Anti Bill Deposit Act

Senate Office of the Setretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session NOV -3 A9;07 SENATE RECEIVED BY: S.B. No. 1470 Introduced by SEN. WIN GATCHALIAN AN ACT ABOLISHING THE COLLECTION OF BILL DEPOSITS BY DISTRIBUTION UTILITIES AND ELECTRIC COOPERATIVES, MANDATING THE REFUND OF EXISTING BILL DEPOSITS, AND FOR OTHER PURPOSES EXPLANATORY NOTE The collection of bill deposits by distribution utilities (DUs) and electric cooperatives (ECs), as authorized under the Magna Carta for Residential Electricity Consumers (MCREC), as amended has long imposed an unnecessary financial burden on consumers. This bill seeks to abolish the collection and reimposition of bill deposits and mandate the refund of existing deposits, together with accrued interest. It further directs the Energy Regulatory Commission (ERC) to conduct an independent audit of all bill-deposit accounts and to prescribe non-deposit-based credit-risk alternatives such as prepaid or installment-based arrangements to maintain payment discipline without imposing upfront costs. Consistent with the Electric Power Industry Reform Act of 2001 (RA 9136) and the Public Service Act (Commonwealth Act No. 146), as amended by RA 11659, this measure strengthens consumer protection, promotes equitable access to electricity, ' ERC Resolution No. 09, Series of 2004 as amended by ERC Resolution No. 28-10

and aligns regulatory practices with the State's mandate to provide reliable and affordable power service. In view of the foregoing, the immediate passage of this measure is earnestly sought. Винно WIN GATCHALIAN

Senale Office of the Secretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 NOV -3 A9:07 First Regular Session SENATE RECEIVED BY: S.B. No. 1470 Introduced by SEN. WIN GATCHALIAN AN ACT ABOLISHING THE COLLECTION OF BILL DEPOSITS BY DISTRIBUTION UTILITIES AND ELECTRIC COOPERATIVES, MANDATING THE REFUND OF EXISTING BILL DEPOSITS, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

SECTION. 1. Short Tile. - This Act shall be known as the "Anti Bill

Deposit Act."

SEC 2. Declaration of Policy. It is hereby declared the policy of the

State to: (a) Protect electricity consumers from unnecessary financial burdens in obtaining and maintaining electric service ; (b) Ensure equitable and affordable access to electricity without the imposition of advance cash deposits or similar requirements; (c) Promote fairness, transparency, and accountability in the billing and collection practices of distribution utilities and electric cooperatives; and

(d) Strengthen consumer protection in the electric power industry consistent with the principles and objectives of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), the Public Service Act (Commonwealth Act No. 146), as amended by Republic Act No. 11659, and other related laws.

SEC. 3. Definition of Terms - For purposes of this Act,

(a) Bill Deposit refers to any amount collected by a distribution utility or electric cooperative as security for payment of future electricity bills, or as a condition for connection, reconnection, or continued service, including any equivalent cash collateral, surety, or advance payment, however denominated; (b) Distribution Utility and Electric Cooperative shall have the same meanings as provided under EPIRA and Presidential Decree No. 269, as amended; and (c) Consumer refers to any person or entity requiring the supply and delivery of electricity for its own use.

SEC. 4. Prohibition Against the Collection of Bill Deposits. - Upon

effectivity of this. Act, no distribution utility or electric cooperative shall, directly or indirectly, collect, re-impose, or require any bill deposit, cash bond, advance payment, or any form of financial guarantee as a condition for: (a) application or connection of electric service; (b) reconnection after disconnection; (c) continuation or additional service; or (d) reimposition following delayed payment.

Any collection made after the effectivity of this Act shall be immediately refundable to the concerned consumer, with interest computed at the prevailing Peso Savings Account Interest Rate of the Land Bank of the Philippines, or the equivalent rate of any government financial institution as approved by the 5 Energy Regulatory Commission (ERC). All existing rules, circulars, or agreements requiring such deposits are 7 hereby repealed or rendered void upon the effectivity of this Act. Provided, that nothing in this Act shall be construed to penalize or restrict 9 any distribution utility or electric cooperative that has already discontinued the collection of bill deposits prior to the effectivity of this Act. Entities that previously collected deposits shall remain obligated to refund the same under

Section 5 of this Act.

