TRANSCO
at the close of each fiscal year and upon approval thereof, submit a copy to the
President of the Philippines and to such other agencies as may be required by law;
(vi) To represent TRANSCO in all dealings and transactions with other offices, agencies, and
instrumentalities of the National Government and with all Persons and other entities,
private or public, domestic or foreign; and
(vii) To exercise such other powers and duties as may be vested in him by the Board from
time to time.

Section 10. Exemption from the Salary Standardization Law. The salaries and benefits of
employees in the TRANSCO shall be exempt from Republic Act No. 6758 and shall be fixed by

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the TRANSCO Board.

Section 11. TRANSCO Privatization.

(a) Within six (6) months from the effectivity of the Act, the PSALM shall submit a Privatization plan
for endorsement by the Power Commission and the approval of the President of the
Philippines. The President of the Philippines thereafter shall direct PSALM to award, in open
competitive bidding, the transmission facilities, including grid interconnections and Ancillary
Services to a qualified party either through an outright sale, a Concession Contract or any other
means not inconsistent with the objectives of the Act. The Buyer or Concessionaire or any
other successor-in-interest to TRANSCO shall be responsible for the improvement, expansion,
operation or maintenance of the transmission assets and the operation of any related
businesses. PSALM and TRANSCO shall secure a nationwide franchise for and in behalf of the
Buyer or Concessionaire. The award shall result in maximum present value of proceeds to the
National Government. In case a Concession Contract is awarded, the Concessionaire shall
have a contract period of twenty-five (25) years, subject to review and renewal for a maximum
period of another twenty-five (25) years. Upon the expiration or termination of the Concession
Contract, the transmission facilities and assets, including the nationwide franchise for the
operation of the transmission system and Grid shall revert to TRANSCO.
(b) In any case, the Buyer or Concessionaire or any other successor-ininterest to TRANSCO shall
comply with the Grid Code and the TDP as approved. The sale agreement/Concession
Contract shall include, but not be limited to, the provision for performance and financial
guarantees or any other covenants that the National Government may require. Failure to
comply with such obligations shall result in the imposition of appropriate sanctions or penalties
by the ERC.
(c) In case of joint venture/consortium with foreign members/participants of the Buyer or
Concessionaire or any other successor-in-interest to TRANSCO, a foreign participant shall be
financially and technically capable, with proven domestic and/or international experience and
expertise as a leading transmission system operator. Such experience must be in a
transmission system of comparable capacity and coverage as the Philippines.

Section 12. Responsibilities of Buyer or Concessionaire.

(a) This Rule shall apply to TRANSCO or its Buyer or Concessionaire or any successor-in-interest
thereto.
(b) The Buyer or Concessionaire or any successor-in-interest thereto, shall:
(i) Be responsible for the improvement, expansion, operation and/or maintenance of the
Grid;
(ii) Comply with the Grid Code and the TDP as approved; and
(iii) Comply with the key performance targets and standards set by ERC, in terms of physical
transmission system and the management of the transmission activity.
(c) The performance indicators for reliability, security, adequacy, integrity and stability shall include,
but not limited to, the following:
(i). Number of Interruption Events;
(ii). Sustained Average Interruption Frequency Index;
(iii.) Momentary Average Interruption Frequency Index;
(iv). Sustained Average Interruption Duration Index;
(v). System Interruption Severity Index;
(vi). Frequency of tripping per 100 ckt-km;
(vii). Average Forced Outage Duration;
(viii) Accumulated Time Error;
(ix) Frequency Limit Violation; and
(x) Voltage Limit Violations.

Section 13. Privatization of Subtransmission.

(a) The subtransmission functions and assets of TRANSCO shall be segregated from the

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transmission functions, assets and liabilities for transparency and disposal: Provided, That the
Subtransmission Assets shall be operated and maintained by TRANSCO or its Buyer or
Concessionaire until their disposal to Qualified Distribution Utilities which are in a position to
take over the responsibility for operating, maintaining, upgrading, and expanding said assets.
All transmission and subtransmission related liabilities of NPC shall be transferred to and
assumed by the PSALM.
(b) TRANSCO shall negotiate with and thereafter transfer such functions, assets, and associated
liabilities to the Qualified Distribution Utility or utilities connected to such subtransmission
facilities not later than two (2) years from the effectivity of the Act or the start of Open Access,
whichever comes earlier: Provided, That in the case of ECs, the TRANSCO shall grant
concessional financing over a period of twenty (20) years: Provided, however, That the
installment payments to TRANSCO for the acquisition of subtransmission facilities shall be
given first priority by the ECs out of the net income derived from such facilities. The TRANSCO
shall determine the disposal value of the Subtransmission Assets based on the revenue
potential of such assets. In case of disagreement in valuation, procedures, ownership
participation and other issues, the ERC shall resolve such issues.
(c) The takeover by a Distribution Utility of any Subtransmission Asset shall not cause a diminution
of service and quality to the End-users. Where there are two (2) or more connected Distribution
Utilities, the consortium or juridical entity shall be formed by and composed of all of them and
thereafter shall be granted a franchise to operate the Subtransmission Assets by the ERC. The
subscription rights of each Distribution Utility involved shall be proportionate to its load
requirements unless otherwise agreed by such Distribution Utilities. Aside from the PSALM,
TRANSCO and connected Distribution Utilities, no third party shall be allowed ownership or
management participation, in whole or in part, in such subtransmission entity.

VII. Self-Evaluation:

1. Now that RA 9136 is in place, what reforms will be instituted in the power industry?

2. With restructuring, will the power industry be fully deregulated? How can government ensure
that consumers will be protected from undue and frequent increases in power rates?

3. Are there any safeguards in the law to prevent certain business groups or blocs from
dominating the restructured power industry?

4. How sure are you that power rates will indeed go down? Are there any pro-poor provisions in
RA 9136?

5. How can government ensure that the proceeds from the sale of NPC assets will be
optimized?

VIII. Review of Concepts:

SECTION 1. Short Title. – This Act shall be known as the “Electric Power Industry Reform Act of
2001”. It shall hereinafter be referred to as the Act.

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SECTION 2. Declaration of Policy. – It is hereby declared the policy of the State:

(a) To ensure and accelerate the total electrification of the country;

(b) To ensure the quality, reliability, security and affordability of the supply of electric power;

(c) To ensure transparent and reasonable prices of electricity in a regime of free and fair competition
and full public accountability to achieve greater operational and economic efficiency and enhance
the competitiveness of Philippine products in the global market;

(d) To enhance the inflow of private capital and broaden the ownership base of the power
generation, transmission and distribution sectors;

(e) To ensure fair and non-discriminatory treatment of public and private sector entities in the
process of restructuring the electric power industry;

(f) To protect the public interest as it is affected by the rates and services of electric utilities and
other providers of electric power;

(g) To assure socially and environmentally compatible energy sources and infrastructure;

(h) To promote the utilization of indigenous and new and renewable energy resources in power
generation in order to reduce dependence on imported energy;

(i) To provide for an orderly and transparent privatization of the assets and liabilities of the National
Power Corporation (NPC);

(j) To establish a strong and purely independent regulatory body and system to ensure consumer
protection and enhance the competitive operation of the electricity market; and

(k) To encourage the efficient use of energy and other modalities of demand side management.

SEC. 3. Scope. – This Act shall provide a framework for the restructuring of the electric power
industry, including the privatization of the assets of NPC, the transition to the desired competitive
structure, and the definition of the responsibilities of the various government agencies and private
entities.

SEC. 4. Definition of Terms. –

(a) “Aggregator” refers to a person or entity, engaged in consolidating electric power demand of
end-users in the contestable market, for the purpose of purchasing and reselling electricity on a
group basis;

(b) “Ancillary Services” refer to those services that are necessary to support the transmission of
capacity and energy from resources to loads while maintaining reliable operation of the transmission
system in accordance with good utility practice and the Grid code to be adopted in accordance with
this Act;

(c) “Captive Market” refers to electricity end-users who do not have the choice of a supplier of
electricity, as may be determined by the Energy Regulatory Commission (ERC) in accordance with
this Act;

(d) “Central Dispatch” refers to the process of issuing direct instructions to electric power industry

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participants by the grid operator to achieve the economic operation and maintenance of quality,
stability, reliability and security of the transmission system;

(e) “Co-Generation Facility” refers to a facility which produces electrical an/or mechanical energy
and forms of useful thermal energy such as heat or steam which are used for industrial commercial
heating or cooling purposes through the sequential use of energy;

(f) “Commission” refers to the decision-making body of the ERC composed of a Chairman and four
(4) members as provided under Section 38 hereof;

(g) “Concession Contract” refers to the award by the government to a qualified private entity of the
responsibility for financing, operating, expanding, maintaining and managing specific Government-
owned assets;

(h) “Contestable Market” refers to the electricity end-users who have a choice of a supplier of
electricity, as may be determined by the ERC in accordance with this Act;

(i) “Customer Service Charge” refers to the component in the retail rate intended for the cost
recovery of customer-related services including, but not limited to, meter reading, billing
administration and collection;

(j) “Demand Side Management” refers to measures undertaken by distribution utilities to encourage
end-users in the proper management of their load to achieve efficiency in the utilization of fixed
infrastructures in the system;

(k) “Department of Energy” or “DOE” refers to the government agency created pursuant to Republic
Act No. 7638 whose expanded functions are provided herein;

(l) “Department of Finance” or “DOF” refers to the government agency created pursuant to
Executive Order No. 127;

(m) “Distribution Code” refers to a compilation of rules and regulations governing electric utilities in
the operation and maintenance of their distribution systems which includes, among others, the
standards for service and performance, and defines and establishes the relationship of the
distribution systems with the facilities or installations of the parties connected thereto;

(n) “Distribution of Electricity” refers to the conveyance of electric power by a distribution utility
through its distribution system pursuant to the provisions of this Act;

(o) “Distribution System” refers to the system of wires and associated facilities belonging to a
franchised distribution utility extending between the delivery points on the transmission or
subtransmission system or generator connection and the point of connection to the premises of the
end-user;

(p) “Distribution Wheeling Charge” refers to the cost or charge regulated by the ERC for the use of a
distribution system and/or the availment of related services;

(q) “Distribution Utility” refers to any electric cooperative, private corporation, government-owned
utility or existing local government unit which has an exclusive franchise to operate a distribution
system in accordance with this Act;

(r) “Electric cooperative” refers to a distribution utility organized pursuant to Presidential Decree No.

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269, as amended, or as otherwise provided in this Act;

(s) “Electric Power Industry Participant” refers to any person or entity engaged in the generation,
transmission, distribution or supply of electricity;

(t) “End-user” refers to any person or entity requiring the supply and delivery of electricity for its own
use;

(u) “Energy Regulatory Board” or “ERB” refers to the independent, quasi-judicial regulatory body
created under Executive Order No. 172, as amended;

(v) “Energy Regulatory Commission” or “ERC” refers to the regulatory agency created herein;

(w) “Franchise Area” refers to a geographical area exclusively assigned or granted to a distribution
utility for distribution of electricity;

(x) “Generation Company” refers to any person or entity authorized by the ERC to operate facilities
used in the generation of electricity;

(y) “Generation of Electricity” refers to the production of electricity by a generation company or a co-
generation facility pursuant to the provisions of this Act;

(z) “Grid” refers to the high voltage backbone system of interconnected transmission lines,
substations and related facilities;

(aa) “Grid Code” refers to the set of rules and regulations governing the safe and reliable operation,
maintenance and development of the high voltage backbone transmission system and its related
facilities;

(bb) “Independent Power Producer” or “IPP” refers to an existing power generating entity which is
not owned by NPC;

(cc) “Inter-Class Cross Subsidy” refers to an amount charged by distribution utilities to industrial and
commercial end-users as well as to other subsidizing customer sectors in order to reduce electricity
rates of other customer sectors such as the residential end-users, hospitals, and streetlights;

(dd) “Inter-Regional Grid Cross Subsidy” refers to an amount embedded in the electricity rates of
NPC charged to its customers located in a viable regional grid in order to reduce the electricity rates
in a less viable regional grid;

(ee) “Intra- Regional Grid Cross Subsidy” refers to an amount embedded in the electricity rates of
NPC charged to distribution utilities and non-utilities with higher load factor and/or delivery voltage in
order to reduce the electricity rates charged to distribution utilities with lower load factor and/or
delivery voltage located in the same regional grid;

(ff) “IPP Administrator” refers to qualified independent entities appointed by PSALM Corporation
who shall administer, conserve and manage the contracted energy output of NPC IPP contracts;

(gg) “Isolated Distribution System” refers to the backbone system of wires and associated facilities
not directly connected to the national transmission system;

(hh) “Lifeline Rate” refers to the subsidized rate given to low-income captive market end-users who

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cannot afford to pay at full cost;

(ii) “National Electrification Administration “ or “NEA” refers to the government agency created under
Presidential Decree No. 269, as amended, and whose additional mandate is further set forth herein;

(jj) “National Power Corporation” or “NPC” refers to the government corporation created under
Republic Act No. 6395, as amended;

(kk) “National Transmission Corporation or “TRANSCO” refers to the corporation organized

pursuant to this Act to acquire all the transmission assets of the NPC;

(ll) “Open Access” refers to the system of allowing any qualified person the use of transmission,
and/or distribution system, and associated facilities subject to the payment of transmission and/or
distribution retail wheeling rates duly approved by the ERC;

(mm) “Philippine Energy Plan” or “PEP” refers to the overall energy program formulated and
updated yearly by the DOE and submitted to Congress pursuant to Republic Act No. 7638;

(nn) “Power Development Program” or “PDP” refers to the indicative plan for managing electricity
demand through energy-efficient programs and for the upgrading, expansion, rehabilitation, repair
and maintenance of power generation and transmission facilities, formulated and updated yearly by
the DOE in coordination with the generation, transmission and distribution utility companies;

(oo) “Power Sector Assets and Liabilities Management Corporation” or “PSALM Corp.” refers to the
corporation created pursuant to Section 49 hereof;

(pp) “Privatization” refers to the sale, disposition, change and transfer of ownership and control of
assets and IPP contracts from the Government or a government corporation to a private person or
entity;

(qq) “Renewable Energy Resources” refers to energy resources that do not have an upper limit on
the total quantity to be used. Such resources are renewable on a regular basis and the renewable
rate is rapid enough to consider availability over an indefinite time. These include, among others,
biomass, solar, wind, hydro and ocean energy;

(rr) “Restructuring” refers to the process of reorganizing the electric power industry in order to
introduce higher efficiency, greater innovation and end-user choice. It shall be understood as
covering a range of alternatives enhancing exposure of the industry to competitive market forces;

(ss) “Retail Rate” refers to the total price paid by end-users consisting of the charges for generation,
transmission and related ancillary services, distribution, supply and other related charges for electric
service;

(tt) “Small Power Utilities Group” or “SPUG” refers to the functional unit of NPC created to pursue
missionary electrification function;

(uu) “Stranded contract costs of NPC or distribution utility” refer to the excess of the contracted cost
of electricity under eligible contracts over the actual selling price of the contracted energy output of
such contracts in the market. Such contracts shall have been approved by the ERB as of December
31, 2000;

(vv) “Stranded Debts of NPC” refer to any unpaid financial obligations of NPC which have not been

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liquidated by the proceeds from the sales and privatization of NPC assets;

(ww) “Subtransmission Assets” refer to the facilities related to the power delivery service below the
transmission voltages and based on the functional assignment of assets including, but not limited to
step-down transformers used solely by load customers, associated switchyard/substation, control
and protective equipment, reactive compensation equipment to improve customer power factor,
overhead lines, and the land such facilities/ equipment are located. These include NPC assets
linking the transmission system and the distribution system which are neither classified as
generation nor transmission;

(xx) “Supplier” refers to any person or entity authorized by the ERC to sell, broker, market or
aggregate electricity to the end-users;

(yy) “Supplier’s Charge” refers to the charge imposed by electricity suppliers for the sale of
electricity to end-users, excluding the charges for generation, transmission and distribution
wheeling;

(zz) “Supply of Electricity” means the sale of electricity by a party other than a generator or a
distributor in the franchise area of a distribution utility using the wires of the distribution utility
concerned;

(aaa) “Transmission Charge” refers to the regulated cost or charges for the use of a transmission
system which may include the availment of ancillary services;

(bbb) “Transmission Development Plan” or “TDP” refers to the program for managing the
transmission system through efficient planning for the expansion, upgrading, rehabilitation, repair
and maintenance, to be formulated by DOE and implemented by the TRANSCO pursuant to this
Act;

(ccc) “Transmission of Electricity” refers to the conveyance of electricity through the high voltage
backbone system; and

(ddd) “Universal Charge” refers to the charge, if any, imposed for the recovery of the stranded cost
and other purposed pursuant to Section 34 hereof.

IX. Reference:

1. EPIRA Law (RA 9136) of 2001 Handbook.

Module No. 4.

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I. Title: Code of Ethics for Electrical Engineers

II. Topic: Professional life, relation with client and employer, relations with fellow engineers, and
penal provisions.
III. Time frame: 4 hours

IV. Introduction:

Ethics is a set of moral principles or values to govern the conduct of an individual belonging
to a group or profession on the basis of honesty, fairness, and justice. An Electrical Engineer should
observe a System of moral principles and values, not in passive recognition, but as a set of dynamic
standards to guide his conduct and way of life. It is his duty to practice his profession according to
this Code of Ethics. The keystone of professional conduct is integrity. In this course teach you how
to be a good professional individuals.

V. Objectives:

At the end of this course, the student is able to;

1. Understand electrical public works and further develop the profession as electrical
practitioners.

VI. Learning Activities

Article I
PROFESSIONAL LIFE

Section 1. An Electrical Engineer should discharge his duties with absolute fidelity to his
clients and employers, and to act at all times, with fairness and impartiality to all, having due regard
to public interest and welfare.
Section 2. An Electrical Engineer should uphold the honor and dignity of his profession and,
therefore, should avoid association with any person or enterprises of known questionable character.
Section 3. An Electrical Engineer should strive to upgrade his skill and knowledge in
electrical engineering in order to give the best possible service to the public which could be attained
by interchanging information and experiences with other engineers, and by unselfishly contributing
to the mission of engineering societies, institutes, schools and engineering and scientific media, and
other public institutions.
Section 4. An Electrical Engineer should only advertise his work or merit in a simple manner
and avoid any practice that will discredit or do injury to the dignity and honor of his profession.
Section 5. An Electrical Engineer should endeavor to extend public knowledge of
engineering and shall discourage spreading the untrue, unfair, and exaggerated statements
regarding engineering.
Section 6. An Electrical Engineer, should have due regard at all times for the safety of the
life and health of his employees, other workers, as well as of the general public and for the
protection of property that may be affected by the work this responsibility.
Section 7. An Electrical Engineer should express an opinion on engineering subject, whether
publicly or privately, only when such opinion is called for, his opinion must be founded on adequate
knowledge and information of the relevant issues and facts based upon his honest convictions.
Section 8. An Electrical Engineer should not issue statements, criticisms, opinions,
arguments or other views on matters except where public interest is affected.

Article II

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RELATION WITH CLIENT AND EMPLOYER

Section 1. An Electrical Engineer should be fair, impartial and reasonable in rendering

professional service to his clients, employers and contractors regarding contracts or other
agreements.
Section 2. An Electrical Engineer should, before undertaking any engagement or entering
into any contracts which calls for his professional service that will require or need the use of
apparatus, other equipment or things in which he has financial interest, have such situation clarified
in the contract or agreement to avoid conflict of interests.
Section 3. An Electrical Engineer should be vigilant in guarding against conditions that may
be dangerous or threatening to life, health, or property on work for which he is responsible, or
otherwise bring such conditions to the attention of those responsible.
Section 4. An Electrical Engineer should present clearly the known possible consequences
or limitations of the work for which he will be responsible.
Section 5. An Electrical Engineer should honestly advise his clients or employer to engage
the services of other experts and specialists, and should cooperate with them in the interests of his
client or employer.
Section 6. An Electrical Engineer should not accept compensation from more than one
interested party for the same professional service pertaining to the same work, without the consent
of all affected parties.
Section 7. An Electrical Engineer should not divulge confidential matters or information
which has come to his knowledge concerning affairs of his client or employers, without their
consent.
Section 8. An Electrical Engineer should not be financially interested in the bids of a
contractor on competitive work for which he has been or expects to be employed as an engineer,
unless he has the consent of his client of employer.
Section 9. An Electrical Engineer should promptly disclose to his client or employer and
interest which he may have in a business that may conflict with or affect his decision regarding
engineering work for which he is employed or which he may be called upon to perform.

Article III
RELATIONS WITH FELLOW ENGINEERS

Section 1. An Electrical Engineer should endeavor at all times to protect the engineering
profession collectively and individually against misrepresentation, distortion, misunderstanding or
unfair criticism.
Section 2. An Electrical Engineer should give credit for the engineering work to the person
whom the credit is legally due.
Section 3. An Electrical Engineer should live up to the standards of professional practice for
electrical engineering.
Section 4. An Electrical Engineer should not directly or indirectly injure the professional
reputation, prospects, or practice of his fellow engineers. Whenever he finds an Engineer violating
the rules of unethical or unprofessional practices, he should not hesitate to bring the matter to the
proper forum for disciplinary or for other appropriate action.
Section 5. An Electrical Engineer should not compete with another Engineer on the basis of
compensation for particular work by means of underbidding, after the results of a public bidding are
announced.

Article IV

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PENAL PROVISIONS

Section 1. Violation of any provision of this Code shall constitute unethical, unprofessional
and dishonorable conduct and the violator shall be subjected to disciplinary action by the Board of
Electrical Engineering.

