Nasecore Petition GR No. 210255

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Republic of the Philippines
SUPREME COURT
Manila
NATIONAL ASSOCIATION OF
ELECTRICITY CONSUMERS
FOR REFORMS (NASECORE),
represented by Petronila L.
Ilagan, FEDERATION OF
VILLAGE ASSOCIATIONS
(FOVA), represented by
Siegfried a A. Veloso,
FEDERATION OF LAS PINAS
HOMEOWNERS ASSOCIATION
(FOLPHA), represented by
Bonifacio Daza and RODRIGO
C. DOMINGO, JR.
Petitioners,
"1'-1i
,Z:.. _u:.. \;Ji >W. '1JI U!
--versus--
G. R.
MANILA ELECTRIC COMPANY
(MERALCO), ENERGY
REGULATORY COMMISSION
(ERC) and DEPARTMENT OF
ENERGY (DOE),
Respondents.
x-------------------------------x
PETITION FOR CERTIORARI
and/ or PROHIBITION
(Class Suit)
(Under Rule 65, Revised Rules of Court, with
Prayer for a Temporary Restraining Order/
Status Quo Ante Order and Injunction)

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CLASS PETITIONERS, by the undersigned counsel, unto
this Honorable Court, respectfully state: THAT-

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I.
PREFATORY STATEMENT
"The essence of due process is distilled in the
immortal cry of Themistocles to Alcibiades "Strike -
but hear me first!
1
" (Italics supplied)
1. The same allegorical and resounding cry was
heard by the framers of our present Constitution when they
enshrined in Article III, Section 1 thereof that:
"Section l. No person shall be deprived of life
liberty or property without due process of law, x x
x." (Italics supplied)
2. It is the very same resounding cry which the class
petitioners eloquently repeat in the present petition as they
plead and challenge the validity of the oppressive and
exorbitant automatic electricity rate adjustments and
increases imposed by respondent MERALCO to its electricity
subscribers, with the accommodating imprimatur of the
Energy Regulatory Commission (ERC), the very
administrative agency tasked to regulate and ensure the
welfare and protection of the electricity-consuming public.
3. The present Petition squarely rests on and is
delimited by the legal postulate that respondent ERC gravely
abused its discretion, amounting to lack or excess of
jurisdiction, when it allowed the said automatic rate
adjustments and increases of MERALCO in its generation
costs, without first requiring publication, notice or hearing
involving the public who will bear the brunt of such
adjustments or increases in electricity rates, in violation of
the due process clause of the Philippine Constitution.
Consequently, such imposition of MERALCO as regards
electricity rate adjustments and increases made
automatically are certainly illegal and must be refunded to
its electricity-consuming subscribers.
1
Restituto Ynot vs. Intermediate Appellate Court, G. R. No. 74457, March 20, 1987.
Page 3 of 35
4. Petitioners come directly to this Honorable Court
on account of the fact that the present case seriously and
plainly involves public policy and that it is of transcendental
importance to the public in general, and that swift and
immediate redress from the Court is required by the
circumstances.
II.
NATURE OF THE PETITION
5. This Petition for Certiorari is a valid recourse
under Rule 65, Sections 1 and 2 of the 1997 Revised Rules
of Civil Procedure availed of to impugn the Resolutions and
Orders (letters) made by the ERC pertaining to automatic
rate adjustments or increases imposed by MERALCO in its
generation costs for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction.
Section 1, Rule 65 of the 1997 Revised Rule on Civil
Procedure provides:
"Section 1.. Petition for certiorari. -- When
any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse
of discretion amounting to lack of excess of its
jurisdiction, and there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course
of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the
facts with certainty and praying that judgment be
rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such
incidental reliefs as Jaw and justice may require.
X x x." (Italics and underscoring supplied)
Upon the other hand, Section 2 of Rule 65, Revised
Rules of Court, provides:
Page 4 of 35
"Section 2. Petition for prohibition. - When the
proceedings of any tribunal, corporation, board,
officer or person, whether exercising judicial, quasi-
judicial or ministerial functions, are without or in
excess of its or his jurisdiction, or with grave abuse
of discretion amounting to lack or excess of
jurisdiction, and there is no appeal or any other
plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the
facts with certainty and praying that judgment be
rendered commanding the respondent to desist from
further proceedings in the action or matter specified
therein, or otherwise granting such incidental reliefs
as law and justice may require.
The petition shall likewise be accompanied by a
certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings
and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as
provided in the third paragraph of section 3, Rule
46." (Italics and underscoring supplied)
III.
TIMELINESS OF THE PETITION
6. On December 5, 2013, MERALCO sought th
ERC's clearance for the staggered implementation of it
generation costs recovery for the November 2013 suppl
month, by way of an exception to the Automatic Generatio
Rate Adjustment (AGRA) Rules.
7. On December 9, 2013, the ERC, through its
Chairperson, Zenaida G. Cruz-Ducut, and Commissioners
Alfredo J. Non and Josefina Patricia A. Magpale-Asirit, sent a
letter to MERALCO's Ivanna G. Dela Pena, First Vice
President and Head, Regulatory Management Office,
advising the grant of clearance for a sought-staggered
implementation of its generation cost recovery.
8. Based on Section 4, Rule 65 of the Revised Rules
on Civil Procedure, herein petitioners have a period of sixty
(60) days from receipt of the above-stated letter granting
clearance for the staggered implementation of MERALCO's
Page 5 of 35
generation cost recovery for the November 2013 supply
month. Considering that petitioners came to know of the
issuance of the said clearance only on December 12, 2013,
then it has until February 10, 2014 within which to file the
present Petition.
9. The filing of the present Petition on December 20,
2013 is, therefore, within the reglementary period.
IV.
THE PARTIES
10. Herein petitioners are a class of similarly situated
individuals who are all subscribers of the respondent utility
company MERALCO, with common or general interest to
numerous persons who are also its subscribers and
consumers. Class petitioners may be served with orders,
resolutions, decisions and other processes of this Honorable
Court at the given address of the undersigned counsel.
11. Petitioners are an aggrupation of different socio-
civic organizations who are collectively promoting and
upholding consumer welfare and protection, which are all
organized and existing under and by virtue of the laws of the
Republic of the Philippines. Almost all of its members, if not
all, are subscribers or consumers being serviced by
respondent MERALCO.
The following are the enumeration of the different
Secretary's Certificates showing the appointment or
delegation of the following individuals who represent and
can act for and in behalf of their respective petitioner-
organizations, to wit:
a. NATIONAL ASSOCIATION OF ELECTRICITY
CONSUMERS FOR REFORMS (NASECORE),
represented by Petronilo Ilagan, as Annex "A"
hereof;
Page 6 of 35
b. FEDERATION OF VILLAGE ASSOCIATIONS
(FOVA), represented by Siegfriedo Veloso, as
Annex "B" hereof;
c. FEDERATION OF LAS PINAS HOMEOWNERS
ASSOCIATION (FOLPHA), represented by Bonifacio
C. Daza, as Annex "C" hereof.
12. Petitioners are suing on the ground that the
issues raised herein are matters of public service, policy and
interest, and that respondent MERALCO, being a public
utility company enjoying franchise from the government,
had submitted itself to government regulations and
surrendered certain business prerogatives. Petitioners, as
citizens organizations of the Philippines, is therefore invoking
the sovereign police and protective power of the State in
filing the instant case
2
.
13. Respondent Department of Energy (DOE) is a
government instrumentality tasked mainly to prepare,
integrate, coordinate, supervise and control all plans,
programs, projects and activities of the government relative
to energy exploration, development, utilization, distribution
and conservation. It is the agency which effected the
assailed amendment of Section 4 (e), Rule 3 of the IRR
EPIRA. It may be served with summons and other
processes of this Honorable Court at its principal office
located at Energy Center, Rizal Drive, Bonifacio Global City,
Taguig City 1632.
14. Respondent Energy Regulatory Commission (ERC)
is, likewise a government instrumentality created under
Republic Act No. 9136, otherwise known as the Electric
Power Industry Reform Act of 2001 (EPIRA Law), tasked
mainly to regulate electricity power rates and to protect
consumer and subscriber interests.
It may be served with summons and other processes of
this Honorable Court at Pacific Centre Building, San Miguel
Avenue, Pasig City, where it maintains its principal office.
15. Respondent Manila Electric Company (MERALCO)
is a corporation duly organized and existing under the laws
2
Lawyers Against Monopoly and Poverty (LAMP), et. al. vs. MERALCO, G. R. No. 141369, April 9, 2003.
Page 7 of 35
of the Republic of the Philippines with principal address at
Lopez Building, Ortigas Avenue, Pasig City, where it may be
served with summons and other processes of this Honorable
Court. MERALCO is engaged in the business of electricity
distribution with franchise to operate granted by the
Republic of the Philippines in Metro Manila, Bulacan, Laguna,
and other adjoining provinces in Luzon.
v.
Class Suit Allegations
16. Class petitioners bring this action in their behalf
and on behalf of the class of similarly situated persons,
whether natural or juridical, with common or general
interest to many persons who are all subscribers and
consumers of respondent MERALCO.
17. The subject matter of the present Petition is of
transcendental importance to all and is aimed to affect and
promote the common good. It is therefore a class suit
pursuant to Sec. 12, Rule 13 of the Rules of Court of the
Philippines. The affected parties are so numerous,
consisting of some 5,000 MERALCO subscribers, more or
less, that it is impracticable to bring them all before the
court so that they may sue for the benefit of all.
18. The named members of the class petitioners are
typical and representative of the class and that they can
fairly and adequately protect the interest and welfare of the
class. Class petitioners' claims do not conflict with those of
the class and that they are represented by an experienced
group of lawyers knowledgeable in civil and class actions.
19. There are common questions of facts and law
relating to the relief demanded by the class petitioners
including, but not limited, to the following:
a. Declaring the amendment of Section 4
(e), Rule 3 of the IRR EPIRA made by the DOE to
be illegal, null and void ab initio;
Page 8 of 35
b. Declaring all Resolutions, Orders or any
other issuances of the ERC authorizing, allowing,
confirming, sanctioning or clearing the automatic
power rate adjustments or increases imposed by
MERALCO as inherently null and void on the
ground of grave abuse of discretion, amounting to
lack or excess of jurisdiction;
c. Declaring all electricity rate
adjustments or increases automatically imposed
or collected by MERALCO from its subscribers and
consumers as inherently and patently null, void
and illegal;
d. Prohibiting the ERC from allowing
MERALCO to automatically impose and collect
electricity rate adjustments and increases;
e. Ordering the audit and subsequent
refund of all rate adjustments or increases
automatically collected or imposed by MERALCO
to all of its consumers or subscribers by virtue of
the assailed ERC Resolutions, Orders or issuances;
f. Ordering the creation of a committee,
headed by the Commission on Audit (COA), and
where consumer interests are sufficiently
represented, that would conduct the audit and
subsequent refund of all automatic electricity
rate adjustments or increases illegally imposed
and collected by MERALCO;
g. Ordering the deposit into an escrow
account of the aggregate amount of refund
determined by the above-said Committee;
h. Ordering the proportionate distribution
of the determined amount of refund to all class
members;
i. Ordering the reimbursement in favor of
the petitioners the costs of the present class suit.
VI.
Brief Statement of Material Facts
and of the Case
Page 9 of 35
20. On February 2, 2006, this Honorable Court, in the
case entitled
11
NASECORE, et. al. vs. ERC and MERALC0
3
",
issued a Decision of even date, the dispositive portion of
which states:
"WHEREFORE, premises considered, the
petition is GRANTED. The assailed ERC Order
dated June 2, 2004 in ERC Case No. 2004-112 is
DECLARED VOID and accordingly SET ASIDE." (Italics
supplied)
21. On August 16, 2006, this Honorable Court issued
a Resolution of even date denying the respective Motions for
Reconsideration filed by the ERC and MERALCO assailing the
above-quoted Decision, the dispositive portion of which
states that:
"WHEREFORE, the Motion for Reconsideration
dated February 17, 2006 of the ERC and the Motion
for Reconsideration dated February 20, 2006 of
MERALCO are DENIED with FINALITY.
The Comment-in-Intervention dated March 6,
2006 of PEPOA and the Intervention dated March 27,
2006 of PIPPA are, likewise, DENIED.
Consequently, upon finality of the Decision
dated February 2, 2006, MERALCO
is DIRECTED to REFUND to the affected consumers
the amount of P0.1327 per kWh (representing the
unauthorized increase from P3.1886 to P3.3213 per
kWh under the nullified ERC Order dated June 2,
2004) reckoned from when the same was charged
and collected from the affected consumers. Instead
of an actual refund, MERALCO may correspondingly
credit in favor of the affected customers the
appropriate amounts for their future
consumption. The ERC is DIRECTED to ensure the
proper execution of the judgment in this case."
(Italics supplied)
3
G. R. No. 163935, February 2, 2006.
Page 10 of 35
22. The above-said case proceeded from the petition
for certiorari, prohibition and injunction, on the ground of
violation of due process, filed by NASECORE, FOVA and
FOLPHA, seeking to nullify the Order dated June 2, 2004 of
the Energy Regulation Commission (ERC) in ERC Case No.
2004-112 approving the increase of respondent MERALCO's
generation charge from P3.1886 per kWh to P3.3213 per
kWh effective immediately, even without complying first
with the requisites of publication mandated by Section 4
(e), Rule 3 of the Implementing Rules and Regulations
(IRR) of the Electric Power Industry Reform Act (EPIRA).
Said Section 4 (e) of the IRR for EPIRA provides:
"(e) Any apolication 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 princioally operates together
with the certification of the notice of publication
thereof in a newspaper of general circulation in the
same localitv.
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." (Italics and underscoring supplied)
Page 11of35
23. In emphasizing the need and the importance to
comply with the publication requirement, this Honorable
Court ratiocinated that:
"Indeed, the basic postulate of due process
ordains that the consumers be notified of any
application, and be apprised of its contents, that
would result in compounding their economic
burden. In this case, the consumers have the right
to be informed of the bases of
respondent MERALCO's amended application for the
increase of its generation charge in order to, if they
so desire, effectively contest the same.
xx x.
The requirement of due process is not some
favor or grace that the ERC may dole out on a bout of
whim or on occasion of charity. Rather, it is a
statutory right to which the consuming public is
entitled.
The requirement of publication in applications
for rate adjustment is not without reason or
purpose. It is ancillary to the due orocess
requirement of notice and hearing. Its purpose is
not merely to inform the consumers that an
application for rate adjustment has been filed by the
public utility. It is to adequately inform them that
an application has been made for the adjustment of
the rates being implemented by the public utility in
order to afford them the opportunity to be heard and
submit their stand as to the propriety and
reasonableness of the of the rates within the period
allowed by the Rule. Without the publication of the
application, the consumers are left to second-guess
the substance and merits of the application.
4
" (Italics
and underscoring supplied)
24. The attempt to automatically impose - that is,
without complying with the required publication - an
electricity rate increase or adjustment having been stunted
and struck down by this Honorable Court's above-mentioned
Decision and Resolution, the Department of Energy, through
then Secretary Raphael P. M. Lotilla, in a seeming act of
4
Ibid.
Page 12 of 35
accommodation in favor of respondent MERALCO and
apparently in collusion with respondent ERC, subsequently
issued "Amendments to Section 4 (e) of Rule 3 and
Section 7 of Rule 18 of the Implementing Rules and
Regulations (IRR) of Republic Act No. 9136, otherwise
known as the Electric Power Industry Reform Act",
effectively doing away with the requirement of publication in
certain rate increase and adjustment applications of
distribution utilities (referring to MERALCO in the present
case).
The lone amendment to Section 4 (e) of Rule 3 of the
IRR EPIRA reads:
"(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 le} shall not apply to Generation
Rate Adjustment Mechanism (GRAM), Incremental
Currency Exchange Recovery Adjustment (ICE RA},
Transmission Rate Adjustment Mechanism,
Transmission True-up Mechanism, System Loss Rate
Adjustment Mechanism, Lifeline Rate Recovery
Mechanism, Cross-Subsidy Mechanism, Local
Page 13 of 35
Franchise Tax Recovery Mechanism, Business Tax
Recovery Mechanism, Automatic Generation Rate
Adjustment Mechanism, VAT Recovery Mechanism,
Incremental Generation Cost Adjustment
Mechanism, and Recovery of Deferred Accounting
Adjustment for Fuel Cost and Power Producers by
NPC and NPC-SPUG, Provided that, such adjustments
shall be subject to subsequent verification by the
ERC to avoid over /under recovery of charges."
(Italics and underscoring supplied)
25. The introduction of the above-quoted amendment
to Section 4 (e), Rule 3 of the IRR EPIRA paved the way for
the ERC's introduction of the "GUIDELINES FOR THE
AUTOMATIC ADJUSTMENT OF GENERATION RA TES
AND SYSTEM LOSS RATES BY DISTRIBUTION
UTILITIES." Under the said guidelines, a distribution utility
like respondent MERALCO may now automatically adjust or
increase not only the system loss rates, but the generation
rates as well. This is so because the publication and other
requirements stated in Section 4 ( e) of the original IRR
EPIRA had already been effectively amended as stated
above, providing for an Automatic Generation Rate
Adjustment Mechanism.
Section 2, Article III of the above-mentioned Guidelines
provides for an automatic Generation Rate increase, as
follows:
"Section 2. Billing of New Generation Rate --
The Distribution Utilities shall bill their customers
the Generation Rate calculated in accordance with
the immediately preceding Section effective on the
tenth (10) day of each month." (Italics and
underscoring supplied)
A certified true copy of the "GUIDELINES FOR THE
AUTOMATIC ADJUSTMENT OF GENERATION RA TES
AND SYSTEM LOSS RATES BY DISTRIBUTION
UTILITIES" is hereto attached and marked as Annex "D"
hereof.
26. Subsequently, ERC likewise issued Resolution No.
