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

Senate Office of the Secretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 NOV -3 P2•4 First Regular Session SENATE RECEIVED BY: S. No. 1477 Introduced by Senator JV Ejercito AN ACT STRENGTHENING THE ENERGY REGULATORY COMMISSION, AMENDING FOR THE PURPOSE SECTIONS 38, 39, 40, 41, 43, 44, 45, AND 46 OF REPUBLIC ACT NO. 9136, OTHERWISE KNOWN AS THE "ELECTRIC POWER INDUSTRY REFORM ACT OF 2001" EXPLANATORY NOTE The Electric Power Industry Reform Act (EPIRA) was enacted in 2001 with the intention of ensuring affordable and reliable electricity to all power consumers in the Philippines. The EPIRA seeks to achieve this through the introduction of sweeping reforms including the restructuring and deregulation of the entire power industry and the privatization of most state-owned power generation and transmission assets. Such reforms were intended to introduce more competition and choices for consumers while leveling the playing field in the power industry in order to encourage greater private sector participation. 1 However, the law has been criticized for failing to achieve its objectives. Our country remains to have one of the most expensive electricity costs in ASEAN. Whenever an increase in the price of electricity is announced, at the forefront is the Energy Regulatory Commission (ERC). It is created under EPIRA that is tasked to be an independent, quasi-judicial, and regulatory body that promotes competition, encourages market development, ensures customer choice, and penalizes abuse of ' Senate Economic Planning Office Police Brief PB-08-03 entitled "Accelerating Power Sector Reforms" Amending the EPIRA

market power. Like other provisions of EPIRA, ERC failed to be effective in ensuring fair competition and protection of consumer welfare. To address the gaps in ERC's current legal framework, this proposed measure seeks to strengthen its organizational structure and enhance its technical capabilities. It will expand ERC's power to monitor, investigate, and penalize anti-competitive and abusive practices. More importantly, this bill institutionalizes stronger mechanisms for consumer protection and stakeholder participation. In order to achieve a fair and efficient energy market, there is a need to transform ERC to a strong and credible regulator. By doing so, this measure aims to restore public trust in energy regulation as well as fulfill the objectives of EPIRA to have affordable and reliable power. As such, the swift passage of this bill is earnestly sought. JV EJERCITO

Senate Office of the Secretarp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES NOV -3 P2:41 First Regular Session SENATE RECEIVED BY: 1477 S. No.. Introduced by Senator JV Ejercito AN ACT STRENGTHENING THE ENERGY REGULATORY COMMISSION, AMENDING FOR THE PURPOSE SECTIONS 38, 39, 40, 41, 43, 44, 45, AND 46 OF REPUBLIC ACT NO. 9136, OTHERWISE KNOWN AS THE "ELECTRIC POWER INDUSTRY REFORM ACT OF 2001" Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Section 38 of Republic Act No. 9136 is hereby amended to read as

5 follows: "Sec. 38. Creation of the Energy Regulatory Commission. - XXX XXX XXX The Commission shall be composed of a [Chairman] CHAIRPERSON and four (4) members to be appointed by the President of the Philippines. THE CHAIRPERSON AND THE MEMBERS OF THE COMMISSION SHALL HAVE THE RANK OF CABINET SECRETARY AND UNDERSECRETARY, RESPECTIVELY. The [Chairman] CHAIRPERSON and the members of the Commission shall be natural-born citizens and residents of the Philippines, persons of good moral character, at least thirty-five (35) years of age, and of recognized competence in any of the following fields: energy, law, economics, finance, commerce, or engineering, with at least ten (10) years actual and distinguished experience in their respective fields of expertise: Provided, That