VII. Self – Evaluation

Explain the following;

1. Article I. section 3.
2. Article II.
3. Article III.

VIII. Review of Concepts

Ethics is a set of moral principles or values to govern the conduct of an individual belonging
to a group or profession on the basis of honesty, fairness, and justice. An Electrical Engineer should
observe a System of moral principles and values, not in passive recognition, but as a set of dynamic
standards to guide his conduct and way of life. It is his duty to practice his profession according to
this Code of Ethics. The keystone of professional conduct is integrity.
Article I - PROFESSIONAL LIFE; Article II - RELATION WITH CLIENT AND EMPLOYER;
Article III - RELATIONS WITH FELLOW ENGINEERS; and Article IV - PENAL PROVISIONS.

IX. Reference

1. Code of Ethics, Republic Act No. 184.

Module No. 5

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I. Title: Magna Carta for Residential Electricity Consumer

II. Topic: General provisions, consumer rights, and consumer obligations.
III. Time Frame: 6 hours

IV. Introduction

Pursuant to the provisions of Section 41 of Republic Act No. 9136, otherwise known as the
Electric Power Industry Reform Act, the Energy Regulatory Commission hereby promulgates the
Magna Carta for Residential Electricity Consumers as adopted in a Resolution by the Commission
on June 9, 2004.
This act teach about the rights of electric consumers, services, billings, testing of meters,
installation, payments and obligations.

V. Objectives

At the end of this course, the student shall be able to;

1. Discuss the law in residential electricity
2. Understand and discuss the rights and duties of every residential costumer.

VI. Learning Activities

CHAPTER I. GENERAL PROVISIONS

Article 1. Title – This Resolution shall be known as the Magna Carta for Residential Electricity
Consumers.
Article 2. Definition of Terms. – (a) Bill Deposit shall mean the deposit required from customers by
distribution utilities of new and/or additional service equivalent to the estimated billing for one month
to guarantee payment of bills.
(b) Billing Adjustment shall mean the amount charged to the consumer for the unbilled
electricity consumed resulting from a stoppage or defect, conspicuous or otherwise, in the meter,
provided that there is no evidence of tampering thereon;
(c) Connection Point shall mean the point of connection of the user system or equipment to
the distribution system (for users of the distribution system) or to the grid (for users of the grid);
(d) Consumer or Customer or End-user shall mean any person who is the registered
customer of the electric utility being supplied with electricity by the concerned distribution utility or
any person authorized by the registered customer to occupy the premises and enjoy electric
service;
(e) Distribution Utility shall mean any electric cooperative, private corporation, government-
owned utility or existing local government unit which has an exclusive franchise or is authorized by
law to distribute electricity to endusers;
(f) Differential Billing shall mean the amount charged to the consumer for the unbilled
electricity illegally consumed as determined through the use of methodologies prescribed by law. It
is determined by multiplying the unbilled consumption in kWh, the period covered and the current
rate of electricity at the time of apprehension;
(g) Energy Regulatory Commission or Commission or ERC shall mean the independent
regulatory agency created under Republic Act No. 9136, otherwise known as the Electric Power
Industry Reform Act of 2001 (EPIRA);
(h) Month shall mean the elapsed time between two succeeding meter readings, at least
twenty-eight (28) days apart but not to exceed thirty one (31) days.
(i) An Officer of the Law shall refer to any person who, by direct provision of law or by
election or by appointment by competent authority, is charged with the maintenance of public order

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and the protection and security of life and property, such as barangay captain/chairman, barangay
councilman, barangay leader, officer or member of Barangay Community Brigades, barangay
policeman, PNP policeman, municipal councilor, municipal mayor and provincial fiscal.
(j) A Registered Customer shall mean the customer who has a valid service contract with the
electric distribution utility.
(k) Residential consumer shall mean a customer classified as such in the distribution utility’s
rate schedule as approved by the ERC.

Article 3. Applicability. – This Magna Carta shall only apply to residential consumers.

Article 4. Basic Rights. - All consumers shall be entitled to the following basic rights:
(a) To have quality, reliable, affordable, safe, and regular supply of electric power;
(b) To be accorded courteous, prompt and non-discriminatory service by the electric service
provider;
(c) To be given a transparent, non-discriminatory and reasonable price of electricity
consistent with the provisions of RA 9136;
(d) To be an informed electric consumer and given adequate access to information on
matters affecting the electric service of the consumer concerned;
(e) To be accorded prompt and speedy resolution of complaints by both the distribution utility
and/or the ERC;
(f) To know and choose the electric service retailer upon the implementation of Retail
Competition; and
(g) To organize themselves as a consumer organization in the franchise area where they
belong and where they are served by the distribution utility or as a network of
organizations.

Article 5. Basic Obligations. - Every consumer must comply with the following obligations and
responsibilities:
(a) To observe the terms of his contract including, among other things, paying monthly
electricity bills promptly and honestly;
(b) To allow the faithful and accurate recording of consumption to be reflected in the
appropriate device;
(c) To allow the utility’s employees/representatives entry/ access to his premises for the
purposes provided for in Article 29 hereof;
(d) To take proper care of metering or other equipment that the electric utility has installed in
his premises;
(e) To inform the distribution utility and/or proper authorities of any theft or pilferage of
electricity or any damage caused by any person to the electric meter and equipment
appurtenant thereto; and
(f) To cooperate with and support programs on the wise and efficient use of electricity.

CHAPTER II. CONSUMER RIGHTS

Article 6. Right to Electric Service. - A consumer has the right to be connected to a distribution
utility for electric power service after the consumer’s full compliance with the distribution utility’s and
local government unit’s (LGU) requirements.

If the said consumer is not the owner of the premises sought to be energized, he shall be required
to submit an undertaking from the owner of the premises that the said owner shall be jointly and
severally liable with the applicant for any unpaid regular monthly bills incurred by the applicant after
leaving the premises, in the absence of or insufficiency of the bill deposit. Subject to the approval of
ERC, a distribution utility which cannot service areas within its franchise territory may allow another
distribution utility or a qualified third party (QTP) to provide electricity services in said area pursuant

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to Rule 7 and Rule 14 of the Implementing Rules and Regulations of the EPIRA.

The labor cost for connecting the distribution utility’s service drop to the connection point shall be
free of charge. The connection point shall be designated upon agreement by the distribution utility
and the consumer.

Article 7. Right to a Refund of Bill Deposits. – The bill deposit provided for under Article 28
hereof shall be refunded within one month from the termination of service provided all bills have
been paid.
A customer who has paid his electric bills on or before its due date for three (3) consecutive years
may, however, demand for the full refund of the deposit even prior to the termination of his service.
An application for this purpose shall be filed with the concerned distribution utility which must refund
the deposit within one month from receipt of such application.

Article 8. Exemption from Payment of Meter Deposits. – All consumers shall be exempt from
payment of meter deposits since private distribution utilities have incorporated the cost of these
electric watthour meters in their rate base. Electric cooperatives shall use their respective
Reinvestment Funds to procure electric watthour meters for their consumers. In cases of loss and/or
damage to the electric meter due to the fault of the customer, he shall bear the replacement cost of
the meter.

Article 9. Right to an Accurate Electric Watthour Meter; Determination of Average Error. - No

meter, including instrument transformers, shall be installed or placed in service unless it has been
tested, certified and sealed by the ERC. All watt-hour meters regardless of make and type before
being placed in service must be adjusted to as close as possible to the condition of zero error. The
method provided in the Standard Rules and Regulations Governing the Operation of Electric Power
Services (ERB Resolution 95-21, as amended) shall be used in the determination of average error.
The ERC seal is a warranty that (1) the meter is an acceptable or accepted type and (2) that it
operates within the allowable limits of tolerance. The consumer has a right to demand the
production of the meter test report containing the findings of the authorized person who tested the
said meter.

Article 10. Right to a Refund of Overbillings. – The customer has the right to a refund in cases of
overbilling by the distribution utility arising from a meter testing showing that the said meter was fast
without any evidence of tampering. In the event that a meter in service is found to have an average
error of more than the tolerance of plus two percent, the customer is entitled to a refund, for a
maximum period of six (6) months prior to the date of discovery, to be applied to the customer’s
future billings.

Article 11. Right to a Properly Installed Meter. – The customer has the right to a meter installed
in a clean place free of vibration and where it will be easily accessible and visible for reading and
testing by both the distribution utility and the consumer. Under no condition should meters be
located behind doors or where they can be easily broken or jarred by moving furnitures or
equipment. Meters shall be located on the outside wall of the building or private pole and shall not
be more
than three (3) meters nor less than 1.52 meters mounting height from the surface on which one
would stand to repair or inspect the meter. Meters may be located in other areas based on justifiable
reasons. A customer shall bear the cost of relocation of his electric
watthour meter under the following circumstances:
1. The customer requests for the relocation of his electric watthour meter, for reasons other
than those provided for in the first paragraph; or
2. The meter installation fails to meet the conditions under the first paragraph resulting from
improvements done on the customer’s premises, thereby necessitating such relocation.
All other relocations of the meter shall be borne by the electric utility,

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Article 12. Right to a Meter Testing by Electric Utility and/ or ERC. - A customer has the right to
require the distribution utility to test, once every two (2) years, free of charge, the accuracy of the
meter installed in his premises making use of a meter standard duly tested and sealed by the ERC.
If the customer requests for meter testing more than once every two years and the meter being
tested is found to be within the tolerable limit as provided for in Article 9 hereof, the utility may
assess
the customer a testing fee based on the testing fee charged by ERC. A written report showing the
result of such test shall be furnished the customer. The customer may also request the ERC to
conduct a meter test, subject to the payment of a fee prescribed under the approved
ERC Schedule of Fees and Charges. In case the meter is found to be inaccurate, the customer may
demand the replacement of the said meter or have the ERC calibrate the said meter to restore its
accuracy closest to the condition of zero (0) error. The provision on refund or billing adjustment due
to inaccurate meters shall apply as appropriate.

Article 13. Right to a Prompt Investigation of Complaints; Customer Dealings. – Distribution

utilities shall record and promptly investigate all complaints referred to them concerning their
services.
The distribution utility must furnish the complainant a report of the action/s taken thereon within the
period stated in the distribution utility’s Compliance Plan as provided for in the Philippine Distribution
Code. In the absence of such plan, the report must be made within fifteen (15) days from receipt of
the complaint. In case of disagreement between the distribution utility and the customer, the latter
may file a complaint with the ERC in accordance with Article 27 of this Magna Carta.

In dealing with their customers relative to electric power services, all officers, employees and agents
of distribution utilities must properly and conspicuously display their identification cards at all times.

Article 14. Right to Extension of Lines and Facilities. – A consumer located within thirty (30)
meters from the distribution utilities’ existing secondary low voltage lines, has the right to an
extension of lines or installation of additional facilities, other than a service drop, at the expense of
the utility inasmuch as said assets will eventually form part of the rate base of the private distribution
utilities, or will be sourced from the reinvestment funds of the electric cooperatives.
However, if a prospective customer is beyond the said distance, or his demand load requires
that the utility extend lines and facilities, the customer may initially fund the necessary expenditures.
To recover his aforementioned expenditures, the customer may either demand the issuance of a
notes payable from the distribution utility or refund at the rate of twenty-five (25) percent of the gross
distribution revenue derived for the calendar year, or, if available, the purchase of preferred shares.
Revenue derived from additional customers tapped directly to the poles and facilities so extended
shall be considered in determining the revenues derived from the extension of facilities.
When a developer initially paid the cost of the extension of lines to provide electric service to
a specific property and incorporated these expenses in the cost thereof, and that property was
purchased and transferred in the name of the registered customer, the latter shall be entitled to the
refund of the cost of the extension of lines, and exercise the options for refund provided in this
article. If the cost of the extension of lines or installation of additional facilities was funded
gratuitously by other persons for the benefit of the customer, this provision shall not apply.
In this connection, all concerned utilities shall furnish the Commission a semi-annual report
of the names of customers who made the aforementioned cash advances, the amount of the cash
advance and the mode of refund.

Article 15. Right to Information; Scheduled Power Interruptions. – In order to increase

consumer awareness, all offices of distribution utilities must provide a Consumer Bulletin Board
where major announcements/documents issued affecting consumers will be posted. Furthermore,
they must establish communications facilities, including but not limited to a customer hotline and
Short Messaging Service (SMS), to cater exclusively to their customers.

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Major announcements/documents shall include, but not be limited to, rate schedules and any
changes thereon; other service charges; terms and conditions of service; standard rules and
regulations governing the operation of distribution utilities; general information on metering,
including but not limited to the manner in which meters are read and description of method used in
reading; decisions and orders of the ERC.
When there are two or more authorized schedules of rates applicable to a customer, the
distribution utility should accordingly advise said customer in writing and apply the rates which are
most beneficial to the customer. At least two (2) days before a scheduled power interruption, a
distribution utility must announce the same to its customers through print, or other mass or
interactive media.
In remote areas where such media are inaccessible, the distribution utility must set up a
Bulletin Board where announcements of scheduled power interruptions will be posted in an area
that could easily be seen by its customers, preferably along roadsides or in front of the entrance to
the City/Municipal Hall or Public Market.

Article 16. Right to a Transparent Billing. - Bills to service customers shall conform with the
format as approved by the ERC. The current formats approved by the Commission are shown in
Annexes A and B of this Magna Carta.

Article 17. Right to a Monthly Electricity Bill. - Bills shall be delivered monthly to the customer by
the distribution utility in accordance with the applicable rate schedule. Said bills shall be payable
to authorized collectors, the collection office, authorized agents/entities or at its authorized banks.
Notwithstanding the provisions of the foregoing paragraph, no violation of the provisions of
this Magna Carta is committed by the distribution utility in reading its customers’ meters beyond the
maximum allowable time provided for in Article 2(h), Provided that such inability to read on time was
due to a fortuitous event and, that the meter reading is done immediately after the said fortuitous
event ceases to exist.
Should the period covered in the electric bill exceed the number of days provided for in this
Magna Carta, the distribution utility shall nevertheless provide the applicable subsidy for that
consumption level due to the customer as if the meter had been read within the maximum allowable
period. The distribution utility shall safely keep the duplicate, electronic or otherwise, or office stub of
the bills used and shall not be destroyed within five (5) years without authority from the Commission.

Article 18. Right to Due Process Prior to Disconnection of Electric Service. - No consumer
shall be deprived of electric service without due process of law. Subject to the foregoing paragraph,
disconnection of electric service shall only be made under the following circumstances:

(a) Non-payment of electric bills within the period of time provided in Article 32 of this Magna
Carta;
(b) Illegal use of electricity under Republic Act No. 7832, otherwise known as the Anti-
Electricity Pilferage Law;
(c) Upon lawful orders of government agencies and/or the courts;
(d) When the public safety so requires;
(e) Request of the registered customers based on justifiable reasons; or
(f) Allowing other end-users or persons to be connected to his electrical installation, whether
for profit or not

Article 19. Right to a Notice Prior to Disconnection. – For disconnections due to non-payment of
electric bills, a written notice must have been served to the customer forty eight (48)-hours before
such disconnection. The distribution utility may discontinue the service notwithstanding the
existence of the customer’s bill deposit with the distribution utility which will serve as guarantee for
the payment of future bill(s) after service is reconnected.
When the owner/occupant of the house or establishment concerned or someone acting in

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his behalf shall have been caught in flagrante delicto doing any of the acts enumerated in Section 6
of RA 7832, the distribution utility concerned shall have the authority and right to disconnect
immediately his electric service after serving the written notice or warning to the effect.
The written notice or warning being referred to herein shall be served prior to such
disconnection and shall indicate the name and address of the consumer, consumer account
number, date of apprehension, findings of fact, amount of energy pilfered in kilowatt-hour, the
amount representing the differential billing and the method used in computing the differential billing.

Article 20. Right to Suspension of Disconnection.– Notwithstanding the service of notice but
subject to the provisions of RA 7832, disconnections of service shall not be made on any week day
beyond three o’clock (3:00 P.M.) in the afternoon, Saturdays, Sundays and official holidays, and
under the following or any other similar circumstances:

(a) One of the permanent occupants is sick and dependent on a life support system requiring
electricity; Provided, That the customer can present a medical certificate issued by a duly
licensed physician or public health official certifying that the termination of the electric
service would be especially dangerous to the health of the said person;
(b) During the funeral wake of a deceased permanent resident of the premises; Provided,
That the consumer can present a duly certified true copy of the death certificate of the
deceased issued by the Local Civil Registry of the city or municipality concerned;
(c) Customer indubitably proves he did not receive a Statement of Account and/or
Disconnection Notice;
(d) Customer is being billed in a single statement for consumption covering several months
due to the failure of the utility to issue a timely monthly billing statement to
the consumer;
(e) Customer or his representative is not around; Provided however, that this shall not be
applicable to disconnections due to non-payment of electric bills.

For Item (a), the suspension of the disconnection shall only be made during the dependency
of the patient on the life support system which shall not exceed two months from such suspension.
For Item (b), the suspension of the disconnection shall only be made during the period of the
wake which shall not exceed one month from the suspension or until the interment, whichever
comes earlier.
For Item (c), the non-receipt should not be caused by the refusal of the customer to accept
such electric bill or notice.
With respect to Item (d), the customer must pay the current billing on its due date. The
distribution utility, however, must enter into an agreement with the customer for a staggered
payment scheme within a period equivalent to the number of months covering the unpaid billings.

Article 21. Right to Tender Payment at the Point of Disconnection; Deposit

Representing the Differential Billing. – If at the time the disconnection is to be made, the
customer tenders payment of the unpaid bill to the agent or employee of the distribution utility who is
to effect the disconnection, the said agent, or employee of the distribution utility shall desist from
disconnecting the service to allow the customer to pay his bills within twenty-four (24) hours;
Provided however, That the customer can only invoke this provision once for the same
unpaid bill. The utility concerned shall not immediately disconnect or shall immediately restore the
electric service of the customer upon the deposit by the customer with the utility or with the
competent court, as the case may be, of the amount representing the differential billing.

Article 22. Right to Electric Service Despite Arrearages of Previous Tenant. – Without
prejudice to enforcing the provisions of the second paragraph of Article 6 hereof, a distribution utility
shall not refuse or discontinue service to an applicant or customer, who is not in arrears to the
distribution utility, even though there are unpaid bills or charges due from the premises occupied by
the applicant, or customer, on account of an unpaid bill of a prior tenant, unless there is evidence

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of conspiracy to defraud the distribution utility.

Article 23. Right to Reconnection of Electric Service. - Whenever the electric service is
disconnected due to non-payment of electric bills, the utility must immediately reconnect the same
within the period provided in the utility’s Compliance Plan as approved by the Commission in
accordance with the Philippine Distribution Code, but in no case shall exceed twenty-four (24) hours
from payment of the said arrearages by the customer. The 24-hour period may be extended
only for justifiable reasons.

Article 24. Right to Witness Apprehension. – Subject to the provisions of RA 7832, all
apprehensions for illegal use of electricity must be personally witnessed by the customer or
occupant or someone of suitable age and discretion residing therein and acting in behalf of the
owner or occupant of the premises, and by an officer of the law or by an ERC representative.

Article 25. Right to ERC Testing of Apprehended Meter. – In case the apprehension is
witnessed by an officer of the law and not by an ERC authorized representative, the electric meter
subject of the offense must be placed in a suitable container, properly identified
and sealed, and shall be opened only for testing by the ERC’s duly authorized representative.
Upon removal, the apprehended meter shall be immediately replaced by the distribution utility with
an accurate electric watthour meter. However, no disconnection of electric service shall be effected
until the ERC issues a meter test report showing that the meter was indeed tampered.

Article 26. Right to Payment Under Protest. – In cases of

regular electric bills or billing adjustments due to the stoppage or failure of the meter to register the
full and correct amount of energy consumed, or for differential billing due to alleged illegal use of
electricity, the consumer shall have the right to pay under protest for purposes of continuous supply
of electricity by the utility without prejudice to a complaint to be filed by such customer against the
imposition of the bill or billing adjustment or differential billing. Such payment shall not be construed
as an admission by the consumer of the allegations or claims of the distribution utility or of any
violation of law or of the contract with the distribution utility.

Article 27. Right to File Complaints before ERC .- Every consumer has the right to file a
complaint before the ERC for violation of ERC laws, rules, regulations, guidelines and policies,
including but not limited to RA 9136 and its Implementing Rules and Regulations, RA
7832 and its Implementing Rules and Regulations and ERB Resolution No. 95-21, as amended;
Provided, That the complainant has previously discussed/consulted the issue with the Consumer
Welfare Desk (CWD) Officer or representative of the concerned distribution utility and no
settlement has been reached.

CHAPTER III. CONSUMER

OBLIGATIONS Article 28. Obligation to Pay Bill Deposit. - A bill deposit from all
residential customers to guarantee payment of bills shall be required of new and/or additional
service. The amount of the bill deposit shall be equivalent to the estimated billing for one month.
Provided that after (1) year and every year thereafter, when the actual average monthly bills are
more or less than the initial bill deposit, such deposit shall be correspondingly increased/decreased
to approximate said billing.
(BSP). The interests shall be credited yearly to the bills of the registered
customer. In cases where the customer has previously received the refund of his bill deposit
pursuant to Article 7, and later defaults in the payment of his monthly bills, the customer shall be
required to post another bill deposit with the distribution utility and lose his right to avail of the right
to refund his bill deposit in the future until termination of service. Failure to pay the required bill
deposit shall be a ground for disconnection of electric service.

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Article 29. Obligation to Allow Inspection, Installation & Removal of Electricity

Apparatus - Customers shall allow the employees and/or representatives of the distribution utility to
enter their premises for the purpose of inspecting, installing, reading, testing, repairing, maintaining,
removing, replacing, or otherwise disposing of its apparatus and property, and/or removing the
distribution utility’s entire property in the event of the termination of the electricity service
contract; and for disconnection of service for non-payment of bills or
violation of contract (VOC). Provided, however, that only authorized employees and/or
representatives of the distribution utility with proper identification cards shall be allowed to make any
external adjustments of any meter or any internal or external adjustments of any other pieces of
apparatus owned by the distribution utility.