10-01 and Resolution No. 10-04, both Series of 2004 and
both entitled IN THE MATTER OF AMENDING THE
Page 14 of 35
GUIDELINES FOR THE AUTOMATIC ADJUSTMENT OF
GENERATION RATES AND SYSTEM LOSS RATES BY
DISTRIBUTION UTILITIES."
Certified true copies of the said Resolution No. 10-01
and Resolution No. 10-04, both Series of 2004, are hereto
attached and marked as Annexes "E" and "F" hereof.
27. Likewise, Resolution No. 16, Series of 2009,
entitled "A RESOLUTION ADOPTING THE RULES
GOVERNING THE AUTOMATIC COST ADJUSTMENT AND
TRUE-UP MECHANISMS AND CORRESPONDING
CONFIRMATION PROCESS FOR DISTRIBUTION
UTILITIES", a certified true copy of which is hereto
attached and marked as Annex "G" hereof.
28. On December 5, 2013, respondent MERALCO
sought clearance from respondent ERC for the staggered
collection of its generation costs for the November 2013
supply month. MERALCO proposed to impose a generation
charge of PhP7.90/kWh in its December 2013 billing, instead
of the calculated PhP9.1070/kWh, and collect the deferred
amount of about PhP3 Billion in its February 2014 billing.
29. Likewise, in a letter dated December 5, 2013,
petitioner NASECORE wrote the respondent ERC, through its
Chairperson Zenaida G. Cruz-Ducut, urging it "to
immediately direct MERALCO not to implement its
reported rate increase this month and .January next
year as this will be contrary to law", to no avail.
30. On December 9, 2013, the ERC, through its
Chairperson, Zenaida G. Cruz-Ducut, and Commissioners
Alfredo J. Non and Josefina Patricia A. Magpale-Asirit, sent a
letter to MERALCO's Ivanna G. Dela Pena, First Vice
President and Head, Regulatory Management Office,
advising the grant of clearance for the sought staggered
implementation of its generation cost recovery.
A certified true copy of the letter dated December 9,
2013 sent by ERC to MERALCO is hereto attached and
marked as Annex "H" hereof.
Page 15 of 35
31. Section 4 (e) of Rule 3 of the IRR EPIRA having
been amended by doing away with publication, which was
originally required, the generation rate adjustment or
increase intended by MERALCO now becomes automatic,
without any mechanism that would apprise or notify the
public of the reasonableness or justness of such adjustment
or increase.
32. Further, ERC practically and deliberately resorted
to a regulatory failure on its part when it conveniently
surrendered its functions to MERALCO when it allowed the
latter to automatically determine its rate adjustment or
increase without even complying with the publication
requirement and conducting the requisite public hearing
thereto.
33. In the present Petition, class petitioners are of the
position that the requirement of publication as an essential
element of due process is inherently indispensable, even in
the light of the amendment made in so far as Section 4 ( e)
of Rule 3 of the EPIRA IRR is concerned. Thus, the related
issuances of the ERC regarding the automatic electricity
generation rate adjustment or increase are all null and void
for being violative of the due process clause of the
Constitution and for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction.
34. Hence, this Petition.
VII.
ARGUMENT
RESPONDENT ERC UNDENIABLY
ACTED WITH GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK
OR EXCESS OF JURISDICTION,
WHEN IT GAVE CLEARANCE AND
ALLOWED RESPONDENT MERALCO
TO AUTOMATICALLY COLLECT, OR
ABOUT TO DO SO, ALBEIT IN A
STAGGERED AND UNLAWFUL
MANNER, ITS NOVEMBER 2013
SUPPLY MONTH GENERATION
COSTS WITHOUT FIRST
PUBLISHING IT AS REQUIRED BY
LAW, AS WELL AS ALL OR ANY
OTHER GENERATION COSTS
IMPOSED BY RESPONDENT
MERALCO WITHOUT DUE PROCESS
OF LAW AGAINST ITS CONSUMERS
AND SUBSCRIBERS IN OTHER
INCLUSIVE SUPPLY MONTH
PERIODS WHICH WERE LIKEWISE
NOT PRIORLY PUBLISHED. ALL
ACTS BEING CONSTITUTIONALLY
INFIRMED.
VIII.
ISSUES
A.
The amendment made in
Section 4 ( e), Rule 3 of the IRR
EPIRA is illegal per se for being
violative of the declared State Policy
of EPIRA and due process.
B.
Rate adjustments or increases
cannot be done automatically
without first complying with the
publication requirements of the law.
c.
Respondent ERC and
respondent MERALCO violated the
Page 16 of 35
due process clause when automatic
rate adjustments or increases borne
out by its alleged generation costs
were allowed and subsequently
collected against the electricity
consuming public.
D.
The due process clause
enshrined in the present
Constitution is deemed to be
written in every statute, contract,
regulation, or undertaking.
E.
Automatic electricity rate
adjustments or increases of
MERALCO are not only violative of
due process but also amount to a
regulatory failure on the part of the
ERC, an abject surrender of its
regulatory functions, in violation of
Section 25, EPIRA.
F.
The automatic rate
adjustments or increases made and
imposed by MERALCO against its
consumers and subscribers being
inherently and patently illegal for
being violative of due process, a
refund of all amounts collected by
MERALCO from the petitioners is
proper and the class must be
ordered.
Page 17 of35
IX.
Discussions
A.
The amendment made in
Section 4 (e), Rule 3 of
the IRR EPIRA is illegal
per se for being violative
of the declared State
Policy of EPIRA and due
process.
B.
Rate adjustments or
increases cannot be done
automatically without first
complying with the
publication reguirements
of the law.
c.
Respondent ERC and
respondent MERALCO
violated the due process
clause when automatic
rate adjustments or
increases borne out by its
alleged generation costs
were allowed and
subseguently collected
against the electricity
consuming public.
D.
The due process clause
enshrined in the present
Page 18 of 35
Page 19 of 35
Constitution is ~ m e to
be written in everx
statute, contract,
regulation, or
undertaking.
35. The above-stated issues, being materially
relevant with each other, shall be discussed jointly herein.
36. Taking cue from the holding of the above-stated
Resolution of this Honorable Court in the above-said case of
11
NASECORE, et. al. vs. ERC and MERALCO" to the effect that
"[I]t should be made clear that, unless Section 4(e),
Rule 3 of the IRR of the EPIRA is amended, the
adjustments of rates based on purchased power or
fuel adjustment costs shall not or in no case be
"automatic"", the Department of Energy amended Section
4 (e), Rule 3 of the IRR EPIRA by exempting certain rate
adjustment or increase mechanisms from the publication
requirement. Thus, by doing away with the said
requirement, it is believed that electricity rate adjustments
or increases, as demonstrated by the herein assailed acts of
respondents ERC and MERALCO, can be made and imposed
automatically.
37. However, it is the firm position of the class
petitioners that, even in the light of the aforesaid
amendment introduced in Section 4 (e), Rule 3 of the IRR
EPIRA, publication of electricity application for rate
adjustments or increases is INDISPENSABLE and that its
imposition cannot be made automatically. In fact, class
petitioners are of the solid position that the amendment
made is per se illegal for being violative of the intendments,
provisions and the declared State Policy behind the EPIRA.
38. Settled is the rule that "[A]n implementing
rule or regulation must conform to and be consistent
with the provisions of the enabling statute; it cannot
amend the law either by abridging or expanding its
scope.
5
"
5
Romarico J. Mendoza vs. People of the Philippines, G. R. No. 183891, October 19, 2011.
Page 20 of 35
39. More so, in the case of Luis K. Lakin, .Jr. vs.
COMELEc6 the Supreme Court held:
"The authority to make IRRs in order to carry
out an express legislative purpose, or to effect the
operation and enforcement of a law is not a power
exclusively legislative in character, but is rather
administrative in nature. The rules and regulations
adooted and promulgated must not, however,
subvert or be contrarv to existing statutes. The
function of promulgating IRRs may be legitimately
exercised only for the purpose of carrying out the
provisions of a law. The power of administrative
agencies is confined to implementing the law or
putting it into effect. Corollary to this is that
administrative regulation cannot extend the law and
amend a legislative enactment. It is axiomatic that
the clear letter of the law is controlling and cannot
be amended bv a mere administrative rule issued for
its implementation. Indeed, administrative or
executive acts shall be valid onlv when thev are not
contrarv to the laws or the Constitution." (Italics and
underscoring supplied)
40. A mere cursory inspection of Section 2 ( c) of the
EPIRA would readily reveal that the publication of electricity
rate adjustments or increases is indispensable, and that its
imposition on the consumers and subscribers cannot be
effected automatically.
Section 2 ( c) of the EPIRA provides:
"Section 2. Declaration of Policv. -- It is hereby
declared the policy of the State:
(a) Xx x;
(b) Xx x;
( c) To ensure transparent and reasonable prices of
electricitv in a regime of free and fair competition and full
public accountabilitv to achieve greater operational and
economic efficiencv and enhance the competitiveness of
Philippine products in the global market:
(d) Xx x;
(e) Xx x;
(f) Xx x;
(g) Xx x;
6
G. R. No. 179431-32,
(h) Xx x;
(i) Xx x;
(j) Xx x;
Page 21of35
(k) X x x." (Italics and underscoring supplied)
41. Clearly, the amendment in Section 4 (e), Rule 3
of the IRR EPIRA, which effectively dispensed with the
publication requirement of certain electricity rate
adjustments or increase mechanisms, definitely makes it a
total impossibility to enforce and implement the avowed
State Policy of transparency in electricity rate fixing
considering that rate adjustments and increases can now be
effected automatically, without any way or method of
apprising or informing the affected public as regards its
justness or reasonableness. Needless to state, publication
of the application for rate adjustments or increases is a
means of ensuring "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."
42. Moreover, publication likewise is an effective tool
in preventing the public from second-guessing the substance
and merits of a particular rate adjustment or increase.
Publication notifies and informs the public that a rate
adjustment or increase is being applied for, as it encourages
participative initiatives on the part of the public, thereby
ruling out any arbitrary and oppressive electricity rate
adjustments. Publication, therefore, is the concrete
manifestation of due process which is essential in any
application for any rate adjustment or increase.
43. Considering that the amendment on Section 4
(e), Rule 3 of the IRR EPIRA, which dispensed with the
publication requirement, clearly runs afoul with the enabling
law which it is supposed to implement, then such
amendment can only be deemed and treated as illegal.
Mere implementing rules and regulations cannot amend,
supplement or substitute for the law itself. Indeed, "the
river cannot rise higher than its source.
7
"
7
Paulo Ballesteros vs. Rolando Abion, G. R. No. 143361, February 9, 2006.
Page 22 of 35
44. The aforesaid amendment made on the IRR
EPIRA being in itself illegal, all other subsequent issuances
made on the basis thereof, particularly the ERC Resolution
No. 10-01 and Resolution No. 10-04, both Series of 2004, as
well as its latest letter dated December 9, 2013 clearing and
allowing the staggered but automatic rate adjustment or
increase of MERALCO's generation cost for November 2013
supply month, must in similar manner be deemed and
declared illegal, null and void ab initio.
It must be struck down! And soon.
45. Incidentally, it bears stressing that no other than
respondent MERALCO committed itself to be transparent and
public in its rates. Thus, Section 5, R. A. 9209, otherwise
dubbed as the MERALCO Mega Franchise, provides:
"Sec. 5. Rates for Services. -- The retail rates
to its captive market and charges for the distribution
of electric power by the grantee to its end-user shall
be regulated by and subject to the approval of the
ERC.
The grantee shall identify and segregate in its
bill to the end-users the components of the retail
rate pursuant to Republic Act No. 9136, unless
otherwise amended. Such rates charged bv the
grantee to the end-users shall be made public and
transparent. The grantee shall implement lifeline
rate to end-users as mandated under Republic Act
No. 9136." (Italics and underscoring supplied)
46. Additionally, MERALCO likewise committed to be
responsible to the public by supplying electricity in the least
cost manner, by charging reasonable, just and competitive
power rates for its services, by not committing acts
constituting abuse of market power, unfair trade practices,
monopolistic schemes and other activities that will hinder
competitiveness or business and industries.
Thus, Section 4, of the same MERALCO Mega Franchise
provides:
Page 23 of 35
"Section 4. Resnonsibility to the Public. - The
grantee shall supplv electricity to its captive market
in the least cost manner. In the interest of the public
good and as far as feasible and whenever required
by the ERC, the grantee shall modify, improve or
change its facilities, poles, lines, systems and
equipment for the purpose of providing efficient and
reliable service and reduced electricity costs. The
grantee shall charge reasonable, just and
competitive power rates for its services to all tvpes
of consumers within its franchised area in order that
business and industries shall be able to compete.
The grantee shall have the obligation to provide
open and nondiscriminatory access to its distribution
system and services for any end-user within its
franchise area consistent with Republic Act No.
9136, otherwise known as the "Electric Power
Industry Reform Act of 2001 ". The grantee shall not
engage in any activity that will constitute an abuse
of market power such as but not limited to, unfair
trade practices, monopolistic schemes and any other
activities that will hinder competitiveness or
business and industries." (Italics and underscoring
supplied)
47. Noteworthy is the fact that the above-stated
commitment of MERALCO to the public, as stated in its Mega
Franchise, can only be done and realized by notifying the
public through publication of its application for rate
adjustments or increases and by encouraging public
participation in the process of its approval, rather than
embedding it automatically, albeit arbitrarily, in each of its
consumer's monthly billing by reason of an instant rate
imposition.
48. Viewed in another context, however, the
automatic rate adjustments and increases promote a
violation of Meralco's Mega Franchise, which is in itself a
ground for its revocation.
49. Additionally, it must be emphasized that the
amendment made on Section 4 (e), Rule 3 of the IRR EPIRA
dispensing with the publication requirement of applications
for rate adjustments or increases does not divest
respondents ERC and MERALCO of the obligation under the
law to publish and conduct public hearings or consultations
thereon.
Page 24 of 35
50. Suffice it to state that the public in general,
represented by the herein class petitioners, who sha II be at
the receiving end of the burden imposed by rate
adjustments or increases, has the right to be notified and
informed thereof, as well as the right to present its side and
be heard. This is in accordance with the due process clause
enshrined in the Constitution, which is deemed written in
every statute, contract, regulation or undertaking. Thus,
even if the requirement of publication had been deleted as a
result of the amendment, such requirement, being essential
to due process, is still deemed effectively written in the IRR
EPIRA.
Thus, in the case of Ruben Serrano vs. NLRc8, the
Supreme Court ruled that:
"Elementary is the doctrine that constitutional
provisions are deemed written into every statute,
contract or undertaking." (Italics and underscoring
supplied)
51. Likewise, due process was simply and plainly
described in the case of .Jose R. Catacutan vs. People
9
as:
"Due process simolv demands an opportunity to
be heard." "Due process is satisfied when the parties
are afforded a fair and reasonable oo0ortunitv to
explain their respective sides of the controversv."
(Italics and underscoring supplied)
52. Given the foregoing disquisition, it is more than
clear that the assailed automatic rate adjustments and
increases allowed by ERC and immediately implemented by
MERALCO is violative of the declared State Policy stated in
the EPIRA and of due process.
8
G. R. No. 117040, January 27, 2000; cited in the separate concurring opinion of then Chief Justice
Artemio Panganiban.
9
G. R. No. 175991, August 31, 2011.
E.
Automatic electricity rate
adjustments or increases
of MERALCO are not only
violative of due process
but also amount to a
regulatory failure on the
part of the ERC, an abject
surrender of its regulatory
functions, in violation of
Section 25, EPIRA.
53. Section 25 of the EPIRA provides:
Page 25 of 35
"SEC.25. Retail Rate. - The retail rates charged
bv distribution utilities for the suDDlv of electricitv in
their captive market shall be subject to regulation bv
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 shall identify and
segregate in its bills to end-users the components of
the retail rate, as defined in this Act." (Italics and
underscoring)
54. Clear from the above-quoted provision of the
EPIRA that no other governm.ent agency or private entity is
tasked and mandated to regulate the retail rates being
charged by MERALCO to its captive market. However, when
the ERC cleared and allowed said MERALCO to automatically
adjust and increase its rate given the herein assailed
Resolutions and letter, respondent ERC practically and
conveniently surrendered and delegated its regulatory
functions and office to MERALCO. Automatic rate
adjustment or increase effectively defeated the regulatory
authority of ERC, as mandated by law.
55. More than being a total regulatory failure on the
part of the ERC, its act of allowing an automatic rate
adjustment or increase amounts to a delegation of its
authority and regulatory functions which is definitely
Page 26 of 35
violative of the above-quoted provision of the EPIRA.
Settled is the rule that a delegated authority cannot further
be delegated -- "potestas delegate non de/egare
potest."
Thus:
"The rule is that what has been delegated
cannot be delegated, or as expressed in the Latin
maxim: potestas delegate non delegare potest. This
rule is based upon the ethical principle that such
delegated power constitutes not only a right but a
duty to be performed by the delegate by the
instrumentality of his own judgment acting
immediately upon the matter of legislation and not
through the intervening mind of another.
10
" (Italics
and underscoring supplied)
56. Axiomatic in the act of ERC is the invalidity of its
action.
F.
The automatic rate
adjustments or increases
made and imposed by
MERALCO against its
consumers and subscribers
being inherently and
patently illegal for being
violative of due process, a
refund of all amounts
collected by MERALCO
from the petitioners and
the class must be ordered.
57. The amount collected or imposed by MERALCO to
its subscribers and consumers from the time the automatic
rate adjustments or increases had been allowed by
10
William C. Dagan, et. al. vs. PHILRACOM, et. al., G. R. No. 175220, February 12, 2009.
Page 27 of 35
respondent ERC being patently illegal, the same should be
returned by way of refund to them, with dispatch. Such
illegal collection or imposition of automatic rate adjustment
or increase amounts to unjust enrichment on the part of
MERALCO, necessitating its return to the said subscribers
and consumers
11

