TERMS OF REFERENCE (TOR) TERMS OF REFERENCE (TOR) FOR WG5-PROJECT 5FOR WG5-PROJECT 5

Regulatory Issues and Challenges of Regulatory Issues and Challenges of Regulated Entity/Owner/Investor and Regulated Entity/Owner/Investor and

ConsumersConsumers

BACKGROUNDBACKGROUND

The 24th Heads of ASEAN Power The 24th Heads of ASEAN Power Utilities/Authorities (HAPUA) Council Utilities/Authorities (HAPUA) Council Meeting, convened in Cebu, Philippines in Meeting, convened in Cebu, Philippines in June 2008, has adopted a recommendation June 2008, has adopted a recommendation of the 8th HAPUA Working Committee (WC) of the 8th HAPUA Working Committee (WC) Meeting to have HAPUA Working Group No. Meeting to have HAPUA Working Group No. 5 on Electricity Supply Industry Services 5 on Electricity Supply Industry Services (WG5) form a Project No. 5 on “Regulatory (WG5) form a Project No. 5 on “Regulatory Issues and Challenges of Regulated Entity/ Issues and Challenges of Regulated Entity/ Owner/ Investor and Consumers”, which Owner/ Investor and Consumers”, which was identified as one of the key issues in was identified as one of the key issues in ESI development/restructuring.ESI development/restructuring.

OBJECTIVESOBJECTIVES

1.1. To share the experiences and strategies To share the experiences and strategies of regulated entities/utilities on common of regulated entities/utilities on common issues and challenges in the regulation of issues and challenges in the regulation of ESI in the ASEAN;ESI in the ASEAN;

2.2. To identify differences in the regulation To identify differences in the regulation of VIU and Unbundled Electricity of VIU and Unbundled Electricity industries;industries;

3.3. To explore possible acceptable position To explore possible acceptable position in addressing the regulators’ policies and in addressing the regulators’ policies and prerogatives common in the regulation of prerogatives common in the regulation of ESI in the ASEAN;ESI in the ASEAN;

4.4. To come up with suggestions for a more To come up with suggestions for a more acceptable balance between the interests acceptable balance between the interests of the regulated entities/owners/investors of the regulated entities/owners/investors and the interests of consumers for the and the interests of consumers for the consideration of electricity regulators;consideration of electricity regulators;

5.5. To identify regulatory and legal challenges To identify regulatory and legal challenges related to cross-border trading/transactions related to cross-border trading/transactions following the experiences of past ESI following the experiences of past ESI transactions between ASEAN member-transactions between ASEAN member-countries with the goal of providing inputs countries with the goal of providing inputs to the various contractual models that may to the various contractual models that may be used in consonance with the be used in consonance with the implementation of the ASEAN Power Grid.implementation of the ASEAN Power Grid.

DELIVERABLESDELIVERABLES

1.1. A Summary Report on the strategies and A Summary Report on the strategies and experiences of regulated entities/utilities experiences of regulated entities/utilities on common issues and challenges in the on common issues and challenges in the regulation of ESI in the ASEANregulation of ESI in the ASEAN

2.2. Suggestions for coming up with a more Suggestions for coming up with a more acceptable balance between the acceptable balance between the interests of the regulated interests of the regulated entities/owners/investors and the entities/owners/investors and the interests of consumers.interests of consumers.

3.3. Information and recommendation on Information and recommendation on the regulatory and legal the regulatory and legal challenges/issues related to cross-challenges/issues related to cross-border electricity trading/transactions border electricity trading/transactions following the experience and following the experience and examples of past ESI transactions examples of past ESI transactions between ASEAN member-countries;between ASEAN member-countries;

4.4. Provide regulatory and legal inputs to Provide regulatory and legal inputs to contractual models that may be used contractual models that may be used in consonance with the in consonance with the implementation of the ASEAN Power implementation of the ASEAN Power Grid.Grid.