Article 30. Obligation to Allow the Construction of Poles,

Lines & Circuits. - Consumers shall allow the distribution utility, if necessary, to construct its poles,
lines and circuits and to place its transformers, apparatus on their property or within the buildings of
the consumer, at a point or points convenient for such purpose. The customer shall allow the
distribution utility to use a suitable space for the installation of necessary metering equipment in
order that such equipment will be protected from damage by the elements, or through the
negligence or deliberate acts of any person or persons.

Article 31. Obligation to Receive Monthly Bills. – Consumers must accept their electric
bills, without prejudice to the exercise of their right to pay under protest pursuant to Article 26 of this
Magna Carta in order to contest the same.

Article 32. Obligation to Pay Monthly Electric Bills. - Consumers must pay their bills not
later than nine (9) days after receipt of the monthly bill.

Article 33. Obligation to Pay Billing Adjustments. – A consumer may be compelled to

pay a billing adjustment in case there is a stoppage or failure by the customer’s meter to register the
full amount of energy consumed without any fault on the part of the customer.
In the event that a meter in service is found to have an average error of more than the tolerance of
minus two percent (2%) without any evidence of tampering by the customer, the utility may ask for
payment of a billing adjustment from its customers of the unregistered consumption. If the said
electric meter was merely found to be defective and has not completely stopped, and such defect
could not be easily detected by the concerned customer, the distribution utility may only be
allowed to recover the unregistered consumption for a maximum period of six (6) months prior to the
discovery of the defect. In cases where there is actual stoppage or any conspicuous defect of the
said meter, the distribution utility may only be allowed to recover the unregistered consumption for a
maximum period of three (3) months prior to such discovery of the stoppage. Notwithstanding the
preceding paragraphs, the distribution utility may recover the full amount of the unregistered
consumption if it has been complying with the two-year meter testing requirement under the
Implementing Rules and Regulations of RA 7832, otherwise known as the Anti- Electricity Pilferage
Act; Provided however, that the recovery period should not go beyond the period from the last
testing of the meter prior to the date of discovery, but which period shall not exceed two (2) years.
The distribution utility, however, must enter into an agreement with the customer for a staggered
payment scheme within a period equivalent to the number of months covering the billing
adjustment. The refund or billing adjustment should be based on the rate prevailing during the
period sought to be recovered, and the estimated consumption shall be based upon the result of the
ERC test on the affected meter during the time of discovery, or his average use of
energy for the immediately preceding six-month period of like use, or the lowest monthly
consumption within three (3) months after the time of discovery. In case of disagreement on such
bill, the Commission shall resolve the same.

Article 34. Obligation not to Commit Illegal Use of Electricity. - No consumer is allowed
to perform acts constituting illegal use of electricity. The following circumstances constitute prima

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facie evidence of illegal use of electricity:

(a) The presence of a bored hole on the glass cover of the electric meter, or at the back or
any part of said meter;
(b) The presence inside the electric meter of salt, sugar and other elements that could result
in the inaccurate registration of the meter’s internal parts to prevent its accurate
registration of consumption of electricity;
(c) The existence of any wiring connection which affects the normal operation or registration
of the electric meter;
(d) The presence of a tampered, broken, or fake seal on the meter, or mutilated, altered or
tampered meter recording chart or graph or computerized chart, graph or log;
(e) The presence in any part of a building or its premises which is subject to the control of
the consumer, or on the electric meter, of a current reversing transformer, jumper,
shorting and/or shunting wire, and/or loop connection or any other similar device;
(f) The mutilation, alteration, reconnection, disconnection, bypassing or tampering of
instruments, transformers and accessories;
(g) The destruction of, or attempt to destroy, any integral accessory of the metering device
box which encases an electric meter, or its metering accessories.
(h) The acceptance of money and/or other valuable consideration by any officer or employee
of the electric utility concerned or the making of such an offer to any such officer or
employee for not reporting the presence of any of the circumstances enumerated in
subparagraphs (a), (b), (c), (d), (e), (f), or (g) hereof.

The discovery of any of the foregoing circumstances must be personally witnessed and
attested to by an officer of the law or a duly authorized representative of the Energy Regulatory
Commission.

Article 35. Obligation to Pay Differential Billing. – A consumer who is discovered to have
committed the offense of illegal use of electricity shall, in addition to the imposition of appropriate
penal sanction, be required to pay a differential billing to the electric distribution utility to be
computed in accordance with existing laws, rules and regulations. The period to be recovered for
the purpose of computing the differential billing shall be subject to the following rules:
1. If prior to the date of discovery, there was a change of meter, change of seal or
reconnection, or replacement of parts, or it can be determined when an abrupt or abnormal drop in
consumption occurred, the period to be recovered for purposes of the differential billing should
be reckoned from the time when the said changes, inspection or reconnection occurred, which may
result in a less than a year period of recovery.
2. Furthermore, if the concerned consumer presents indubitable and adequate proof that the
occurrence of the illegal use of electricity is for a period which could be less than a year, then for
purposes of calculating the differential billing, the recoverable period shall start from the occurrence
of the illegal use up to the time of apprehension.
3. In the absence of the two aforementioned circumstances, the distribution utility may be
allowed to recover the differential billing up to a maximum of sixty (60) billing months up to the time
of discovery.

VII. Self – evaluation

1. What is the rights of consumers?

2. What is the consumer’s obligations?

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VIII. Review of Concepts

CHAPTER I. GENERAL PROVISIONS. Article 1. Title; Article 2. Definition of Terms; Article 3.

Applicability; Article 4. Basic Rights; Article 5. Basic Obligations.

CHAPTER II. CONSUMER RIGHTS. Article 6. Right to Electric Service; Article 7. Right to a Refund
of Bill Deposits; Article 8. Exemption from Payment of Meter Deposits; Article 9. Right to an
Accurate Electric Watthour; Meter; Determination of Average Error; Article 10. Right to a Refund of
Overbillings
Article 11. Right to a Properly Installed Meter; Article 12. Right to a Meter Testing by Electric Utility
and/or ERC; Article 13. Right to a Prompt Investigation of Complaints; Customer Dealings; Article
14. Right to Extension of Lines and Facilities; Article 15. Right to Information; Scheduled Power
Interruptions; Article 16. Right to a Transparent Billing; Article 17. Right to a Monthly Electricity Bill
Article 18. Right to Due Process Prior to; Disconnection of Electric Service; Article 19. Right to a
Notice Prior to Disconnection; Article 20. Right to Suspension of Disconnection; Article 21. Right to
Tender Payment at the Point of; Disconnection; Deposit Representing; the Differential Billing; Article
22. Right to Electric Service Despite; Arrearages of Previous Tenant; Article 23. Right to
Reconnection of Electric; Service; Article 24. Right to Witness Apprehension; Article 25. Right to
ERC Testing of Apprehended Meter; Article 26. Right to Payment Under Protest; Article 27. Right to
File Complaints before ERC.

CHAPTER III. CONSUMER OBLIGATIONS. Article 28. Obligation to Pay Bill Deposit; Article 29.
Obligation to Allow Inspection, Installation & Removal of Electricity Apparatus; Article 30. Obligation
to Allow the Construction of Poles, Lines & Circuits; Article 31. Obligation to Receive Monthly Bills;
Article 32. Obligation to Pay Monthly Electric Bills; Article 33. Obligation to Pay Billing Adjustments;
Article 34. Obligation not to Commit Illegal Use of; Electricity; Article 35. Obligation to Pay
Differential Billing.

IX. Reference

1. Magna Carta for Residential Electricity Consumers, ERC Edition.

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Module No. 6

I. Title: Gird Code

II. Topic: Grid Code General Conditions, Grid Connection Requirements, Grid Planning, and Grid
Operations and Scheduling and Dispatch.
III. Time Frame: 4 hours

IV. Introduction

The Philippine Grid Code establishes the basic rules, requirements, procedures, and
standards that govern the operation, maintenance, and development of the high-voltage backbone
Transmission System in the Philippines. The Grid Code identifies and recognizes the responsibilities
and obligations of three (3) key independent functional groups, namely (a) Grid Owner, (b) System
Operator, and (c) Market Operator. These functional groups and all Users of the Grid must comply
with all the provisions of the Grid Code. The Grid Code is intended to be used with the Market Rules
of the Wholesale Electricity Spot Market to ensure the safe, reliable, and efficient operation of the
Grid.

Republic Act No. 9136, also known as the “Electric Power Industry Reform Act of 2001,”
mandated the creation of the Energy Regulatory Commission (ERC). Section 43(b) of the Act also
provides that the ERC promulgate and enforce a National Grid Code and a Distribution Code which
shall include, but not 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 any violation of their provisions. The Grid Code was prepared using a
functional rather than an organizational format so that it will remain robust and require minimum
changes as the Philippine electric power industry is transformed to its new organizational structure.

V. Objectives

At the end of this course, the student shall able to;

1. Discuss Grid Code General Conditions, Grid Connection Requirements, Grid Planning and
Grid Operations and Scheduling and Dispatch.

VI. Learning Activities

CHAPTER 1
GRID CODE GENERAL CONDITIONS

1.1 PURPOSE AND SCOPE

1.1.1 Purpose
(a) To cite the legal and regulatory framework for the promulgation and enforcement of the
Philippine Grid Code;
(b) To specify the general rules pertaining to data and notices that apply to all
Chapters of the Grid Code;
(c) To specify the rules for interpreting the provisions of the Grid Code; and
(d) To define the common and significant terms and abbreviations used in the Grid Code.

1.1.2 Scope of Application This Chapter applies to all Grid Users including:

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(a) The Grid Owner;

(b) The System Operator;
(c) The Market Operator;
(d) Generators;
(e) Distributors;
(f) Suppliers; and
(g) Any other entity with a User System connected to the Grid.

1.2 AUTHORITY AND APPLICABILITY

1.2.1 Authority The Act provides the Energy Regulatory Commission (ERC) the authority to
promulgate the Philippine Grid Code.

1.2.2 Applicability 1.2.2.1 The Philippine Grid Code applies to the three national Grids, which
consist of the Luzon, Visayas, and Mindanao Grids. 1.2.2.2 The ERC shall promulgate the rules
and regulations that will apply to the small Grids, which are not connected to the national Grids.

1.3 ENFORCEMENT AND SUSPENSION OF PROVISIONS

1.3.1 Enforcement

1.3.1.1 The Act assigns to the ERC the responsibility of enforcing the Grid Code.
1.3.1.2 The ERC shall establish the Grid Management Committee (GMC) to monitor Grid Code
compliance at the operations level and to submit regular and special reports pertaining to Grid
operations.
1.3.1.3 The GMC shall also initiate an enforcement process for any perceived violations of Grid
Code provisions and recommend to the ERC the appropriate fines and penalties for such
violations.

1.3.2 Suspension of Provisions. Any provision of the Grid Code may be suspended, in whole or in
part, when the Grid is not operating in the Normal State or pursuant to any directive given by
the ERC or the appropriate government agency.

1.4 DATA, NOTICES, AND CONFIDENTIALITY

1.4.1 Data and Notices

1.4.1.1. The submission of any data under the Grid Code shall be done through
electronic format or any suitable format agreed upon by the concerned parties.
1.4.1.2 Written notices under the Grid Code shall be served either by hand
delivery, registered first-class mail, or facsimile transfer.

1.4.2 Confidentiality

1.4.2.1 All data submitted by any Grid User to the Grid Owner, System Operator
or Market Operator in compliance with the data requirements of the Grid Code, shall be treated
by the Grid Owner, System Operator, or Market Operator as confidential. These include data
requirements for connection to the Grid and those that are required in the planning, operation,
and maintenance of the Grid.

1.4.2.2 Aggregate data shall be made available by the Grid Owner or the System Operator when
requested by a User. These data shall be used only for the purpose specified in the request
and shall be treated by the User as confidential.

1.5 CONSTRUCTION OF REFERENCES

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1.5.1 References Unless the context otherwise requires, any reference to a particular Chapter,
Article,
Section, Subsection, or Appendix of the Grid Code shall be applicable only to that
Chapter, Article, Section, Subsection, or Appendix to which the reference is made.

1.5.2 Cross-References A cross-reference to another document shall not in any way impose any
condition or modify the material contained in the document where such cross-reference is
made.

1.5.3 Definitions When a word or phrase that is defined in the Definitions Article is more particularly
defined in another Article, Section, or Subsection of the Grid Code, the particular definition in that
Article, Section, or Subsection shall prevail if there is any inconsistency.

1.5.4 Foreword, Table of Contents, and Titles. The Table of Contents was added for the
convenience of the users of the Grid Code. The Table of Contents, the Foreword, and the titles of
the Chapters, Articles, and Sections shall not be considered in interpreting the Grid Code
provisions.

1.5.5 Mandatory Provisions The word “shall” refers to a rule, procedure, requirement, or any
provision of the Grid Code that requires mandatory compliance.

1.5.6 Singularity and Plurality In the interpretation of any Grid Code provision, the singular shall
include the plural and vice versa, unless otherwise specified.

1.5.7 Gender Any reference to a gender shall include all other genders. Any reference to a person
or entity shall include an individual, partnership, company, corporation, association,
organization, institution, and other similar groups.

1.5.8 “Include” and “Including” The use of the word “include” or “including” to cite an enumeration
shall not impose any restriction on the generality of the preceding words.

1.5.9 “Written” and “In Writing” The words “written” and “in writing” refer to the hardcopy of a
document that is generally produced by typing, printing, or other methods of reproducing words in a
legible format.

1.5.10 Repealing Clause All existing rules and regulations, orders, resolutions, and other similar
issuances, or parts thereof, which are inconsistent with the provisions of the Philippine Grid Code
are hereby repealed or modified accordingly.

1.6 DEFINITIONS In the Grid Code the following words and phrases shall, unless more particularly
defined in an Article, Section, or Subsection of the Grid Code, have the following meanings:

Accountable Manager. A person who has been duly authorized by the Grid Owner (or a
User) to sign the Fixed Asset Boundary Documents on behalf of the Grid Owner (or the User).

Act. Republic Act No. 9136 also known as the “Electric Power Industry Reform Act of 2001”,
which mandated the restructuring of the electricity industry, the privatization of the National Power
Corporation, and the institution of reforms, including the promulgation of the Philippine Grid Code
and the Philippine Distribution Code.
Active Energy. The integral of the Active Power with respect to time, measured in Watthour
(Wh) or multiples thereof. Unless otherwise qualified, the term “Energy” refers to Active Energy.
Active Power. The time average of the instantaneous power over one period of the
electrical wave, measured in Watts (W) or multiples thereof. For AC circuits or Systems, it is the

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product of the root-mean-square (RMS) or effective value of the voltage and the RMS value of the
in-phase component of the current. In a three-phase System, it is the sum of the Active Power of the
individual phases.
Administrative Loss. The component of System Loss that refers to the Energy used in
the proper operation of the Grid (e.g. station service) that is not classified as Technical Loss or Non-
technical Loss.
Adverse Weather. A weather condition that results in abnormally high rate of Forced
Outages for exposed Components while such condition persists, but does not qualify as a Major
Storm Disaster. An Adverse Weather condition can be defined for a particular System by selecting
the proper values and combinations of the weather conditions reported by the Weather Bureau
including thunderstorm, wind velocity, precipitation, and temperature.
Alert Warning. A notice issued by the System Operator, including Yellow Alert, Blue
Alert, and Red Alert, to notify the Grid Users that an alert state exists.
Amended Connection Agreement. An agreement between a User and the Grid Owner
(or the Distributor), which specifies the terms and conditions pertaining to the renovation or
modification of the User System or Equipment at an existing Connection Point in the Grid (or the
Distribution System).
Ancillary Service. Support services such as Frequency Regulating and Contingency
Reserves, Reactive Power support, and Black Start capability which are necessary to support the
transmission capacity and Energy that are essential in maintaining Power Quality and the Reliability
and Security of the Grid.
Apparent Power. The product of the root-mean-square (RMS) or effective value of the
current and the root-mean-square value of the voltage. For AC circuits or systems, it
is the square root of the sum of the squares of the Active Power and Reactive Power, measured in
volt-ampere (VA) or multiples thereof.
Asset Transfer Date. Such date as may be appointed by the Secretary of the DOE by order
of the Act for the transfer of the Grid Owner’s assets to Users or vice versa.
Automatic Generation Control (AGC). The regulation of the power output of
Generating Units within a prescribed area in response to a change in system Frequency, tie-line
loading, or the relation of these to each other, so as to maintain the System Frequency or the
established interchange with other areas within the predetermined limits or both.
Automatic Load Dropping (ALD). The process of automatically and deliberately
removing pre-selected Loads from a power System in response to an abnormal condition in order to
maintain the integrity of the System.
Availability. The long-term average fraction of time that a Component or System is in
service and satisfactorily performing its intended function. Also, the steady-state probability that a
Component or System is in service.
Average Assets. The average of the assets at the beginning and end of the period.
Average Collection Period. The ratio of average receivables to daily sales.
Average Inventory. The average of the inventory at the beginning and end of the period.
Average Receivables. The average of the accounts receivable at the beginning and end of
the period.
Average Sales. The average of the sales at the beginning and end of the period.
Backup Protection. A form of protection that operates independently of the specified
Components in the primary protective System. It may duplicate the primary protection or may be
intended to operate only if the primary protection fails or is temporarily out of service.
Backup Reserve. Refers to a Generating Unit that has Fast Start capability and can
Synchronize with the Grid to provide its declared capacity for a minimum period of eight (8) hours.
Also called Cold Standby Reserve.
Balanced Three-Phase Voltages. Three sinusoidal voltages with equal frequency and
magnitude and displaced from each other in phase by an angle of 120 degrees.
Black Start. The process of recovery from Total System Blackout using a Generating
Unit with the capability to start and synchronize with the System without an external power supply.
Blue Alert. A notice issued by the System Operator when a tropical disturbance is

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expected to make a landfall within 24 hours.

Business Day. Any day on which banks are open for business.
Capability and Availability Declaration. Refers to the data submitted by the Generator
for its Scheduled Generating Unit, which is used by the Market Operator in preparing the day-ahead
Generation Schedule. It includes declaration of capability and availability, Generation Scheduling
and Dispatch Parameters, and Price Data.
Central Dispatch. The process of issuing direct instructions to the electric power
industry participants by the System Operator to achieve an economic operation while maintaining
Power Quality, Stability, and the Reliability and Security of the Grid.
Circuit Breaker. A mechanical switching device, which is capable of making, carrying,
and breaking current under normal circuit conditions and also capable of making, carrying for a
specified time, and breaking current under specified abnormal circuit conditions, such as a short
circuit.
Committed Project Planning Data. The data pertaining to a User Development once the
offer for a Connection Agreement or an Amended Connection Agreement is accepted.
Completion Date. The date, specified in the Connection Agreement or Amended
Connection Agreement, when the User Development is scheduled to be completed
and be ready for connection to the Grid.
Component. A piece of Equipment, a line or circuit, a section of line or circuit, or a group of
items, which is viewed as a unit for a specific purpose.
Connected Project Planning Data. The data which replaces the estimated values that were
assumed for planning purposes, with validated actual values and updated estimates for the future
and by updated forecasts, in the case of forecast data.
Connection Agreement. An agreement between a User and the Grid Owner (or the
Distributor), which specifies the terms and conditions pertaining to the connection of the User
System or Equipment to a new Connection Point in the Grid (or the Distribution System).
Connection Point. The point of connection of the User System or Equipment to the Grid (for
Users of the Grid) or to the Distribution System (for Users of the Distribution System).
Connection Point Drawings. The drawings prepared for each Connection Point, which
indicate the equipment layout, common protection and control, and auxiliaries at the Connection
Point.
Constrained Generation Schedule. The Generation Schedule prepared by the Market
Operator after considering operational constraints, including the Grid constraints, changes in
Generating Unit Declared Data and parameters, and changes in forecasted data.
Contingency Reserve. Generating Capacity that is intended to take care of the loss of the
largest Synchronized Generating Unit or the power import from a single Grid interconnection,
whichever is larger. Contingency Reserve includes Spinning Reserve and Backup Reserve.
Control Center. A facility used for monitoring and controlling the operation of the Grid,
Distribution System, or a User System.
Critical Loading. Refers to the condition when the loading of transmission lines or
substation Equipment is between 90 percent and 100 percent of the continuous rating.
Customer. Any person/entity supplied with electric service under a contract with a
Distributor or Supplier.
Customer Demand Management. The reduction in the Supply of Electricity to a Customer
or the disconnection of a Customer in a manner agreed upon for commercial purposes, between a
Customer and its Generator, Distributor, or Supplier.
Customer Self-Generating Plant. A Customer with one or more Generating Units not
subject to Central Dispatch, to the extent that it operates exclusively to supply all or part of its own
electricity requirements, and does not export electrical power using the Distribution System.
Days in Inventory. The ratio of average inventory to cost of goods sold per day.
Debt-Equity Ratio. The ratio of long-term debt to total long-term capital.
Debt Ratio. The ratio of total liabilities to total assets.
Declared Data. The data provided by the Generator in accordance with the latest/current
Generating Unit parameters.