out of the four (4) members of the Commission, there shall be one (1) member of the Philippine Bar, one (1) certified public accountant and one (1) licensed engineer. XXX The [Chairman] CHAIRPERSON of the Commission shall act as the Chief Executive Officer of the Commission AND SHALL HAVE THE FOLLOWING POWERS, FUNCTIONS AND DUTIES: a) TO EXECUTE, ADMINISTER AND IMPLEMENT THE POLICIES AND MEASURES APPROVED AND ADOPTED BY THE COMMISSION; b) TO DIRECTLY ADMINISTER AND SUPERVISE THE OPERATIONS AND DAY-TO-DAY BUSINESS ACTIVITIES OF THE COMMISSION; c) TO REPRESENT THE COMMISSION IN ALL DEALINGS WITH OFFICES, AGENCIES AND INSTRUMENTALITIES OF THE GOVERNMENT AND WITH ALL PERSONS AND ENTITIES, PUBLIC OR PRIVATE, DOMESTIC OR FOREIGN, UNLESS OTHERWISE DIRECTED BY THE COMMISSION; d) TO EXECUTE, ON BEHALF OF THE COMMISSION, ALL CONTRACTS, AGREEMENTS AND OTHER INSTRUMENTS AFFECTING THE INTERESTS OF THE ERC DULY APPROVED BY THE COMMISSION; e) TO DIRECT AND SUPERVISE THE PREPARATION OF THE AGENDA FOR THE MEETINGS OF THE COMMISSION; f) TO PRESIDE AT THE MEETINGS OF THE COMMISSION; 9) TO INSTITUTE TEMPORARY PRICE MITIGATION MEASURES TO PROTECT CONSUMER INTERESTS DURING THE IMPENDENCY, EXISTENCE, OR EFFECTS OF A CALAMITY OR EMERGENCY; AND h) TO EXERCISE SUCH OTHER POWERS, FUNCTIONS AND DUTIES AS MAY BE ASSIGNED TO HIM BY THE COMMISSION.

• , THE ERC SHALL SUBMIT TO THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) THE PROPOSED ORGANIZATIONAL RESTRUCTURING PROVIDED HEREIN WITHIN THREE (3) MONTHS FROM THE EFFECTIVITY OF THIS ACT. THE DBM SHALL ACT ON THE SUBMITTED PROPOSED ORGANIZATIONAL RESTRUCTURING WITHIN ONE (1) MONTH FROM ITS RECEIPT. EVERY AFTER FIVE (5) YEARS FROM THE EFFECTIVITY OF THIS ACT, THE ERC SHALL REASSESS ITS THEN ORGANIZATIONAL STRUCTURE TO DETERMINE IF THERE IS A NEED FOR FURTHER RESTRUCTURING OR REORGANIZATION, WHICH MAY INCLUDE ADDITIONAL SERVICES, DIVISIONS OR PERSONNEL PER DIVISION. THE DBM SHALL APPROVE ANY PROPOSED ORGANIZATIONAL RESTRUCTURING WITHIN ONE 1) MONTH FROM ITS RECEIPT THEREOF. THE COMMISSION SHALL CONDUCT AN ASSESSMENT OF THE FITNESS OF THE SKILLS AND CAPABILITIES OF EXISTING PERSONNEL. ON THE BASIS OF THE RESULTS OF SUCH ASSESSMENT, THE COMMISSION MAY IMPLEMENT SUCH MOVEMENT IN PERSONNEL TO ESTABLISH THE NEW ORGANIZATIONAL STRUCTURE, IN ACCORDANCE WITH APPLICABLE LAWS, ALIGNED WITH SUCH PERSONNEL'S CAPACITY AND PERFORMANCE; PROVIDED, THAT THE NEW POSITION TO WHICH THEY WERE TRANSFERRED TO WILL BE OF THE SAME RANK AND SALARY FROM ITS PREVIOUS POSITION WITHOUT THE NECESSITY OF REAPPOINTMENT.