58. Note must be made that the herein assailed ERC
Resolutions date back to the year 2004 when automatic rate
adjustment and increase was allowed by ERC. Thus, the
year 2004 must be the reckoning year of the refund prayed
for.
59. In order that the refund may be effected in a
transparent manner, a committee headed by the
Commission on Audit (COA), and joined by representatives
of the electricity consuming public, through the herein class
petitioners, must be created and its members appointed, for
the sole purpose of conducting a diligent audit designed to
ascertain the total amount of refund due to MERALCO
consumers and subscribers.
60. Likewise, in the name of transparency, MERALCO
must be made to deposit the amount of refund to an escrow
account in favor of the class petitioners and the class itself
of subscribers and consumers.
x.
GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OR EXCESS OF JURISDICTION
61. In the case of Tri-Corp Land & Development,
Inc. vs. Court of Appeals
12
, the Supreme Court had the
occasion to define grave abuse of discretion, to wit:
"As defined, grave abuse of discretion means
such capricious and whimsical exercise of judgment
as is equivalent to lack or excess of jurisdiction or,
where the power is exercised in an arbitrary manner
by reason of oassion, prejudice, or personal hostilitv,
11
Similar to what was ordered in the aforesaid case of NASECORE vs. ERC & MERALCO, infra.
12
G. R. No. 165742, June 30, 2009.
Page 28 of 35
and it must be so patent or gross as to amount to an
evasion of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in
contemplation of law." (Italics and underscoring
supplied)
62. In the case at bar, respondents clearly acted with
grave abuse of discretion, sufficient to conclude that they
acted in a whimsical, capricious, or arbitrary manner by
reason of prejudice amounting to an evasion of a positive
duty or to a virtual refusal to perform the duty enjoined or
to act at all in contemplation of law, when:
a. The DOE amended Section 4 (e), Rule 3
of the IRR EPIRA in violation of the provision and
declared State Policy of the law;
b. Respondent ERC, following and basing
on the illegal amendment made by the DOE,
issued the herein assailed Resolutions and letter
allowing the automatic rate adjustment and
increase in favor of MERALCO, which resulted in
the unlawful imposition of illegal electricity rate
adjustment or increase and in clear violation of
due process of law;
c. The ERC virtually surrendered its
regulatory functions, as an undue advantage, in
favor of MERALCO and against the general public.
XI.
ALLEGATIONS IN SUPPORT OF
THE APPLICATION OF THE CLASS PLAINTIFFS
FOR A TEMPORARY RESTRAINING ORDER I STATUS
QUO ANTE ORDER AND INJUNCTION
Class plaintiffs adopt and reiterate the herein-above
allegations insofar as they are material hereto;
Page 29 of 35
63. The issuance by respondent ERC of the herein
assailed Resolution and Letter which is immediately
executory on the part of MERALCO to automatically collect
and impose electricity rate adjustment and increase leaves
class petitioners without any other plain, speedy, immediate
and
1
available recourse under the law to prevent the
exetution thereof, upon its lapse into finality.
64. The threatened execution of the above-stated
Resolutions and letter would definitely render nugatory and
academic the relief and remedies herein prayed for, if the
same will not be outrightly restrained and/or enjoined. It
would definitely be promotive of the interest of substantial
justice and public policy to restrain and/or enjoin the
execution of the same issuances.
65. In the same manner, not only the class
petitioners, but the public in general based on the
perpetration of an injustice, would suffer grave and
irreparable injury if the said Resolutions and letter are
executed or carried out by MERALCO with the concurrence of
DOE and ERC, as it would deprive the class petitioners and
the class itself of their rights without due process of law.
66. Class petitioners are meritoriously entitled to the
relief and remedies prayed for, and the whole or part of such
relief and remedies consist in restraining the commission of
the acts complained of, or the performance of an action or
acts, either for a limited period or perpetually.
67. The commission or continuance of the acts
complained of during the litigation or the non-performance
thereof would work grave injustice to the herein class
petitioners and the general public.
68. MERALCO, with the concurrence of DOE and ERC,
is doing, threatening, is about to do or procuring to be
done, some acts in violation of the petitioners' and the
public's rights respecting the subject of the action herein and
tending to render the judgment hereof ineffectual.
69. The threatened and actual implementation and
execution of the said Resolutions and letter would serve no
purpose but to tolerate unjust enrichment and injustice.
Page 30 of 35
70. There is a need to place the parties in their
respective status before the filing of the present case and
before the issuance of the assailed Resolutions and letter by
the ERC, necessitating the issuance of a Status Quo Ante
Order.
71. The immediate issuance of the injunctive and
ancillary relief of restraining and/or enjoining the
implementation or execution of the afore-mentioned
Resolutions and letter issued by respondent ERC in favor of
MERALCO is highly in order.
72. Or if the acts complained of have already been
commenced or accomplished, the immediate issuance of the
injunctive and ancillary relief of restraining and/or enjoining
the implementation or execution of the afore-mentioned
Resolutions and letter issued by the ERC in favor of
MERALCO is highly in order.
XII.
Prayer
WHEREFORE, premises considered, it is respectfully
prayed of this Honorable Court that:
Immediately upon Filing of the Petition
1. A Temporary Restraining Order (TRO) or a Status
Quo Ante Order be issued ex-parte immediately and with
extreme dispatch, restraining and enjoining respondents,
their agents, representatives and all other persons, agencies
or instrumentalities who may be acting under their direct
and incidental control and supervision, from implementing,
executing and carrying out the execution of its Resolution
10-01, Resolution 10-04, both Series of 2004, and the letter
of ERC to MERALCO dated December 9, 2013 (Annexes "E",
"F" and "H", respectively);
Page 31of35
After Due Notice and/or Summary Hearing on
the Issuance of Injunction
2. A Writ of Prohibitory Preliminary Injunction be
immediately issued restraining and enjoining the
respondents, and all other persons, agencies or
instrumentalities who may be acting under their direct and
incidental control and supervision, from implementing,
executing and carrying out Resolution 10-01, Resolution 10-
04, both Series of 2004, and the letter dated December 9,
2013, until the final disposition on the merits of the present
petition;
After Hearing on the Merits
3. The Writ of Prohibitory Preliminary Injunction be
declared permanent and
4. Render a Decision declaring the respondents to
have acted with grave abuse of discretion, amounting to lack
or excess of jurisdiction, and consequently:
a. Declaring the amendment of Section 4
(e), Rule 3 of the IRR EPIRA made by the DOE to
be illegal, null and void ab initio;
b. Declaring all resolutions, orders or any
other issuances of respondent ERC authorizing,
allowing, confirming and implementing the
automatic power rate adjustments or increases
imposed by MERALCO as inherently null and void
on the ground of grave abuse of discretion,
amounting to lack or excess of jurisdiction;
c. Declaring of all electricity rate
adjustments or increases automatically imposed
or collected by MERALCO from its subscribers and
consumers as inherently and patently null, void
and illegal;
Page 32 of 35
d. Prohibiting the ERC from allowing
MERALCO to impose and collect automatically
rates adjustments and increases;
e. Ordering the audit and subsequent
refund of all rate adjustments or increases
automaticallv collected or imposed by
respondent MERALCO to all of its consumers or
subscribers by virtue of the assailed ERC
resolutions, orders or issuances with utmost
dispatch, reckoned from the year 2004;
f. Ordering the creation of a committee,
appointing the Commission on Audit (COA) as
head, and where consumer interests are
sufficiently represented, that would conduct
immediate audit and subsequent refund of all
automatic electricity rate adjustments or
increases illegally imposed and collected by
MERALCO reckoned from the year 2004;
g. Ordering the deposit in an escrow
account the aggregate amount of refund
determined by the committee headed Commission
on Audit (COA); and
h. Ordering the proportionate distribution
of the determined amount of refund to all class
members;
Other remedies appropriate under the premises are
also prayed for.
Metro Manila, December lta, 2013.
Counsel forvPetitioners
4045 Bigasan Street
Brgy. Palanan, Makati City
IBP Lifetime No. 03214122903
PTR No. 3671506-01.02.13-Rizal
Roll of Attorneys No.19190
Page 33 of 315
MCLE Exemption No. 3-001432-6.28.10 Pasig
Counsel for Petitioners
Suite 201 Carreon Building
2746 Zenaida Street
Brgy. Poblacion, Makati City
PTR No. 3676854-01.08.13-Makati
IBP Lifetime No. 0010-11.15.93
Roll of Attorneys No. 23649
MCLE Compliance No. V-0001091-11.12.13
Countel for Petitioners
No. 137 Libis Gochuico Street,
Circumferential Road 3,
Caloocan City 1400
Tel. No. 3511718
Email: ronrodillas@yahoo.com
IBP NO. 926338; 01-16-13-Calmana
PTR NO. 5534040; 01-14-13-Caloocan City
Roll of Attorneys No. 48536
MCLE Compliance No. IV - 0018734, April 24, 2013
Copy furnished:
Manila Electric Company
Lopez Building, Ortigas Avenue
Pasig City
Energy Regulatory Commission
Pacific Centre Building
San Miguel Avenue, Pasig City
Department of Energy
Energy Center, Rizal Drive
Bonifacio City
Taguig City 1632
EXPLANATION
Page 34 of 35
fiR # ;JDt-3
/fk/ f', 0,

/U fJ 1.rv1 g
fr /.t7?13
Copies of the foregoing Petition for Certiorari and
Prohibition were served by registered mail with return card
due to time constraint and lack of available messengerial to
effect personal service hereof.

Page 36of 35
REPUBLIC OF THE PHILIPPINES)
Makati City ) SS.
x----------------------------------x
VERIFICATION I CERTIFICATION
I, RODRIGO C. DOMINGO, one of the petitioners in the above-
entitled case, of legal age, Filipino citizen, with postal address located
at 15/F LPL Center, No. 130 L. P. Leviste St., Salcedo Village, Makati
City, after having been duly sworn in accordance with law, hereby
depose and state: That -
1. I am one of the petitioners in the present class action
against respondents;
2. I caused the preparation of the foregoing Petition for
Certiorari and Prohibition;
3. I have read the contents thereof and affirm that the same
are true and correct to the best of my personal knowledge and/or are
based on authentic records;
4. Pursuant to and in compliance with Supreme Court
Administrative Circular NO. 04-94, I hereby certify that I have not
commenced any other action or proceeding involving the same issues
in the Supreme Court, the Court of Appeals, or different divisions
thereof, or any other tribunal or agency; to the best of my knowledge,
no such action or proceeding is pending with the Supreme Court, the
Court of Appeals, or different divisions thereof, or any other tribunal or
agency; and if I should thereafter learn that a similar action or
proceeding has been filed or is pending before the above tribunals or
agency, I hereby undertake to report that fact within five (5) days
therefrom.

/
ODRIGO C. DOMINGO, JR.
Petitioner/ Affia nt
OSCA ID No. 3677
issued by Makati City
on April 27, 2005
nEC 2 o 1.U\3
SUBSCRIBED AND SWORN to before me this _ December,
2013, in the City of Makati, the affiant exhibited to me his
government-issued ID as stated above, bearing his photograph, as his
competent evidence of his identity.
Doc. No. J:l/
Page No. _!:&
Book No. _IM
Series of 2013.