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Declared Net Capability. The Capability of a Generating Unit as declared by the Generator
net of station service.
Degradation of the Grid. A condition resulting from a User Development or a Grid
expansion project that has a Material Effect on the Grid or the System of other Users and which can
be verified through Grid Impact Studies.
Demand. The Active Power and/or Reactive Power at a given instant or averaged over a
specified interval of time, that is actually delivered or is expected to be delivered by an electrical
Equipment or supply System. It is expressed in Watts (W) and/or VARs and multiples thereof.
Demand Control. The reduction in Demand for the control of the Frequency when the
Grid is in an Emergency State. This includes Automatic Load Dropping, Manual Load Dropping,
demand reduction upon instruction by the System Operator, demand disconnection initiated by
Users, Customer Demand Management, and Voluntary Load Curtailment.
Demand Control Imminent Warning. A warning from the System Operator, not preceded
by any other warning, which is issued when a Demand Reduction is expected within the next 30
minutes.
Demand Forecast. The projected Demand and Active Energy related to a Connection Point
in the Grid.
Department of Energy (DOE). The government agency created pursuant to Republic Act
No. 7638 which is provided with the additional mandate under the Act of supervising the
restructuring of the electricity industry, developing policies and procedures, formulating and
implementing programs, and promoting a system of incentives that will encourage private sector
investments and reforms in the electricity industry and ensuring an adequate and reliable supply of
electricity.
Detailed Planning Data. Additional data, which the Grid Owner requires, for the conduct of
a more accurate Grid planning study.
Disconnection. The opening of an electrical circuit to isolate an electrical System or
Equipment from a power source.
Dispatch. The process of apportioning the total Demand of the Grid through the issuance
of Dispatch Instructions to the Scheduled Generating Units and the Generating Units providing
Ancillary Services in order to achieve the operational requirements of balancing Demand with
generation that will ensure the Security of the Grid.
Dispatch Instruction. Refers to the instruction issued by the System Operator to the
Generators with Scheduled Generating Units and the Generators whose Generating Units will
provide Ancillary Services to implement the final Generation Schedule in real time.
Dispute Resolution Panel. A panel appointed by the GMC (or DMC) to deal with specific
disputes relating to violations of the provisions of the Grid Code (or Distribution Code).
Distribution Code. The set of rules, requirements, procedures, and standards governing
Distribution Utilities and Users of Distribution System in the operation, maintenance and
development of the Distribution System. It also defines and establishes the relationship of the
Distribution System with the facilities or installations of the parties connected thereto.
Distribution of Electricity. The conveyance of electric power by a Distribution Utility
through its Distribution System.
Distribution System. The system of wires and associated facilities belonging to a
franchised Distribution Utility, extending between the delivery points on the transmission, sub-
transmission system, or Generating Plant connection and the point of connection to the premises of
the End-User.
Distribution Utility. An Electric Cooperative, private corporation, government-owned utility,
or existing local government unit that has an exclusive franchise to operate a Distribution System.
Distributor. Has the same meaning as Distribution Utility.
Dynamic Instability. A condition that occurs when small undamped oscillations begin
without any apparent cause because the Grid is operating too close to an unstable condition.
Earth Fault Factor. The ratio of the highest RMS phase-to-ground power Frequency voltage
on a sound phase, at a selected location, during a fault to ground affecting one or more phases, to
the RMS phase-to-ground power Frequency voltage that would be obtained at the selected location

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with the fault removed.

Electric Cooperative. A cooperative or corporation authorized to provide electric services
pursuant to Presidential Decree No. 269, as amended, and Republic Act No. 6938 within the
framework of the national rural electrification plan.
Electrical Diagram. A schematic representation, using standard electrical symbols, which
shows the connection of Equipment or power System Components to each other or to external
circuits.
Embedded Generating Plant. A Generating Plant that is connected to a Distribution
System or the System of any User and has no direct connection to the Grid.
Embedded Generating Unit. A Generating unit within an Embedded Generating Plant.
Embedded Generator. A person or entity that generates electricity using an Embedded
Generating Plant.
Emergency State. The Grid operating condition when a Multiple Outage Contingency has
occurred without resulting in Total System Blackout and any of the following conditions is present:
(a) generation deficiency exists; (b) Grid transmission voltages are outside the limits of 0.90
and 1.10; or (c) the loading level of any transmission line or substation Equipment is above
110 percent of its continuous rating.

End-User. A person or entity that requires the supply and delivery of electricity for its own
use.
Energy. Unless otherwise qualified, refers to the Active Energy.
Energy Regulatory Commission (ERC). The independent, quasi-judicial regulatory body
created pursuant to Republic Act No. 9136, which is mandated to promote competition, encourage
market development, ensure customer choice, and penalize abuse of market power in the
restructured electricity industry and among other functions, to promulgate and enforce the Philippine
Grid Code and the Philippine Distribution Code.
Equipment. All apparatus, machines, conductors, etc. used as part of, or in connection with,
an electrical installation.
Equipment Identification. The System of numbering or nomenclature for the identification
of Equipment at the Connection Points in the Grid.
Event. An unscheduled or unplanned occurrence of an abrupt change or disturbance in a
power System due to fault, Equipment Outage, or Adverse Weather Condition.
Expected Energy Not Supplied (EENS). The expected Energy curtailment due to
generating capacity Outages in the specified period.
Extra High Voltage (EHV). A voltage level exceeding 230 kV up to 765 kV.
Fast Start. The capability of a Generating Unit or Generating Plant to start and synchronize
with the Grid within 15 minutes.
Fault Clearance Time. The time interval from fault inception until the end of the arc
extinction by the Circuit Breaker.
Fault Level. The expected current, expressed in kA or in MVA, that will flow into a short
circuit at a specified point in the Grid or System.
Financial Current Ratio. The ratio of current assets to current liabilities.
Financial Efficiency Ratio. A financial indicator that measures the productivity in the
entity’s use of its assets.
Financial Year. The same as the calendar year.
Fixed Asset Boundary Document. A document containing information and which defines
the operational responsibilities for the Equipment at the Connection Point.
Flicker. The impression of unsteadiness of visual sensation induced by a light stimulus
whose luminance or spectral distribution fluctuates with time.
Forced Outage. An Outage that results from emergency conditions directly associated
with a Component, requiring that it be taken out of service immediately, either automatically or as
soon as switching operations can be performed. Also, an Outage caused by human error or the
improper operation of Equipment.
Franchise Area. A geographical area assigned or granted to a Distributor for the Distribution

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of Electricity.
Frequency. The number of complete cycles of a sinusoidal current or voltage per unit
time, usually measured in cycles per second or Hertz.
Frequency Control. A strategy used by the System Operator to maintain the Frequency of
the Grid within the limits prescribed by the Grid Code by the timely use of Frequency Regulating
Reserve, Contingency Reserve, and Demand Control.
Frequency Regulating Reserve. Refers to a Generating Unit that assists in Frequency
Control by providing automatic Primary and/or Secondary Frequency response.
Frequency Variation. The deviation of the fundamental System Frequency from its nominal
value.
Generating Plant. A facility, consisting of one or more Generating Units, where electric
Energy is produced from some other form of Energy by means of a suitable apparatus.
Generating Unit. A conversion apparatus including auxiliaries and associated
Equipment, functioning as a single unit, which is used to produce electric Energy from some other
form of Energy.
Generation Company. Any person or entity authorized by the ERC to operate a facility
used in the Generation of Electricity.
Generation of Electricity. The production of electricity by a Generation Company.
Generation Schedule. Refers to the schedule that indicates the hourly output of the
Scheduled Generating Units and the list of Generating Units that will provide Ancillary Services for
the next Schedule Day.
Generation Scheduling and Dispatch Parameters. Refers to the technical data pertaining
to the Scheduled Generating Units, which are taken into account in the preparation of the
Generation Schedule.
Generator. Has the same meaning as Generation Company.
Good Industry Practice. The practices and methods not specified in specific standards but
are generally accepted by the power industry to be sound and which ensure the safe and reliable
planning, operation, and maintenance of a power System.
Grid. The high voltage backbone System of interconnected transmission lines, substations,
and related facilities for the purpose of conveyance of bulk power. Also known as the Transmission
System.
Grid Code. The set of rules, requirements, procedures, and standards to ensure the safe,
reliable, secured and efficient operation, maintenance, and development of the high voltage
backbone Transmission System and its related facilities.
Grid Impact Studies. A set of technical studies which are used to assess the possible
effects of a proposed expansion, reinforcement, or modification of the Grid or a User Development
and to evaluate Significant Incidents.
Grid Owner. The party that owns the high voltage backbone Transmission System and is
responsible for maintaining adequate Grid capacity in accordance with the provisions of the Grid
Code.
Grounding. A conducting connection by which an electrical circuit or Equipment is
connected to earth or to some conducting body of relatively large extent that serves as ground.
Harmonics. Sinusoidal voltages and currents having frequencies that are integral
multiples of the fundamental frequency. High Voltage (HV). A voltage level exceeding 34.5 kV up to
230 kV.
IEC Standard. The international standard for electro-technical Equipment approved and
published by the International Electrotechnical Commission.
Imminent Overloading. Refers to the condition when the loading of transmission lines
or substation Equipment is above 100 percent up to 110 percent of the continuous rating.
Implementing Safety Coordinator. The Safety Coordinator assigned by the Grid Owner (or
the User) to establish the requested Safety Precautions in the User System (or the Grid).
Interest Cover. The ratio of earnings before interest and taxes plus depreciation to
interest plus principal payments made during the year.
Interruption. The loss of service to a Customer or a group of Customers or other

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facilities. An Interruption is the result of one or more Component Outages.

Interruption Duration. The period from the initiation of an Interruption up to the time
when electric service is restored.
Island Grid. A Generating Plant or a group of Generating Plants and its associated load,
which is isolated from the rest of the Grid but is capable of generating and maintaining a stable
supply of electricity to the Customers within the isolated area. Isolation. The electrical separation of
a part or Component from the rest of the electrical System to ensure safety when that part or
Component is to be maintained or when electric service is not required.
Large Customer. A Customer with a demand of at least one (1) MW, or the threshold value
specified by the ERC.
Large Generator. A Generation Company whose generating facility at the Connection Point
has an aggregate capacity in excess of 20 MW.
Leverage Ratio. A financial indicator that measures how an entity is heavily in debt.
Liquidity Ratio. A financial indicator that measures the ability of an entity to satisfy its
short-term obligations as they become due.
Load. An entity or an electrical Equipment that consumes electrical Energy.
Load Factor. The ratio of the total Energy delivered during a given period to the product of
the maximum Demand and the number of hours during the same period.
Load Reduction. The condition in which a Scheduled Generating Unit has reduced or is not
delivering electrical power to the System to which it is Synchronized.
Local Safety Instructions. A set of instructions regarding the Safety Precautions on HV or
EHV Equipment to ensure the safety of personnel carrying out work or testing on the Grid or the
User System.
Long Duration Voltage Variation. A variation of the RMS value of the voltage from nominal
voltage for a time greater than one (1) minute.
Long Term Flicker Severity. A value derived from twelve (12) successive
measurements of Short Term Flicker Severity over a two-hour period. It is calculated as the cube
root of the mean sum of the cubes of twelve (12) individual measurements.
Loss of Load Probability (LOLP). The expected number of days in a specified period in
which the daily peak Demand will exceed the available generating capacity.
Low Voltage. A voltage level not exceeding 1000 volts.
Maintenance Program. A set of schedules, which are coordinated by the Grid Owner
and the System Operator, specifying planned maintenance for Equipment in the Grid or in any User
System.
Major Storm Disaster. A weather condition wherein the design limits of Equipment or
Components are exceeded, and which results in extensive mechanical fatigue to Equipment,
widespread customer Interruption, and unusually long service restoration time.
Manual Load Dropping (MLD). The process of manually and deliberately removing pre-
selected Loads from a power System, in response to an abnormal condition, and in order to
maintain the integrity of the System.
Market Operator. An independent group, with equitable representation from the electric
power industry participants, whose task includes the operation and administration of the Wholesale
Electricity Spot Market in accordance with the Market Rules.
Material Effect. A condition that has resulted or is expected to result in problems involving
Power Quality, System Reliability, System Loss, and safety. Such condition may require extensive
work, modification, or replacement of Equipment in the Grid or the User System.
Medium Voltage (MV). A voltage level exceeding one (1) kV up to 34.5 kV.
Merit Order Table. Refers to the list showing the offer prices and the corresponding
capacity of the Scheduled Generating Units arranged in a manner such that the lowest offer price is
at the top of the list.
Minimum Stable Loading. The minimum Demand that a Generating Unit can safely
maintain for an indefinite period of time.
Modification. Any actual or proposed replacement, renovation, or construction in the
Grid or the User System that may have a Material Effect on the Grid or the System of any User.

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Momentary Average Interruption Frequency Index (MAIFI). The total number of

momentary customer power Interruptions within a given period divided by the total number of
customers served within the same period.
Momentary Interruption. An Interruption whose duration is limited to the period
required to restore service by automatic or supervisory controlled switching operations or by manual
switching at a location where an operator is immediately available.
Multiple Outage Contingency. An Event caused by the failure of two or more
Components of the Grid including Generating Units, transmission lines, and transformers.
National Electrification Administration (NEA). The government agency created under
Presidential Decree No. 269, whose additional mandate includes preparing Electric Cooperatives in
operating and competing under a deregulated electricity market, strengthening their technical
capability, and enhancing their financial viability as electric utilities through improved regulatory
policies.
National Power Corporation (NPC). The government corporation created under
Republic Act No. 6395, as amended, whose generation assets, real estate, and other disposable
assets, except for the assets of SPUG, and IPP contracts, shall be privatized, and whose
transmission assets shall be transferred to the Power Sector Assets and Liabilities Management
Corporation (PSALM).
National Transmission Corporation (TRANSCO). The corporation that assumed the
authority and responsibility of planning, maintaining, constructing, and centrally operating the high-
voltage Transmission System, including the construction of Grid interconnections and the provision
of Ancillary Services.
Negative Sequence Unbalance Factor. The ratio of the magnitude of the negative
sequence component of the voltages to the magnitude of the positive sequence component of the
voltages, expressed in percent.
Net Profit Margin. The ratio of net profit after taxes to sales.
Non-Technical Loss. The component of System Loss that is not related to the physical
characteristics and functions of the electrical System, and is caused primarily by human error,
whether intentional or not. Non-Technical Loss includes the Energy lost due to the tampering of
meters and erroneous meter reading.
Normal State. The Grid operating condition when the System Frequency, voltage, and
transmission line and equipment loading are within their normal operating limits, the Operating
Margin is sufficient, and the Grid configuration is such that any fault current can be interrupted and
the faulted equipment isolated from the Grid.
Notice to Synchronize. The notice given by the System Operator to a Generator requiring a
Generating Unit to Synchronize with the Grid.
Operating Margin. The margin of generation over the total Demand plus losses that is
necessary for ensuring Power Quality and the Security of the Grid. Operating Margin is the sum of
the Frequency Regulating Reserve and the Contingency Reserve.
Operating Program. A periodic program prepared by the Grid Owner and the System
Operator based on data submitted by Generators and Users which specifies the expected
Availability and aggregate capability of generation to meet forecasted Demand.
Outage. The state of a Component when it is not available to perform its intended function
due to some event directly associated with that Component. An Outage may or may not cause an
Interruption of service to Customers.
Outage Duration. The period from the initiation of the Outage until the affected Component
or its replacement becomes available to perform its intended function.
Overvoltage. A Long Duration Voltage Variation where the RMS value of the voltage is
greater than or equal to 110 percent of the nominal voltage.
Partial System Blackout. The condition when a part of the Grid is isolated from the rest of
the Grid and all generation in that part of the Grid has Shutdown.
Philippine Electrical Code (PEC). The electrical safety Code that establishes basic
materials quality and electrical work standards for the safe use of electricity for light, heat, power,
communications, signaling, and other purposes.

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Philippine Energy Plan (PEP). The overall energy program formulated and updated yearly
by the DOE and submitted to Congress pursuant to R.A. 7638.
Planned Activity Notice. A notice issued by a User to the Grid Owner and the System
Operator for any planned activity, such as a planned Shutdown or Scheduled Maintenance of its
Equipment, at least seven (7) days prior to the actual Shutdown or maintenance.
Point of Grounding. The point on the Grid or the User System at which Grounding can be
established for safety purposes.
Point of Isolation. The point on the Grid or the User System at which Isolation can be
established for safety purposes.
Power Development Program (PDP). The indicative plan for managing Demand
through energy-efficient programs and for the upgrading, expansion, rehabilitation, repair, and
maintenance of power generation and transmission facilities, formulated and updated yearly by the
DOE in coordination with Generators, the Grid Owner, System Operator, and Distribution Utilities.
Power Factor. The ratio of Active Power to Apparent Power.
Power Line Carrier (PLC). A communication Equipment used for transmitting data signals
through the use of power transmission lines.
Power Quality. The quality of the voltage, including its frequency and resulting current, that
are measured in the Grid, Distribution System, or any User System.
Power Sector Assets and Liabilities Management Corporation (PSALM Corp.). The
Government-owned and controlled corporation created pursuant to Sec. 49 of the Act,
which took ownership of all existing NPC generation assets, liabilities, IPP contracts,
real estate, and all other disposable assets.
Preliminary Project Planning Data. The data relating to a proposed User Development
at the time the User applies for a Connection Agreement or an Amended Connection Agreement.
Primary Response. The automatic response of a Generating Unit to Frequency changes,
released increasingly from zero to five seconds from the time of Frequency change,
and which is fully available for the next 25 seconds.
Profitability Ratio. A financial indicator that measures the entity’s return on its
investments.
Protective Device. A protective relay or a group of protective relays and/or logic elements
designed to perform a specified protection function.
Pumped Storage Plant. A hydro-electric Generating Plant which normally generates electric
Energy during periods of relatively high System Demand by utilizing water which has been pumped
into a storage reservoir usually during periods of relatively low System Demand.
Quick Ratio. The ratio of current assets less inventory to current liabilities.
Reactive Energy. The integral of the reactive power with respect to time, measured in VARh
or multiples thereof.
Reactive Power. The component of electrical power representing the alternating exchange
of stored Energy (inductive or capacitive) between sources and loads or between two systems,
measured in VAR or multiples thereof. For AC circuits or systems, it is the product of the RMS value
of the voltage and the RMS value of the quadrature component of the alternating current. In a three-
phase system, it is the sum of the Reactive Power of the individual phases.
Reactive Power Capability Curve. A diagram which shows the Reactive Power
capability limit versus the Real Power within which a Generating Unit is expected to operate under
normal conditions.
Red Alert. An alert issued by the System Operator when the Grid Contingency Reserve is
zero, a generation deficiency exists, or there is Critical Loading or Imminent Overloading of
transmission lines or Equipment.
Red Alert Warning. A warning issued by the System Operator to Users regarding a planned
Demand reduction following the declaration of a Red Alert.
Registered Data. Data submitted by a User to the Grid Owner at the time of connection of
the User System to the Grid.
Reliability. The probability that a System or Component will perform a required task or
mission for a specified time in a specified environment. It is the ability of a power System to

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continuously provide service to its Customers.

Requesting Safety Coordinator. The Safety Coordinator assigned by the Grid Owner (or
the User) when it requests that Safety Precautions be established in the User System (or the Grid).
Return on Assets (ROA). The ratio of net profits after taxes to average total assets.
Return on Investment (ROI). The most common name given by analysts to return on
assets.
Safety Coordinator. A person designated and authorized by the Grid Owner (or the User) to
be responsible for the coordination of Safety Precautions at the Connection Point when work or
testing is to be carried out on a System which requires the provision of Safety Precautions for HV or
EHV Equipment.
Safety Log. A chronological record of messages relating to safety coordination sent and
received by each Safety Coordinator.
Safety Precautions. Refers to the Isolation and Grounding of HV or EHV Equipment when
work or testing is to be done on the Grid or User System.
Safety Rules. The rules that seek to safeguard personnel working on the Grid (or User
System) from the hazards arising from the Equipment or the Grid (or User System).
Safety Tag. A label conveying a warning against possible interference or intervention as
defined in the safety clearance and tagging procedures.
Sales-to-Assets Ratio. The ratio of sales to average total assets.
Schedule Day. The period from 0000H to 2400H each day.
Scheduled Generating Plant. A Generating Plant whose Generating Units are subject to
Central Dispatch by the System Operator.
Scheduled Generating Unit. A Generating Unit within a Scheduled Generating Plant.
Scheduled Maintenance. The Outage of a Component or Equipment due to
maintenance, which is coordinated by the Grid Owner and the System Operator or User, as the
case may be.
Scheduling. The process of matching the offers to supply Energy and provide Ancillary
Services with the bids to buy Energy and the operational support required by the Grid, to prepare
the Generation Schedule, which takes into account the operational constraints in the Grid.
Secondary Response. The automatic response to Frequency which is fully available 25
seconds from the time of Frequency change to take over from the Primary Response, and which is
sustainable for at least 30 minutes.
Security. The continuous operation of a power system in the Normal State, ensuring safe
and adequate supply of power to End-Users, even when some parts or Components of the System
are on Outage.
Security Red Alert. A notice issued by the System Operator when peace and order
problems exist, which may affect Grid operations.
Short Duration Voltage Variation. A variation of the RMS value of the voltage from its
nominal value for a time greater than one-half cycle of the power frequency but not exceeding one
minute.
Short Term Flicker Severity. A measure of the visual severity of Flicker derived from a
time-series output of a Flicker meter over a ten-minute period.
Shutdown. The condition of the Equipment when it is de-energized or disconnected from
the System.
Significant Incident. An Event on the Grid, a Distribution System, or the System of any
User that has a serious or widespread effect on the Grid, the Distribution System, and/or the User
System.
Significant Incident Notice. A notice issued by the System Operator or any User if a
Significant Incident has transpired on the Grid or the System of the User, as the case may be.
Single Outage Contingency. An Event caused by the failure of one Component of the Grid
including a Generating Unit, transmission line, or a transformer.
Site. Refers to a substation or switchyard in the Grid or the User System where the
Connection Point is situated.
Small Generator. A Generation Company whose generating facility at the Connection Point

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has an aggregate capacity of 20 MW or below.

