MOA ON SETTLEMENT OF LINE

RENTAL IN SEP 2014

October 31, 2014

THE INSTANCES OF EXTREME PRICE SEPARATION IN SEP 2014

HAVE TWO MAIN EFFECTS:

1.

ON CUSTOMERS: WESM CHARGED VERY HIGH LINE RENTAL COSTS

1.

WESM IS COLLECTING >100 PHP/KWH LINE RENTAL FOR THE AFFECTED

INTERVALS
VAT ON LINE RENTAL AMOUNT IS ALSO BEING COLLECTED @ .4099% GMR

ON GCGI: THE MARKET BILLED PGPP2 WITH INADVERTENT GAINS.

GCGI ACCIDENTALY PURCHASED POWER AT NEGATIVE PRICES FOR THE AFFECTED

INTERVALS DUE TO THE TRIPPING OF THE UNITS
GCGI RECEIVED POSITIVE TRADING AMOUNTS AND NSS

1. ON CUSTOMERS: WESM CHARGED VERY HIGH LINE RENTAL

COSTS TO PGPP2 CUSTOMERS.
PHP
63.93 M

LINE RENTAL
60.93 M

VAT 3.00 M

2. ON GCGI: THE MARKET BILLED PGPP2 WITH INADVERTENT

GAINS.
PHP

50.10 M

TRADING
AMOUNT
41.56 M

NET SETTLEMENT
SURPLUS
8.54 M

HOW DO WE SETTLE THE AMOUNTS?

MEMORANDUM OF AGREEMENT
1.

GCGI agrees and is willing to offset the amount representing the

TA and NSS of PGPP2 with the LR and VAT on LR charged to
customers for the affected intervals.
PHP
63.93 M

50.10 M

LINE RENTAL
60.93 M

VAT 3.00 M

TRADING
AMOUNT
41.56 M

NET SETTLEMENT
SURPLUS
8.54 M

13.83 M
Residual
Line Rental

MEMORANDUM OF AGREEMENT
2. If PGPP2 TA and NSS for the affected intervals are not enough, GCGI and
Customers agree to the following settlement arrangement:

2a. GCGI shall advance the payment for and remit to PEMC the
residual line rental amount.
2b. Customers shall pay GCGI the amount of Line Rental charges they
would have paid had there been no price separation (Normal Line
Rental based on past year average for same intervals as affected).
2c. The remaining balance after TA, NSS and normal LR were
deducted shall be settled by the parties wherein 50% thereof shall be
shouldered by GCGI and the other 50% is proportionately borne by
the customers.
2d. GCGI and Customers shall agree on the manner and terms of
payment provided that the period for repayment shall in no case be
more than 24 months.

IN CONCEPT, THE RESIDUAL LINE RENTAL AMOUNT SHALL BE

SETTLED BY GCGI AND CUSTOMERS IN SUCH WAY THAT:

PHP

50% Customer
Share
RESIDUAL
LINE RENTAL
13.83 M

50% GCGI
Share
NORMAL LINE RENTAL

Based on Average Historical LR

of past year for the same
intervals (exclusive of
Administered Prices)

Note that the concept above will be applied on a per interval basis
considering that the transactions involved are hourly in nature.

SETTLEMENT METHODOLOGY FOR INDIVIDUAL CUSTOMERS

PER INTERVAL

PhP Residual
Line Rental

PhP Share of
Customer to
Residual
Line Rental

Balance subject
to 50/50 Sharing

% Share of
Customer to
Total Line Rental

Customers
Normal Line
Rental from
TGPP
(Past Year Ave.
for same
Intervals)

50%

PhP Share of
Customer to
Residual Line
Rental

Balance subject
to 50/50 Sharing

PhP Customer
Share to be
collected within
24 Months

Thank You.