is Approved for’
Posiiag
wurw.ere.por,ph
Republic of the Philippines.
ENERGY REGULATORY COMMISSION
San Miguel Avenue, Pasig City
RESOLUTION NO.__*? _, Series of 2006
A RESOLUTION ADOPTING THE RULES FOR THE REGISTRATION OF
WHOLESALE AGGREGATORS
WHEREAS, Section 30 of Republic Act No. 9136, otherwise known as the
“Electric Power Industry Reform Act of 2001", empowers the Energy Regulatory
Commission (ERC) to authorize other similar entities to become eligible as
members, either directly or indirectly, of the Wholesale Electricity Spot Market
(WESM),
WHEREAS, there is a need to provide supply options for Distribution Utilities
in order to facilitate their participation in the WESM;
WHEREAS, the participation of these Distribution Utilities in the WESM shall
be facilitated through an entity referred to as a "Wholesale Aggregator’;
WHEREAS, the ERC proposed a set of Rules for the Registration of
Wholesale Aggregators whereby a public consultation was conducted on 31 March
2006;
WHEREAS, the set of Rules for the Registration of Wholesale Aggregators
establishes (i) the qualifications, criteria and limitations of Wholesale Aggregators; (i)
the requirements and procedures for registration; and (iii) the obligations of
Wholesale Aggregators;
WHEREAS, these Wholesale Aggregators shall be bound by the WESM
Rules with respect to their transactions in the market;
NOW THEREFORE, the Commission, after thorough and due deliberation,
hereby RESOLVES, as it is hereby RESOLVED, to APPROVE and ADOPT the set
of Rules for the Registration of Wholesale Aggregators herein attached as ANNEX
“A” and made an integral part of this Resolution;
\. HlResolution No.___*? __, Series of 2006
A Resolution Adopting the Rules for the Registration of Wholesale Aggregators
Page 2 of 2
This Resolution shall take effect fifteen (15) days following its publication in a
newspaper of general circulation in the Philippines.
Pasig City, May 22, 2006
OLWER B. BUTALID . ALCORDO
mmissioner Commissioner
eer A.TAN -JANDRO Z. BARIN
Commissioner Commissioner
covANNEX “A”
Republic of the Philippines
ENERGY REGULATORY COMMISSION
San Miguel Avenue, Ortigas, Pasig City
RULES FOR THE REGISTRATION OF
WHOLESALE AGGREGATORS
ERC CASE NO. 2006 - 003 RM
Pursuant to Section 30 of Republic Act No. 9136, hereinafter referred to as the Act,
its Implementing Rules and Regulations, the Philippine Grid Code, Philippine
Distribution Code, and the Wholesale Electricity Spot Market (WESM) Rules, the
Energy Regulatory Commission (ERC) hereby adopts and promulgates the following
Rules for the registration of qualified Wholesale Aggregators.
ARTICLE |
GENERAL PROVISIONS
Section 1. Objectives
The following are the objectives of these Rules:
a, To promote free and fair competition and accountability of Electric Power
Industry Participants;
b. To provide supply options for Distribution Utilities, specifically small electric
cooperatives:
¢. To provide for the qualifications of a Wholesale Aggregator and the
requirements and procedures for registration with the ERC; and
d. To establish the obligations of a Wholesale Aggregator.
Section 2, Guiding Principles
Section 30 of the Act empowers the ERC to authorize other similar entities to
become eligible as members, either directly or indirectly, of the WESM.
These entities authorized by the ERC shall be bound by the WESM Rules
with respect to their transactions in the market
Hence, no Person, other than a Generation Company, shall implement any
contract for the sale of electricity to Distribution Utilities without having
registered with the ERC as a Wholesale Aggregator.Section 3. Registration
The ERC shall issue a Certificate of Registration to a qualified Wholesale
Aggregator to become a member of the WESM and to comply with all
applicable requirements stipulated herein.
Section 4. Scope
This set of Rules shall apply to any Person intending to become a Wholesale
Aggregator consistent with the Act and its Implementing Rules and
Regulations.
Section 5. Definition of Terms.
