Amending R.A. No. 9136 (Electric Power Industry Reform Act of 2001)

Senate TWENTIETH CONGRESS OF THE Olice at the secretary REPUBLIC OF THE PHILIPPINES First Regular Session ) 25 ME -P PY 20 SENATE NECEIVED SY: S.B. No. 1088 Introduced by Senator WIN GATCHALIAN AN ACT REMOVING THE PUBLIC OFFERING REQUIREMENT OF GENERATION COMPANIES, AMENDING FOR THE PURPOSE SECTION 43(T) OF REPUBLIC ACT NO. 9136, OTHERWISE KNOWN AS THE ELECTRIC POWER INDUSTRY REFORM ACT OF 2001 EXPLANATORY NOTE Republic Act No. (RA) 9136, otherwise known as the Electric Power Industry Reform Act of 2001, provides that it is the declared policy of the State (i) to ensure the quality, reliability, security and affordability of the electric power supply; (ii) to enhance the inflow of private capital and broaden the ownership base of the power generation sector; and (iii) "to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability." Towards this end, RA 9136 requires generation companies (GenCos) which are not publicly listed to offer and sell to the public not less than 15% of their common shares of stock "to ensure the successful restructuring and modernization of the electric power industry." After almost 20 years since RA 9136 was passed, various reasons show that this requirement no longer serves its purpose. First, at present, the electric power industry has already been restructured with into four sectors: generation, transmission, distribution, and supply. Second, the generation sector is "competitive and open" in that it is not a public utility operation thus allowing more players to enter the market. Only the generation companies' power supply agreements with distribution utilities are subject to the approval of the Energy Regulatory Commission (ERC). As a result of these two reasons, there are now more participants in the generation sector.

Third, as a business affected with public interest, there are policies in place to ensure the protection of consumers and the public in general, such as the requirement of a Certificate of Compliance from the ERC, ' the reliability index which provides for a cap in the allowed outages of power plants, and the competitive selection process (CSP) requirement in the procurement of power supply by distribution utilities. These require generation companies to modernize their facilities to meet regulatory standards and ensure market competitiveness to compete in the CSP. Fourth, it is expected that the demand for electric power supply will increase in the next 20 years. According to the Philippine Energy Plan (PEP) 2023-2050, by 2050, the projected total peak demand is 68.5 gigawatts (GW) under business as usual scenario (BAU). 4 This will require an additional total installed capacity of 122.7 gigawatts (GW) from 28.3GW in 2022.5 Moreover, under the country's objective to attain more than 50% of energy mix attributed to renewable energy by 2050, the grid requires 65 GWh from BESS and expands to 466 GWh by 2040 and 1,021 GWh by 2050.6 Towards this end, the country needs an environment which attracts more investment in the generation sector especially for RE. Given the foregoing, the initial purpose of the public offering requirement for generation companies in the EPIRA no longer serves its purpose and if we are to encourage more investments in generation to meet our demand needs in the next twenty years, it is crucial to eliminate this additional barrier to entry. As such, the immediate passage of this measure is sought. WIN GATCHALIAN 1 Section 6 of RA 9136. 2 ERC Resolution No. 10 Series of 2020. A Resolution Adopting the Interim Reliability Performance Indices and Equivalent Outage Days Per Year of Generating Units. Issued on 16 November 2020. Effective on 3 January 2021. 3 Department of Energy (DOE) Department Circular No. DC 2018-02-0003. Adopting and Prescribing the Policy for the Competitive Selection Process in the Procurement by the Distribution Utilities of Power Supply Agreement for the Captive Market. Signed on 1 February 2018. Effective on 10 February 2018. (As amended by DOE Department Circular No. DC 2021-09-0030) 4 Page 78. PEP 2023-2050. Available at https://legacy.doe.gov.ph/sites/default/files/pdf/pep/PEP%202023- 2050%20Vol.%20I.pdf. Accessed on 7 July 2025. 5 Page 79. PEP 2023-2050. https://legacy.doe.gov.ph/sites/default/files/pdf/pep/PEP%202023-2050%20Vol.%201.pdf. Accessed on 7 July 2025. 6Page 79. PEP 2023-2050. https://legacy.doe.gov.ph/sites/default/files/pdf/pep/PEP%202023-2050%20Vol.%20I.pdf. Accessed on 7 July 2025.

Senate Office of the secrctary TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session ) 25 AUG -7 P1'20 SENATE RECEIVED TY: S.B. No. 1088 Introduced by Senator WIN GATCHALIAN AN ACT REMOVING THE PUBLIC OFFERING REQUIREMENT OF GENERATION COMPANIES, AMENDING FOR THE PURPOSE SECTION 43(T) OF REPUBLIC ACT NO. 9136, OTHERWISE KNOWN AS THE ELECTRIC POWER INDUSTRY REFORM ACT OF 2001 Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: 1 SECTION 1. Removal of Public Offering Requirement of Generation Companies. - 2 Section 43(t) of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001, is hereby amended to read as follows: "SEC. 43. Functions of the ERC. - The ERC shall promote competition, encourage market development, ensure customer choice and penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured industry: XXX (t) Perform such other regulatory functions as are appropriate and necessary in order to ensure the successful restructuring and modernization of the electric power industry, such as, but not limited to, the rules and guidelines under which [generation companies,] distribution utilities which are not publicly listed shall offer and sell to the public a portion not

less than fifteen percent (15%) of their common share of stocks: Provided, however, That [generation companies,] distribution utilities or their respective holding companies that are already listed in the PSE are deemed in compliance. For existing [companies] DISTRIBUTION UTILITIES, such public offering shall be implemented not later than five (5) years from the effectivity of this Act. New [companies] DISTRIBUTION UTILITIES shall implement their respective public offerings not later than five (5) years from the issuance of their certificate [of compliance] OF PUBLIC CONVENIENCE AND NECESSITY; and

SECTION 2. Implementing Rules and Regulations. - The Energy Regulatory

Commission shall, in consultation with the Department of Energy, other relevant government agencies, the electric power industry participants, consumers, and other public and private stakeholders, promulgate the Implementing Rules and Regulations of the Act within ninety (90) calendar days from its effectivity.

SECTION 3. Separability Clause. - If, for any reason, any provision of this Act is

declared to be unconstitutional or invalid, the other sections or provisions hereof which are not affected thereby shall continue to be in full force or effect. 19 SECTION 4. Repealing Clause. - All laws, decrees, orders, rules and regulations or parts thereof which are inconsistent with or contrary to the provisions of this Act are hereby repealed, amended or modified accordingly.

SECTION 5. Effectivity. - This Act shall take effect fifteen (15) days after its complete

publication in the Official Gazette or in a national newspaper of general circulation. Approved,