NO
Un!i ecernber31 2013
Appl No 1 iVlai,.;it1 City
IBP 11899793. May :::2 1012-RSM
PTR #3685-185 Jan 16,
S C Holl No 59597
MCLE Compliance No IV-0011330
Unit 6E Cit1tana Herrera Towef
fl9a St cor Valero St
S"'IGliold(J Mek<ii!li
.'':\

VERIFICATION & CERTIFICATION

PETRONILO L. ILAGAN, of legal age, Filipino, married, with office and postal address
at No. 10 Bayside Court Compound, 680 Quirino Avenue, Tambo, Paranaque City, after
being sworn, deposes and states: THAT
1. He is the President of the National Association of Electricity Consumers
for Reforms, Inc., who had caused the preparation of the foregoing Petition a copy of
Secretary's Certificate authorizing Mr. Petronila L . Ilagan to file this Petition is
attached as Annex "A"
2. He read and fully understood the allegations contained in said Petition
and that all the facts therein contained are true and correct based on his personal
knowledge and authentic records.
3. He hereby certify that he have not commenced nor caused the
commencement of any other action or proceeding involving the issues raised herein
before the Regional Trial Court, the Supreme Court or different Divisions thereof, or
any other tribunal or agency, and that to the best of his knowledge, no such action or
proceedings is pending before the Regional Trial Court, the Supreme Court, or
different Divisions thereof, or any other tribunal or agency; and that if he should
learn that a similar action or proceeding has been filed or pending before the
Supreme Court, or different Divisions thereof, or any other tribunals or agency, he
shall notify this Honorable Commission within five (5) days from such notice.
IN WITNESS WHEREOF, he has hereunto affixed his signature this 19th day of
December 2013 at Paranaque City.
ILAGAN
Affiant
SUBSCRIBED AND SWORN to before me this day of ,DEC 2 0 2013 2013, by
affiant who showed me his Drivers License N10-7 4-012320 issued by L TO - East
Avenue
1
ec.n.J "-if'i ri "j 011 "1, 4Df4.
Doc. No.
Page No.
Book No.
21.l_;
!IL;
w_
Series of 2013
ATT ..... ,

Until December 31 2013
Appt No M-521 Makati City
IBP #899793. May 22 201'2-RSM
PIR #3685485 Jan 16, 2013-Makab
S C Holl No 59597
Unit GE Cityiand Herrera Tower
#98 Rufino St c.or Valero St
Saleado Viilage Makati Git'
1
SIEGFRIEDO A. VELOSO, of legal age, Filipino, married, with office and postal
address at #19 Tagaytay St. Alabang Hills Village, Cupang, Muntinlupa City, after being
sworn, deposes and states: THAT
1. He is a Director of the Federation of Village Associations, who had caused the
preparation of the foregoing Petition a copy of Secretary's Certificate authorizing ENGR.
SIEGFRIEDO A. VELOSO to file this Petition is attached as Annex "P,,"
2. He read and fully understood the allegations contained in said Petition and that all
the facts therein contained are true and correct based on his personal knowledge and
authentic records.
3. He hereby certify that he have not commenced nor caused the commencement of any
other action or proceeding involving the issues raised herein before the Regional Trial
Court, the Supreme Court or different Divisions thereof, or any other tribunal or agency,
and that to the best of his knowledge, no such action or proceedings is pending before the
Regional Trial Court, the Supreme Court, or different Divisions thereof, or any other
tribunal or and that if he should learn that a similar action or proceeding has been
filed or pending before the Supreme Court, or different Divisions thereof, or any other
tribunals or agency, he shall notify this Honorable Commission within five (5) days from
such notice.
December 2013 at MUNTINLUP A CITY.

Affiant
. 1 8 ZU1J
SUBSCRIBED AND SWORN to before me on this __ th day or 2013,
by affiant who showed me his OSCA ID No. 19263 issued at Muntinlupa City on
November 20, 2007.
Doc.No.ti
Page No. "'
Book No.
Series of20
\'.t
'I
"
'
,,

I
BONIFACIO C. DAZO of legal age, Filipino, widower, with office and postal address at
Myrna Panlilio St., B.F.Resort Village, Las Pinas City, after being sworn, deposes and
states: THAT
1. He is the President of the Federation of Las Pinas Homeowners
Association, Inc., who had caused the preparation of the foregoing Petition a copy of
Secretary's Certificate authorizing BONIFACIO C. DAZO to file this Petition is
attached as Annex"/,"
2. He read and fully understood the allegations contained in said Petition
and that all the facts therein contained are true and correct based on his personal
knowledge and authentic records.
3. He hereby certify that he have not commenced nor caused the
commencement of any other action or proceeding involving the issues raised herein
before the Regional Trial Court, the Supreme Court or different Divisions thereof, or
any other tribunal or agency, and that to the best of his knowledge, no such action or
proceedings is pending before the Regional Trial Court, the Supreme Court, or
different Divisions thereof, or any other tribunal or agency; and that if he should
learn that a similar action or proceeding has been filed or pending before the
Supreme Court, or different Divisions thereof, or any other tribunals or agency, he
shall notify this Honorable Commission within five (5) days from such notice.
December 2013 at Las Pin as City.
BONIFACIO C. DAZO
Affiant
SUBSCRIBED AND SWORN to before me this day of DEC 2 0 2013 2013, by
affiant who showed me his Community Certificate No. 06133462 issued on February 2,
",
2013 at Las Pinas City. osa ID No ll)Of'43 rE..sued 1.-"6 fi;,.s. ec,11 C9iV 14,w(}.2.
Doc. No. Ji2 ;
Page
Book
Series of 2013
LLUZ

201J
/\pp\ No M-52 \ Makat1 City
IElP #899793. May 22
.Jan 16, :wu-Makati
S C Holl No 59597
Unit. 6E Cityiand Herrera Tower
#98 Rufino St. cor Valero St
- Salcedo ViilaQe M<1kat1
,,
REPUBLIC OF THE PHILIPPINES)
MAKA TI CITY )S.S.
AFFIDAVIT OF SERVICE
(Jn compliance with Section 12, Rule 13 of the Rules of Court,
as amended by Supreme Court Resolution dated April 8, 1997)
I, ALLEN D. BUG-ATAN, Filipino, of legal age, with office address at 15
111
Floor, LPL Center, 130 L. P. Leviste Street, Salcedo Village, Makati City, after having
been duly sworn in accordance with law, hereby depose and state: That -
1. I am a liaison officer of Domingo Dizon Adre & Leonardo - A Law
Partnership;
2. On December 20, 2013, I served by registered mail with return card the
foregoing "Petition/or Certiorari and/or Prohibition" dated December 16, 2013, in the
case entitled "National Association of Electricity Consumers for Reforms (NASECORE),
et. al. vs. Manila Electric Compamy, et. al." G. R. No. , Supreme Court,
Manila, to:
Manila Electric Company
Lopez Building, Ortigas A venue
Pasig City
Energy Regulatory Commission
Pacific Centre Building
San Miguel A venue, Pasig City
Department of Energy
Energy Center, Rizal Drive
Bonifacio City
Taguig City 1632
RR# /VOT,"J
December 20, 2013
Makati Bel-Air P.O.
RR# /{?)1-J
RR# /JVr'-J
I
3. The above-described documents were placed in a sealed envelopes addressed
to the aforementioned addressees, with postage fully prepaid, and with instructions to the
postmaster to return the same to sender after ten (10) days if not delivered.
SUSCRIBED AND SWORN TO before me this 20th day of December 2013 in
Makati City, affiant exhibiting to me his Philhealth Card No. 01-051485921-9 with his
picture attached thereon as a competent proof his identity.
Doc. No. _m_;
Page No. _Jf}_;
Book No. _l!J_;
Series of 2013.
l". LUZ
0
\ .
. - ,
Until Oeetm1ber :.> 1 2D 13
f,pp! No rv:-.S?.1 City
lflf" llE::CJ'J793 M.1y 2L ?O i2-;<SM
PTR llJ6;'l'.i4Wi .Jan 1G. ::''Jn-Mal<a\'Jr
SC Roll N1J
MCLE No
Unit 6E Cilyl.ind HerrrJr.:i Tov1r.r
ff.98 Rufino :,;1. cor Valero St
S;:ilcedo Viitage Mak.ati G1tw
TABLE OF ANNEXES
ANNEXES DESCRIPTIONS
"A" Secretary's Certificate of National Association of Electricity
Consumers for Reform {NASECORE) dated December :1.0>,
2013.
"B" Secretary's Certificate of Federation of Village Associations
(FOVA) dated December 18, 2013.
"C" Secretary's Certificate of Federation of Las Pifias
Homeowners Associations (FOLPHA) dated _____ _
"D" Guidelines for the Automatic Adjustment of Generation
Rates and System Loss Rates by Distribution Utilities.
"E" Certified True Copy of Resolution No. 10-01, Series of
2004 entitled In The Matter of Amending the Guidelines !
1
for the Automatic Adjustment of Generation Rates and
11
System Loss Rates by Distribution Utilities.
''
"F" Certified True Copy of Resolution No. 10-04, Series of
1
2004 entitled In The Matter of amending the Guidelines
for the Automatic Adjustment of Generation Rates and
System Loss Rates by Distribution Utilities.
"G" Resolution No. 16, Series of 2009 entitled A Resolution
Adopting the Rules Governing the Automatic Cost
Adjustment and True-Up Mechanisms and Corresponding
Confirmation Process for Distribution Utilities.
"H" Certified True Copy of the letter dated December 9, 2013
sent by ERC to MERALCO.
I
'
'
'I
i
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1

ANNEX A
ANNEX A
SECRETARY'S CERTIFICATE
I, RONALD G. GOL:UN, a duly elected, qualified and incumbent Corporate
Secretary of National Association of electricity Consumers for Reforms, Inc
(NASECORE), a non-stock corporation duly organized and existing under and by virtue
of the laws of the Philippines, do hereby certify that:
At the special of the Board of Directors of the NASECORE duly
convened and held on December 13, 2013 at which meeting a quorum was present,
acted throughout and voted, the following resolutions were approved:
I
"RESOLVED, that the Board of Directors of NASECORE approve, as it hereby
approves, the filing of tile Petition with the Supreme Court of the Philippines.
RESOLVED, that Mr. Petronila L. Ilagan, President of NASECORE was
empowered, and is hereby empowered to sign, execute, verify and deliver on behalf
of NASECORE the said Petition, any papers and instruments that he may deem
appropriate and necessary, for the furtherance of NASECORE's interest.
WITNESS THE SIGNATURE of the undersigned as such officer of the
Association and its corporate seal hereunto affixed on this 13th day of Decembf2013
at Parafiaque City.
AND SWORN to before me this d of ____ 2013, affiant
exhibiting to me his Driver's License No. N03-01.-3082 !16 issued at LTO - East
e-yplr&Nlj 3
1
.2.-013
Doc. No. _Ja__
Page No._!fL_
Book No. [,j
Series of 2013

Until December 31 2'0'13
Appl No M-521 M<1kat1 City
IBP May 22. 2012-RSM
PTR Jan 16, 20"13-Mal\an
S C Roll No :iq','.:)"/
MCLE COl'r1pJ1;;;r1tlf< i'Jo IV-0011330
Unit SF Cityland Herrera Tower
#98 Huftno St cor Valero St
Salcedo V1ilaBe. M.akatl Ci.tr
2
ANNFXAB
I, MELANIE S. ROSAS, a duly elected, qualified and incumbent Corporate Secretary of
Federation of Village Associations (FOV A), a non-stock corporation duly organized and existing
under and by virtue of the laws of the Philippines, do hereby certify that:
At the regular meeting of the Board of Directors of FOV A duly convened and held on
October 12, 2013 at which meeting a quorum was present, acted throughout and voted, the
following resolutions were approved.
"RESOLVED, that the Board of Directors of FOV A approve, as it hereby approves, the
filing of the Petition with the Supreme court of the Philippines.
RESOLVED, that Engr. Siegfriedo A. Veloso, Director for External Affairs of FOVA
was empowered, and is hereby empowered to sign, execute, verify and deliver on behalf of
FOV A the said Petition, any papers and instruments that he may deem appropriate and
necessary, for the furtherance ofFOVA's interest.
WITNESS THE SIGNATURE of the undersigned as such officer offlie Asiation and
its corporate seal hereunto affixed on this 17th day of December 2013 at Muqf City.
SUBSCRIBED AND SWORN to before me this of December 2013, affiant exhibiting
to me her Community Tax Certificate No. 07889794 issued at Muntinlupa City on February 1,
2013.
'\

Page No. ..-:
Book No.
Series of 201
\
!/(
ANNEX
ANNEX A
I, EDWARD COLOBONG , a duly elected, qualified and incumbent Corporate
Secretary of the FEDERATION OF LAS PINAS HOMEOWNERS ASSOCIATION (FOLPHA), a
non-stock corporation duly organized and existing under and by virtue of the laws of
the Philippines, do hereby certify that:
At the special meeting of the Board of Directors of the FOLPHA duly
convened and held on December 14, 2013 at which meeting a quorum was present,
acted throughout and voted, the following resolutions were approved:
"RESOLVED, that the Board of Directors of FOLPHA approve, as it hereby
approves, the filing of the Petition with the Supreme Court of the Philippines.
RESOLVED, that BONIFACIO C. DAZO, President of FOLPHA was empowered,
and is hereby empowered to sign, execute, verify and deliver on behalf of FOLPHA the
said Petition, any papers and instruments that he may deem appropriate and
necessary, for the furtherance of FOLPHA's interest.
WITNESS THE SIGNATURE of the undersigned as such officer of the
Association and its corporate seal hereunto affixed on this l6th day of December 2013
at Las Pinas City.

Corporate Secretary
OE.C 2 O 20131
SUBSCRIBED AND SWORN to before me this di:!}' of 2013, affiant
exhibiting to me his Driver's License No. ,,_.. t1.lotli a.ft.
Doc. No. _J&J_
PageNo.J_
Book No. _IB,__/ _
Series of 2013
ll.fpit"Vnj Ott J'1
.. LLUZ

Un 1 December 2013
Appl lfo Makal1 City
IBP May 2:'. ,'() 12'-RSM
PTR #Jbf;!;.,105 .Inn Vi, 2013-Makati
!') C f<oll No '.i'l'i'9l
MCL[ Co111pi1.
0
;ncf" :\lo 1\1-0011330
Unit !'ii: Citvland I ierrem Tower
#98 St CoJr Valero Sl
Salcedo V1ilage, Mal>ab Cit)'
"
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.....
.....