Small Power Utilities Group (SPUG). The functional unit of NPC created to pursue the
missionary electrification function.
Spinning Reserve. The component of Contingency Reserve which is Synchronized to the
Grid and ready to take on Load. Also called Hot Standby Reserve.
Spot Market. Has the same meaning as the Wholesale Electricity Spot Market.
Stability. The ability of the dynamic Components of the power System to return to a normal
or stable operating point after being subjected to some form of change or disturbance.
Standard Planning Data. The general data required by the Grid Owner as part of the
application for a Connection Agreement or Amended Connection Agreement.
Start-Up. The process of bringing a Generating Unit from Shutdown to synchronous
speed.
Supervisory Control and Data Acquisition (SCADA). A system of remote control and
telemetry used to monitor and control a power System.
Supplier. Any person or entity authorized by the ERC to sell, broker, market, or
aggregate electricity to the End-users.
Supply of Electricity. The sale of electricity by a party other than a Generator or a
Distributor in the Franchise Area of a Distribution Utility using the wires of the Distribution Utility
concerned.
Sustained Interruption. Any Interruption that is not classified as a Momentary
Interruption.
Synchronized. The state when connected Generating Units and/or interconnected AC
Systems operate at the same frequency and where the phase angle displacements
between their voltages vary about a stable operating point.
System. Refers to the Grid or Distribution System or any User System. Also a group of
Components connected or associated in a fixed configuration to perform a specified function.
System Loss. The total Energy injected into the Grid (or the Distribution System) minus the
total Energy delivered to Distributors and End-Users. In the Grid Code, it is the Energy injected into
the Grid by Generating Plants, plus (or minus) the Energy transported through Grid interconnections
minus the total Energy delivered to Distributors and End-Users. In the Distribution Code, it is the
Energy received from the Grid plus internally generated Energy by Embedded Generating Plants,
plus (or minus) the Energy transported by other Distributors minus the total Energy delivered
to End-Users.
System Operator. The party responsible for generation Dispatch, the provision of Ancillary
Services, and operation and control to ensure safety, Power Quality, Stability, Reliability, and the
Security of the Grid.
System Test. The set of tests which involve simulating conditions or the controlled
application of unusual or extreme conditions that may have an impact on the Grid or the User
System.
System Test Coordinator. A person who is appointed as the chairman of the System
Test Group.
System Test Group. A group established for the purpose of coordinating the System Test to
be carried out on the Grid or the User System.
System Test Procedure. A procedure that specifies the switching sequence and proposed
timing of the switching sequence, including other activities deemed necessary and appropriate by
the System Test Group in carrying out the System Test.
System Test Proponent. Refers to the Grid Owner or the User who plans to undertake a
System Test and who submits a System Test Request to the System Operator.
System Test Program. A program prepared by the System Test Group, which contains the
plan for carrying out the System Test, the System Test Procedure, including the manner in which
the System Test is to be monitored, the allocation of costs among the affected parties, and other
matters that the System Test Group had deemedappropriate and necessary.
System Test Report. A report prepared by the Test Proponent at the conclusion of a
System Test for submission to the System Operator, the Grid Owner (if it is not the System Test

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Proponent), the affected Users, and the members of the System Test Group.
System Test Request. A notice submitted by the System Test Proponent to the System
Operator indicating the purpose, nature, and procedures for carrying out the proposed System Test.
Technical Loss. The component of System Loss that is inherent in the physical delivery of
electric Energy. It includes conductor loss, transformer core loss, and technical errors in meters.
Test and Commissioning. Putting into service a System or Equipment that has passed all
required tests to show that the System or Equipment was erected and connected in the proper
manner and can be expected to work satisfactorily.
Total Demand Distortion (TDD). The ratio of the root-mean-square value of the harmonic
content to the root-mean-square value of the rated or maximum demand fundamental quantity,
expressed in percent.
Total Harmonic Distortion (THD). The ratio of the root-mean-square value of the
harmonic content to the root-mean-square value of the fundamental quantity, expressed in percent.
Total System Blackout. The condition when all generation in the Grid has ceased, the
entire System has Shutdown, and the System Operator must implement a Black Start
to restore the Grid to its Normal State.
Transformer. An electrical device or Equipment that converts voltage and current from
one level to another.
Transient Instability. A condition that occurs when undamped oscillations between
parts of the Grid result in Grid separation. Such Grid disturbances may occur after a
fault and the loss of Generating Units and/or transmission lines.
Transient Voltages. High-frequency Overvoltages caused by lightning, switching of
capacitor banks or cables, current chopping, arcing ground faults, ferroresonance, and
other related phenomena.
Transmission Development Plan (TDP). The program for expansion, reinforcement,
and rehabilitation of the Transmission System which is prepared by the Grid Owner and submitted
to the DOE for integration with the PDP and PEP.
Transmission of Electricity. Refers to the conveyance of electricity through the Grid.
Transmission System. Has the same meaning as Grid.
Unconstrained Generation Schedule. The Generation Schedule without considering any
operational constraints such as the Grid constraints, changes in Generating Unit Declared Data and
parameters, and changes in forecasted data.
Underfrequency Relay (UFR). An electrical relay that operates when the System
Frequency decreases to a preset value. Undervoltage. A Long Duration Voltage Variation where
the RMS value of the voltage is less than or equal to 90 percent of the nominal voltage.
User. A person or entity that uses the Grid or Distribution System and related facilities.
Also, a person or entity to whom the Grid Code or Distribution Code applies.
User Development. The System or Equipment to be connected to the Grid or to be
modified, including the relevant proposed new connections and/or modifications within the User
System that requires a Connection Agreement or an Amended Connection Agreement.
User System. Refers to a System owned or operated by a User of the Grid or Distribution
System.
Voltage. The electromotive force or electric potential difference between two points,
which causes the flow of electric current in an electric circuit.
Voltage Control. The strategy used by the System Operator, Distributors, or User to
maintain the voltage of the Grid, Distribution System, or the User System within the limits prescribed
by the Grid Code or the Distribution Code.
Voltage Dip. Has the same meaning as Voltage Sag.
Voltage Fluctuation. The systematic variations of the voltage envelope or random
amplitude changes where the RMS value of the voltage is between 90 percent and
110 percent of the nominal value.
Voltage Instability. A condition that results in Grid voltages that are below the level
where voltage control Equipment can return them to the normal level. In many cases,
the problem is compounded by excessive Reactive Power loss.

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Voltage Reduction. The method used to temporarily decrease Demand by a reduction of

the System voltage.
Voltage Sag. A Short Duration Voltage Variation where the RMS value of the voltage
decreases to between 10 percent and 90 percent of the nominal value.
Voltage Swell. A Short Duration Voltage Variation where the RMS value of the voltage
increases to between 110 percent and 180 percent of the nominal value.
Voltage Unbalance. In the Grid Code, it refers to the Negative Sequence Unbalance
Factor or the Zero Sequence Unbalance Factor. In the Distribution Code, it refers to
the maximum deviation from the average of the three phase voltages divided by the
average of the three phase voltages, expressed in percent.
Voltage Variation. The deviation of the root-mean-square (RMS) value of the voltage
from its nominal value, expressed in percent.
Voluntary Load Curtailment (VLC). The agreed self-reduction of Demand by
identified industrial End-Users to assist in Frequency Control when generation
deficiency exists.
Weather Disturbance Alert. A notice issued by the System Operator when a weather
disturbance has entered the Philippine area of responsibility.
Weather Disturbance Monitoring. The tracking of weather disturbances.
WESM Rules. The rules that govern the administration and operation of the Wholesale
Electricity Spot Market.
Wheeling Charge. Refers to the tariff paid for the conveyance of electric Power and
Energy through the Grid or a Distribution System.
Wholesale Electricity Spot Market (WESM). The electricity market established by the
DOE pursuant to Section 30 of the Act.
Yellow Alert. A notice issued by the System Operator when the Contingency Reserve is
less than the capacity of the largest Synchronized Generating Unit or power import
from a single interconnection, whichever is higher.
Zero Sequence Unbalance Factor. The ratio of the magnitude of the zero sequence
component of the voltages to the magnitude of the positive sequence component of
the voltages, expressed in percent.

1.7 ABBREVIATIONS

A Ampere
AC Alternating Current
AGC Automatic Generation Control
ALD Automatic Load Dropping
DC Direct Current
DMC Distribution Management Committee
DOE Department of Energy
EBIT Earnings Before Interest and Taxes
EENS Expected Energy Not Supplied
EHV Extra High Voltage
ERB Energy Regulatory Board
ERC Energy Regulatory Commission
GMC Grid Management Committee
GW Gigawatt
GWh Gigawatt-hour
HV High Voltage
IDMAS Integrated Disturbance Monitoring and Analysis System
IEC International Electrotechnical Commission
IED Intelligent Electronic Devices
IEEE Institute of Electrical and Electronics Engineers
ISO International Standards Organization

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IRR Implementing Rules and Regulations

kW Kilowatt
kWh Kilowatt-hour
kVARh Kilovar-hour
LOLP Loss-of-Load Probability
LV Low Voltage
MAIFI Momentary Average Interruption Frequency Index
MLD Manual Load Dropping
MV Medium Voltage
MVA Megavolt-ampere
MVAR Megavar
MVARh Megavar-hour
MW Megawatt
MWh Megawatt-hour
NEA National Electrification Administration
NSUF Negative Sequence Unbalance Factor
PBX Private Branch Exchange
PDP Power Development Program
PEP Philippine Energy Plan
PLC Power Line Carrier
RISSP Record of Inter-System Safety Precautions
RMS Root-mean-square
ROA Return on Assets
ROI Return on Investment
RTU Remote Terminal Unit
SCADA Supervisory Control and Data Acquisition
SEIN Standard Equipment Identification Number
SPUG Small Power Utility Group
TDD Total Demand Distortion
TDP Transmission Development Plan
THD Total Harmonic Distortion
TRANSCO National Transmission Corporation
UFR Underfrequency Relay
V Volts
VA Volt-Ampere
VAR Volt-Ampere Reactive
VLC Voluntary Load Curtailment
W Watt
WESM Wholesale Electricity Spot Market
Wh Watt-hour
ZSUF Zero Sequence Unbalance Factor

CHAPTER 5
GRID CONNECTION REQUIREMENTS

5.1 PURPOSE AND SCOPE 5.1.1 Purpose

(a) To specify the technical, design, and operational criteria at the User’s Connection Point;
(b) To ensure that the basic rules for connection to the Grid or to a User System
are fair and non-discriminatory for all Users of the same category; and
(c) To list and collate the data required by the Grid Owner from each category of user and to
list the data to be provided by the Grid Owner to each category of User.

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5.1.2 Scope of Application This Chapter applies to the following Grid Users:
(a) The Grid Owner;
(b) The System Operator;
(c) Generators;
(d) Distributors;
(e) Suppliers; and
(f) Any other entity with a User System connected to the Grid.

5.2 GRID TECHNICAL, DESIGN, AND OPERATIONAL CRITERIA

5.2.1 Power Quality Standards
5.2.1.1 The Grid Owner and System Operator shall ensure that at any Connection Point in
the Grid, the Power Quality standards specified in Article 3.2 are complied with.
5.2.1.2 Users seeking connection to the Grid or modification of an existing connection shall
ensure that their Equipment can operate reliably and safely within the limits specified in
Article 3.2 during normal conditions, and can withstand the limits specified in this Article.

5.2.2 Frequency Variations

5.2.2.1 During normal operating conditions, the Grid Frequency shall be within the limits
specified in Section 3.2.2.
5.2.2.2 In case the System frequency momentarily rises to 62.4 Hz or falls to 57.6 Hz, all
Generating Units shall remain in synchronism with the Grid for at least five (5) seconds to
allow the System Operator to undertake measures to correct the situation.

5.2.3 Voltage Variations

5.2.3.1 The Long Duration Voltage Variations at any Connection Point during normal
conditions shall be within the limits specified in Section 3.2.3.
5.2.3.2 During Single Outage Contingencies, the RMS values of the voltages shall not result
in an undervoltage or Overvoltage at any Connection Point.
5.2.3.3 The Grid Owner shall consider the maximum estimated Voltage Swell in the selection
of the voltage ratings of Grid Equipment.

5.2.4 Harmonics

5.2.4.1 The Total Harmonic Distortion of the voltage and the Total Demand Distortion of the
current, at any Connection Point, shall not exceed the limits prescribed in Section 3.2.4.
5.2.4.2 Users shall ensure that their System shall not cause the harmonics in the Grid to
exceed the limits specified in Section 3.2.4.

5.2.5 Voltage Unbalance

5.2.5.1 The maximum Negative Sequence Unbalance Factor at any Connection Point in the
Grid shall not exceed the limits specified in Section 3.2.5 during normal operating conditions.
5.2.5.2 The maximum Zero Sequence Unbalance Factor at any Connection Point in the Grid
shall not exceed the limits specified in Section 3.2.5 during normal operating conditions.

5.2.6 Voltage Fluctuation and Flicker Severity

5.2.6.1 The Voltage Fluctuation at any Connection Point with a fluctuating Demand shall not
exceed the limits specified in Section 3.2.6.
5.2.6.2 The Flicker Severity at any Connection Point in the Grid shall not exceed the limits
specified in Section 3.2.6.

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5.2.7 Transient Voltage Variations

5.2.7.1 The Grid and the User System shall be designed and operated to include devices
that will mitigate the effects of transient Overvoltages on the Grid and the User System.
5.2.7.2 The Grid Owner and the User shall take into account the effect of
electrical transients when specifying the insulation of their electrical Equipment.
5.2.7.3 Infrequent short-duration peaks may be permitted subject to the conditions specified
in Section 3.2.7.

5.2.8 Grounding Requirements

5.2.8.1 At nominal voltages of 115 kV and above, the Grid shall be effectively
grounded with an Earth Fault Factor of less than 1.4.
5.2.8.2 At nominal voltages below 115 kV, the Grid Owner shall specify the grounding
requirements and the applicable Earth Fault Factor at the Connection Point.

5.2.9 Equipment Standards

5.2.9.1 All Equipment at the Connection Point shall comply with the requirements of the IEC
Standards or their equivalent national standards.
5.2.9.2 All Equipment at the Connection Point shall be designed, manufactured, and tested
in accordance with the quality assurance requirements of the ISO 9000 series.
5.2.9.3 The prevailing standards at the time when the Connection Point was designed or
modified, rather than the Test and Commissioning date or the Asset Transfer Date, shall
apply to all Equipment at the Connection Point.

5.2.10 Maintenance Standard

5.2.10.1 All Equipment at the Connection Point shall be operated and maintained in
accordance with Good Industry Practice and in a manner that shall not pose a threat to the
safety of any personnel or cause damage to the Equipment of the Grid Owner or the User.
5.2.10.2 The User shall maintain a log containing the test results and maintenance
records relating to its Equipment at the Connection Point and shall make this log available
when requested by the Grid Owner.
5.2.10.3 The Grid Owner shall maintain a log containing the test results and maintenance
records relating to its Equipment at the Connection Point and shall make this log available
when requested by the User.

5.3 PROCEDURES FOR GRID CONNECTION OR MODIFICATION

5.3.1 Connection Agreement

5.3.1.1 Any User seeking a new connection to the Grid shall secure the required Connection
Agreement with the Grid Owner prior to the actual connection to the Grid.
5.3.1.2 The Connection Agreement shall include provisions for the submission of information
and reports, Safety Rules, Test and Commissioning programs, Electrical Diagrams,
statement of readiness to connect, certificate of approval to connect, and other requirements
prescribed by the ERC.

5.3.2 Amended Connection Agreement

5.3.2.1 Any User seeking a modification of an existing connection to the Grid shall secure
the required Amended Connection Agreement with the Grid Owner prior to the actual
modification of the existing connection to the Grid.
5.3.2.2 The Amended Connection Agreement shall include provisions for the submission of

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additional information and reports required by the Grid Owner and other requirements
prescribed by the ERC.

5.3.3 Grid Impact Studies

5.3.3.1 The Grid Owner shall develop and maintain a set of required technical planning
studies for evaluating the impact on the Grid of any proposed connection or modification to
an existing connection. These planning studies shall be completed within the period
prescribed by the ERC. The Grid Owner shall treat this period as the maximum acceptable
planning study duration.
5.3.3.2 The Grid Owner shall specify which of the planning studies described in Article 6.3
will be carried out to evaluate the impact of the proposed User Development on the Grid.
5.3.3.3 The User shall indicate whether it wishes the Grid Owner to undertake additional
technical studies. The User shall shoulder the cost of the additional technical studies.
5.3.3.4 Any User applying for connection or a modification of an existing connection to the
Grid shall take all necessary measures to ensure that the proposed User Development will
not result in the Degradation of the Grid. The Grid Owner may disapprove an application for
connection or a modification to an existing connection, if the Grid Impact Studies show that
the proposed User Development will result in the Degradation of the Grid.
5.3.3.5 To enable the Grid Owner to carry out the necessary detailed Grid Impact Studies,
the User may be required to provide some or all of the Detailed Planning Data listed in
Article 6.5 ahead of the normal timescale referred to in Section 5.3.6.

5.3.4 Application for Connection or Modification

5.3.4.1 The Grid Owner shall establish the procedures for the processing of applications for
connection or modification of an existing connection to the Grid.
5.3.4.2 Any User applying for connection or a modification of an existing connection to the
Grid shall secure from the Grid Owner the Five-Year Statement of the TDP.
5.3.4.3 The User shall submit to the Grid Owner the completed application form for
connection or modification of an existing connection to the Grid. The application form shall
include the following information:
(a) A description of the proposed connection or modification to an existing
connection, which shall comprise the User Development at the Connection Point;
(b) The relevant Standard Planning Data listed in Article 6.4; and
(c) The Completion Date of the proposed User Development.

5.3.4.4 The User shall submit the planning data in three (3) stages, according to
their degree of commitment and validation as described in Section 5.10.2. These include:
(a) Preliminary Project Planning Data;
(b) Committed Project Planning Data; and
(c) Connected Project Planning Data.

5.3.5 Processing of Application

5.3.5.1 The Grid Owner shall process the application for connection or modification to an
existing connection within 30 days from the submission of the completed application form.
5.3.5.2 After evaluating the application submitted by the User, the Grid Owner shall inform
the User whether the proposed User Development is acceptable or not.
5.3.5.3 If the application of the User is acceptable, the Grid Owner and the User shall sign a
Connection Agreement or an Amended Connection Agreement, as the case may be.
5.3.5.4 If the application of the User is not acceptable, the Grid Owner shall notify the User
why its application is not acceptable. The Grid Owner shall include in its notification a
proposal on how the User’s application will be acceptable to the Grid Owner.
5.3.5.5 The User shall accept the proposal of the Grid Owner within 30 days, or a longer
period specified in the Grid Owner’s proposal, after which the proposal automatically lapses.

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5.3.5.6 The acceptance by the User of the Grid Owner’s proposal shall lead to the signing of
a Connection Agreement or an Amended Connection Agreement.
5.3.5.7 If the Grid Owner and the User cannot reach agreement on the proposed connection
or modification to an existing connection, the Grid Owner or the User may bring the matter
before the ERC for resolution.
5.3.5.8 If a Connection Agreement or an Amended Connection Agreement is signed, the
User shall submit to the Grid Owner, within 30 days from signing or a longer period agreed
to by the Grid Owner and the User, the Detailed Planning Data pertaining to the proposed
User Development, as specified in Article 6.5.

5.3.6 Submittals Prior to the Commissioning Date

5.3.6.1 The following shall be submitted by the User prior to the commissioning date,
pursuant to the terms and conditions and schedules specified in the Connection Agreement:
(a) Specifications of major Equipment not included in the Standard Planning Data
and Detailed Planning Data;
(b) Details of the protection arrangements and settings referred to in Section 5.4.9 for
Generating Units and in Section 5.5.2 for Distributors and other Grid Users;
(c) Information to enable the Grid Owner to prepare the Fixed Asset Boundary
Document referred to in Article 5.7 including the name(s) of Accountable Manager(s);
(d) Electrical Diagrams of the User’s Equipment at the Connection Point as
described in Article 5.8;
(e) Information that will enable the Grid Owner to prepare the Connection Point
Drawings, referred to in Article 5.9;
(f) Copies of all Safety Rules and Local Safety Instructions applicable to the User’s
Equipment and a list of Safety Coordinators, pursuant to the requirements of Article
7.8;
(g) A list of the names and telephone numbers of authorized representatives,
including the confirmation that they are fully authorized to make binding decisions on
behalf of the User, for Significant Incidents pursuant to the procedures specified in
Section 7.7.2;
(h) Proposed Maintenance Program; and
(i) Test and Commissioning procedures for the Connection Point and the User
Development.
5.3.6.2 The requirements in items (e) and (f) above need not be submitted for Embedded
Generating Plants pursuant to the terms and conditions specified in the Connection
Agreement.

5.3.7 Commissioning of Equipment and Physical Connection to the Grid

5.3.7.1 Upon completion of the User Development, including work at the Connection Point,
the Equipment at the Connection Point and the User Development shall be subjected to the
Test and Commissioning procedures specified in Section 5.3.6.
5.3.7.2 The User shall then submit to the Grid Owner a statement of readiness to
connect, which shall include the Test and Commissioning reports.
5.3.7.3 Upon acceptance of the User’s statement of readiness to connect, the Grid Owner
shall, within 15 days, issue a certificate of approval to connect.
5.3.7.4 The physical connection to the Grid shall be made only after the certificate of
approval to connect has been issued by the Grid Owner to the User.

5.4 REQUIREMENTS FOR LARGE GENERATORS

5.4.1 Requirements Relating to the Connection Point

5.4.1.1 The Generator’s Equipment shall be connected to the Grid at the voltage level(s)

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agreed to by the Grid Owner and the Generator based on Grid Impact Studies.
5.4.1.2 The Connection Point shall be controlled by a circuit breaker that is capable of
interrupting the maximum short circuit current at the point of connection.
5.4.1.3 Disconnect switches shall also be provided and arranged to isolate the circuit
breaker for maintenance purposes.

5.4.2 Generating Unit Power Output

5.4.2.1 The Generating Unit shall be capable of continuously supplying its Active Power
output, as specified in the Generator’s Declared Data, within the System Frequency
range of 59.7 to 60.3 Hz. Any decrease of power output occurring in the Frequency
range of 59.7 to 57.6 Hz shall not be more than the required proportionate value of
the System Frequency decay.
5.4.2.2 The Generating Unit shall be capable of supplying its Active Power and Reactive
Power outputs, as specified in the Generator’s Declared Data, within the voltage
variations specified in Section 5.2.3 during normal operating conditions.
5.4.2.3 The Generating Unit shall be capable of supplying its Active Power output, as
specified in the Generator’s Declared Data, within the limits of 0.85 Power Factor
lagging and 0.90 Power Factor leading at the Generating Unit’s terminals, in
accordance with its Reactive Power Capability Curve.