Act Republic Act No, 9136, otherwise known as
“Electric Power Industry Reform Act of
2001",
Applicant A Person or entity seeking to obtain a
Certificate of Registration to become a
Wholesale Aggregator,
Certificate of Registration The certificate granted by the ERC to any
Person or entity authorized to act as a
Wholesale Aggregator;
Competition Rules The rules promulgated by ERC to promote
and ensure competition in the electric power
industry pursuant to the Act and its
Implementing Rules and Regulations;
Distribution Utility 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;
Economic Zones (EZs) Selected areas which are highly developed
or have the potential to be developed into
agro-industrial, industrial, tourist,
recreational, commercial, —_ banking,
investment and financial centers (with
Distribution Utilities) and for purposes of
these Rules only, shall be considered
Distribution Utilities;
Generation Company Refers to any person or entity authorized by
the ERC to operate facilities used in the
‘generation of electricity;
¢ Page 2 of 8Person A natural or juridical person, as the case
may be;
Wholesale Electricity The Wholesale Electricity Spot Market
Spot Market (WESM) established pursuant to Section 30 of the
Act;
Wholesale Aggregator Any Person or entity, other than a
Generation Company, issued a Certificate of
Registration by the ERC to sell electricity to
Distribution Utilities;
Wholesale Aggregation The contract entered into by 2 Wholesale
Contract Aggregator with Distribution Utiities,
Terms, not otherwise defined herein, which are defined in the Act or its !mplementing
Rules and Regulation (RR) shall have the meaning ascribed to them in the Act or its
IRR (as the case may be).
ARTICLE I!
QUALIFICATIONS, CRITERIA AND LIMITATIONS
OF A WHOLESALE AGGREGATOR
Section 1. Any natural or juridical person, other than a Generation Company, duly
organized to engage in the wholesale aggregation business may register as a
Wholesale Aggregator.
Section 2. Upon registration with the ERC, the Applicant must demonstrate that it
has the personnel and business structure in place necessary to manage and operate
its wholesale aggregation business.
Section 3, Ownership Limitation and Restrictions.
a. A Wholesale Aggregator or affiliate thereof or any stockholder, director or
officer or any of their relatives within the fourth (4) civil degree of
consanguinity or affinity, legitimate or common law, shall not own any
interest, directly or indirectly, in TRANSCO or its buyer or concessionaire;
’. Except for ex-officio government-appointed representatives, no Person
who is an officer or director of the TRANSCO or its buyer or
concessionaire shall be a Wholesale Aggregator or an officer, director or
stockholder of any Wholesale Aggregator.
ph
Page 3018ARTICLE III
REQUIREMENTS AND PROCEDURES
Section 1. The Applicant shall register with the ERC prior to implementing its
Wholesale Aggregation Contract. Provided all the requirements shall have been
complied with, the ERC shall approve or reject an application within thirty (30)
working days from the date of application unless ERC shall have required the
submission of additional information, or ordered on reasonable grounds, the
postponement of final action on an application. A Certificate of Registration shall be
issued upon approval of an application
Section 2. The following documents and information are required to be submitted
by an Applicant:
a. Articles of Incorporation/Partnership with Certificate of Registration (for
juridical person) or Business Name Registration Certificate (for single
proprietorship);
b. All applicable contracts already signed and executed in relation to the
wholesale aggregation business, if any;
c. List of affiliates engaged in the generation, distribution and retail supply of
electricity, and their corresponding business addresses, if any;
d. List of shareholders and their shareholdings, directors and officers,
including curriculum vitae, if any; and
@. Duly accomplished Application Form for registration (copy available for
downloading at the ERC website or can be secured at the Spot Market
Division).
Section 3. An Applicant shall incorporate in its Wholesale Aggregator Contracts
provisions for the protection of Distribution Utilities against fraud, gross negligence,
bad faith or malicious intent. An Applicant shall be required to provide and maintain
a security deposit based on its one (1) month actual energy sales under an escrow
account subject to the terms and conditions acceptable to the ERC. The security
deposit may be in the form of either cash or any applicable bank guaranty issued by
any universal commercial bank. For its first month of operation, the one (1) month
total projected energy sales wil initially set the required security deposit and shall be
updated every end of June and December each year, in which case, will be set to
the highest actual energy sales occurring during the previous six (6) month period.
The Applicant shall submit to the ERC a certification from any universal commercial
bank stating the amount deposited in escrow. An Applicant shall also incorporate in
its Wholesale Aggregator Contracts provisions on the establishment as well as
drawdown of such security deposit.
Page 4 of 8Section 4. In case of renewal of registration, the Wholesale Aggregators shall
submit the following requirements:
a. Duly accomplished Application Form for Renewal of registration (copy
available for downloading at the ERC website or can be secured at the
Spot Market Division):
b. Recent annual report to shareholders together with Audited Financial
Statements; and
¢. Such other information or documents that ERC may require.
Section 5. All contracts entered into by Distribution Utilities with the Wholesale
Aggregators shall be considered as bilateral contracts and shall be subject to review
and approval by the ERC pursuant to Section 45 (b) of the Act.
Section 6. Failure to submit the requirements to the ERC shall be a ground for
denial of the application or renewal of registration.
