Article 85p. 85

NATURAL RESOURCES AND ENVIRONMENTAL LAWS STATUTES and IMPLEMENTING RULES AND REGULATIONS

The ERC shall, in determining the existence of market

power abuse or anti-competitive behavior, require from

generation companies the submission of their individual

pricing formulas as well as their financial statements.

Section 7. Transmission Sector. - The transmission of

electric power shall be a regulated common electricity

carrier business, subject to the ratemaking powers of the

ERC.

The

ERC

shall

set

the

standards

of

the

voltage

transmission

that

shall

distinguish the transmission

from the subtransmission assets. Pending the issuance

of such new standards, the distinction between the

transmission and subtransmission assets shall be as

follows: 230 kilovolts and above in the Luzon Grid, 69

kilovolts and above in the Visayas and in the isolated

distribution systems, and 138 kilovolts and above in the

Mindanao Grid: Provided, That for the Visayas and the

isolated distribution system, should the 69 kilovolt line

not form part of the main transmission grid and be

directly connected to the substation of the distribution

utility, it shall form part of the subtransmission system.

Section

8.

Creation

of

the

National

Transmission

Company.

-

There

is

hereby

created

a

National

Transmission

Corporation,

hereinafter

referred

to as

TRANSCO,

which

shall

assume

the

electrical

transmission function of the National Power Corporation,

and have the powers and functions hereinafter granted.

The

TRANSCO

shall

assume

the

authority

and

responsibility of NPC for the planning, construction and

centralized

operation

and

maintenance

of

its

high

voltage

transmission

facilities,

including

grid

interconnections and ancillary services.

Within six (6) months from the effectivity of this Act, the

transmission and subtransmission facilities of NPC and

all

other

assets

related

to

transmission

operations,

including

the

nationwide

franchise of NPC for the

operation of the transmission system and the grid, shall

be transferred to the TRANSCO. The TRANSCO shall be

wholly owned by the Power Sector Assets and Liabilities

Management Corporation (PSALM Corp.).

The

subtransmission

functions

and

assets

shall

be

segregated from the transmission functions, assets and

liabilities for transparency and disposal: Provided, That

the

subtransmission

assets

shall

be

operated

and

maintained by TRANSCO until their disposal to qualified

distribution utilities which are in a position to take over

the responsibility for operating, maintaining, upgrading,

and

expanding

said

assets.

All

transmission

and

subtransmission

related

liabilities

of

NPC

shall

be

transferred to and assumed by the PSALM Corp.

TRANSCO shall negotiate with and thereafter transfer

such functions, assets, and associated liabilities to the

qualified distribution utility or utilities connected to such

subtransmission facilities not later than two (2) years

from the effectivity of this Act or the start of open

access, whichever comes earlier: Provided, That in the

case of electric cooperatives, the TRANSCO shall grant

concessional financing over a period of twenty (20) years:

Provided, however, That the installment payments to

TRANSCO for the acquisition of subtransmission facilities

shall be given first priority by the electric cooperatives

out of the net income derived from such facilities. The

TRANSCO shall determine the disposal value of the

subtransmission assets based on the revenue potential

of such assets.

In

case

of

disagreement

in

valuation,

procedures,

ownership participation and other issues, the ERC shall

resolve such issues.

The

take

over

by

a

distribution

utility

of

any

subtransmission asset shall not cause a diminution of

service and quality to the end-users. Where there are

two

or

more

connected

distribution

utilities,

the

consortium or juridical entity shall be formed by and

composed of all of them which has been granted a

franchise to operate the subtransmission asset by the

ERC. The subscription rights of each distribution utility

involved

shall

be

proportionate

to

their

load

requirements unless otherwise agreed by the parties.

Aside from the PSALM Corp., TRANSCO and connected

distribution utilities, no third party shall be allowed

ownership or management participation, in whole or in

part, in such subtransmission entity.

The

TRANSCO may exercise the power of eminent

domain subject to the requirements of the Constitution

and existing laws. Except as provided herein, no person,

company or entity other than the TRANSCO shall own

any transmission facilities.

Prior to the transfer of the transmission functions by

NPC to TRANSCO, and before promulgation of the Grid

Code, ERC shall ensure that NPC shall provide to all

electric

power

industry

participants

open

and

non-discriminatory access to its transmission system.

Any violation thereof shall be subject to the fines and

penalties imposed herein.

Section 9. Functions and Responsibilities. - Upon the

effectivity of this Act, the TRANSCO shall have the

following functions and responsibilities:

(a)

Act

as

the

system

operator

of

the nationwide

electrical transmission and subtransmission system, to

be transferred to it by NPC;

(b) Provide open, equal and non-discriminatory access to

its transmission system to all electricity users;

(c)

Ensure

and

maintain

the

reliability,

adequacy,

security,

stability

and

integrity

of

the

nationwide

electrical

grid

in

accordance with the performance

standards for the operation and maintenance of the grid,

as

set

forth

in

a

Grid

Code

to

be

adopted

and

promulgated by the ERC within six (6) months from the

effectivity of this Act;

(d)

Improve

and

expand

its

transmission

facilities,

consistent with the Grid Code and the Transmission

Development Plan (TDP) to be promulgated pursuant to

this Act, to adequately serve generation companies,

distribution utilities and suppliers requiring transmission

service

and/or

ancillary

services

through

the

transmission

system:

Provided,

That

TRANSCO shall

submit any plan for expansion or improvement of its

facilities for approval by the ERC;

(e) Subject to technical constraints, the grid operator of

the

TRANSCO

shall

provide

central

dispatch

of

all

generation facilities connected, directly or indirectly, to

the transmission system in accordance with the dispatch

schedule submitted by the market operator, taking into

account outstanding bilateral contracts; and

(f) TRANSCO shall undertake the preparation of the TDP.

In the preparation of the TDP, TRANSCO shall consult the

other

sectors

of

the

power

industry

such

as

the

generation

companies, distribution utilities, and the

electricity end-users. The TDP shall be submitted to the

DOE

for

integration

with

the

Power

Development

Program and the National Energy Plan, provided for in

Republic

Act

No.

7638

otherwise

known

as

"the

Department of Energy Act of 1992".

A generation company may develop and own or operate

dedicated point-to-point limited transmission facilities

that are consistent with the TDP: Provided, That such

facilities are required only for the purpose of connecting

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