ANNEX D
ENERGY REGULA TORY COMMISSION
GUIDELINES FOR THE AUTOMATIC ADJUSTMENTOF
RATES AND SYSTEM LOSS RATES BY
DISTRIBUTION UTILITIES
Pursuant to Section 43 (f) of Republic Act No. 9136 or the Act, Rule 7 of
its Implementing Rules and Regulations (IRR) and Section 10 of Republic Act
No. 7832, the Energy Regulatory Commission (ERC) hereby adopts and
promulgates these Guidelines to establish a process for the automatic
adjustment of Generation Rates and System Loss Rates by Distribution Utilities.
ARTICLE I
GENERAL PROVISIONS
These Guidelines shall have the following objectives:
a} To ensure and maintain the quality, reliability, security and affordability
of the supply of electric power;
b) To ensure transparent and reasonable prices of electric power service
in a regime of free and fair competition and to achieve greater
operational and economic efficiency;
c) To ensure full recovery of all allowable Generation Costs and other
costs associated with the System Loss Caps in an efficient and timely
manner; and
d) To protect the public interest as it is affected by the rates and services
of Distribution Utilities .
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ENERGY P.EGVL.\TORY
Page 1of7
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ARTICLE II
SCOPE AND DEFINITION OF TERMS
Section 1. Scope - These Guidelines shall apply to all Distribution Utilities.
Section 2. Definition of Terms - As used in these Guidelines, the
following terms shall have the following respective meanings:
a) Act" unless otherwise stated, shall refer to Republic Act No. 9136,
otherwise known as the "Electric Power Industry Reforrn Act of 2001 ".
b) "Average Transmission Rate (AlR)" shall mean the transmission
. costs approved per unbundling divided by the annualized kWh sales
per unbundling.
c) "Deferred Accounting Adjustment (DAA)" shall mean the
component of the generation rate, calculated in accordance with the
Generation Rate Adjustment Mechanism (GRAM), intenda.:f to recover
the deferred accounting balance.
d) "Distribution Utility (DU)" shall refer 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 the Act.
e) "Energy Regulatory Commission" or "ERC" shall refer to the
regulatory agency created by Section 38 of the Act.
f) "Generation Cost" shall mean costs associated with the acquisition of
purchased power. Generation costs include only those costs that are
reasonable, prudently incurred, and are eligible for recovery in
accordance with the current practice of the ERC.
_,,..
g) "Generation Rate" shall mean the cost of power generated and sold
to the distribution utility by the National Power Corporation (NPC) as
well as the Independent Power Producers (IPPs). which shall be
passed on to the DU's customers, as calculated in the formula
prescribed in these Guidelines.
h) "Ineligible Supply Contracts" shall mean power supply agreements
entered into by the DUs with the IPPs, which were not approved by the
then Energy Regulatory Board or by the ERC ..
Page 2 of7
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i) "Other Generation Rate Adjustments (OGA)" shall refer to
under( over)-recoveries in generation costs, recoveries from violation of
contracts and other pilferages, as well as other adjustments deemed
necessary by the ERC, subject to the provisions of these guidelines.
The OGA shall not be subject to any carrying charge. .
j) "Prompt Payment Discount ( ~ P D ) shall mean the three percent
(3%) discount that electric distribution utilities get from NPC for paying
their power bills on or before the tenth (10th) day of the month following
the billing period.
k) "System Loss" shall mean the difference between (kilowatt-hour)
kWh purchased and/or generated and kWh sold by a Distribution Utility
expressed as a percentage of kWh purchased and/or generated.
I) "System Loss Cap" shall mean the level of System Loss recoverable
from customers as established by the ERG in accordance with Section
43 (f) of the Act.
m) "System Loss Rate" shall mean the rate determined in accordance
with the formula set forth in Article IV hereof. Individual System Loss
Rates may be calculated for different customer classes if the
Distribution Utility maintains records on the individual customer class
System Loss.
"ARTICLE Ill
MONTHLY ADJUSTMENT OF THE GENERATION RA TE ,..
Section 1. Adjustment Formula - On the tenth (10) day of each
calendar month, Distribution Utilities shall calculate new Generation Rates based
c;in the following formula:
GR=AGC+OGA
Whera:
GR == Generation Rate to be charged per kWh
AGC = Adjusted Generation Cost, automatically computed without need
of prior ERG verification and confirmation, as follows:
[(GC; + GC;; + ..... + GGn) - (PPD * 50%) J
=
TP
Page 3of7
(
GC i ton = The Generation Cost in Pesos from source of power 1
th rough source of power n for the previous month,
excluding power sourced from self-generating facilities
PPD = Prompt Payment Discounts availed by the Distribution
Utility, net of the Prompt Payment Discounts passed on to
the end customers relative to the previous month's
gene.ration cost
TP = Total Purchases in kWh for the previous month
OGA = Other Generation Rate Adjustments, refer to adjustments
deemed necessary by the Commission
verification and confirmation, which shall include, but
shall not be limited to, under(over)-recoveries in
generation costs and recoveries from violation of
contracts and other pilferages. The OGA shall not be
subject to any carrying charge .
. -.... in the case of ineligible supply contracts, generation costs from such
contracts shall not be included in the calcufation of recoverable generation costs.
In the event, however, that a DU inadvertently or willfully recovers the same, the
ERC shall automatically order the refund thereof through the "OGA" without
prejudice to the imposition of appropriate penalties.
Section 2. Billing of New Generation Rate - The Distribution Utilities
shall bill their customers the Generation Rates calculated in accordance with the
immediately preceding Section effective on the tenth (10) day of each month.
ARTICLE IV
MONTHLY ADJUSTMENT OF THE SYSTEM LOSS RA TE
Section 1. Adjustment Formula - On the tenth (10) day of each
calendar month, Distribution Utilities shall calculate new System Loss Rates
based on the following formula:
SLR= (GR* U) + (ATR * U)
l/Vhere:
....
SLR = System Loss Rate
GR = Generation Rate calculated in accordance with Article Ill
Page 4of7
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1.
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ATR = Average Transmission Rate based on the most recent
unbundling decision in Peso per kWh, computed as
Transmission Costs per unbundling divided by the
Annualized Sales in kWh per unbundling
U =Gross Up Factor=(% System Loss I [1- %System Loss])
The % System Loss is based on the actual System Loss or the System
Loss cap whichever is lower plus actual company use or the company use cap of
1 % whichever is lower. The actual System Loss and company use are based. on
the preVious month figures to be submitted by the DU. Actual System Loss can
be calculated on an individual customer class level if the Distribution Utiljty has
the requisite information to support individual System Loss Rates.
Section 2. Billing of System Loss Rate - The Distribution Utilities shall
bill their customers on the tenth (10) day of each month the System Loss Rates
calculated in accordance with the immediately preceding Section.
ARTICLE V
VERIFICATION PROCESS
Section 1. Monthly Reporting Requirements - On or before the
twentieth (20th) day of each month, the Distribution Utilities shall provide the
ERC with all calculations related to Articles Ill and IV along with supporting
documentations, which shall include, but not limited to, the following:
Invoices from power suppliers;
Sample bills to end-users;
Official receipts of payment of power supplier invoices
ERC Forms-M-001 & M-002; and
Other documents deemed relevant by the ERC.
Section 2. Post Verification - At least every six (6) months, the ERC
shall verify the recovery of Generation Costs by comparing the actual allowable
costs incurred for the period with the actual revenues for the same period
generated by the Generation Rates and the portion of the Systems Loss Rates
attributable to Generation Costs.
Should the ERC fail to verify the Generation Rate (including the OGA) and
System Loss Rate within six (6) months from the submission of calculation and_.
supporting documentations in accordance with the immediately preceding
Section, the rates shall be deemed final and confirmed.
Page 5of7
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Upon completion of the semi-annual verification process, the ERC shall
issue an Order establishing the adjustments to be included in the OGA resulting
from said semi-annual verification. These adjustments shall be implemented in
the succeeding six (6) month period to reflect any over or under recovery.
Section 3. Prior Verification of Other Generation Rate Adjustments
(OGA). OGA other than those included in Article V, Section 2 shall be verified
and confirmed by the ERC within forty five (45) days from date of its filing and
only thereafter shall they be recoverable.
ARTICLE VI
FINAL FILING UNDER THE GENERATION RA TE ADJUSTMENT
MECHANISM
Section 1. Effectivity of the Generation Rate Adjustment Mechanism
(GRAM) - Upon the effectivity of these Guidelines, the GRAM shall no longer be
applicable to Distribution Utilities.
Section 2. Final filing under GRAM - Distribution Utilities that are using
the GRAM to recover Generation Costs shall file their final GRAM applications
within sixty (60) days from the effectivity of these Guidelines. Tfte'"fi'rn!t'GRAM
filing shall include the period from their last approved GRAM filing to the
effectivity of these Guidelines for purposes of calculating the final Deferred
Accounting Adjustment (DAA).
ARTICLE VII
Section 1. Fines and Penalties. Violation of any provision of these
Guidelines shall be subject to the imposition of fines and penalties in accordance
with the Guidelines to Govern the Imposition of Administrative Sanctions in the
Form of Fines and Penalties Pursuant to Section 46 of Republic Act No. 9136
promulgated by the ERC on May 17, 2002.
ARTICLE VIII
FINAL PROVISIONS
Section 1. Exception Clause. Where good cause appears, the ERC
may allow an exception from any provisions of these Guidelines, if such
-
Page 6of7
t ~ ~ ~ ~ ~ ... (.
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exception is found to be in the public interest and is not contrary to law or
any other related rules and regulations.
Section 2. Separability Clause If for any reason, any part or section
of these Guidelines is declared unconstitutional or invalid, the other parts
or sections hereof which are not affected thereby shall continue to be in full
force and effect.
Section 3. Effectivity These Guidelines shall take effect on the
fifteenth (15th) day following its publication in t\vo (2) newspapers of
general circulation.
Pasig City, October 13, 2004.
,
"-
(On Official Travel)
OLIVER B. BUT ALID
Commissioner
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Commissioner
Page 7 of7
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Commissioner
.L4'L
Commissioner
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ANNEXE.
ENERGY REGULAT<;lRY COMMISSION
RESOLUTION No.10-01, Series of 2004
IN THE MATTER OF AMENDING THE GUIDELINES FOR
THE AUTOMATIC ADJUSTMENT OF GENERATION RATES
AND SYSTEM LOSS RA TES BY DISTRIBUTION UTILITIES
This is to AMEND Sections 1 and 2 of Articles Ill and IV of the
GUIDELINES FOR THE AUTOMATIC ADJUSTMENT OF GENERATION
RATES AND SYSTEM LOSS RATES. BY DISTRIBUTION UTILITIES
(uGuidelines") approved on 13 October 2004 which read as follows:
.ARTICLE Ill
MONTHLY ADJUSTMENT OF THE GENERATION RATE
Section 1. Adjustment Formula - On the tenth (10) day of
each calendar month, Distribution Utilities shall calculate new
Generation Rates based on the following formula:
xxx xxx xxx
Section 2. Billing of New Generation Rate - The Distribution
Utilities shall bill their customers the Generation Rates calculated . in
accordance with the immediately preceding Section effective on the tenth
(10) day of each month."
"ARTICLE IV
MONTHLY ADJUSTMENT OF THE SYSTEM LOSS RATE
. Section 1. Adjustment Formula - On the tenth (10) day of
each calendar month, Distribution utilities shall calculate new
System Loss Rates based on the following formula:
xxx xxx xxx
Section 2. Billing of System Loss Rate - The Distribution
Utiiities shall bill their customers on the tenth (10) day of each
month the System Loss Rates calculated in accordance with the
immediately preceding Section."

A
......... -.,...,...,.,,_,.,. ..
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The Commission, after due deliberation, RESOLVED, as it hereby
RESOLVES, to amend the above-quoted portion of the Guidelines, to now read
as follows:

I
ARTICLE Ill
MONTHLY ADJUSTMENT OF THE GENERATION RATE
Section 1. Adjustment Formula - On or. before the tenth
{1 O) day of each calendar month, Distribution Utilities shall
calculate new Generation Rates based on the following formula:
xxx xxx xxx
Section 2. Billing of New Generation Rate - The Distribution
Utilities shall bill their customers the Generation Rates calculated in
accordance with the immediately preceding Section effective on or before
the tenth (10) day of each
"ARTICLE IV
Section 1. Adjustment Formula - On or before the tenth
{10) day of each calendar month, Distribution Utilities shall
calculate new System Loss Rates based on the following formula:
xxx xxx xxx
Section 2. Billing of System Loss Rate - The Distribution Utilities
shall bill their customers on or before the tenth (10) day of each month the
System Loss Rates calculated in accordance with the immediately
preceding Section."

A
(
This Resolution shall take effect on the eighth (8th) day following its
publication in two (2) daily newspapers of general circulation in the Philippines.

(On Official
RODOLFO B. A:
/ --RAtJ: A. TAN
Commissioner
JESUS N. ALCORDO
Commissioner
Commissioner

- - ..
-- - -- .
-
-...
ENERGY REGULA TORY COMMISSION
AN.NEX f
RESOLUTION NO. 10-04, Series of 2004

IN THE MATIER OF AMENDING THE GUIDELINES FOR
THE AUTOMATIC ADJUSTMENT OF GENERATION RATES
AND SYSTEM LOSS RATES BY DISTRIBUTION UTILITIES
!. ...
This is to AMEND Section 1 of Article IV of the GUIDELINES FOR THE
AUTOMATIC ADJUSTMENT OF GENERATION RATES AND SYSTEM LOSS
. . .. RATES BY DISTRIBUTION UTILITIES ("Guidelines") approved on -13 October
:- . 2004 which read as follows:
"ARTICLE IV
Section 1. Adjustment Formula On the tenth (10) day of each
calendar month, Distribution Utilities shall calculate new System Loss Rates
SLR= (GR* U) + (ATR * U)
Where_
GR = Generation Rate calculated in accordance with Article Ill
ATR =Average TranSJ"!lission Rate based on the most recent
unbundling decision in Peso per kWh, computed as
U =Gross Up Factor=(% System Loss I [1- %System Loss])

1 . -
; .. .. ... .
. , -. ..
.-..-----
The % System Loss is based on the actual System Loss or the System
Loss cap whichever is lower plus actual company use or the company use cap of
1% is lower. The actual System Loss and company use are based on-, tii:
the previous month figures to be submitted by the OU. Actual System Loss can .
be calculated on an individual customer class level if the Distribution Utility has
the requisite information to support individual System Loss Rates: -
The Commission, after due deliberation, RESOLVED, as it hereby
RESOLVES, to amend the portion of the Guidelines, to now read
as follows:
UARTICLE IV
Section 1. Adjustment Fonnula On or betore the tenth (1 O} day of
each calendar month, Distribution Utilities shall calculate new System Loss Rates
SLR= (GR U) + (ATR * U)
Where:
GR= Generation Rate calculated in accordance with Article Ill
ATR =Average Transmission Rate based on the-most recent
unt>undling decision in Peso per kWh, computed as
U = Gross Up Factor= (% System Loss I [1- %System Loss]}
The % System Loss is based on tne actual System Loss or the System
Loss cap whichever is lower plus actual company use or the company Yse cap of
1 % whichever is lower; The actual System Loss and company use are based on
the average of the most recent twelve (12) month period for which information is
available. Actual System Loss can be calculated on an individual customer class
level if the Distribution Utility has the requisite information to support individual
System Loss Rates.
.........--...
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This Resolution shall take effect on the third (3n1> day following its publication
in two (2) newspapers of general circulation in the Philippines .
... :-...

Co
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mm1ss1oner
Commissioner
Commissioner
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Republic of the Philippines \ l
ENERGY REGULATORY COMMISSION\ =-- . . , ..
San Miguel Avenue, Pasig ANNE'W
RESOLUTION Series of 2009
A RESOLUTION ADOPTING THE RULES GOVERNING
THE AUTOMATIC COST ADJUSTMENT AND TRUE-UP MECHANISMS
AND
CORRESPONDING CONFIRMATION PROCESS FOR DISTRIBUTION
UTILITIES
WHEREAS, pursuant to Section 43 (t) of Republic Act No. 9136,
the Energy Regulatory Commission (ERG) is mandated to promulgate
rules and regulations and perform such other regulatory functions as are
appropriate and necessary in order to ensure the successful restructuring
and modernization of the electric power industry;
WHEREAS, the ERC has adopted several automatic cost
adjustment mechanisms in separate issuances and it is deemed ideal to
consolidate, update, and rationalize the requirements und.er all these
separate issuances;
WHEREAS, the ERC finds it necessary to establish a systematized
confirmation process that conforms to the due process requirement of the
law for the following automatic cost adjustment and true-up mechanisms:
1. Automatic Generation Rate and System Loss Adjustment
Mechanism;
2. Transmission Rate Adjustment Mechanism;
3. Lifeline Rate Recovery Mechanism;
4. Local Franchise Tax Recovery Mechanism;
5. Local Business Tax Recovery Mechanism;
6. Guidelines for the Calculation of the Over or Under
Recovery in the Implementation of Lifeline Rates by
Distribution Utilities;
7. Guidelines for a True-Up Mechanism of the Over or Under
Recovery in the Implementation of Inter-Class Cross
Subsidy Removal by Distribution Utilities;
8. ERC Resolution No. 12, Series of 2005, "A Resolution
Approving a New Policy on the Treatment of Prompt
Payment Discount (PPD)";
9. Guidelines for the Calculation of the Over or Under
Recovery in the Implementation of System Loss Rate by
Distribution Utilities; and
10. Rules for the Calculation of the Over or Under Recovery in
the Implementation of Transmission Rates.
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WHEREAS, on November 22 and 25, 2008, the ERC conducted
public consultations for the adoption of the proposed Rules Governing the
Automatic Cost Adjustment and True-up Mechanisms and Corresponding
Confirmation Process for Distribution Utilities;
NOW THEREFORE, the ERC, after considering the various views
and comments submitted by all interested parties, hereby RESOLVES, as
it is hereby RESOLVED, to APPROVE and ADOPT, the Rules Governing
the Automatic Cost Adjustment and Troe-up Mechanisms and
Corresponding Confirmation Process for Distribution Utilities herein
attached as Annex "A" and made an integral part of this Resolution.
This Resolution shall take effect fifteen (15) days following its
publication in a newspaper of general circulation in the country.
Pasig City, July 13, 2009.
MARIA T ~ C . 1 1 1 1 :
RULES GOVERNING THE AUTOMATIC COST ADJUSTMENT
AND TRUE-UP MECHANISMS AND CORRESPONDING
CONFIRMATION PROCESS FOR DISTRIBUTION UTILITIES
Pursuant to Section 43 (f) and {t) of Republic Act No. 9136 or the Act, Rule 7 of
its Implementing Rules and Regulations (IRR) and Section 10 of Republic Act
No. 7832, the Energy Regulatory Commission {ERC) hereby adopts and
promulgates these Rules to establish a procedure for the automatic recovery or
refund of pass through costs and the confirmation process that would govern
the automatic cost adjustment and true-up mechanisms approved by the ERC.
ARTICLE 1
GENERAL PROVISIONS
Section 1. Objectives
These Rules shall have the following objectives:
1.1 To ensure appropriate recovery of various pass through costs in an
efficient manner;
1.2 To put in place a fair and transparent process for the confirmation of the
automatic cost adjustments implemented by the Distribution Utilities
(DUs) and the true-up of other pass-through charges as approved by the
ERC;
1.3 To ensure and maintain the quality, reliability, security and affordability of
the supply of electric power; and
1.4 To protect the public interest as it is affected by the rates and services of
the DUs.
Section 2. Scope
These Rules shall apply to all DUs, and shall govern the recovery of the
following pass through costs:
2.1 Generation;
2.2 Transmission;
2.3 System Loss;
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2.4 Lifeline Subsidy; and
2.5 Local Franchise and Business Taxes.
Section 3. Definition of Terms
Unless the context otherwise provides, the following words and terms
used herein shall have the following meanings:
3.1 "Act" unless otherwise stated, shall refer to Republic Act No. 9136,
otherwise known as the "Electric Power Industry Reform Act of 2001".
3.2 "Business Tax" shall refer to the tax levied by the cities and
municipalities pursuant to Sections 143 and 151 of the Local
Government Code of 1991.
3.3 "Captive Market" shall refer to electricity end-users who do not have the
choice of a Supplier of electricity, as may be determined by the ERG in
accordance with the Act.
3.4 "Commission" shall refer to the Energy Regulatory Commission
created under Section 38 of Republic Act No. 9136.
3.5 "Company Use" shall refer to the Energy used by the Distribution Utility
in the proper operation of the Distribution System (e.g. substation service
and Distribution Utility's offices, warehouses, workshops and other
essential electrical Loads).
3.6 "Distribution Charges" shall refer to the distribution, supply, metering
and other related charges/adjustments.
3.7 "Distribution Utility (DU)" shall refer 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 the Act.
3.8 "Electric Cooperative (EC)" shall refer to a Distribution Utility organized
and incorporated pursuant to Presidential Decree No. 269, as amended
by Presidential Decree No. 1645 and Republic Act No. 6938, otherwise
known as the Cooperative Code of the Philippines.
3.9 "Franchise Tax" shall refer to the tax levied by the province and cities
on businesses enjoying a franchise pursuant to Sections 137 and 151 of
Republic Act No. 7160, otherwise known as the Local Government Code
of 1991.
Page 2 of 33

