ATTACHMENT A DEFINITION AND BOUNDARIES OF TRANSMISSION CONNECTION ASSETS 1.

0 Purpose

The Energy Regulatory Commission (ERC) regulates the transmission wheeling rates through its promulgation of the following regulatory documents, including approved updates from time-to-time: The Transmission Wheeling Rate Guidelines (TWRG); The Open Access Transmission Service Rules (OATS Rules); and The Connection Charging Policy (CCP).

The definition of the Transmission Connection Assets has a significant impact on the outcomes of these regulatory documents, and hence on Customers of the National Transmission Corporation and/or its Concessionaire (TransCo). As such the Commission requires that its policy position on the definition of the Transmission Connection Assets which provide Transmission Connection Services be established. The following definition is the Commissions policy position. 2.0 Definition

Transmission Connection Assets are those assets that are put in place for the primary purpose of connecting a Customer to the Grid and used for the purpose of Transmission Connection Services for the conveyance of electricity. A definition of terms used in this document is attached as Annex A. 3.0 Functionality

These are Facilities which, if taken out of the System, will only affect the Customer connected to it and will have minimal effect on the Grid, or other connected Customers. 4.0 Transmission Connection Assets for Load 4.1 Boundaries

The boundaries of Transmission Connection Assets are: (i) from the last Single Mechanical Connection of a User System or Equipment of a Customer, at its Connection Point, to the last

Single Mechanical Connection which is not shared with another Customer within the Grid, or which is on the lower voltage terminal of the closest Step-Down Transformer within the Grid; or (ii) from the last Single Mechanical Connection which is not shared with another Customer within the Grid, or which is on the lower voltage terminal of the closest Step-Down Transformer within the Grid, to the last Single Mechanical Connection of a User System or Equipment of a Customer at its Connection Point.

The specific assets which are owned by any Load Customer and the Connection Assets which meet these boundary conditions are shown in Annex B. 4.2 Inclusions

The Transmission Connection Assets shall include: The power circuit breaker(s), surge arrester(s), disconnect switch(es) including Numerical Distance Relays, Break Failure Relays or any other multi-function protective devices and Equipment as prescribed and required in the Grid Code or mechanical connection just prior to the Connection Point which is not shared by another Customer. The power circuit breaker(s), surge arrester(s), disconnect switch(es) including Numerical Distance Relays, Break Failure Relays or any other multi-function protective devices and Equipment as prescribed and required in the Grid Code or mechanical connection just prior to the shared network asset which is used to isolate the shared network from the not shared Equipment servicing one Customer.

4.3

Exclusions

The Transmission Connection Assets shall exclude: Communications Equipment, SCADA, and other Equipment used for System Operations. Meters and metering Equipment used for Supply and Metering Services. Step down transformers within the Grid. Any transmission, sub-transmission or distribution line which is (at the date of approval of the Connection Charging Policy by the ERC) shared between Customers. Contributed Assets paid or partially paid for by Customers. Where Subtransmission Assets are sold to a DU Consortium (either a partnership, or joint venture, or single corporation or entity), such Connection Point for that Regulated Entity shall be

treated as if it were a shared Connection Point between two or more DUs, irrespective of the ownership of that DU Consortium. 5.0 Transmission Connection Assets for Generation

The boundaries of Transmission Connection Assets for Generating Facilities connected to the Grid are: 5.1 For Existing Generation Plant

Existing Generation Plants are those which were under construction, were in existence, were in service, have been granted a Certificate of Compliance (COC) by the ERC as a Generation Company, or have applied to the ERC for a CoC as a Generation Company, as at the date of the Commissions Resolution adopting the Transmission Connection Asset definition and boundaries. Any existing Generation Plant has no Transmission Connection Assets beyond their Connection Point to the Grid. Ownership and control of such transmission assets or Equipment associated with each Connection Point or which lie within the Generating Facility are as agreed and documented under existing contracts between TransCo and the Generating Facility owner. In the case of the Generating Facilities owned and controlled by the National Power Corporation (NPC), a Memorandum of Understanding (MoU) which defines and identifies the ownership and control of all the transmission assets or Equipment inside the premises of the Generating Facility at each Connection Point, should exist. This MoU shall be consistent with PSALM Circular No. 2005003, titled Guidelines in the Determination of Fixed Asset Boundary Between Generating Facility and TransCo, dated February 14, 2005. The ERC shall determine whether or not a Generation Plant is an Existing Generation Plant if there is a dispute on such classification for the purposes of the treatment of Transmission Connection Assets. 5.2 For New Generation Plant

New Generation Plants are those which have not applied to the ERC for a Certificate of Compliance (COC) as a Generation Company under s.6 of the Electric Power Industry Reform Act of 2001 (EPIRA) and s.4 of Rule 5 of the Implementing Rules and Regulations (IRR), as at the date of the Commissions Resolution of the Definition and Boundaries of Transmission Connection Asset. For a New Generation Plant, the boundaries of the Transmission Connection Assets are defined in the same manner as for Load (refer to 4.0 above), including those Equipment and transmission lines which it requires for connection from the Connection Point at its generation site to the Grid and

which it is willing to fund as a contributed asset to TransCo (who retain ownership and responsibilities for operation and maintenance) because TransCo is unable or unwilling to invest in those Connection Assets at that time. Any new Generating Plant can choose to install and own its transmission Facilities (including lines) up to the Connection Point to the Grid offered for connection by TransCo. Such Connection Point to the Grid must be offered by TransCo, but excluding connection to such Subtransmission Systems as are connected to that System and are owned and operated by TransCo. The ERC shall determine whether or not a Generation Plant is a New Generation Plant if there is a dispute on such classification for the purposes of the treatment of Transmission Connection Assets. 5.3 For Expansions to Existing Generation Plants