SEC. 5. Audit and Refund of Existing Bill Deposits. Within ninety

(90) calendar days from the effectivity of this Act, the ERC shall undertake, or cause the conduct of, an independent audit and reconciliation of all bill-deposit accounts maintained by distribution utilities and electric cooperatives. The audit shall identify total amounts collected, refunded, unclaimed, and outstanding; reconcile consumer-level balances, including those of customers who have terminated service, relocated, or transferred accounts; and determine any excess, dormant, or unrefunded deposits, which shall continue to earn interest until fully released. The ERC shall submit a consolidated audit report to 22 Congress and publish the same on its official website. Within one hundred eighty (180) days after completion of the ERC audit, every distribution utility and electric cooperative shall refund all existing bill deposits, together with accrued interest up to the date of actual release, computed in accordance with existing ERC rules and regulations. Refunds shall be released in cash, check, or electronic transfer, unless the consumer expressly opts to apply the amount to future bills.

Any unclaimed refund after one (1) year shall be remitted to the ERC in trust for consumers, to be applied as credits to future electricity bills or to lifeline 3 subsidy programs, subject to ERC rules. All unrefunded deposits shall continue to earn interest until fully released 5 to the consumers. Failure to complete the required refund or to submit the audited reports 7 within the prescribed period shall constitute a continuing violation subject to the fines and sanctions under Section 21 of the Public Service Act, as amended. 9 The ERC may extend the prescribed periods for justifiable reasons.

SEC. 6. Consumer Protection and Alternative Credit

Arrangements. - To maintain payment discipline without imposing advance cash requirements, the ERC shall, within ninety (90) calendar days from the effectivity of this Act, promulgate rules prescribing deposit-free credit-risk alternatives, which may include: (a) Prepaid, or pay-as-go metering systems; (b) Installment or staggered payment arrangements; (c) Voluntary credit insurance or guarantee schemes; and (d) Other mechanisms consistent with the consumer rights provisions of the Magna Carta for Residential Electricity Consumers. In formulating such rules, the ERC shall ensure that risk-mitigation measures are fair, transparent, and proportionate, considering the financial conditions of electric cooperatives and other small utilities. No consumer shall be disconnected for failure to post or re-post any deposit. Disconnection of service shall be allowed only for non-payment of actual electric bills, subject to due process and existing ERC rules.

SEC. 7. Transition and Regulatory Adjustments. The ERC shall, in

accordance with its powers under existing laws, ensure a reasonable transition in the implementation of this Act. For this purpose, the ERC may issue such resolutions, rules and regulation or advisories as may be necessary to: (a) Prescribe uniform refund procedures; (b) Monitor compliance by distribution utilities (DUs) and electric cooperatives (ECs); and (c) Determine appropriate accounting or ratemaking treatment to give full effect to the abolition of bill deposits and the refund of existing amounts. The ERC shall likewise coordinate with the Department of Energy (DOE), the National Electrification Administration (NEA), and other concerned agencies to ensure effective implementation and public information.

SEC. 8. Penalties. Any violation of this Act or of its implementing rules

and regulations shall be subject to the penalties, sanctions, and fines prescribed by the ERC pursuant to its powers under EPIRA, the Public Service Act, as amended, and other applicable laws, rules, and regulations.

SEC. 9. Implementing Rules and Regulations. Within ninety (90)

calendar days from the effectivity of this Act, the ERC, in consultation with DOE, NEA, and consumer groups, shall promulgate the necessary implementing rules and regulations.

SEC. 10. Repealing Clause. - All laws, decrees, executive order,

administrative order, rules and regulations, circulars, resolutions and/or parts thereof contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly.

SEC. 11. Separability Clause. - If for any reason, any section or

provision of this Act is declared unconstitutional or invalid, other sections or provisions which are not affected thereby shall continue to be in full force and effect.

SEC. 12. Effectivity Clause. - This Act shall take effect fifteen (15)

6 days following its publication in the Official Gazette or in a newspaper of general circulation. Approved,