Section 7. All submissions shall be certified under oath by the Applicant or its duly
authorized officer, in case of a juridical person.
ARTICLE IV
PAYMENT OF FEES
The Applicant shall pay the registration fee in the amount of Ten Thousand Pesos
(PhP10,000.00) upon the filing of its application or renewal of registration
ARTICLE V
TERM OF CERTIFICATE OF REGISTRATION
The Certificate of Registration issued by the ERC shall have a term of five (5) years,
renewable at the end of every term. The registration shall be non-transferable and
shall be valid for the stated term unless otherwise revoked by the ERC.
‘A Wholesale Aggregator shall apply for the renewal of registration not later than sixty
(60) days before the expiration of its Certificate of Registration. The ERC shall issue
the renewed registration within thirty (30) days upon receipt of the documents
required. The term of the renewed Certificate of Registration shall commence
immediately after the end of the preceding term of registration
po hMARTICLE VI
REPORTORIAL REQUIREMENTS
Section 1. Information. Each Wholesale Aggregator shall file a report every end of
June and December each year, or any other report as may be deemed necessary by
the ERC containing the following information, in a form prescribed by the ERC:
a. Monthly energy sales to its Distribution Utilities;
b. Monthly revenues from energy sales to its Distribution Utilities;
c. Any new contracts signed and executed as well as any amendments to the
previously filed contracts or agreements, in relation to its wholesale
aggregation business;
4. Certification from any universal commercial bank stating the updated
amount deposited in escrow referred to in Article I!!, Section 3 hereof; and
e. Other information that the ERC deems necessary or useful in carrying out
its duties and obligations.
ARTICLE Vil
OBLIGATIONS OF WHOLESALE AGGREGATORS
Section 1. A Wholesale Aggregator who is also engaged in the generation and
distribution businesses shall ensure that its wholesale aggregation business
activities are functionally and structurally unbundled from its generation and
distribution businesses, as provided for in Rule 10 of the IRR of the Act on the
Structural and Functional Unbunaling of Electric Power Industry Participants. In said
unbundling, the Wholesale Aggregator shall ensure that there is no cross
subsidization between and among its power supply business activities, in
accordance with the ERC-approved Business Separation and Unbundling Plan.
Section 2. A Wholesale Aggregator shall comply with the provisions of the Act and
its Implementing Rules and Regulations, the applicable provisions of the Philippine
Grid Code, Philippine Distribution Code, the Open Access Transmission Service
(OATS) and Distribution Services and Open Access Rules (DSOAR), the
Competition Rules and all applicable rules and regulations prescribed by ERC,
including the reportorial requirements prescribed in these Rules.
Section 3. A Wholesale Aggregator shall register and comply with the requirements
and procedures set by the Market Operator as a WESM trading participant and shall
comply with the WESM Rules and all relevant manuals, policies and guidelines.
RWSection 4. A Wholesale Aggregator shall inform the ERC of any material change in
the information supplied in its application for registration within thirty (30) days fram
the occurrence of such event.
Section 5. A Wholesale Aggregator that intends to cease operations shall notify the
ERC and the Distribution Utilities it has contracted with, at least sixty (60) days prior
to ceasing operations. A Wholesale Aggregator shall likewise submit a settlement
plan or proof of payment of any amount owed to the Market Operator, Generation
Companies, Distribution Utilities or any other entities which the Wholesale
Aggregator has contracted with relative to its wholesale aggregation business. The
security deposit under Article II! Section 3 hereof shall account for purchases of the
Distribution Utilities from other sources resulting from the cessation of its operations
until such time that the amount of deposit has been fully exhausted or the affected
Distribution Utility has entered into a new contract with another party, whichever
comes eatlier. Thereafter, the Certificate of Registration is deemed cancelled.
ARTICLE Vill
SANCTIONS
The ERC shall impose the appropriate fines and penalties, including the suspension
or revocation of the Certificate of Registration, for any violation or non-compliance
with these Rules, pursuant to the “Guidelines to Govern the Imposition of
Administrative Sanctions in the Form of Fines and Penalties Pursuant to Section 46
of RA. 9136"
ARTICLE IX
SEPARABILITY
if for any reason, any section of these Rules is declared unconstitutional or invalid,
other parts or sections hereof not affected thereby shail continue to be in full force
and effect.ARTICLE X
EFFECTIVITY
These Rules shall take effect on the fifteenth (15") day following its publication in a
newspaper of general circulation in the country.
Pasig City, 22. May 2006
VER B. BUTALID
Commissioner ‘Commissioner
Pega
RAUF A. TAN :JANDRO Z. BARI
Commissioner Commissioner
Page 8 of 8