For the Existing Generation Plants defined in clause 4.2.1 above, any addition of a new Generating Unit which provides additional capacity at that Generating Plant or increases the Installed Generating Capacity of the Generating Plant, and which requires incremental investment by TransCo, the incremental investment between the previously existing Connection Point and the Grid which is required to allow full dispatch of that additional capacity, shall be treated as if it were a Transmission Connection Asset for a New Generation Plant as in clause 5.2 above. For clarity, the boundaries of the Transmission Connection Assets which arise from this incremental investment are defined in the same manner as for Load (refer to 4.0 above). Incremental costs due to augmentation of capacity to remove constraints deep in the Grid are not included in Transmission Connection Assets. 5.4 Generation Plant Exclusions

This definition of Transmission Connection Assets only applies to Generating Facilities connected to the Grid. It does not apply to Self-Generation Facilities or Embedded Generating Plant. The specific assets which are owned by any Grid connected Generation Plant and by the Regulated Entity are shown in Annex C.

ANNEX A DEFININITION OF TERMS: The following are the definitions of the terms used in the Definition and Boundaries of Transmission Connection Assets. The source or original definition of the term is referenced in parenthesis. Connection Point: The point of connection of a User System or Equipment to the Grid. (s1.3 TWRG, s1.6 Grid Code) Customer: A person whose User System or Equipment is directly connected to the Grid and who purchases or receives, or who is seeking to purchase or receive, Regulated Transmission Services. For the avoidance of doubt, this may include a person who operates a Generation Facility, a Distribution Utility or an End-user. In addition, and notwithstanding the foregoing, a Customer includes an Embedded Generator (as that term is defined in the Grid Code) in so far as that Embedded Generator purchases or receives, or is seeking to purchase or receive, the Regulated Transmission Services referred to in paragraphs (e) or (g) of the definition of Regulated Transmission Services. (s1.3 TWRG) Equipment: All apparatus, machines, conductors, etc. used as part of, or in connection with, an electrical installation. (s1.6 Grid Code) Facilities: A generic term describing the apparatus, Equipment, buildings and necessary supporting resources for the generation, transmission, supply, sale, ancillary support, and consumption of Electricity. (A1 OATS) Generation Plant: A facility, consisting of one or more Generating Units, where electric Energy is produced from some form of Energy by means of a suitable apparatus. (s1.6 Grid Code) Grid: The high voltage backbone system of interconnected transmission lines, substations and related facilities, located in each of the island groups of Luzon, Visayas and Mindanao, or as may otherwise be determined by the ERC in accordance with Section 45 of the EPIRA, together with such Subtransmission Systems as are connected to that System and are owned and operated by the Regulated Entity. (s1.3 TWRG, and based on Rule 4 IRR) Regulated Entity: Collectively, any entity or entities who provide any Regulated Transmission Services. (s1.3 TWRG) Regulated Transmission Services: The following services: (a) the conveyance of electricity through the Grid and the control and monitoring of electricity as it is conveyed through the Grid (including any services that support such conveyance, control or monitoring or the safe operation of the Grid); (b) the planning, maintenance, augmentation and operation of the Grid;

(c)

the provision, installation, commissioning, testing, repair, maintenance and reading both of meters that are used to measure the delivery of electricity to Customers and of other meters that are used (for the purposes of the WESM) to measure the flow of electricity into or through the Grid; (d) until the commencement of the Second Regulatory Period, Transmission Connection Services; (e) the provision of Ancillary Services that are provided using assets which form part of the Grid1 (excluding any such Ancillary Services to the extent they are provided to the System Operator under contract or through a spot market established under the WESM Rules); (f) billing, collection and customer service for Customers purchasing (or seeking to purchase) any of the services referred to in paragraphs (a), (b), (c) and (e) and for persons purchasing (or seeking to purchase) any Transmission Connection Services; and (g) those services provided by the System Operator under the Grid Code, the Distribution Code or the WESM Rules in its capacity as such, but do not include such of these services as are determined by the ERC to be contestable.(s1.3 TWRG) Single Mechanical Connection: Refers to the three discrete joints, each joint between two electrical Components in a single phase of a three phase electrical System. Usually all three joints are within close proximity, between similar electrical Components, but each in a separate phase of the three phase circuit. System: Refers to the Grid or the Distribution System or any User System. Also a group of Components connected and associated in a fixed configuration to perform a specified function. (s1.6 Grid Code) Step-Down Transformer: An electrical device or Equipment that converts voltage and current from one level to another, where the output at the Customer side of the Transformer has a lower voltage than the input at the Grid side of the Transformer. TransCo: National Transmission Corporation and/or its Concessionaire. Transmission Connection Services: The following services: (a) the provision of capability at a Connection Point to deliver electricity to or take electricity from the Connection Point; (b) the conveyance of electricity: (i) from the User System or Equipment of a Customer to the Connection Point; or (ii) (c) (d) from the Connection Point to the User System or Equipment of a Customer;

the planning, installation, maintenance, augmentation, testing and operation of Transmission Connection Assets; and the provision of services that support any of the services referred to in paragraphs (a) to (c). (s1.3 TWRG)

An example of such Ancillary Services is services provided by a series reactor or a static var compensator.

User System: Refers to a System owned or operated by a User of the Grid or Distribution System. (s1.6 Grid Code)