SCOPESCOPE1.1. Industry Structure and Responsibilities of Regulator and Industry Structure and Responsibilities of Regulator and

Regulated Entity/Owner/Investor and Consumers Regulated Entity/Owner/Investor and Consumers 2.2. Regulatory Environment and FrameworkRegulatory Environment and Framework3.3. Industry Reforms/Regulations in place to achieve the Industry Reforms/Regulations in place to achieve the

following:following: Forging competitionForging competition Ensuring adequacy of supplyEnsuring adequacy of supply Maintaining secure, quality and reliable electricity Maintaining secure, quality and reliable electricity

systemsystem Promoting high level of performance efficiency in the Promoting high level of performance efficiency in the

industryindustry Achieving total electrification of the countryAchieving total electrification of the country Providing reasonable returns to owners/investorsProviding reasonable returns to owners/investors Safeguarding consumer interestSafeguarding consumer interest

4.4. Best Practices in RegulationBest Practices in Regulation5.5. Challenges in RegulationChallenges in Regulation6.6. Challenges on regulatory and legal cross-border electricity Challenges on regulatory and legal cross-border electricity

trading/ transactiontrading/ transaction

PROJECT LEADER AND PROJECT LEADER AND MEMBERSMEMBERS

PROJECT LEADERPROJECT LEADERPhilippines – National Power Corporation (NPC) and Philippines – National Power Corporation (NPC) and National Transmission Corporation (TransCo)National Transmission Corporation (TransCo)

PROJECT MEMBERSPROJECT MEMBERSThe Project 5 is open to all HAPUA member The Project 5 is open to all HAPUA member countries and utilities. Each HAPUA member utility countries and utilities. Each HAPUA member utility shall designate one (1) representative to Project 5 shall designate one (1) representative to Project 5 as a member and other participants, if any, to be as a member and other participants, if any, to be observers. The representatives are preferably observers. The representatives are preferably personnel involved in the regulatory concerns of personnel involved in the regulatory concerns of each member utility. each member utility.

The first meeting of Project 5 shall be The first meeting of Project 5 shall be organized by the HAPUA Secretariat organized by the HAPUA Secretariat and PLN in Jakarta. Host and venue and PLN in Jakarta. Host and venue of additional meeting(s) shall be as of additional meeting(s) shall be as agreed upon by the Project members agreed upon by the Project members

HOST AND VENUE OF HOST AND VENUE OF MEETINGMEETING

TIMELINE TIMELINE

– To start the Project Implementation in To start the Project Implementation in January 2009.January 2009.

– To report the Project progress to the To report the Project progress to the HAPUA Council in the next meeting HAPUA Council in the next meeting tentatively scheduled in May/June tentatively scheduled in May/June 2009. (Coordinate with WG 5-Project 2009. (Coordinate with WG 5-Project No. 6) No. 6)

– To complete the Project by June of To complete the Project by June of 2010. (Tentative)2010. (Tentative)

PROJECT ACTION PLANPROJECT ACTION PLANDescription Date Responsibility

1. Present the project proposal to HAPUA Working Committee (WC) for recommendation

November 2007  WG5 Project Coordinator 

2. Present the project proposal to HAPUA Council for approval

June 2008 WC Chairman

3. Develop a survey questionnaire/ template to collect necessary information from members

January 2009 WG5 Project 5 Members, to be initiated by the ProjectLeader 

4. Finalize the template (1st Project Meeting)

 February 2009  WG5 Project 5 Members

5. Accomplish the questionnaire and submit to Project Leader

March to May 2009  WG5 Project 5 Members

6. Consolidate survey inputs June to September 2009  WG5 Project 5 Leader

7. Project Meeting to prepare initial draft of the report (2nd Project Meeting)

October 2009  WG5 Project 5 Members

8. Review and comments on the draft report, for submission to Project Leader

November 2009 WG5 Project 5 Members

9. Finalize of the report March 2010 WF5 Project 5 Leader

10. Submission of the Final Report June 2010  WG5 Project 5 Leader

CONTACT PERSONCONTACT PERSON

Atty. Melchor P. RidulmeAtty. Melchor P. RidulmeVP – General CounselVP – General CounselNational Power Corporation (NPC)National Power Corporation (NPC)Quezon Avenue corner BIR Road, DilimanQuezon Avenue corner BIR Road, Diliman1100 Quezon City, Philippines1100 Quezon City, PhilippinesTel. +632 921-3518Tel. +632 921-3518Fax +632 926-1837Fax +632 926-1837E-mail: E-mail: MPRidulme@napocor.gov.phMPRidulme@napocor.gov.ph and and

RKEYbanez@napocor.gov.phRKEYbanez@napocor.gov.ph