PASIG CITY – On August 2, 2006, the Energy Regulatory Commission thru Chairman Rodolfo Albano, Jr. has approved the petition of Aklan Electric Cooperative Inc. [AKELCO] to enter into an Electric Power Purchase Agreement (EPPA) with Mirant Global Corporation. [ERC Case No. 2005-013 RC]

After series of Public Hearings held in Boracay, Metro Manila, and Lezo, Aklan, the Energy Regulatory Commission has finally approved the EPPA Contract between AKELCO and Mirant Global Corporation.

In reaching the decision, the Commission took into consideration the documents as well as the comments and issues submitted by the petitioner, intervenors, oppositors and other interested parties who manifested their respective positions on the instant petition.

On May 18, 2005, Atty. Cyril C. del Callar, President of the National Power Corporation [NPC] issued a certification to AKELCO that NPC or its successor generating companies do not have the capacity to supply electric power of 12,500kWh and 4,000,000kWh in the Visayas per month, thus AKELCO intends to source power from MIRANT.

Based on the letter dated January 2, 2006 of TRANSCO to Panay Electric, Inc. [PECO] [which the Commission used in its evaluation of the PECO-Panay Power supply contract], the projected demand of Panay Grid is about 129MW, while the supply reaches only 54MW, a deficit of 75 MW.

The tight demand-supply scenario in the Cebu-Negros-Panay [CNP] Grid is aggravated by the fact that AKELCO is at the load end of the power grid and therefore most vulnerable to power fluctuations and load shedding once power supply is insufficient.

Most of the supply comes from Leyte, flows through Cebu and Negros and finally to Panay. Even then, the power source link in Panay is in Iloilo, thereby making delivery of power to Aklan difficult because of transmission constraints.

With regards to the computation of Electric Fee Formula, AKELCO and its end- users are protected by the fuel and lube oil consumption rate caps. The fuel consumption rate cap is 0.2591918 liter per kWh, while the lube oil consumption rate cap is 0.00168 liter per kWh. The rate base was reduced from P2.5286 to P2.4375 per kWh. Any inefficiency beyond the caps is borne by Mirant and is not passed on to AKELCO and its consumers.