1. Understanding the Dynamics of Electricity Trade in the Philippines with the Entry of Retail Competition and Open Access

2. Discussion Flow  A Background of the Industry  Open Access and Retail Competition  The New Players  Updates  The Way Forward

3. A Background of the Industry

4. EPIRA - To ensure adequate and reliable power supply - To ensure the non- discriminatory use of Transmission and distribution network facilities for the benefit of the consumers - To ensure competitive market driven prices through healthy competition among electricity suppliers - To ensure transparency of rates through itemization and segregation of various components of electricity tariffs 4

5. End goal of the EPIRA: Competitive Electricity Prices 5 The goal of the EPIRA is a vibrant power industry with healthy competition creating competitive prices of electricity for the benefit of the consumer.

6. The industry before and after open access CREM 6 GenerationTransmissionDistributionSupply Captive & Contestable Customers Generation & Transmission Distribution & Supply Captive Customers Before After

7. Competitive generation Regulated transmission and distribution retail Competitive retailproviders End-users Reformed Power Sector 7

8. Open Access and Retail Competition

9. What is Open Access? Non-discriminatory use of transmission and distribution facilities Transmission open access is already in place Distribution open access to commence with retail competition

10. What is Retail Competition? 10 I have no choice better offer here Now With Competition

11. 5 Conditions Precedent 11 UnbundlingRemoval of Subsidy WESM NPC Assets Privatization IPP Administrator

12. 2 Additional Conditions 12 Designation of the Central Registration Body (CRB) Establishment of the B2B System

13. Electricity Markets WESM Competitive Retail Electricity Market CREM Competitive Retail Electricity Market (CREM) refers to the retail market once Open Access and Retail Competition commences.

14. The New Players

15. The Contestable Customer 15 An electricity End-user that belongs to the Contestable Market under Open Access and Retail Competition.

16. The Retail Electricity Supplier 16 A Retail Electricity Supplier (RES) is a person or an entity authorized by the ERC to sell, broker, market or aggregate electricity to end-users in the Contestable Market.

17. Who may obtain a license? 1.A Generation Company 2. A Distribution Utility which will operate outside its franchise area or suppliers which will operate outside the Economic Zones 3. An Affiliate of a DU 4. An IPP Administrator 5. Entities who would be Selling, brokering or marketing electricity to contestable customers 17

18. The Local Retail Electricity Supplier 18 The business segment of an Electricity Distribution Utility entity catering to the Contestable Market only within its franchise area.

19. Local RES RES The RES & The LOCAL RES 19

20. CREM 20 Supplier of Last Resort The Supplier of Last Resort (SOLR) is an entity designated by the ERC to serve contestable customers following a last resort supply event or a SOLR event

21. SOLR Reasons 21 You failed to choose your supplier of electricity upon Open Access Date You failed to find a willing supplier of electricity RES ceased operations RES violated obligations to DU RES is no longer allowed to trade in the WESM RES license was revoked

22. 22 Retail Electricity Supplier (RES) Local RES Supplier of Last Resort (SOLR) Contestable Customers 1 MW & up 18 licensed RES 745 - Luzon 96- Visayas 5 Local RES 26 SOLRs

23. Ensuring Continuous Electricity Supply for the Consumers 23 With the wide array of electricity supplier choices made available to the consumer, continuous power supply at competitive rates and efficient service will be assured.

24. Updates

25. Rules for RES Licensing- July 13, 2005 (Amended: Feb 1, 2006 & Feb 15, 2011)Business Separation Guidelines- Sept. 22, 2006Distribution Services and Open Access Rules- Jan. 18, 2006Code of Conduct- June 7, 2006Supplier of Last Resort (SOLR)- June 21, 2006Rules on Rate Filing by the SOLR- Oct 10, 2007Competition Rules- June 23, 2006Rules on Customer Switching (RCS)- Sept. 26, 2007Rules for Contestability- Jan. 23, 2008

26. Updates The Issuance of ERC Resolution 27, Series of 2011 directing the Distribution Utilities to: 1.Install TOU Meters in the facilities of customers consuming a monthly average of at least 1MW; and 2. Provide a 12 month load data to customers consuming a monthly average of at least 1MW.

27. Updates 18 licensed Retail Electricity Suppliers (RES), 26 SOLR providers and 5 Local RES

28. The Way Forward

29. Updates 29 Transitory Rules for the Competitive Retail Electricity Market (CREM) Objectives: To ensure the smooth transition from the existing structure to a competitive environment. To promote the interests of all stakeholders in the electricity industry. Salient Features: Effectivity of 1 year from December 26, 2012. 6-month Transition period from Dec 26, 2012 to June 26, 2013. DU to continue supply to Contestable Customers (CCs) during the 6-month transition period. CCs have the option to maintain supply from the DU, in so far as the latter’s function as a Local RES. CRB to develop the B2B IT System & Market Manuals prior to the 6-month transition period. CCs who fail to enter into an RSC shall be serviced by the designated SOLRs. SOLRs for DCCs shall be the designated SOLR for the franchise area where the DCC is located. Protocols and processes in the ERC promulgated OARC rules shall be adopted during the transitory period and the initial OARC phase.

30. The Establishment of the B2B System 30 Accounting, Billing and Settlement Rules and Procedures The Way Forward

31. Requirements Know Thyself Current bill Attractive Value Added Services Assess your Company 31

32. Deliberate Investigate Due Diligence RES Profile 33

33. END OF PRESENTATION 33

34. ERC websites: www.erc.gov.ph www.buyyourelectricity.com.ph E-mail address: contestable@erc.gov.ph Telephone numbers: (02) 914-5000 Loc. 147 Tel/Fax number: (02) 633-3253 34