5.4.3 Frequency Withstand Capability

5.4.3.1 If the System frequency momentarily rises to 62.4 Hz or falls to 57.6 Hz, all
Generating Unit shall remain in synchronism with the Grid for at least five (5) seconds, as
specified in Section 5.2.2. The Grid Owner may waive this requirement, if there are sufficient
technical reasons to justify the waiver.
5.4.3.2 The Generator shall be responsible for protecting its Generating Units against
damage for frequency excursions outside the range of 57.6 Hz and 62.4 Hz. The Generator
shall decide whether or not to disconnect its Generating Unit from the Grid.

5.4.4 Unbalance Loading Withstand Capability

5.4.4.1 The Generating Unit shall meet the requirements for Voltage Unbalance as specified
in Section 5.2.5.
5.4.4.2 The Generating Unit shall also be required to withstand without tripping, the
unbalance loading during clearance by the Backup Protection of a close-up phase-to-phase
fault on the Grid or, in the case of an Embedded Generating Unit, on the User System.

5.4.5 Speed-Governing System

5.4.5.1 The Generating Unit shall be capable of contributing to Frequency Control by

continuous regulation of the Active Power supplied to the Grid or to the User System in the
case of an Embedded Generating Unit.
5.4.5.2 The Generating Unit shall be fitted with a fast-acting speed-governing system to
provide Frequency Control under normal operating conditions in accordance with Article 7.6.
The speed-governing System shall have an overall speed-droop characteristic of five (5)
percent or less. Unless waived by the Grid Owner in consultation with System Operator, the
speed-governing System shall be capable of accepting raise and lower signals from the
Control
Center of the System Operator.
5.4.5.3 When a Generating Unit becomes isolated from the Grid, the speedgoverning
System shall provide Frequency Control to the resulting Island Grid. Exemptions from this
requirement shall be specified in the Connection Agreement or Amended Connection
Agreement.

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5.4.6 Excitation Control System

5.4.6.1 The Generating Unit shall be capable of contributing to Voltage Control by

continuous regulation of the Reactive Power supplied to the Grid or, in the case of
Embedded Generating Unit, to the User System.
5.4.6.2 The Generating Unit shall be fitted with a continuously acting automatic excitation
control System to control the terminal voltage without instability over the entire operating
range of the Generating Unit.
5.4.6.3 The performance requirements for excitation control facilities, including power
System stabilizers, where necessary for System operations shall be specified in the
Connection Agreement or Amended Connection Agreement.

5.4.7 Black Start Capability

5.4.7.1 The Grid shall have Black Start capability at a number of strategically located
Generating Plants.
5.4.7.2 The Generator shall specify in its application for a Connection Agreement or
Amended Connection Agreement if its Generating Unit has a Black Start capability.

5.4.8 Fast Start Capability

5.4.8.1 The Generator shall specify in its application for a Connection Agreement or
Amended Connection Agreement if its Generating Unit has a Fast Start capability.
5.4.8.2 The Generating Unit shall automatically Start-Up in response to frequency-level
relays with settings in the range of 57.6 Hz to 62.4 Hz.

5.4.9 Protection Arrangements

5.4.9.1 The protection of Generating Units and Equipment and their connection to the Grid
shall be designed, coordinated, and tested to achieve the desired level of speed, sensitivity,
and selectivity in fault clearing and to minimize the impact of faults on the Grid.
5.4.9.2 The Grid Owner and the User shall be solely responsible for the protection System of
the electrical equipment and facilities at their respective sides of the Connection Point.
5.4.9.3 The Fault Clearance Time shall be specified in the Connection Agreement or
Amended Connection Agreement. The Fault Clearance Time for a fault on the Grid where
the Generator’s Equipment are connected, or on the Generator’s System where the Grid
Owner’s Equipment are connected, shall not be longer than:
(a) 85 milliseconds (ms) for 500 kV;
(b) 100 ms for 230 kV and 138 kV; and
(c) 120 ms for voltages less than 138 kV.
5.4.9.4 Where the Generator’s Equipment are connected to the Grid at 500 kV, 230 kV, or
138 kV and a circuit breaker is provided by the Generator (or by the Grid Owner) at the
Connection Point to interrupt the fault current at any side of the Connection Point, a circuit
breaker fail protection shall also be provided by the Generator (or the Grid Owner).
5.4.9.5 The circuit breaker fail protection shall be designed to initiate the tripping of all the
necessary electrically-adjacent circuit breakers and to interrupt the fault current within the
next 50 milliseconds, in the event that the primary protection system fails to interrupt the fault
current within the prescribed Fault Clearance Time.
5.4.9.6 The Generator shall provide protection against loss of excitation on the Generating
Unit.
5.4.9.7 The Generator shall provide protection against pole-slipping on the
Generating Unit.
5.4.9.8 The ability of the protection scheme to initiate the successful tripping of the Circuit

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Breakers that are associated with the faulty Equipment, measured by the System Protection
Dependability Index, shall be not less than 99 percent.

5.4.10 Transformer Connection and Grounding

5.4.10.1 If the Generator’s Equipment are connected to the Grid at a voltage that is equal to
or greater than 115 kV, the high-voltage side of the transformer shall be connected in Wye,
with the neutral available for connection to ground.
5.4.10.2 The Grid Owner shall specify the connection and grounding requirements for the
low-voltage side of the transformer, in accordance with the provisions of Section 5.2.8.

5.5 REQUIREMENTS FOR DISTRIBUTORS AND OTHER GRID USERS

5.5.1 Requirements Relating to the Connection Point

5.5.1.1 The Distributor’s or other Grid User’s Equipment shall be connected to the Grid at
voltage level(s) agreed to by the Grid Owner and the Distributor (or other Grid User) based
on Grid Impact Studies.
5.5.1.2 The Connection Point shall be controlled by a circuit breaker that is capable of
interrupting the maximum short circuit current at the point of connection. 5.5.1.3 Disconnect
switches shall also be provided and arranged to isolate the
circuit breaker for maintenance purposes.

5.5.2 Protection Arrangements

5.5.2.1 The protection of the Distributor’s or other Grid User’s Equipment at the Connection
Point shall be designed, coordinated, and tested to achieve the desired level of speed,
sensitivity, and selectivity in fault clearing and to minimize the impact of faults on the Grid.
5.5.2.2 The Grid Owner and the User shall be solely responsible for the protection systems
of electrical equipment and facilities at their respective sides of the Connection Point.
5.5.2.3 The Fault Clearance Time shall be specified in the Connection Agreement or
Amended Connection Agreement. The Fault Clearance Time for a fault on the Grid where
the User’s Equipment are connected, or on the User System where the Grid Owner’s
Equipment are connected, shall not be longer than:
(a) 85 ms for 500 kV;
(b) 100 ms for 230 kV and 138 kV; and
(c) 120 ms for voltages less than 138 kV.

5.5.2.4 Where the Distributor’s or other Grid User’s Equipment are connected to the Grid at
500 kV, 230 kV, or 138 kV and a circuit breaker is provided by the Distributor or other Grid
User (or by the Grid Owner) at the Connection Point to interrupt fault currents at any side of
the Connection Point, a circuit breaker fail protection shall also be provided by the Distributor
or other Grid User (or the Grid Owner).
5.5.2.5 The circuit breaker fail protection shall be designed to initiate the tripping of all the
necessary electrically-adjacent circuit breakers and to interrupt the fault current within the
next 50 milliseconds, in the event that the primary protection System fails to interrupt the
fault current within the prescribed Fault Clearance Time.
5.5.2.6 Where the automatic reclosure of a circuit breaker is required following a fault on the
User System, automatic switching Equipment shall be provided in accordance with the
requirements specified in the Connection Agreement or Amended Connection Agreement.
5.5.2.7 The ability of the protection scheme to initiate the successful tripping of the Circuit
Breakers that are associated with the faulty Equipment, measured by the System Protection
Dependability Index, shall be not less than 99 percent.
5.5.2.8 The Grid Owner or the System Operator may require specific Users to provide other

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Protection schemes, designed and developed to maintain Grid Security, or to minimize the
risk and/or impact of disturbances on the Grid.

5.5.3 Transformer Connection and Grounding

5.5.3.1 If the Distributor’s or other Grid User’s Equipment are connected to the Grid at a
voltage that is equal to or greater than 115 kV, the high-voltage side of the transformer shall
be connected in Wye, with the neutral available for connection to ground.
5.5.3.2 The Grid Owner shall specify the connection and grounding requirements for the low-
voltage side of the transformer, in accordance with the provisions of Section 5.2.8.

5.5.4 Underfrequency Relays for Automatic Load Dropping

5.5.4.1 The Connection Agreement or Amended Connection Agreement shall specify the
manner in which Demand, subject to Automatic Load Dropping, will be split into discrete MW
blocks to be actuated by Underfrequency Relays.
5.5.4.2 The Underfrequency Relays to be used in Automatic Load Dropping shall be fully
digital with the following characteristics:
(a) Frequency setting range: 57.0 to 62.0 Hz in steps of 0.1 Hz, preferably 0.05 Hz;
(b) Adjustable time delay: 0 to 60 s in steps of 0.1 s;
(c) Rate of Frequency setting range: 0 to ±10 Hz/s in steps of 0.1 Hz/s;
(d) Operating time delay: less than 0.1s;
(e) Voltage lock-out: Selectable within 55% to 90% of nominal voltage;
(f) Facility stages: Minimum of two stages operation; and
(g) Output contacts: Minimum of three output contacts per stage.
5.5.4.3 The Underfrequency Relays shall be suitable for operation from a nominal AC input
of 115 volts. The voltage supply to the Underfrequency Relays shall be sourced from the
primary System at the supply point to ensure that the input Frequency to the Underfrequency
Relay is the same as that of the primary System.
5.5.4.4 The tripping facility shall be designed and coordinated in accordance with the
following reliability considerations:
(a) Dependability: Failure to trip at any one particular Demand shedding point shall
not harm the overall operation of the scheme. The overall dependability of the
scheme shall not be lower than 96 percent; an
(b) Outages: The amount of Demand under control shall not be reduced significantly
during the Outage or maintenance of the Equipment.

5.6 COMMUNICATION AND SCADA EQUIPMENT REQUIREMENTS

5.6.1 Communication System for Monitoring and Control

5.6.1.1 A communication System shall be established so that the Grid Owner, the System
Operator and the Users can communicate with one another, as well as exchange data
signals for monitoring and controlling the Grid during normal and emergency conditions.
5.6.1.2 The Grid Owner shall provide the complete communication Equipment required for
the monitoring and control of the Connection Point and the Generating Units.
5.6.1.3 The Grid Owner may use a combination of communication media such as
digital/analog Power Line Carrier (PLC), digital/analog microwave radio, and fiber optics to
link the User System with the Grid Owner’s System. Backup communication may be referred
to as UHF/VHF half-duplex, hand-held or base radios, and mobile (cellular) phones, if
applicable.
5.6.2 SCADA System for Monitoring and Control

5.6.2.1 The Grid Owner shall provide a Remote Terminal Unit (RTU) for interconnection with

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the System Operator’s Control Center, to serve as telemetry Equipment for monitoring real-
time information and controlling the Equipment at the User System.
5.6.2.2 The RTU shall be compatible with the Master Station protocol requirements and
modem specifications of the System Operator. In the event that the Master Station is
changed, the Grid Owner shall be responsible for any change needed for the RTU to match
the new requirements.
5.6.2.3 The Grid Owner shall also provide, if applicable, other related Equipment such as
transducers, cables, modems, etc. for interconnection with the SCADA System of the Grid.

5.7 FIXED ASSET BOUNDARY DOCUMENT REQUIREMENTS

5.7.1 Fixed Asset Boundary Document

5.7.1.1 The Fixed Asset Boundary Documents for any Connection Point shall provide the
information and specify the operational responsibilities of the Grid Owner and the User for
the following:
(a) HV and EHV Equipment;
(b) LV and MV Equipment; and
(c) Communications and metering equipment.
5.7.1.2 For the Fixed Asset Boundary Document referred to in item (a) above, the
responsible management unit shall be shown, in addition to the Grid Owner or the User. In
the case of Fixed Asset Boundary Documents referred to in items (b) and (c) above, with the
exception of protection equipment and inter-trip equipment operation, it will be sufficient to
indicate the responsible User or the Grid Owner.
5.7.1.3 The Fixed Asset Boundary Document shall show precisely the Connection Point and
shall specify the following:
(a) Equipment and their ownership; (b) Accountable Managers;
(c) Safety Rules and procedures including Local Safety Instructions and the Safety
Coordinator(s) or any other persons responsible for safety;
(d) Operational procedures and the responsible party for operation and control;
(e) Maintenance requirements and the responsible party for undertaking
maintenance; and
(f) Any agreement pertaining to emergency conditions.

5.7.1.4 The Fixed Asset Boundary Documents shall be available at all times for the use of
the operations personnel of the Grid Owner and the User.

5.7.2 Accountable Managers

5.7.2.1 Prior to the Completion Date specified in the Connection Agreement or Amended
Connection Agreement, the User shall submit to the Grid Owner a list of Accountable
Managers who are duly authorized to sign the Fixed Asset Boundary Documents on behalf
of the User.
5.7.2.2 Prior to the Completion Date specified in the Connection Agreement or Amended
Connection Agreement, the Grid Owner shall provide the User the name of the Accountable
Manager who shall sign the Fixed Asset Boundary Documents on behalf of the Grid Owner.
5.7.2.3 Any change to the list of Accountable Managers shall be communicated to the other
party at least six (6) weeks before the change becomes effective. If the change was not
anticipated, it must be communicated as soon as possible to the other party, with an
explanation why the change had to be made.
5.7.2.4 Unless specified otherwise in the Connection Agreement or the Amended
Connection Agreement, the construction, Test and Commissioning, control, operation and
maintenance of Equipment, accountability, and responsibility shall follow ownership.

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5.7.3 Preparation of Fixed Asset Boundary Document

5.7.3.1 The Grid Owner shall establish the procedure and forms required for the preparation
of the Fixed Asset Boundary Documents.
5.7.3.2 The User shall provide the information that will enable the Grid Owner to prepare the
Fixed Asset Boundary Document, in accordance with the schedule specified in the
Connection Agreement or Amended Connection Agreement.
5.7.3.3 The Grid Owner shall prepare the Fixed Asset Boundary Documents for the
Connection Point at least two (2) weeks prior to the Completion Date.
5.7.3.4 The Fixed Asset Boundary Document for the Equipment at the Connection Point
shall include the details of the lines or cables emanating from the Grid Owner’s and the
User’s sides of the Connection Point.
5.7.3.5 The date of issue and the issue number shall be included in every page of
the Fixed Asset Boundary Document.

5.7.4 Signing and Distribution of Fixed Asset Boundary Document

5.7.4.1 Prior to the signing of the Fixed Asset Boundary Document, the Grid Owner shall
send a copy of the completed Fixed Asset Boundary Document to the User, for any revision
or for confirmation of its accuracy.
5.7.4.2 The Accountable Managers designated by the Grid Owner and the User shall sign
the Fixed Asset Boundary Document, after confirming its accuracy.
5.7.4.3 Once signed but not less than two (2) weeks before the implementation date, the
Grid Owner shall provide two (2) copies of the Fixed Asset Boundary Document to the User,
with a notice indicating the date of issue, the issue number and the implementation date of
the Fixed Asset Boundary Document.

5.7.5 Modifications of an Existing Fixed Asset Boundary Document

5.7.5.1 When a User has determined that a Fixed Asset Boundary Document requires
modification, it shall inform the Grid Owner at least eight (8) weeks before implementing the
modification. The Grid Owner shall then prepare a revised Fixed Asset Boundary Document
at least six (6) weeks before the implementation date of the modification.
5.7.5.2 When the Grid Owner has determined that a Fixed Asset Boundary Document
requires modification, it shall prepare a revised Fixed Asset Boundary Document at least six
(6) weeks prior to the implementation date of the modification.
5.7.5.3 When the Grid Owner or a User has determined that a Fixed Asset Boundary
Document requires modification to reflect an emergency condition, the Grid Owner or the
User, as the case may be, shall immediately notify the other party. The Grid Owner and the
User shall meet to discuss the required modification to the Fixed Asset Boundary Document,
and shall decide
whether the change is temporary or permanent in nature. Within seven (7) days after the
conclusion of the meeting between the Grid Owner and the User, the Grid Owner shall
provide the User a revised Fixed Asset Boundary Document.
5.7.5.4 The procedure specified in Section
5.7.4 for signing and distribution shall be applied to the revised Fixed Asset Boundary
Document. The Grid Owner’s notice shall indicate the revision(s), the new issue number and
the new date of issue.

5.8 ELECTRICAL DIAGRAM REQUIREMENTS

5.8.1 Responsibilities of the Grid Owner and Users

5.8.1.1 The Grid Owner shall specify the procedure and format to be followed in the

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preparation of the Electrical Diagrams for any Connection Point.

5.8.1.2 The User shall prepare and submit to the Grid Owner an Electrical Diagram for all the
Equipment on the User’s side of the Connection Point, in accordance with the schedule
specified in the Connection Agreement or Amended Connection Agreement.
5.8.1.3 The Grid Owner shall provide the User with an Electrical Diagram for all the
Equipment on the Grid Owner’s side of the Connection Point, in accordance with the
schedule specified in the Connection Agreement or Amended Connection Agreement.
5.8.1.4 If the Connection Point is at the User’s Site, the User shall prepare and distribute a
composite Electrical Diagram for the entire Connection Point. Otherwise, the Grid Owner
shall prepare and distribute the composite Electrical Diagram for the entire Connection Point.

5.8.2 Preparation of Electrical Diagrams

5.8.2.1 The Electrical Diagrams shall provide an accurate record of the layout and circuit
connections, ratings and identification of Equipment, and related apparatus and devices at
the Connection Point.
5.8.2.2 If possible, all the Equipment at the Connection Point shall be shown in one Electrical
Diagram. When more than one Electrical Diagram is necessary, duplication of identical
information shall be minimized. The Electrical Diagrams shall represent, as closely as
possible, the physical arrangement of the Equipment and their electrical connections.
5.8.2.3 The Electrical Diagrams shall be prepared using the Site and Equipment
Identification prescribed in Article 7.11. The current status of the Equipment shall be
indicated in the diagram. For example, a decommissioned switch bay shall be labeled
“Spare Bay.”
5.8.2.4 The title block of the Electrical Diagram shall include the names of authorized
persons together with provisions for the details of revisions, dates, and signatures.

5.8.3 Changes to Electrical Diagrams

5.8.3.1 If the Grid Owner or a User decides to add new Equipment or change an existing
Equipment Identification, the Grid Owner or the User, as the case may be, shall provide the
other party a revised Electrical Diagram, at least one month prior to the proposed addition or
change.
5.8.3.2 If the modification involves the replacement of existing Equipment, the revised
Electrical Diagram shall be provided to the other party in accordance with the schedule
specified in the Amended Connection Agreement.
5.8.3.3 The revised Electrical Diagram shall incorporate the new Equipment to be added, the
existing Equipment to be replaced or the change in Equipment Identification.

5.8.4 Validity of Electrical Diagrams

5.8.4.1 The composite Electrical Diagram prepared by the Grid Owner or the User, in
accordance with the provisions of Section
5.8.1, shall be the Electrical Diagram to be used for all operation and planning activities
associated with the Connection Point.
5.8.4.2 If a dispute involving the accuracy of the composite Electrical Diagram arises, a
meeting between the Grid Owner and the User shall be held as soon as possible, to resolve
the dispute.

5.9 CONNECTION POINT DRAWING REQUIREMENTS

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5.9.1 Responsibilities of the Grid Owner and Users

5.9.1.1 The Grid Owner shall specify the procedure and format to be followed in the
preparation of the Connection Point Drawing for any Connection Point.
5.9.1.2 The User shall prepare and submit to the Grid Owner the Connection Point Drawing
for the User’s side of the Connection Point, in accordance with the schedule specified in the
Connection Agreement or Amended Connection Agreement.
5.9.1.3 The Grid Owner shall provide the User with the Connection Point Drawing for the
Grid Owner’s side of the Connection Point, in accordance with the schedule specified in the
Connection Agreement or Amended Connection Agreement.
5.9.1.4 If the Connection Point is at the User Site, the User shall prepare and
distribute a composite Connection Point Drawing for the entire Connection Point. Otherwise,
the Grid Owner shall prepare and distribute the composite Connection Point Drawing for the
entire Connection Point.

5.9.2 Preparation of Connection Point Drawings

5.9.2.1 The Connection Point Drawing shall provide an accurate record of the layout and
circuit connections, ratings and identification of Equipment, and related apparatus and
devices at the Connection Point.
5.9.2.2 The Connection Point Drawing shall indicate the Equipment layout,
common protection, and control and auxiliaries. The Connection Point Drawing shall
represent, as closely as possible, the physical arrangement of the Equipment and their
electrical connections.
5.9.2.3 The Connection Point Drawing shall be prepared using the Site and Equipment
Identification prescribed in Article 7.11. The current status of the Equipment shall be
indicated in the drawing. For example, a decommissioned switch bay shall be labeled “Spare
Bay.”
5.9.2.4 The title block of the Connection Point Drawing shall include the names
of authorized persons together with provision for the details of revisions, dates, and
signatures.