uPR;'f/4 I
3.10 "Generation Rate (GR)" shall refer to the rate associated with the
purchase of power from power supplierfs and distribution utility-owned
generation facility as incorporated in the approved unbundled rates or as
subsequently authorized by the Commission.
3.11 "Gross Sales or Receipts" shall, as defined in Section 131(n) of the
Local Government Code of 1991, include the total amount of money or
its equivalent representing the contract price, compensation or service
fee, including the amount charged or materials supplied with the services
and deposits or advance payments actually or constructively received
during the taxable quarter for the services performed or to be performed
for another person excluding discounts if determinable at the time of
sales, sales return, excise tax, and value-added tax (VAT).
3.12 "Ineligible Supply Contracts" shall refer to power supply agreements
entered into by the DUs with the IPPs or other DUs, which were not
approved by the then Energy Regulatory Board or by the Commission.
3.13 "Lifeline Subsidy Rate (LSR)" shall refer to the rate charged to non-
lifeline customers to cover the lifeline discount provided to
marginalized/low income captive market end-users.
3.14 "Marginalized End-Users" shall 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 as determined
by the Commission.
3.15 "National Grid Corporation of the Philippines (NGCP)" shall refer to
the private consortium which had been awarded the concession to
assume the power transmission functions of the National Transmission
Corporation (TRANSCO).
3.16 "National Power Corporation (NPC)" shall refer to the government
corporation created under Republic Act No. 6395, as amended.
3.17 "National Transmission Corporation (TRANSCO)" shall refer to
Corporation organized pursuant to the Act which assumed the electrical
transmission function of the NPC.
3.18 "Net Settlement Surplus (NSS)" shall refer to the settlement surplus
remaining after all market transactions have been accounted for,
including the assignment of transmission line rentals to Network Service
Providers. This remainder is assumed to be attributed to economic
rentals arising from other binding constraints, and accounted for in
accordance with clause 3.13.16 of the WESM Rules.
Page 3 of 33

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3.19 "Philippine Electricity Market Corporation (PEMC)" shall refer to the
entity responsible for the operations of the spot market, governed by the
Philippine Electricity Market (PEM) Board in accordance with clause 1.4
of the WESM Rules.
3.20 "Pilferage Cost Recoveries (PCR)" shall refer to costs recovered from
illegal tapping, tampering of meter, use of jumper, and other means of
illicit usage of electricity.
3.21 "Power Factor Discount (PFD)" shall refer to the discount extended to
DUs having maintained their power factor above the set threshold which
maximizes the capacity of TRANSCO's facilities thereby resulting to real
savings in power costs, improvement of voltage regulation and release in
system capacity.
3.22 "Prompt Payment Discount (PPD)" shall refer to the discount that DUs
get from power supplier/s for paying their bills within the discount period.
3.23 "Power Supplier/s" shall refer to an entity/ies selling power to a DU
which may include the following: a) National Power Corporation (NPC);
b) Independent Power Producers (IPPs), either through bilateral power
supply contracts or through the Wholesale Electricity Spot Market; and c)
Other DUs.
3.24 "Recovery Period" shall generally refer to the period when the cost
adjustments are implemented.
3.25 "System Loss" shall refer to the difference between kilowatt-hour (kWh)
purchased and/or generated and kWh sold plus company use.
3.26 "System Loss Cap" shall refer to the level of System Loss recoverable
from customers, as provided for under Republic Act No. 7832 or the Anti-
electricity and Electric Transmission Lines/Materials Pilferage Act of
1994, until a different cap is determined, as established by the
Commission in accordance with Section 43 (f) of the Act.
3.27 "System Loss Rate (SLR)" shall refer to the rate determined in
accordance with the formula set forth in Article II hereof. For DUs where
different system loss charges were granted for each of their respective
customer classes in the Unbundling Decisions, SLR shall be calculated
based on an individual customer class level with the requisite reliable
information to support individual System Loss Rates.
3.28 "Transmission Rate (TR)" shall refer to the rate associated with the
cost incurred in the transmission of electricity from the generators to the
distribution utilities' system.
Page 4 of 33
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3.29 "Wholesale Electricity Spot Market (WESM}" shall refer to the market
where trading of electricity is made, established pursuant to Section 30
of R.A. 9136.
ARTICLE 2
CALCULATION OF THE ADJUSTED
RETAIL RATES
Section 1. Generation Rate. The Generation Rate (GR) of the DU shall be
determined as follows:
1.1. For a DU sourcing 100% of its power requirement from NPC:
1.1.1. For TOU customers, the GR shall be the NPC TOU rates
plus adjustments on GRAM, ICERA and Franchise and
Benefits to Host Communities as approved by the
Commission;
1.1.2. For customers under special programs of the DU, the GR
shall be based on their contracts: and
1.1 .3. For other customers, the GR shall be computed using the
formula provided under Section 2 hereof.
1.2. For a DU sourcing its power requirement from sources other than
NPC:
1.2. 1. For TOU customers, the GR shall be the DU's TOU rates as
approved by the Commission:
1.2.2. For customers under special programs of the DU, the
GR shall be based on their contracts:
1.2.3. For customers of a Buying DU under a Sale for Resale
Agreement, if the customers being supplied are not
connected with the main distribution grid and the cost is
different from those for other regular customers, the GR
shall include the Generation, Transmission, System Loss,
Distribution, Supply and Metering Charges of the Selling
DU; and
1.2.4. For other customers, the GR shall be computed using the
formula provided under Section 2 hereof.
Page 5 of 33
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Section 2. Generation Rate Formula. The GR applicable to customers
referred to in Sections 1. 1.3 and 1.2.4 shall be calculated and billed each
calendar month by the DU using the following formula:
FORMULA 1
GR== AGR+ OGA
Where:
GR =
AGR =
Generation Rate expressed in Peso/kWh;
Adjusted Generation Rate calculated, as follows:
AGR
TGC
TPG GR
\Nhere:
TGC =[(GC; +GC,, ++ GC.)-50% (PPD, + PPD,, ++ PPD.)- PCR]
Where:
GCi to n = The Generation Costs in Pesos from source of power
i through source of power n for the previous month
coming from Transition Supply Contracts (excluding
Mandated Rate Reduction and penalties), Power
Supply Agreements, WESM purchases, and
distribution utility-owned generation facility, as
incorporated in the approved unbundled rates or as
subsequently authorized by the Commission, less the
following:
a. Generation revenues from TOU customers;
b. Cost of power distributed to customers under
DU's special programs;
c. Cost of power distributed to customers under a
Sale for Resale Agreement, if the customers
being supplied are not connected with the main
distribution grid and the cost is different from
those for other regular customers; and
Page 6 of 33
..
d. Net Settlement Surplus amount as determined in
Article 5, Section 5.4 of the Rules for the
Distribution of Net Settlement Surplus, if any.
PPDuon = Prompt Payment Discounts availed by the DU from
source of power i through source of power n for the
previous month, net of the Prompt Payment
Discounts passed on to the end customers, where
discount passed on to customers can not be higher
than the discount availed from the power supplier/s,
relative to the previous month's generation cost;
PCR = Pilferage cost recoveries during the previous month;
and
TPGaR = Total kWh Purchased and Generated for the previous
month net of kWh sold to customers under TOU,
and kWh distributed to special programs and Sale for
Resale Agreements, if the customers being supplied
are not connected with the main distribution grid and
the cost is different from those for other regular
customers.
OGA = Other Generation Rate Adjustments, refer to adjustments
deemed necessary by the Commission after prior verification
and confirmation, and the GOUR determined using the formula
provided in Article 4, Section 2 hereof. The OGA shall not be
subject to any carrying charge.
In the case of ineligible supply contracts, generation costs from such contracts
shall include the kilowatt-hours pertaining to ineligible contracts pegged at the
DU's load weighted average NPC TOU rates or the actual rate as billed by the
IPP, whichever is lower.
Section 3. Transmission Rate. The Transmission Rate (TR) shall be
calculated and billed each calendar month by the DUs using the following
formulae:
3.1. For Customer classes with TR expressed in Peso/kWh:
Page 7 of 33
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FORMULA2.A
Where:
TRN =( tN ]+ OTCAN
TPGTR
"
TRN = Transmission Rate expressed in Peso/kWh;
tN = PTC x CPN;
TPGTR,.
OTCAN
Where:
PTC = Refers to the previous month's actual transmission
cost, net of fifty percent (50%) of PFD availed;
Where:
PFD = Power Factor Discounts availed
by the DU, net of the Power
Factor Discounts given to
customers and Third Parties for
the month, where: Discount
passed on to customers and
Third Parties ;S; discount availed
from TRANSCO/NGCP for the
month; and
CPN = Actual or computed Coincident Peak Demand
Allocation Factor for customer class N corresponding
to the previous month's period or the CP demand
allocation factor as reflected in the last approved
unbundled rates of the DU.
= Total kWh Purchased and Generated for the previous month;
= Other Transmission Cost Adjustments, refer to adjustments
and confirmation, and the TOUR determined using the
formula provided in Article 4, Section 3 hereof; and
N = Refers to a specific customer class (ex. N=1,2, .... , where
1= Residential, 2= Commercial, etc.).
Page 8 of 33
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3.2. Customer classes with TR expressed in Peso/kW:
FORMULA 2.B
TR, =(;J+OTCAN
Where:
TRN = Transmission rate expressed in Peso/kW:
t = PTCx CPN;
N
Where:
PTC = Refers to the previous month's actual transmission cost,
net of fifty percent (50%) of PFD availed;
Where:
PFD = Power Factor Discounts availed by
the DU, net of the Power Factor
Discounts given to customers and
Third Parties for the month, where:
Discount passed on to customers and
Third Parties ::;; discount availed from
TRANSCO/NGCP for the month; and
CPN = Actual or computed Coincident Peak Demand Allocation
Factor for customer class N corresponding to the
previous month's period or the CP demand allocation
factor as reflected in the last approved unbundled
rates of the DU.
OTCAN = Other Transmission Cost Adjustments, refer to adjustments
deemed necessary by the Commission after prior verification and
confirmation, and the TOUR determined using the formula
provided in Article 4, Section 3 hereof
Page 9 of 33
DN
= kW billing demand for the previous month for customer class N;
and
3.3 Customer classes with TR expressed in both Peso/kWh and
Peso/kW.
The component expressed in Peso/kWh shall remain constant.
The component expressed in Peso/kW shall be adjusted using the
following formula:
FORMULA2.C
(
t -'s xTKR .)J
TR = N ~ TRH N + OTCA
N D N
N
Where:
T R ~ = Transmission rate expressed in Peso/kW;
t
= PTCx CP
N N,
Where:
PTC = Refers to the previous month's actual transmission cost,
net of fifty percent (50%) of PFD availed, by the
corresponding kWh purchased;
Where:
PFD = Power Factor Discounts availed by the
DU, net of the Power Factor Discounts
given to customers and Third
Parties for the month, where: Discount
passed on to customers and Third
Parties ~ discount availed from
TRANSCO/NGCP for the month; and
{
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%
Page 10 of 33
STR,.
TKRN
OTCAN
DIV
CPN = Actual or computed Coincident Peak Demand Allocation
Factor for customer class N corresponding to the
previous month's period or the CP demand allocation
rates of the DU.
= kWh sales for the previous month for customer class N;
= Current TR component expressed in Peso/kWh for customer
class N;
= Other Transmission Cost Adjustments, refer to adjustments
confirmation, and the TOUR determined using the formula
provided in Article 4, Section 3 hereof;
= kW billing demand for the previous month for customer class N;
and
Section 4. System Loss Rate. The System Loss Rate (SLR) shall be
calculated and billed each calendar month by the DUs using the following
formula:
FORMULA 3
SLR = (TGR + ATR) U + OSLA
Where:
SLR = System Loss Rate expressed in Peso/kWh;
TGR = Total Generation Rate including customers under the DU's TOU
program calculated as follows:
TGR = GTGC
TPG SLR
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Where:
GTGC = [(GC, + GC,, + ... +GC.)-50%(PPD, + PPD,, + + PPDJ-PCR]
Where:
GC i to n = The Generation Costs in Pesos from source of
power i through source of power n for the previous
month coming from Transition Supply Contracts
(excluding Mandated Rate Reduction and
penalties), Power Supply Agreements, WESM
purchases, and distribution utility-owned generation
facility, as incorporated in the approved unbundled
rates or as subsequently authorized by the
Commission, less the following:
a. Cost of power distributed to customers under
b. Cost of power distributed to customers under a
c. Net Settlement Surplus amount as determined
in Article 5, Section 5.4 of the Rules for the
Distribution of Net Settlement Surplus, if any;
PPD;,on = Prompt Payment Discounts availed by the
Distribution Utility from source of power i through
source of power n for the previous month, net of the
Prompt Payment Discounts passed on to the end
customers, where discount passed on to customers
cannot be higher than the discount availed from the
power supplier/s, relative to the previous month's
generation cost; and
PCR = Pilferage cost recoveries during the previous month.
TPGsLR = Total kWh Purchased and Generated for the previous
month net kWh distributed to special programs and
Sale for Resale Agreements, if such sales have
different system loss charge rates from regular
customers.
Page 12 of 33
_
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ATR = Average Transmission Rate expressed in Peso/kWh, computed
as follows:
[N
ATR = TPG SLR
VVhere:
tN = Total Transmission Cost for the previous month;
Vv'here:
If SLR is a uniform charge to all customer classes:
IN = PTC as defined in Article 2, Section 3
hereof;
If SLR varies per each customer class:
IN= PTC x CPN;
Where:
PTC = As defined in Article 2, Section 3 hereof;
and
CP,.,= As defined in Article 2, Section 3 hereof.
TPGsLR = Total kWh Purchased and Generated for the previous
month net of kWh distributed to special programs and
Sale for Resale Agreements, if such sales have
different system loss charge rates from regular
customers.
U = Gross Up Factor=(% SL I (1- Actual% System Loss);
The %SL is based on:
a) the Actual Systems Loss for the most
recent 12-month period or the Systems
Loss Cap, whichever is lower; plus
Page 13 of 33
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b) the Actual Company Use for the most
recent 12-rnonth period or 1%, whichever
is lower.
The Actual % System Loss, on the other hand, is based
on:
a) the Actual System Loss for the most recent
12-month period; plus
b) the Actual Company Use for the most
recent 12-month period.
The kWh Sales to be used in determining the System Loss shall
be net of kWh distributed to special programs and Sale for
Resale Agreements, if such sales have different system loss
charge rates from regular customers.
If SLR varies per customer class, the DU shall compute the
applicable Gross Up Factor per customer class.
Pursuant to ERC Resolution No. 17, Series of 2008, upon the
Commission's approval of the DU's Operation and Maintenance
Expenses, wherein the Company Use shall have been included,
the same shall no longer form part of the %SL and Actual % SL
as defined above; and
OSLA = Other System Loss Cost Adjustments, refer to adjustments
confirmation, and the SLOUR determined using the formula
provided in Article 4, Section 4 hereof.
Section 5. Lifeline Subsidy Rate Formula. The Lifeline Subsidy Rate (LSR)
shall be calculated and billed each calendar month by the DU using the
following formula:
FORMULA4
LSR
Page 14 of 33

