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Republic of the Philippines
aes DEPARTMENT OF ENERGY

Department Circular No. _DC2006-07-0010 io
LA.

Adopting Further Amendments to the WESM Rules

Whereas, Rule 8.6.1 of the Wholesale Electricity Spot Market Rules (WESM)
Rules provide for the approval by the Department of Energy (DOE) of proposals
for any changes in the WESM rules upon the endorsement by the Board of
Directors of the Philippine Electricity Market Corporation (PEM Board);

Whereas, on April 20, 2006, May 16, 2006 and June 15, 2006, the Interim Rules
Change Committee has approved a resolution endorsing for approval! by the
PEM Board certain changes in the WESM Rules concerning provisions on
limiting the liability of the PEM Board, dispute resolution, billing and settlements
and metering;

Whereas, after discussion, the PEM Board has resolved on June 6, 2006 and
June 21, 2006 to approve for endorsement to the DOE the aforesaid changes to
the WESM Rules;

NOW THEREFORE, pursuant to its authority under the WESM Rules, the DOE
hereby issues, adopts and promulgates the following amendments to the WESM
Rules.

A. WESM Rules
1. Incorporation of Clause 1.4.9 to read -

The members of the PEM Board are not liable for any loss or
damage suffered or incurred by a Participant or any other
person unless the PEM Board or any of its members, as the
case may be, acted with malice, manifest partiality, bad faith,
gross incompetence or gross negligence.

2. Incorporation of Clause 1.4.10 to read —

Notwithstanding clause 1.4.9, except for liability arising out of
conduct involving malice, manifest partiality, bad faith, gross
incompetence or gross negligence, if the PEM Board is or the
members thereof are made liable to pay any amount for loss or
damage suffered or incurred in the exercise of its functions
under the WESM Rules and WESM Manuals, the PEM Board or
the members thereof shall be indemnified for the full amount

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adjudged; and, for costs or expenses incurred by that person
defending himself in the related proceedings.

3. Clause 3.15.3 is amended to read —

The security provided by a WESM Member under this clause
3.15 shall be either:

(a) A bank guarantee in a form and from a bank acceptable to
the Market Operator, or

(b) Another immediate, irrevocable and unconditional
commitment in a form and from a bank or other institution
acceptable to the Market Operator, or

(c) Surety bond issued by a surety or insurance company duly
accredited by the Office of the insurance Commissioner of the
Philippines; or

(d) Such other forms of security or guarantee acceptable to
the Market Operator.

4. Clause 3.15.8.3 is amended to read —

The trading limit for a WESM Member at any time shall not be
greater than 95% of the total value of the security provided by
the WESM Member to the Market Operator under clauses
3.15.3 (a), (b) and (c).

5. Clause 4.6.2.1 is amended to read —

The MSP that is contracted by the MTP for a particular
metering point shall retrieve the metering data from the
meter and transmit the data to the Market Operator for
billing and settlement.

However, the MSP shail not make, cause or allow any
alteration to the original stored meter data as retrieved in
the metering installation.

At its option, the Market Operator may also directly retrieve
the meter data.

The MSP with a Certificate of Authority from ERC and
registered with MO must be capable of sending meter data
in the required format of MO. An MSP must have its own

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Meter Data Retrieval System and compatible with the MO
Meter Data Collection System.

_ Clause 7.3.1 4 is amended to read —

Notwithstanding clause 7.3.13, except for liabitity arising from
conduct involving malice, manifest partiality, bad faith, gross
incompetence or gross negligence, if the Dispute Resolution
Administrator, the dispute resolution panel or the members
thereof are made liable to pay any amount for loss or damage x
XX

. The definition of Billing Period under Chapter 11 is amended to
read —

Billing period. The period of one month commencing at 00:00
hours of the twenty sixth (26 day of each calendar month
to 24:00 hours of the twenty-fifth (25) day of the next
_ calendar month.

Separability Clause
If for any reason, any section or provision of this Department Circular is declared
unconstitutional or invalid, such parts not affected shall remain in full force and
Effectivity

This Department Circular shall take effect immediately following its publication in
two (2) newspapers of general! circulation.

Energy Center, Fort Bonifacio, Taguig City, Metro Manila, July 2O , 2006.

tes

aphael P.M Lotilla

Secretary