5.9.3 Changes to Connection Point Drawings

5.9.3.1 If the Grid Owner or a User decides to add new Equipment or change an existing
Equipment Identification, the Grid Owner or the User, as the case may be, shall provide the
other party a revised Connection Point Drawing, at least one month prior to the proposed
addition or change.
5.9.3.2 If the modification involves the replacement of existing Equipment, the revised
Connection Point Drawing shall be provided to the other party in accordance with the
schedule specified in the Amended Connection Agreement.
5.9.3.3 The revised Connection Point Drawing shall incorporate the new Equipment to be
added, the existing Equipment to be replaced, or the change in Equipment Identification.
5.9.3.4 The Grid Owner and the User shall, if they have agreed to do so in writing, modify
their respective copies of the Connection Point Drawings to reflect the change that they have
agreed on, in accordance with the schedule specified in the Connection Agreement or
Amended Connection Agreement.

5.9.4 Validity of the Connection Point Drawings

5.9.4.1 The composite Connection Point Drawing prepared by the Grid Owner or the User, in
accordance with Section 5.9.1, shall be the Connection Point Drawing to be used for all
operation and planning activities associated with the Connection Point.
5.9.4.2 If a dispute involving the accuracy of the composite Connection Point
Drawing arises, a meeting between the Grid Owner and the User shall be held as soon as

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possible, to resolve the dispute.

5.10 GRID DATA REGISTRATION

5.10.1 Data to be Registered

5.10.1.1 The data relating to the Connection Point and the User Development that are
submitted by the User to the Grid Owner shall be registered according to the following data
categories:
(a) Forecast Data;
(b) Estimated Equipment Data; an
(c) Registered Equipment Data.
5.10.1.2 The Forecast Data, including Demand and Active Energy, shall contain the User’s
best estimate of the data being projected for the five (5) succeeding years.
5.10.1.3 The Estimated Equipment Data shall contain the User’s best estimate of
the values of parameters and information about the Equipment for the five (5) succeeding
years.
5.10.1.4 The Registered Equipment Data shall contain validated actual values of parameters
and information about the Equipment that are submitted by the User to the Grid Owner at the
connection date. The Registered Equipment Data shall include the Connected Project
Planning Data, which shall replace any estimated values of parameters and information
about the Equipment previously submitted as Preliminary Project Planning Data and
Committed
Project Planning Data.

5.10.2 Stages of Data Registration

5.10.2.1 The data relating to the Connection Point and the User Development that are
submitted by a User applying for a Connection Agreement or an Amended Connection
Agreement shall be registered in three (3) stages and classified accordingly as:
(a) Preliminary Project Planning Data;
(b) Committed Project Planning Data; and
(c) Connected Project Planning Data;
5.10.2.2 The data that are submitted at the time of application for a Connection
Agreement or an Amended Connection Agreement shall be considered as Preliminary
Project Planning Data. These data shall contain the Standard Planning Data specified in
Article 6.4, and the Detailed Planning Data specified in Article 6.5, when required ahead of
the schedule specified in the Connection Agreement or Amended Connection Agreement.
5.10.2.3 Once the Connection Agreement or the Amended Connection Agreement is signed,
the Preliminary Project Planning Data shall become the Committed Project Planning Data,
which shall be used in evaluating other applications for Grid connection or modification of
existing Grid connection and in preparing the Transmission Development Plan.
5.10.2.4 The Estimated Equipment Data shall be updated, confirmed, and replaced with
validated actual values of parameters and information about the Equipment at the time of
connection, which shall become the Connected Project Planning Data. These data shall be
registered in accordance with the categories specified in Section 5.10.1 and shall be used in
evaluating other applications for Grid connection or modification of existing Grid connection
and in preparing the Transmission Development Plan.

5.10.3 Data Forms

The Grid Owner, in consultation with the System Operator and the Market Operator, shall develop
the forms for all data to be submitted in accordance with an application for a Connection Agreement
or an Amended Connection Agreement.

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VII. Self – Evaluation.

1. What is the stage of Data Registration?

2. What is the requirements for Electrical Diagram?
3. What is SCADA?
4. What are the scope and purpose of the grid Code?

VIII. Review of concepts

Chapter 1. Grid code general conditions; Purpose and Scope, Authority and Applicability,
Enforcement and Suspension of Provisions, Data, Notices, and Confidentiality, Construction of
References, Definitions of Terms and Abbreviation.

Chapter 5. Grid Connection Requirements; Grid Technical, Design, and Operational Criteria,
Procedures for Grid Connection or Modification, Requirements for Large Generators, Requirements
for Distributors and Other Grid Users, Communication and SCADA Equipment Requirements, Fixed
Asset Boundary Document Requirements, Electrical Diagram Requirements, Connection Point
Drawing Requirements, and Grid Data Registration.

IX. Reference

1. PHILIPPINE GRID CODE, RA 9136, 2001 Edition, Handbook

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Module No. 7

I. Title: NATIONAL BUILDING CODE

II. Topic: General provisions; administration and enforcemen; permits and inspection; types of
construction; requirements for fire zones; fire-resistive requirements in construction;
classification and general requirement of all buildings by use of occupancy; light and
ventilation;
III. Time Frame: 4 hours

IV. Introduction

In this module we are going to discuss about national building code that Electrical
Practitioners are needed. If you are familiar with this, the main goal or target of this is give
knowledge and understand the code and laws.

V. Objectives

At the end of this course, the student is able to;

1. Discuss the building permits and inspections, construction and fire proof requirements.

VI. Learning Activities

CHAPTER I
GENERAL PROVISIONS

Section 101. Title. This Decree shall be known as the "National Building Code of the Philippines"
and shall hereinafter be referred to as the "Code".

Section 102. Declaration of Policy. It is hereby declared to be the policy of the State to safeguard
life, health, property, and public welfare, consistent with the principles of sound environmental
management and control; and to this end, make it the purpose of this Code to provide for all
buildings and structures, a framework of minimum standards and requirements to regulate and
control their location, site, design quality of materials, construction, use, occupancy, and
maintenance.

Section 103. Scope and Application. (a) The provisions of this Code shall apply to the design,
location, sitting, construction, alteration, repair, conversion, use, occupancy, maintenance, moving,
demolition of, and addition to public and private buildings and structures, except traditional
indigenous family dwellings as defined herein.
(b) Building and/or structures constructed before the approval of this Code shall not be affected
thereby except when alterations, additions, conversions or repairs are to be made therein in which
case, this Code shall apply only to portions to be altered, added, converted or repaired.

Section 104. General Building Requirements. (a) All buildings or structures as well as accessory
facilities thereto shall conform in all respects to the principles of the safe construction and must be

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suited to the purpose for which they are designed.

(b) Buildings or structures intended to be used for the manufacture and/or production of any kind of
article or product shall observe adequate environmental safeguards.
(c) Buildings or structures and all parts thereof as well as all facilities found therein shall be
maintained in safe, sanitary and good working condition.

Section 105. Site Requirements. The land or site upon which will be constructed any building or
structure, or any ancillary or auxiliary facility thereto, shall be sanitary, hygienic or safe. In the case
of sites or buildings intended for use as human habitation or abode, the same shall be at a safe
distance, as determined by competent authorities, from streams or bodies of water and/or sources
ofr considered to be polluted; from a volcano or volcanic site and/or any other building considered to
be a potential source of fire or explosion.

Section 106. Definitions. As used in this Code, the words, terms and phrases enumerated in Annex
"A" hereof shall have the meaning or definition, correspondingly provided therein.

CHAPTER II
ADMINISTRATION AND ENFORCEMENT

Section 201. Responsibility for Administration and Enforcement.

The administration and enforcement of the provisions of this Code including the imposition of
penalties for administrative violations thereof is hereby vested in the Secretary of Public Works,
Transportation and Communications, hereinafter referred to as the "Secretary".

Section 202. Technical Staff.

The Secretary is hereby authorized to constitute and provide in his Department a
professional staff composed of highly qualified architects, engineers and technicians who possess
diversified and professional experience in the field of building design and construction.

Section 203. General Powers and Functions of the Secretary under this Code.
For purposes of carrying out the provisions of this Code, the Secretary shall exercise the
following general powers and functions:
(1) Formulate policies, plans, standards and guidelines on building design, construction, use
occupancy and maintenance, in accordance with this Code.
(2) Issue and promulgate rules and regulations to implement the provisions of this Code and
ensure compliance with policies, plans, standards and guidelines formulated under paragraph 1 of
this Section.
(3) Evaluate, review, approve and/or take final action on changes and/or amendments to
existing Referral Codes as well as on the incorporation of other referral codes which are not yet
expressly made part of this Code.
(4) Prescribe and fix the amount of fees and other charges that the Building Official shall
collect in connection with the performance of regulatory functions.

Section 204. Professional and Technical Assistance.

The Secretary with the assistance of his technical staff shall provide such professional,
technical, scientific and other services including testing laboratories and facilities as may be
required to carry out the provisions of this Code; Provided that the Secretary may secure such
services as he may deem necessary from other agencies of the National Government and may
make arrangement for the compensation of such services. He may also engage and compensate
within appropriations available therefor, the services of such number of consultants, experts and
advisers on full or part-time basis, as may be necessary, coming from the government or private
businesses, entities or associations to carry out the provisions of this Code.

Section 205. Building Officials.

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Except as otherwise provided herein, the Building Official shall be responsible for carrying
out the provisions of this Code in the field as well as the enforcement of orders and decisions made
pursuant thereto. Due to the exigencies of the service, the Secretary may designate incumbent
Public Works District Engineers, City Engineers and Municipal Engineers act as Building Officials in
their respective areas of jurisdiction.
The designation made by the Secretary under this Section shall continue until regular
positions of Building Official are provided or unless sooner terminated for causes provided by law or
decree.
Section 206. Qualifications of Building Officials. No person shall be appointed as a Building Official
unless he possesses the following qualifications:
1. A Filipino citizen and of good moral character.
2. A duly registered architect or civil engineer.
3. A member of good standing of a duly accredited organization of his profession for not less
than two years.
4. Has at least five years of diversified and professional experience in building design and
construction.

Section 207. Duties of a Building Official.

In his respective territorial jurisdiction, the Building Official shall be primarily responsible for
the enforcement of the provisions of this Code as well as of the implementing rules and regulations
issued therefor. He is the official charged with the duties of issuing building permits.
In the performance of his duties, a Building Official may enter any building or its premises at
all reasonable times to inspect and determine compliance with the requirements of this Code, and
the terms and conditions provided for in the building permit as issued.
When any building work is found to be contrary to the provisions of this Code, the Building
Official may order the work stopped and prescribe the terms and/or conditions when the work will be
allowed to resume. Likewise, the Building Official is authorized to order the discontinuance of the
occupancy or use of any building or structure or portion thereof found to be occupied or used
contrary to the provisions of this Code.

Section 208. Fees. Every Building Official shall keep a permanent record and accurate account of
all fees and other charges fixed and authorized by the Secretary to be collected and received under
this Code.
Subject to existing budgetary, accounting and auditing rules and regulations, the Building
Official is hereby authorized to retain not more than twenty percent of his collection for the operating
expenses of his office. The remaining eighty percent shall be deposited with the provincial, city or
municipal treasurer and shall accrue to the General Fund of the province, city or municipality
concerned.

Section 209. Exemption.

Public buildings and traditional indigenous family dwelling shall be exempt from payment of
building permit fees. As used in this Code, the term "additional indigenous family dwelling" means a
dwelling intended for the use and occupancy by the family of the owner only and constructed of
native materials such as bamboo, nipa, logs, or lumber, the total cost of which does not exceed
fifteen thousand pesos.

Section 210. Use of Income from Fees.

Any provision of law to the contrary notwithstanding, the Secretary is hereby authorized to
prescribe the procedures for the use of all net income realized by the office of the Building Official
from the collection of fees and charges not exceeding twenty percent thereof in accordance with
Section 208. Such income may be used to cover necessary operating expenses including the
purchase of equipment, supplies and materials, traveling expenses, obligation expenses and
sheriff's fees and payment of other prior years' obligations not adequately funded, subject to existing
budgetary and auditing rules and regulations.

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Section 211. Implementing Rules and Regulations.

In the implementation of the provisions of this Code, the Secretary shall formulate necessary
rules and regulations and adopt design and construction standards and criteria for buildings and
other structures.
Such standards, rules and regulations shall take effect after their publication once a week for
three consecutive weeks in a newspaper of general circulation.

Section 212. Administrative Fines.

For the violation of any of the provisions of this Code or any of the rules or regulations
issued thereunder the Secretary is hereby empowered to prescribe and impose fines not exceeding
ten thousand pesos.

Section 213. Penal Provisions.

It shall be unlawful for any person, firm or corporation, to erect, construct, enlarge, alter,
repair, move, improve, remove, convert, demolish, equip, use, occupy, or maintain any building or
structure or cause the same to be done contrary to or in violation of any provision of this Code.
Any person, firm or corporation who shall violate any of the provisions of this Code and/or
commit any act hereby declared to be unlawful shall upon conviction, be punished by a fine of not
more than twenty thousand pesos or by imprisonment of not more than two years or by both such
fine and imprisonment: Provided, that in the case of a corporation firm, partnership or association,
the penalty shall be imposed upon its officials responsible for such violation and in case the guilty
party is an alien, he shall immediately be deported after payment of the fine and/or service of his
sentence.

Section 214. Dangerous and Ruinous Buildings or Structures. Dangerous buildings are those which
are herein declared as such or are structurally unsafe or not provided with safe egress, or which
constitute a fire hazard, or are otherwise dangerous to human life, or which in relation to existing
use, constitute a hazard to safety or health or public welfare because of inadequate maintenance,
dilapidation, obsolescence, or abandonment; or which otherwise contribute to the pollution of the
site or the community to an intolerable degree.

Section 215. Abatement of Dangerous Buildings.

When any building or structure is found or declared to be dangerous or ruinous, the Building
Official shall order its repair, vacation or demolition depending upon the degree of danger to life,
health, or safety. This is without prejudice to further action that may be taken under the provisions of
Articles 482 and 694 to 707 of the Civil Code of the Philippines.

Section 216. Other Remedies.

The rights, actions and remedies provided in this Code shall be in addition to any and all
other rights of action and remedies that may be available under existing laws.

CHAPTER III
PERMITS AND INSPECTION

Section 301. Building Permits.

No person, firm or corporation, including any agency or instrumentality of the government
shall erect, construct, alter, repair, move, convert or demolish any building or structure or cause the
same to be done without first obtaining a building permit therefor from the Building Official assigned
in the place where the subject building is located or the building work is to be done.

Section 302. Application for permits.

In order to obtain a building permit, the applicant shall file an application therefor in writing

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and on the prescribed form from the office of the Building Official. Every application shall provide at
least the following information:
(1) A description of the work to be covered by the permit applied for;
(2) Certified true copy of the TCT covering the lot on which the proposed work is to be done.
If the applicant is not the registered owner, in addition to the TCT, a copy of the contract of
lease shall be submitted;
(3) The use or occupancy for which the proposal work is intended;
(4) Estimated cost of the proposed work.
To be submitted together with such application are at least five sets of corresponding plans and
specifications prepared, signed and sealed by a duly mechanical engineer in case of mechanical
plans, and by a registered electrical engineer incase of electrical plans, except in those cases
exempted or not required by the Building Official under this Code.

Section 303. Processing of Building Permits.

The processing of building permits shall be under the overall administrative control and
supervision of the Building Official and his technical staff of qualified professionals. In processing an
application for a building permit, the Building Official shall see to it that the applicant satisfies and
conforms with approved standard requirements on zonings and land use, lines and grades,
structural design, sanitary and sewerage, environmental health, electrical and mechanical safety as
well as with other rules and regulations promulgated in accordance with the provisions of this Code.

Section 304. Issuance of Building Permits.

When satisfied that the work described in an application for building permit and the plans
and specifications submitted therewith, conform to the requirements of this Code and other pertinent
rules and regulations, the Building Official shall, within fifteen days from payment of the required
fees by the applicant, issue the building permit applied for.
The Building Official may issue a permit for the construction of only a part or portion of a
building or structure whenever the plans and specifications submitted together with the application
do not cover the entire building or structure.
Approved plans and specifications shall not be changed, modified or altered without the
approval of the Building Official and the work shall be done strictly in accordance thereto.

Section 305. Validity of Building Permits.

The issuance of a building permit shall not be construed as an approval or authorization to
the permittee to disregard or violate any of the provisions of this Code.
Whenever the issuance of a permit is based on approved plans and specifications which are
subsequently found defective, the Building Official is not precluded from requiring permittee to effect
the necessary corrections in said plans and specifications or from preventing or ordering the
stoppage of any or all building operations being carried on thereunder which are in violation of this
Code.
A building permit issued under the provisions of this Code shall expire and become null and
void if the building or work authorized therein is not commenced within a period of one year from the
date of such permit, or if the building or work so authorized is suspended or abandoned at any time
after it has been commenced, for a period of 120 days.

Section 306. Non-Issuance, Suspension or Revocation of Building Permits.

The Building Official may order or cause the non-issuance, suspension or revocation of building
permits on any or all of the following reasons or grounds:
(a) Errors found in the plans and specifications;
(b) In correct or inaccurate data or information supplied;
(c) Non-compliance with the provisions of this Code or of any rule or regulation.Notice of
non-issuance, suspension or revocation of building permits shall always be made in writing,
stating the reason or grounds therefor.

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Section 307. Appeal.

Within fifteen (15) days from the date of receipt of advice of the non-issuance, suspension or
revocation of permits, the applicant/permittee may file an appeal with the Secretary who shall render
his decision within fifteen days from date of receipt of notice of appeal. The decision of the
Secretary shall be final subject only to review by the Office of the President.

Section 308. Inspection and Supervision of Work.

The owner of the Building who is issued or granted a building permit under this Code shall
engage the services of a duly licensed architect or civil engineer to undertake the full time inspection
and supervision of the construction work. Such architect or civil engineer may or may not be the
same architect or civil engineer who is responsible for the design of the building.
It is understood however that in either case, the designing architect or civil engineer is not
precluded from conducting inspection of the construction work to check and determine compliance
with the plans and specifications of the building as submitted.
There shall be kept at the jobsite at all times a logbook wherein the actual progress of
construction including tests conducted, weather conditions and other pertinent data are to be
recorded.
Upon completion of the construction, the said licensed architect or civil engineer shall submit
the logbook, duly signed and sealed, to the Building Official. He shall also prepare and submit a
Certificate of Completion of the project stating that the construction of building conforms to the
provisions of this Code as well as with the approved plans and specifications.

Section 309. Certificate of Occupancy.

No building or structure shall be used or occupied and no change in the existing use or
occupancy classification of a building or structure or portion thereof shall be made until the Building
Official has issued a Certificate of Occupancy therefor as provided in this Code.
A certificate of Occupancy shall be issued by the Building Official within thirty (30) days if
after final inspection and submittal of a Certificate of Completion referred to in the preceding section,
it is found that the building or structure complies with the provisions of this Code.
The Certificate of Occupancy shall be posted or displayed in a conspicuous place on the
premises and shall not be removed except upon order of the Building Official.
The non-issuance, suspension and revocation of Certificates of Occupancy and the
procedure for appeal therefrom shall be governed in so far as applicable, by the provisions of
Section 306 and 307 of this Code.

CHAPTER IV
TYPES OF CONSTRUCTION

Section 401. Types of Construction.

For purposes of this Code, all buildings proposed for construction shall be classified or
identified according to the following types:
(1) Type I. Type I buildings shall be a wood construction. The structural elements may be
any of the materials permitted by this Code.
(2) Type II. Type II buildings shall be of wood construction with protective fire-resistant
materials and one-hour fireresistive throughout: Except, that permanent non-bearing
partitions may use fire-retardant treated wood within the framing assembly.
(3) Type III. Type III buildings shall be of masonry and wood construction. Structural
elements may be any of the materials permitted by this Code: Provided, that the building
shall be one-hour fire-resistive throughout. Exterior walls shall be of incombustible fire-
resistive construction.
(4) Type IV. Type IV buildings shall be of steel, iron, concrete, or masonry construction.
Walls, ceiling, and permanent partitions shall be of incombustible fireresistive construction:
Except, that permanent non-bearing partitions of one-hour fire-resistive construction may
use fire-retardant treated wood within the framing assembly.

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(5) Type V. Type V buildings shall be fire-resistive. The structural elements shall be of steel,
iron, concrete, or masonry construction. Walls, ceilings, and permanent partitions shall be of
incombustible fire-resistive construction.

Section 402. Changes in Types.

No change shall be made in the type of construction of any building which would place the
building in a different sub-type or type of construction unless such building is made to comply with
the requirements for such sub-type of construction: Except, when the changes is approved by the
Building Official upon showing that the new or proposed construction is less hazardous, based on
life and fire risk, than the existing construction. Section 403. Requirements on Type of Construction.
Subject to the provisions of this Chapter, the Secretary shall prescribe standards for each type of
construction, and promulgate rules and regulations therefor, relating to structural framework,
exterior walls and openings, interior walls and enclosures, floors, exists, and stairs construction, and
roofs.

CHAPTER V
REQUIREMENTS FOR FIRE ZONES

Section 501. Fire Zones Defined.

Fire zones are areas within which only certain types of buildings are permitted to be
constructed based on their use or occupancy, type of construction, and resistance to fire.

Section 502. Buildings located in more than One Fire Zone.

A building or structure which is located partly in one fire zone andpartly in another shall be
considered to be in the more highly restrictive fire zone, when more than one-third of its total floor
area is located in such zone.

Section 503. Moved Building.

Any building or structure moved within or into any fire zone shall be made to comply with all
the requirements for buildings in that fire zone.

Section 504. Temporary Buildings.

Temporary building such as reviewing stands and other miscellaneous structures conforming
to the requirements of this Code, and sheds, canopies and fences used for the protection of the
public around and in conjunction with construction work, may be erected in the fire zones by special
permit from the Building Official for a limited period of time, and such buildings or structures shall
be-completely removed upon the expiration of the time limit stated in such permits.

Section 505. Center Lines of Streets.

For the purpose of this Chapter, the center line of an adjoining street or alley may be
considered an adjacent property line. Distances shall be measured at right angles to the street or
alley.

Section 506. Restrictions on Existing Buildings.