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Where:
LSR = Lifeline Subsidy Rate expressed in Peso/kWh
TD = Total Discount amount given to Lifeline customers in the
previous month computed as follows:
L [([S LSR x TRate] + [NCust x Fixed I Cust ])D]
1=ln
Where:
j = Lifeline level bracket 1 to lifeline bracket n;
SISR
TRate
NCust
= Total kWh for the previous month of lifeline
bracketj;
= Total PhP/kWh rate subject to lifeline discount
which include generation, transmission, system
loss, distribution, supply, metering and loan
condonation;
Total number of customers for the previous
month for lifeline bracketj;
D = Discount rate for lifeline bracket j; and
Fixed!Cust = Fixed metering charge for residential customers.
S = Total kWh of non-lifeline customers for the previous month; and
NL,_,.ff
OLRA = Other Lifeline Rate Cost Adjustments, refer to adjustments
and confirmation, and LSOUR determined using the formula
provided in Article 4, Section 5 hereof.
Section 6. The Franchise and Business Taxes Rates shall be calculated using
the following formulae:
6.1. For Franchise Taxes that a DU is required to pay the
LGU/s that shall be included in its customers' bills, recovery
shall be based on the tax rate multiplied against the total
distribution charges in Peso {Distribution, Supply, Metering
Page 15 of 33
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and other charges/adjustments, i.e. subsidy on lifeline charge,
lifeline subsidy discount and inter-class cross subsidy charge,
excluding Reinvestment Fund collections in the case of an EC).
For transparency, the EC shall reflect as a separate line item in its
monthly billings to its customers the approved Reinvestment Fund
rate/kWh and corresponding revenues.
6.2. For Business Taxes that a DU is required to pay the LGU/s that
shall be included in its customers' bills, recovery shall be based
on the following formula:
FORMULAS.A
Where:
BT=( Bta) + OBTA
SFBT
BT = Business Taxes Charge expressed in Peso/kWh representing
business taxes that a DU is required to pay the LGU/s ;
Bra = Business Tax (excluding penalty and surcharge) other than
those already considered in the distribution rates, paid for the
preceding calendar year;
SFsr = Actual kWh Sales for the preceding calendar year; and
OBTA = Other Business Taxes Cost Adjustments, refer to adjustments
and confirmation, and the BTOUR determined using the
formula provided in Article 4, Section 6.1 hereof.
The computation of local business taxes shall be based on the
DU's total distribution charges, excluding the penalties and
surcharges paid by the DU. For an EC, Reinvestment Fund shall
be excluded from the total distribution charges. For transparency,
the EC shall reflect as a separate line item in its monthly billings to
its customers the approved Reinvestment Fund rate/kWh and
corresponding revenues.
A DU that intends to include in its retail rates the franchise and
business taxes imposed on it by the LGU/s where it operates
must first submit to the ERC the certified true copies of the valid
Page 16 of 33
,., .. 4 S *'1'
tax ordinance/s subjecting it to such taxes. In the case of
Business Taxes, submissions shall include tax receipts for the
payments made for the preceding year, data on its kWh sales for
the previous year, and other relevant data. The DU shall await
the ERC's clearance before the inclusion and imposition of such
taxes in its customers' retail rates.
6.3. For Franchise and Business Taxes that a DU had already paid to
the concerned LGU/s prior to the implementation of recovery of
current Franchise and Business Taxes shall be allowed recovery
FORMULA5.B
Where:
TRAC = ( Lfla + Bta) + OFBA
STRAC
TRAC = Tax Recovery Adjustment Charge expressed in Peso/kWh
applied to the customer's monthly billing until such time the total
franchise and business taxes paid to the local government shall
have been fully recovered;
Lfta
=
Bta
=
SrnAc =
OFBA
=
Local franchise tax (excluding penalty and surcharge) paid
prior to the implementation of the approved franchise tax rate;
Business Tax (excluding penalty and surcharges) paid prior
to the implementation of the approved business tax formula;
Projected kWh sales for a particular proposed recovery period
or as determined by ERC; and
Other Franchise and Business Taxes Cost Adjustments, refer to
adjustments deemed necessary by the Commission after prior
verification and confirmation, and the TROUR determined using
the formula provided in Article 4, Section 6.2 hereof.
Page 17 of 33
Before including the TRAC in its customers' bill, the DU shall
submit to the ERC its calculation thereof using the TRAC formula
provided above, together with the following information and
supporting documents:
a. Proposed recovery period;
b. Certified true copy of prior years Tax Assessments
issued by the concerned LGU/s;
c. Certified true copies of Local Tax Ordinance/s;
d. Certified true copies of Official Receipts;
e. Projected kilowatt-hours sales for the particular
proposed recovery; and
f. Other relevant documents as may be required by
the ERC.
Upon receipt of the complete documents, the ERC shall verify and
determine from the submissions the appropriate TRAC that the
DU shall be allowed to impose on its customers.
The DU shall await the ERC's clearance before the inclusion and
imposition of such taxes in its customers' retail rates and shall
impose the TRAC allowed until such time that its franchise and
business tax payments, as may be adjusted by the ERC during its
prior verification, have been fully recovered.
ARTICLE 3
REPORTORIAL REQUIREMENTS
Section 1. Submission of Reportorial Requirements. Starting on the month
following the inclusion in the customers' bills, the DU shall provide the ERC with
all calculations and information relative to the adjustment mechanisms provided
for herein through the prescribed Uniform Reportorial Requirements along with
supporting documentations, which shall include, but not limited to, the following:
Page 18 of 33
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1.1 Basic Supporting Documents
1.1.1 Invoices from Power Supplier/s and National Transmission
Corporation (TRANSCO)/National Grid Corporation of the
Philippines (NGCP);
1.1.2 Debit/Credit Memos from Power Supplier/s and
TRANSCO/NGCP, if any;
1.1.3 Official Receipts of payments to Power Supplier/s and
TRANSCO/NGCP; and
1.1.4 Actual consumer bills per class (3 bills per class).
1.2 For Generation Rates and System Loss Rates
1.2. 1 Sworn statement of DU if it has its own generation facility
(one-time submission only, if applicable);
1.2.2 Monthly Generation Report for DU-Owned generation
facility, if applicable; and
1.2.3 Sworn and notarized statement on PPD availed from power
supplier/s, PPD extended to end-users and pilferage
recoveries enjoyed by the DU.
1.3 For Transmission Rates
1.3.1 Sworn and notarized statement on PFD availed from
TRANSCO/NGCP and PFD extended to end-users and
Third Parties by the DU.
1.4 For Franchise Tax and Business Tax (FTBT) Rates
1.4.1 Actual consumer bills per class (3 bills per class) in the
area where FTBT rate/s is/are levied; and
1.4.2 Summary of the tax imposition and collection for every
locality within its franchise area relative to taxes computed
in accordance with Article 2, Section 7 of these Rules.
(,
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1.5 For Tax Recovery Adjustment Charge (TRAC)
1.5.1 Actual collections from the implementation of TRAC; and
1.5.2 Actual consumer bills per class (3 bills per class) in the
area where TRAC rate/s is/are levied; and
ARTICLE 4
CALCULATION OF THE OVER OR UNDER RECOVERY IN THE
IMPLEMENTATION OF ADJUSTMENT MECHANISMS
Section 1. Calculation of Over/Under Recoveries. The DU shall calculate the
over or under recoveries on the Generation Rate, Transmission Rate, System
Loss Rate, Lifeline Subsidy Rate and Franchise and Business Taxes Rate
brought about by the variance between the allowable cost and the revenues
billed using the applicable formulae.
Section 2. Generation Rate Over/Under Recovery. The Generation Rate
Over/Under Recovery (GOUR) applicable to customers being referred to in
Article 2, Sub-sections 1.1.3 and 1.2.4 shall be calculated based on the
following formula:
FORMULA 6
Where:
GOUR =
AGC =
GOUR
_ [(AGC - GRR )+ rGOUR ]
SGOUR To1ril
Refers to under/over-recoveries in generation costs
during the recovery period expressed in Peso/kWh;
Total Allowable Generation Cost, computed as follows:
AGC = :L[((GC, + GC .. + ... GC .)- 50%(PPD I+ PPD" + ... PPDn )- PCR a o t ~ )s ]
I TPG J t ~ GJl.W
Page 20 of 33
Where:
GC i to n = The Generation Costs in Pesos from source of power
i through source of power n for month 1 to m coming
from Transition Supply Contracts (excluding
Mandated Rate Reduction and penalties), Power
Supply Agreements, WESM purchases, and
distribution utility-owned generation facility, as
incorporated in the approved unbundled rates or as
subsequently authorized by the Commission, less
the following:
PP Di con
PCRG<JllR
TPGGOIJR
SC;<JUR
a. Generation revenues from TOU customers;
b. Cost of power distributed to customers under
c. Cost of power distributed to customers under a
d. Net Settlement Surplus amount as determined in
Article 5, Section 5.4 of the Rules for the
Distribution of Net Settlement Surplus, if any;
= Prompt Payment Discount availed by the DU, net of
the Prompt Payment Discounts passed on to the end
customers for month 1 to m, where discounts passed
on to customers cannot be higher than the discount
availed from the power supplier/s, relative to
generation cost;
= Pilferage recoveries for month 1 to m;
= Total kWh Purchased and Generated for month 1 to
m net of kWh sold to customers under TOU, kWh
distributed to special programs and Sale for Resale
Agreements, if the customers being supplied are not
connected with the main distribution grid and the cost
is different from those for other regular customers;
and
= Actual kWh Sales for month 1 to m net of kWh sold
to customers under TOU, kWh distributed to special
Page 21of33
programs and Sale for Resale Agreements, if the
customers being supplied are not connected with the
main distribution grid and the cost is different from
those for other regular customers.
In the case of ineligible supply contracts, generation costs from
such contracts shall include the kilowatt-hours pertaining to
ineligible contracts but the costs shall be pegged at the DU's load
weighted average NPC TOU rates or the actual rate as billed by
the IPP, whichever is lower.
GRR = Total generation revenues billed to customers except those
associated with TOU, special programs and Sale for Resale
Agreements, if the area is not connected with the main
distribution grid and the cost is different from those for other
regular customers, computed as follows:
rGOUR
SCiOf!llr.,. .. 1
Where:
AGRGR = As defined in Section 2, Article 2 hereof ;and
SaouR = Actual kWh Sales for month 1 to m, net of kWh sold
to custoniers under TOU, and kWh distributed to
special programs and Sale for Resale Agreements, if
the customers being supplied are not connected with
the main distribution grid and the cost is different
from those for other regular customers.
= The total running balance of the refund/coflect as a result of
any prior confirmation/s; and
= Total actual kWh Sales for the recovery period net of kWh sold
to customers under TOU, and kWh distributed to special
programs and Sale for Resale Agreements, if the customers
being supplied are not connected with the main distribution grid
and the cost is different from those for other regular customers.
Section 3. Transmission Rate Over/Under Recovery. The Transmission Rate
Over/Under Recovery (TOUR) shall be calculated per customer class based on
the following formula:
3.1. For Customer classes with TR expressed in Peso/kWh:
FORMULA 7
TOUR"'= [(ATCN -TRR,.,.)+rTOURJ
s
TOUR"
3.2. Customer classes with TR expressed in Peso/kW and Customer
classes with TR expressed in both Peso/kWh and Peso/kW.
FORMULAS
Where:
T O U R ~ = [(ATCN -TRR,,.)+rTOURN]
BDTOUR_,.
TOUR.v = Refers to over/under recoveries in transmission cost during the
recovery period expressed in Peso/kWh for class N;
ATCN = Refers to the actual transmission cost during the recovery
W'here:
period computed as follows:
ATC N = I [(Tc -so% PFD )s J
1..... TPG TOUR CP N
muR
TC = The actual transmission cost in Peso for month 1 to
m
I
PFD = Power Factor Discounts availed by the DU, net of the
Power Factor Discounts given to customers and
Third Parties for month 1 to m , where: Discount
passed on to customers and Third Parties ~ discount
availed from TRANSCO/NGCP for month 1 to m;
TPGrouR = Total Purchased and Generated in kWh for month
1 to m corresponding to the transmission cost;
Page 23 of 33
SrouR = Actual kWh Sales for month 1 to m corresponding to
the transmission cost;
CPN = Actual or computed Coincident Peak Demand
Allocation Factor for customer class N corresponding
to the recovery period or the CP demand allocation
rates of the DU; and
N = Refers to a specific customer class (ex. N=1,2, .. ,
where 1= Residential, 2= Commercial, etc.).
TRR,v = Transmission Cost Recoveries during the recovery period, to
be computed as follows:
= inPhP/kWxBIJ.v)]
\M7ere:
rTOUR
=
s =
TOUU,.
BDTOCIR"
l..m
TRN = Transmission Rate in PhP/kWh and/or PhP/kW as
applicable to customer class N as implemented by
the DU for month 1 to m. If the transmission rate for
customer N is expressed in PhP/kWh only, then the
Transmission Charge in PhP/kW in the formula
should be equal to zero (0) and vice-versa;
S = Total kWh sales for customer class N for month 1 to
N
m;
BDN = Total kW billing demand for customer class N for
month 1 to m; and
N = Refers to a specific customer class (ex. N=1,2, .... ,
where 1= Residential, 2= Commercial, etc.).
The total running balance of the refund/collect as a result of
prior confirmation/s.
Total kWh Sales for the recovery period for customer class N.
Total kW billing demand the recovery period for customer class
N.
Page 24 of 33
1':

M
1
I
Section 4. System Loss Rate Over/Under Recovery. The System Loss Rate
Over/Under Recovery (SLOUR) shall be calculated based on the following
formula:
FORMULAS
SLOUR= [(ASLC- ASLR)+ rSLOUR]
TPGSlfllJR
Where:
SLOUR = Refers to over/under recoveries in system loss during the
recovery period expressed in Peso/kWh;
ASLC = Allowable System Loss Cost incurred during the recovery
period computed as follows:
Vv'here:
ASLC = L[(GTGC +TC-50%PFD)U]
l...m
GTGC = As defined in Section 4, Article 2 hereof;
TC = The actual transmission cost in Peso for month 1 to
m
.
PFD = Power Factor Discounts availed by the DU, net of the
Power Factor Discounts given to customers and
Third Parties for month 1 to m , where: Discount
passed on to customers and Third Parties $;discount
availed from TRANSCO/NGCP for month 1 to m; and
u = Gross Up Factor=% SL I (1- Actual% System
Loss);
The %SL is based on:
a) the Actual Systems Loss for month
1 to m or the Systems Loss Cap,
whichever is lower; plus
Page 25 of 33
,, .: ;}
,Jb.-u ''" ,,_._, Vfl///} 11
u .,, . ,'l"'W."1.JI "- WC: }
b) the Actual Company use for month
1 tom or 1 %, whichever is lower.
The Actual % System Loss, on the other
hand, is based on:
a) the Actual System Loss for month 1
tom; plus
b) the Actual Company Use for month
1 tom.
The kWh Sales to be used in determining the System
Loss shall be net of kWh distributed to special
programs and Sale for Resale Agreements, if such
sales have different system loss charge rates from
regular customers.
If SLR varies per customer class, the DU shall
compute the applicable Gross Up Factor per
customer class.
Pursuant to ERC Resolution No. 17, Series of 2008,
upon the Commission's approval of the DU's
Operation and Maintenance Expenses, wherein the
Company Use shall have been included, the same
shall no longer form part of the %SL and Actual %
SL as defined above.
ASLR == Total actual system loss revenues for generation and
transmission billed to customers except those associated with
special programs and Sale for Resale Agreements, if such
sales have different system loss charge rates from regular
customers, computed as follows:
ASLR = L [SLR x SSWUR]
l...m
Where:
SLR = As defined in Section 4, Article 2 hereof; and
Page 26 of 33
.. .,,___ ... ,
,\ .. ,., cWi}t .
t, J:I , -" '-r"J ,. , lt, '
r. ;,
:; wm. ANGE
j "- nbOflicar,, i

,,
SSUJ11R
= Actual kWh Sales for month 1 to m, net of kWh
distributed to special programs and Sale for Resale
Agreements, if such sales have different system loss
charge rates from regular customers;
rSLOUR = The total running balance of the refund/collect as a result of
prior confirmation/s; and
TPGswuR = Total kWh Purchased and Generated for the recovery period
net kWh distributed to customers under special programs and
Sale for Resale Agreements, if such sales have different
system loss charge rates from regular customers.
Section 5. Lifeline Subsidy Over/Under Recovery. The Lifeline Subsidy
Over/Under Recovery (LSOUR) to be charged to non-lifeline customers shall be
calculated based on the following:
FORMULA 10
LSOUR = LD
s /SOUR .'ll.-TOT.<I.
Where:
LSOUR = Refers to over/under recoveries on lifeline subsidy during the
LD = Difference between the Total Discounts given to lifeline
customers and Total Subsidy collected from non-lifeline
customers, computed as follows:
VVhere:
LD= L (TS-TD)
1 ... m
TS = Lifeline subsidy amount collected from non-lifeline
customers for month 1 to m, computed as follows:
TS = s /SOUR _ _.,_ x LSR
Page 27 of 33
"----,
t
t
'i
l
'
Where:
s lSOIJR,.,,
= total kWh consumption of non-lifeline
customers for the month; and
LSR = lifeline subsidy rate per kWh collected
from non-lifeline customers for the
month.
TD = total discount amount given to lifeline customers for
month 1 to m, computed as follows:
TD,= L l((SLSou" x TRate)+(NCust LL x Fixed !Cust))x Dj
r-+11
Where:
j = Lifeline level bracket 1 to lifeline
bracket n;
s lSOURu
TR ate
:VCust rL
Fixed!
Cust
= Total kWh consumption of lifeline
customers for the month of lifeline
bracket j;
= Total PhP/kWh rate subject to lifeline
discount which include generation,
transmission, system loss,
distribution, supply, metering and
loan condonation;
= Total number of customers for the
month for lifeline bracket j;
= Fixed metering charge for residential
customers; and
D = Discount rate for lifeline bracket j.
s, ... ,, . ,, m"' = Total kWh consumption of non-lifeline customers for the
recovery period.
Section 6. Franchise and Business Taxes Over/Under Recovery. The
Franchise and Business Taxes Over/Under Recovery to be charged to
customers shall be calculated based on the following formulae:
Page 28 of 33
/ <I
. -/VJ4;i;/1
:$,
I
'l
Where:
S Lsor:R.,1.
= total kWh consumption of non-lifeline
customers for the month; and
LSR = lifeline subsidy rate per kWh collected
from non-lifeline customers for the
month.
TD = total discount amount given to lifeline customers for
month 1 tom, computed as follows:
TD, = L l(< S LSouRu x TRate) + ( NCust u x Fixed I Cu st) )x DJ
r-1
Where:
j = Lifeline level bracket 1 to lifeline
bracket n;
SLSOURu
TRate
NCust,,
Fixed/
Cust
= Total kWh consumption of lifeline
customers for the month of lifeline
bracketj;
= Total PhP/kWh rate subject to lifeline
discount which include generation,
transmission, system loss,
distribution, supply, metering and
loan condonation;
= Total number of customers for the
month for lifeline bracket j;
= Fixed metering charge for residential
customers; and
D = Discount rate for lifeline bracket j.
s . ~ ~ ~ = Total kWh consumption of non-lifeline customers for the
recovery period.
Section 6. Franchise and Business Taxes Over/Under Recovery. The
Franchise and Business Taxes Over/Under Recovery to be charged to
customers shall be calculated based on the following formulae:
Page 28 of 33
l "/1.
/'Yi!Ji;Jt
,j,
,
(
6.1. For BT Over/Under Recovery (BTOUR) to be charged to
customers shall be calculated based on the following formula:
FORMULA 11
BTOUR = [(BTR, + BTR11 + ... Br;-.)-(BTA, + BTA11 + ... BTA.)l

Where:
BTOUR = Refers to over/under recoveries business taxes during the
BTRuon = Business tax revenue for the recovery period i ton computed
as follows:
BTR =(BT x Ls llTOUR ""''" )
Where:
BT
s H1<!UR.crL.
i:olm
= ERC Approved Annual Business Tax Rate; and
= Actual kWh Sales for month i to month m during
the recovery period.
BTAuon = ERC verified business taxes paid by the DU for the recovery
period I to n; and
. , = Total actual kWh Sales for the recovery period.
6.2. For TRAC Over/Under Recovery (TROUR) to be charged to
customers shall be calculated based on the following formula:
FORMULA 12
(
(TRAC X ISTROURA<tua,)-FBTA J
TROUR =
1
=
1
m
s TROUR "'"""'
Page 29 of 33
;
'ii

'1

-

.... ,..
11}
Where:
TR OUR
TRAC
STROUR,cnml
FBTA
= Refers to over/under recoveries franchise and business
taxes during the recovery period expressed in Peso/kWh
for class N;
= Tax Recovery Adjustment Charge implemented by the DU;
= Actual kWh Sales for month i to month m during the
recovery period;
= ERG verified Franchise and Business Tax payments paid
by the DU; and
ARTICLE 5
FILING AND RESOLUTION OF THE APPLICATIONS
Section 1. Filing. The DUs shall file their respective consolidated applications
within the period as prescribed hereunder:
Distribution
Period of Filing Covered Adjustments
Utilities
October 30, 2009
Adjustments implemented until the
Luzon DUs
billing month of December 2008
October 30, 2010
Visayas DUs
October 30, 2011
Mindanao DUs
Page 30 of 33
' .. -.
I
CEITfl7IE A .,
. rr.orn . ANGELES"/
. : 'l".'I "'_;11... nJ..:-- .. :.
Thereafter, the DUs shall file their respective consolidated applications within
the period as prescribed hereunder:
Distribution Utilities Period of Filing Covered Adjustments
Luzon DUs October 30, 2012 Jan. 2009 - Dec. 2011
Visayas DUs October 30, 2013 Jan. 2010 - Dec. 2012
Mindanao DUs October 30, 2014 Jan. 2011 - Dec. 2013
Subsequently, the DUs shall file their respective consolidated applications every
three (3) years following the sequence of period of filing prescribed above.
Section 2. True Up Mechanisms Approved by the ERC. The filing of
calculations of over or under recoveries from adjustments implemented
by the DUs referred to in the preceding Section shall include the Lifeline Rate
Recovery Mechanism, Inter-class Cross Subsidy Recovery Mechanism,
Recovery Mechanism of Under Recoveries in the Reinstatement of Prompt
Payment Discounts, Recovery Mechanism in the Implementation of System
Loss Rates, Recovery Mechanism in the Implementation of Transmission Rates
and such other mechanisms that the ERG may adopt.
Section 3. Applicability of Rules Governing the True-Up Mechanisms. The
specific rules for the calculation of over and under recoveries and such other
pertinent provisions as provided in the following:
3.1 Guidelines for the Calculation of the Over or Under Recovery in
the Implementation of Lifeline Rates by Distribution Utilities;
3.2 Guidelines for a True-Up Mechanism of the Over or Under
Recovery in the Implementation of Inter-Class Cross Subsidy
removal by Distribution Utilities;
3.3 ERC Resolution No. 12, Series of 2005, A Resolution Approving a
New Policy on the Treatment of Prompt Payment Discount (PPD);
Page 31of33
I
Thereafter, the DUs shall file their respective consolidated applications within
the period as prescribed hereunder:
Distribution Utilities Period of Filing Covered Adjustments
Luzon DUs October 30, 2012 Jan. 2009 - Dec. 2011
Visayas DUs October 30, 2013 Jan. 2010- Dec. 2012
Mindanao DUs October 30, 2014 Jan. 2011 - Dec. 2013
Subsequently, the DUs shall file their respective consolidated applications every
three (3) years following the sequence of period of filing prescribed above.
Section 2. True Up Mechanisms Approved by the ERC. The filing of
calculations of over or under recoveries from adjustments implemented
by the DUs referred to in the preceding Section shall include the Lifeline Rate
Recovery Mechanism, Inter-class Cross Subsidy Recovery Mechanism,
Recovery Mechanism of Under Recoveries in the Reinstatement of Prompt
Payment Discounts, Recovery Mechanism in the Implementation of System
Loss Rates, Recovery Mechanism in the Implementation of Transmission Rates
and such other mechanisms that the ERG may adopt.
Section 3. Applicability of Rules Governing the True-Up Mechanisms. The
specific rules for the calculation of over and under recoveries and such other
pertinent provisions as provided in the following:
the Implementation of Lifeline Rates by Distribution Utilities;
3.2 Guidelines for a True-Up Mechanism of the Over or Under
Recovery in the Implementation of Inter-Class Cross Subsidy
removal by Distribution Utilities;
3.3 ERC Resolution No. 12, Series of 2005, A Resolution Approving a
New Policy on the Treatment of Prompt Payment Discount (PPD);
Page 31of33
the Implementation of System Loss Rate by Distribution Utilities;
and
3.5 Rules for the Calculation of the Over or Under Recovery in the
Implementation of Transmission Rates.
shall continue to be in force and shall be used in the verification of any over and
under recoveries of the DUs and the determination and implementation of the
rates for recovery or refund of such over or under recoveries as may be ordered
by the ERC.
Section 4. Fonn of Application and Supporting Documents. The
applications and supporting documents therewith shall adopt the templates to
be prescribed by the ERC.
Section 5. Referral to External Auditors. At its discretion, the ERC may refer
the application to an accredited external auditor for audit. The cost of hiring
such accredited auditor as stipulated in the contract for the services of such
accredited auditor approved by the ERC shall be borne by the concerned DU.
Such cost shall be treated, upon proof of actual payment thereof as a
recoverable expense and shall be considered in the calculation of over or under
recoveries for the test period covered.
Section 6. Applicability of the ERC Rules of Practice and Procedure. - The
ERC Rules of Practice and Procedure shall apply suppletorily to the verification
process outlined in these Rules insofar as they are not inconsistent herewith.
ARTICLE 6
VIOLATION OF THE RULES
Section 1. Fines and Penalties - Violation of any provision of these Rules shall
be subject to the imposition of fines and penalties in accordance with the Rules
to Govern the Imposition of Administrative Sanctions in the Form of Fines and
Penalties Pursuant to Section 46 of Republic Act No. 9136 promulgated by the
ERC on May 17, 2002, as amended.
Page 32 of 33
...
~ ~
~
1 ~ . '
,..__ ,
~ . n r r H p,.
ARTICLE 7
FINAL PROVISIONS
Section 1. Exception Clause - Where good cause appears, the Commission
may allow an exemption from any provision of these Rules, if such is found to
be in the public interest and is not contrary to law or any other related rules and
regulations.
Section 2. Separability Clause - If for any reason, any part or section of
these Rules is declared unconstitutional or invalid, the other parts or sections
hereof which are not affected thereby shall continue to be in full force and
effect.
Section 3. Repealing Clause - All previous Commission issuances not
consistent with these Rules are hereby accordingly repealed or deemed
modified.
Section 4. Effectivity - These Rules shall take effect fifteen (15) days
following its publication in a newspaper of general circulation.
Pasig City, July 13, 2009.

,,, RAlJ:. A. TAN
Commissioner /
MARIA ASTANEDA
Page 33 of 33

"
';
t
#
.. ! :
_::------__..,

..,p,.w
!NEllGY REGULATOR\' tOllMISSION ffllUPPUUl
9 December 2013
IVANNA G. DELA PENA
First Vice President and Head
.
Regulatory Management Office
MANILA ELECTRIC COMPANY
Ortigas, Pasig City
.
Dear Ms. Dela Pena:
/Y/'17
ANNEX W
In the letter dated 5 December 2013; MERALCO sought the Energy
Regulatory Commission's (ERC) clearance to stagger collection of its
generation costs for the November 2013 supply mortth, invoking Article
VIII, Section 1 of the AGRA (Automatic Generation Rate Adjustment) Rules,
which provides that the "ERC may allow an exception from any pro\.risions
of these Guidelines, if such exception is found be in the public interest
and fs not contrary to law or any other related rules and regulations."
Specifically, MERALCO proposed to impose a generation charge of
PhP7.90/kWh in its December 2013 billing, iristead of the calculated
PhP9.1070/kWh, and collect the deferred amount of abd"ut PhP3 Billion in
its February 2014/. billing.
At today's presentation of MERALCO before the ERC of its December
gemeration charge and its proposed cost recovery deferment, it suggested
two other options, which involve capping the generation charge for the
December billing at PhP7.67 /kWh and implementing the deferred cost
recovery in the February 2014 billing for Option 2 and in the February and
March 2014 billings for Option 3.
The ERC is well-aware of the huge impact that MERALCO's generation
charge adjustment vyill have on the retail rates to its customers. Given
that there are also re.ported increases in the prices of other commodities,
MERALCO's proposal tu stagger the implementation of its ge,neration cost
is timely, as it will cushion the impact on the electricity consumers.
t
The ERC therefore grants MERALCO the clearance it seeks to stagger
implementation of its generation cost recovery by way of an exception to
the AGRA Rules. Accordingly, MERALCO is authorized to implement a
.,
\
ciITT_ IF. , z fli-;1;:::;: :_..,
. }j '"' \
E!h HS. l' ,i. .. :,
.. R<!e;onls cc
< '
"
generation charge of PhP7.67 /kWh in its December 2013 billing and add
to its calculated generation charge for February 2014 billing the
generation rate of PhPl.00/kWh. The balance on the deferred generation
amount without any carrying costs shall _be included in MERALCO's
generation charge-for March 2014. Shquld MERALCO seek to recover its
carrying costs on the entire deferred amount, it shall file a formal
application for this.
The foregoing should not in any way be construed as a confirmation of
MERALCO's generation costs incurred in November 2013, which shall
remain subject of the confirmation and post-verification proceedings in
accordance with the applicable ERC resolution on the matter.
We hope this addresses your concerns.
Very truly yours,
f /1- I
G. CRUt-DUC1!T
L/ Chairnerson and CEO
v
ALFRHDO J. NON
Commissioner
:TRICIA A. MAGPALE-ASIRIT -
.
.
"'
J
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