Existing buildings or structures in fire zones that do not comply with the requirements for a
new building erected therein shall not hereafter be enlarged, altered, remodeled, repaired or moved
except as follows:
(a) Such building is entirely demolished;
(b) Such building is to be moved outside the limits of the more highly restrictive Fire Zone to
a zone where the building meets the minimum standards;
(c) Changes, alterations and repairs may be made provided that in any 12-month period, the
value of the work does not exceed twenty percent of the value of the existing building, and
provided that, such changes do not add additional combustible material, and do not, in the
opinion of the Building Official, increase the fire hazard;

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(d) Additions thereto are separated from the existing building by fire walls, as set forth in
Sub-section 604 (b);
(e) Damage from fire or earthquake, typhoons or any fortuitous event may be repaired, using
the same kind of materials of which the building or structure was originally constructed,
provided that, the cost of such repair shall not exceed twenty percent of the replacement
cost of the building or structure.

Section 507. Designation of Fire Zones.

The Secretary shall promulgate specific restriction for each type of Fire Zone. Cities and
municipalities shall be divided into such Fire Zones in accordance with local, physical, and spatial
framework plans submitted by city or municipal planning and/or development bodies.

CHAPTER VI
FIRE-RESISTIVE REQUIREMENTS IN CONSTRUCTION

Section 601. Fire-Resistive Rating Defined. Fire-resistive rating means the degree to which a
material can withstand fire as determined by generally recognized and accepted testing methods.

Section 602. Fire-Resistive Time Period Rating. Fire-resistive time period rating is the length of time
a material can withstand being burned which may be one-hour, two-hours, three hours, four-hours,
etc.

Section 603. Fire-Resistive Standards. All materials of construction, and assemblies or

combinations thereof shall be classified according to their fire-retardant or flame-spread ratings as
determined by general accepted testing methods and/or by the Secretary.

Section 604. Fire-Resistive Regulations. The Secretary shall prescribe standards and promulgate
rules and regulations on the testing of construction materials for flame spread characteristics, tests
on fire damages, fire tests of building construction and materials, door assemblies and tin clad fire
doors and window assemblies, the installation of fire doors and windows and smoke and fire
detectors for fire protective signaling system, application and use of controlled interior finish, fire
resistive protection for structural members, fire-resistive walls and partitions, fire-resistive floor or
roof ceiling, fire-resistive assemblies for protection of openings and fire-retardant roof coverings.

CHAPTER VII
CLASSIFICATION AND GENERAL REQUIREMENT OF ALL
BUILDINGS BY USE OF OCCUPANCY

Section 701. Occupancy Classified.

(a) Buildings proposed for construction shall be identified according to their use or the
character of its occupancy and shall be classified as follows:
(1) Group A. Residential Dwellings
Group A Occupancies shall be dwellings.
(2) Group B. Residentials, Hotels and Apartments
Group B Occupancies shall be multiple dwelling units including boarding or lodging houses,
hotels, apartment buildings, row houses, convents, monasteries, and other similar building each of
which accommodates more than ten persons.
(3) Group C. Education and Recreation Group C Occupancies shall be buildings used for
school or day-care purposes, involving assemblage for instruction, education, or recreation, and not
classified in Group I or in Division 1 and 2 or Group H Occupancies.
(4) Group D. Institutional Group D Occupancies shall include: Division 1. Mental hospitals,
mental sanitaria, jails, prisons, reformatories, and buildings where personal liberties of inmates are
similarly restrained.sa d Division 2. Nurseries for full-time care of children under kindergarten age,
hospitals, sanitaria, nursing homes with nonambulatory patients, and similar buildings each

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accommodating more than five persons.Division 3. Nursing homes for ambulatory patients, homes
for children of kindergarten age or over, each accommodating more than five persons: Provided,
that Group D Occupancies shall not include buildings used only for private or family group dwelling
purposes.
(5) Group E. Business and Mercantile Group E Occupancies shall include:
Division 1. Gasoline filling and service stations, storage garages and boot storage structures where
no work is done except exchange of parts and maintenance requiring no open flame, welding, or the
use of highly flammable liquids. Division 2. Wholesale and retail stores, office buildings, drinking and
dining establishments having an occupant load of less than one hundred persons, printing plants,
police and fire stations, factories and workshops using not highly flammable or combustible
materials and paint stores without bulk handlings. Division 3. Aircraft hangers and open parking
garage with no repair work is done except exchange of parts and maintenance requiring no open
flame, welding or the use of highly flammable liquids.
(6) Group F. Industrial Group F Occupancies shall include: ice plants, power plants, pumping plants,
cold storage, and creameries, factories and workshops using incombustible and non-explosive
materials, and storage and sale rooms for incombustible and nonexplosive materials.
(7) Group G. Storage and Hazardous Group G Occupancies shall include:
Division 1. Storage and handling of hazardous and highly flammable material.
Division 2. Storage and handling of flammable materials, dry cleaning plants using flammable
liquids; paint stores with bulk handling, paint shops and spray painting rooms.
Division 3. Wood working establishments, planning mills and box factories, shops, factories where
loose combustible fibers or dust are manufactured, processed or generated; warehouses where
highly combustible material is store.
Division 4. Repair garages.
Division 5. rcraft repair hangers.
(8) Group H. Assembly Other Than Group 1 Group H Occupancies shall include:
Division 1. Any assembly building with a stage and an occupant load of less than 1000 in the
building.
Division 2. Any assembly building without stage and having an occupant load of 300 or more in the
building.
Division 3. Any assembly building without a stage and having an occupant load of less than
300 in the building. Division 4. Stadia, reviewing stands, amusement park structures not included
within Group I or in Division 1, 2, and 3 of this Group.
(9) Group I. Assembly Occupant Load 1000 or More Group I Occupancies shall be any assembly
building with an age and an occupant load of 1000 or more in the building.
(10) Group J. Accessory Group J Occupancies shall include:
Division 1. Private garage, carports, sheds and agriculture buildings.
Division 2. Fences over 1.80 meters high, tanks, and towers.
(b) Other subgroupings or divisions within Groups A to J may be determined by the Secretary. Any
other occupancy not mentioned specifically in this Section, or about which there is any question
shall be included in the Group which it most nearly resembles based on the existing or proposed life
and fire hazard.

Section 702. Change in Use. No change shall be made in the character of occupancy or use of any
building which would place the building in a different division of the same group of occupancy or in a
different group of occupancies, unless such building is made to comply with the requirements of this
code for such division or group of occupancy. The character of occupancy of existing buildings may
be changed subject to the approval of the Building Official and the building may be occupied or
purposes set forth in other Groups: Provided the new or proposed use is less hazardous, based on
life and fire risk, than the existing use.

Section 703. Mixed Occupancy.

(a) General Requirements
When a building is of mixed occupancy or used for more than one occupancy, the whole building

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shall be subject to the most restrictive requirement pertaining to any of the type of occupancy found
therein except in the following:
(1) When a one-storey building houses more than one occupancy, each portion of the building shall
conform to the requirement of the particular occupancy housed therein and;
(2) Where minor accessory uses do not occupy more than ten percent of the area of any floor or a
building, nor more than ten percent of the basic area permitted in the occupancy requirements, in
which case, the major use of the building determine the occupancy classification.
(b) Forms of Occupancy Separation
Occupancy separations shall be vertical or horizontal or both, or when necessary, of such other
forms as may be required to afford a complete separation between the various occupancy divisions
in the building.
(c) Types of Occupancy Separation
Occupancy separation shall be classified as "One-Hour Fire Resistive", "Two-Hour Fire Resistive",
"Three-Hour Fire Resistive" and "Four-Hour Fire-Resistive:
(1) A "One-Hour Fire-Resistive Occupancy Separation" shall be of not less than one-hour fire-
resistive construction. All openings in such separation shall be protected by a fire-assembly having
a one-hour fire-resistive rating.
(2) A "Two-Hour Fire-Resistive Occupancy Separation" shall be of not less than two-hour fire-
resistive construction. All openings in such separation shall be protected by a fire-assembly having
a two-hour fire-resistive rating.
(3) A "Three-Hour Fire-Resistive Occupancy
Separation" shall be of not less than three-hour fire-resistive construction. All openings in walls
forming such separation shall be protected by a fire assembly having a three-hour fire resistive
rating. The total width of all openings in any three-hour fire-resistive occupancy separation wall in
any one storey shall not exceed 25 per cent of the length of the wall in that storey and no single
opening shall have an area greater than 10.00 square meters. All openings in floors forming a
"Three-Hour Fire Resistive Occupancy Separation" shall be protected by vertical enclosures
extending above and below such openings. The walls of such vertical enclosures shall be of not less
than two-hour fire-resistive construction, and all openings therein shall be protected by a fire
assembly having a three-hour fire-resistive rating.
(4) A "Four-Hour Fire-Resistive Occupancy Separation" shall have no openings therein and shall be
of not less than four-hour fire resistive construction.
(d) Fire-Rating for Occupancy Separation Occupancy Separations shall be provided between
groups, subgroupings, or divisions of occupancies. The Secretary shall promulgate rules and
regulations for appropriate occupancy separations in buildings of mixed occupancy: Provided, that,
where any occupancy separation is required, the minimum shall be a "One-Hour Fire-Resistive
Occupancy Separation"; and where the occupancy separation is horizontal, structural member
supporting the separation shall be protected by an equivalent fire-resistive construction.Section 704.
Location of Property.
(a) General. No Building shall be constructed unless it adjoins or has direct access to a public space
yard or street on at least one of its sides. For the purpose of this Section, the center line of an
adjoining street or alley shall be considered an adjacent property line. Eaves over required windows
shall not be less than 750 millimeters from the side and rear property lines.
(b) Fire Resistance of Walls. Exterior walls shall have fire resistance and opening protection in
accordance with the requirements set forth by the Secretary. Projections beyond the exterior wall
shall not exceed beyond a point one-third the distance from an assumed vertical plane located
where the fire-resistive protection of openings is first required to the location on property whichever
is the least restrictive. Distance shall be measured at right angles from the property line. When
openings in exterior walls are required to be protected due to distance from property line, the sum of
the areas of such openings in any storey shall not exceed 50 percent of the total area of the wall in
that storey.
(c) Buildings on Same Property and Buildings Containing Courts
For the purpose of determining the required wall and opening protection, buildings on the same
property and court walls shall be assumed to have a property line between them. When a new

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building is to be erected on the same property with an existing building, the assume property line
from the existing building shall be the distance to the property line for each occupancy as set forth
by the Secretary. Provided, that two or more buildings on the same property may be considered as
one building if the aggregate area of such building is within the limits of allowable floor areas for a
single building, and when the buildings so considered, house different occupancies or are of
different types of construction, the area shall be that allowed for the most restrictive occupancy or
construction.

Section 705. Allowable Floor Areas. The allowable floor areas for one-storey building and buildings
over one-storey shall not exceed the limits prescribed by the Secretary for each occupancy groups
and/or types of construction. For purposes of this Section, each portion of a building separation by
one or more area separation walls may be considered a separate building provided the area
separation walls meet the requirements prescribed therefor by the Secretary.

Section 706. Allowable Floor Area Increases.

The floor areas hereinabove provided may be increased in certain specific instances and under
appropriate conditions, based on the existence of public space, streets or yards extending along
and adjoining two or more sides of the building or structure subject to the approval of the Building
Official.

Section 707. Maximum Height of Buildings.

The maximum height and number of storeys of every building shall be dependent upon the
character of occupancy and the type ofconstruction as determined by the Secretary considering
population density, building bulk, widths of streets and car parking requirements. The height shall be
measured from the highest adjoining sidewalk or ground surface: Provided, that the height
measured from the lowest adjoining surface shall not exceed such maximum height by more than
3.00 meters: Except, that towers, spires, and steeples, erected as part of a building and not used for
habitation or storage are limited as to height only by structural design if completely of incombustible
materials, or may extend not to exceed 6.00 meters above the height limits for each occupancy
group if of combustible materials.

Section 708. Minimum Requirements for Group A Dwellings.

(a) Dwelling Location and Lot Occupancy.
The dwelling shall occupy not more than ninety percent of a corner lot and eighty percent of an
inside lot, and subject to the provisions on Easement on Light and View of the Civil Code of the
Philippines, shall be at least 2 meters from the property line.
(b) Light and Ventilation.
Every dwelling shall be so constructed and arranged as to provide adequate light and ventilation as
provided under Section 805, of this Code.
(c) Sanitation.
Every dwelling shall be provided with at least one sanitary toilet and adequate washing and
drainage facilities.
(d) Foundation. Footing shall be of sufficient size and strength to support the load of the dwelling
and shall be at least 250 millimeters thick and 600 millimeters below the surface of the ground.
(e) Post. The dimensions of wooden post shall be those found in Table
708-A Dimensions of Wooden Posts (Annex B-1). Each post shall be anchored to such footing by
strap and bolts of adequate size.
(f) Floor. The live load of the first floor shall be at least 200 kilograms per square meter and for the
second floor, at least 150 kilograms per square meter.
(g) Roof. The wind load for roofs shall be at least 120 kilograms per square meter for vertical
projection.
(h) Stairs. Stairs shall be at least 750 millimeters in clear width, with a rise of 200 millimeters and a
minimum run of 200 millimeters.
(i) Entrance and Exit. There shall be at least one entrance and another one for exit.

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(j) Electrical Requirements. All electrical installation shall conform to the requirements of the
Philippine Electrical Code.
(k) Mechanical Requirements.Mechanical systems and/or equipment installation shall be subject to
the requirement of the Philippine Mechanical Engineering Code.

Section 709. Requirements for Other Group Occupancies.

Subject to the provisions of this Code, the Secretary shall promulgate rules and regulations for each
of the other Group Occupancies covering: allowable construction, height, and area; location on
property, exit facilities, light, ventilation, and sanitation; enclosures of vertical openings; fire
extinguishing systems; and special hazards.

CHAPTER VIII
LIGHT AND VENTILATION

Section 801. General Requirements of Light and Ventilation.

(a) Subject to the provisions of the Civil Code of the Philippines on Basement of Light and
View and to the provisions of this part of the Code, every building shall be designed, constructed,
and equipped to provide adequate light and ventilation.
(b) All buildings shall face a street or public alley or a private street which has been duly
approved.
(c) No building shall be altered nor arranged so as to reduce the size of any room or the
relative area of windows to less than that provided for buildings under this Code, or to create an
additional room, unless such additional room conforms to the requirements of this Code.
(d) No building shall be enlarged so that the dimensions of the required court or yard would
be less than that prescribed for such building.

Section 802. Measurement of Site Occupancy.

(a) The measurement of site occupancy or lot occupancy shall be taken at the ground level
and shall be exclusive of courts, yards, and light wells.
(b) Courts, yards, and light wells shall be measured clear of all projections from the walls
enclosing such wells or yards with the exception of roof leaders, wall copings, sills, or steel fire
escapes not exceeding 1.20 meters in width.

Section 803. Percentage of Site Occupancy.

(a) Maximum site occupancy shall be governed by the use, type of construction, and height
of the building and the use, area, nature, and location of the site; and subject to the provisions of the
local zoning requirements and in accordance with the rules and regulations promulgated by the
Secretary.

Section 804. Size and Dimensions of Courts.

(a) Minimum size of courts and their least dimensions shall be governed by the use, type of
construction, and height of the building as provided in the rules and regulations promulgated by the
Secretary, provided that the minimum horizontal dimension of court shall be not less than 2.00
meters.
(b) All inner courts shall be connected to a street or yard, either by a passageway with a
minimum width of 1.20 meters or by a door through a room or rooms.

Section 805. Ceiling Heights.

(a) Habitable rooms provided with artificial ventilation have ceiling heights not less than 2.40
meters measured from the floor to the ceiling; Provided that for buildings of more than one-storey,
the minimum ceiling height of the first storey shall be 2.70 meters and that for the second storey
2.40 meters and succeeding storeys shall have an unobstructed typical head-room clearance of not
less than 2.10 meters above the finished floor. Above stated rooms with a natural ventilation shall
have ceiling height not less than 2.70 meters.

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(b) Mezzanine floors shall have a clear ceiling height not less than 1.80 meters above and
below it.

Section 806. Size and Dimensions of Rooms.

(a) Minimum sizes of rooms and their least horizontal dimensions shall be as follows:
1. Rooms for Human Habitations. 6.00 square meters with at least dimensions of 2.00
2. Kitchens. 3.00 square meters with at least dimension of 1.50 meters;
3. Bath and toilet. 1.20 square meters with at least dimension of 0.90 meters.

Section 807. Air Space Requirements in Determining the Size of Rooms.

(a) Minimum space shall be provided as follows:
1. School Rooms. 3.00 cubic meters with 1.00 square meter of floor area per person;
2. Workshops, Factories, and Offices. 12.00 cubic meters of space per person;
3. Habitable rooms. 14.00 cubic meters of space per person.

Section 808. Window Openings.

(a) Every room intended for any use, not provided with artificial ventilation system as herein
specified in this Code, shall be provided with a window or windows with a total free area of openings
equal to at least ten percent of the floor area of room, and such window shall open directly to a
court, yard, public street or alley, or open water courses.

Section 809. Vent Shafts.

(a) Ventilation or vent shafts shall have a horizontal cross – sectional area of not less than
0.10 square meter for every meter of height of shaft but in no case shall the area be less than 1.00
square meter. No vent shaft shall have its least dimension less than 600 millimeters.
(b) Skylights. Unless open to the outer at the top for its full area, vent shaft shall be covered
by a skylight having a net free area or fixed louver openings equal to the maximum required shaft
area.
(c) Air ducts shall open to a street or court by a horizontal duct or intake at a point below the
lowest window opening. Such duct or intake shall have a minimum unobstructed cross-sectional
area of not less than 0.30 square meter with a minimum dimension of 300 millimeters. The openings
to the duct or intake shall not be less than 300 millimeters above the bottom of the shaft and the
street surface or level of court at the respective ends of the duct or intake.

Section 810. Ventilation Skylights.

(a) Skylights shall have glass area not less than that required for the windows that are
replaced. They shall be equipped with movable sashes or louvers with an aggregate net free area
not less than that required for openable parts in the window that are replaced or provided with
approved artificial ventilation of equivalent effectiveness.

Section 811. Artificial Ventilation.

(a) Rooms or spaces housing industrial or heating equipment shall be provided with artificial
means of ventilation to prevent excessive accumulation of hot and/or polluted;
(b) Whenever artificial ventilation is required, the equipment shall be designed and
constructed to meet the following minimum requirements in changes:
1. For rooms entirely above grade and used for office, clerical, or administrative purposes, or
as stores, sales rooms, restaurants, markets, factories, workshops, or machinery rooms, not
less than three changes of air per hour shall be provided.
2. For rooms entirely above grade and used as bakeries, hotel or restaurant kitchens,
laundries other than accessory to dwellings, and boiler rooms not less than ten changes of
air per hour shall be provided.
3. For auditorium and other rooms used for assembly purposes, with seats or other
accommodations not less than 0.03 cubic meter of air per minute shall be supplied for each
person.

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4. For wards and dormitories of institutional buildings not less than 0.45 cubic meter of air
per minute shall be supplied for each person accommodated.
5. For other rooms or spaces not specifically covered under this Section of the Code,
applicable provisions of the Philippine Mechanical Engineering Code, shall be followed.

VII. Self – Evaluation

Discuss.

1. Section 811
2. Section 806
3. Section 801
4. CHAPTER VI
5. Chapter V

VIII. Review of Concepts

CHAPTER I. GENERAL PROVISIONS; Title, Declaration of Policy, Scope and Application,

General Building Requirements, and site Requirements.
CHAPTER II. ADMINISTRATION AND ENFORCEMENT. Responsibility for Administration
and Enforcement, Technical Staff, General Powers and Functions of the Secretary under this Code,
Professional and Technical Assistance, Building Officials, Qualifications of Building Officials, Duties
of a Building Official, Fees, Exemption, Use of Income from Fees, Implementing Rules and
Regulations, Administrative Fines, Penal Provisions, Dangerous and Ruinous Buildings or
Structures, Abatement of Dangerous Buildings, and Other Remedies.
CHAPTER III. PERMITS AND INSPECTION. Building Permits, Application for permits,
Processing of Building Permits, Issuance of Building Permits, Validity of Building Permits, Non-
Issuance, Suspension or Revocation of Building Permits, Appeal, Inspection and Supervision of
Work, and Certificate of Occupancy.
CHAPTER IV. TYPES OF CONSTRUCTION. Changes in Types, and Requirements on
Type of Construction.
CHAPTER V. REQUIREMENTS FOR FIRE ZONES. Fire Zones Defined, Buildings located
in more than One Fire Zone, Moved Building, Temporary Buildings, Center Lines of Streets,
Restrictions on Existing Buildings, Designation of Fire Zones.
CHAPTER VI. FIRE-RESISTIVE REQUIREMENTS IN CONSTRUCTION. Fire-Resistive
Rating Defined, Fire-Resistive Time Period Rating, Fire-Resistive Standards, Fire-Resistive
Regulations.
CHAPTER VII. CLASSIFICATION AND GENERAL REQUIREMENT OF ALL BUILDINGS
BY USE OF OCCUPANCY. Occupancy Classified, Change in Use. Mixed Occupancy, Location of
Property, Allowable Floor Areas, Allowable Floor Area Increases, Maximum Height of Buildings,
Minimum Requirements for Group A Dwellings, Requirements for Other Group Occupancies.
CHAPTER VIII. LIGHT AND VENTILATION. General Requirements of Light and Ventilation,
Measurement of Site Occupancy, Percentage of Site Occupancy, Size and Dimensions of Courts,
Ceiling Heights, Size and Dimensions of Rooms, Air Space Requirements in Determining the Size

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of Rooms, Window Openings, Vent Shafts, Ventilation Skylights, and Artificial Ventilation.

IX. Reference

1. NATIONAL BUILDING CODE OF THE PHILIPPINES, R.A. No. 6541, 2001

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