Sec. 2. A new Section, designated as Section 38(A) of Republic Act No. 9136,

is hereby inserted to read as follows:

"SEC. 38(A). PROHIBITED ACTS - DURING THEIR TERM OF OFFICE, THE CHAIRPERSON AND MEMBERS OF THE COMMISSION ARE HEREBY PROHIBITED FROM: a) TAKING UP ANY EMPLOYMENT OR CONSULTANCY ARRANGEMENT WITH ANY ELECTRIC POWER INDUSTRY PARTICIPANT; b) HOLDING ANY COMMERCIAL OR ANY PECUNIARY INTEREST WHATSOEVER EITHER AS INVESTOR, STOCKHOLDER, OFFICER, OR DIRECTOR, IN ANY ELECTRIC POWER INDUSTRY PARTICIPANT, OR THOSE ENGAGED IN THE BUSINESS OF TRANSMITTING, GENERATING, SUPPLYING OR DISTRIBUTING ANY FORM OF ENERGY; C) HOLDING ANY OTHER OFFICE OR EMPLOYMENT; AND d) PRACTICING ANY PROFESSION, DIRECTLY OR INDIRECTLY, ENGAGING IN ANY BUSINESS, OR HOLDING ANY FINANCIAL INTEREST IN ANY CONTRACT WITH, OR ANY FRANCHISE, OR RECEIVING SPECIAL PRIVILEGES GRANTED BY THE GOVERNMENT OR ANY SUBDIVISION, AGENCY, OR INSTRUMENTALITY THEREOF, INCLUDING GOVERNMENT- OWNED AND CONTROLLED CORPORATIONS (GOCCS) OR THEIR SUBSIDIARIES. PROVIDED, THAT DURING THE INCUMBENCY OF THE CHAIRPERSON OR MEMBER OF THE COMMISSION, ANY OF THEIR RELATIVES WITHIN THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR AFFINITY, LEGITIMATE OR COMMON LAW, SHALL BE PROHIBITED FROM: a) TAKING UP ANY EMPLOYMENT OR CONSULTANCY ARRANGEMENT WITH AN ELECTRIC POWER INDUSTRY PARTICIPANT; b) HOLDING ANY COMMERCIAL OR ANY PECUNIARY INTEREST, EITHER AS INVESTOR, STOCKHOLDER, OFFICER OR DIRECTOR, IN ANY ELECTRIC POWER

INDUSTRY PARTICIPANT, OR THOSE ENGAGED IN THE BUSINESS OF TRANSMITTING, GENERATING, SUPPLYING OR DISTRIBUTING ANY FORM OF ENERGY; AND C) APPEARING AS COUNSEL OR AGENT ON ANY MATTER PENDING BEFORE THE COMMISSION OR TRANSACTING BUSINESS DIRECTLY OR INDIRECTLY THEREIN. PROVIDED, FURTHER, THAT THE CHAIRMAN AND MEMBERS OF THE COMMISSION OR ANY OF THEIR RELATIVES WITHIN THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR AFFINITY, LEGITIMATE OR COMMON LAW, HOLDING ANY COMMERCIAL OR ANY PECUNIARY INTEREST, IN ANY ELECTRIC POWER INDUSTRY PARTICIPANT, IN ANY CAPACITY, SHALL DIVEST THROUGH SALE OR LEGAL DISPOSITION OF ANY AND ALL INTERESTS IN THE ENERGY SECTOR UPON ASSUMPTION OF OFFICE: PROVIDED, FINALLY, THAT WITHIN THREE (3) YEARS FROM CESSATION OF THEIR SERVICE, THE CHAIRPERSON AND THE MEMBERS OF THE COMMISSION ARE HEREBY PROHIBITED FROM: a) RUNNING FOR ANY PUBLIC OFFICE IN THE NATIONAL OR LOCAL ELECTION; b) TAKING UP ANY EMPLOYMENT OR CONSULTANCY ARRANGEMENT WITH ANY ELECTRIC POWER INDUSTRY PARTICIPANT; AND C) PERSONALLY APPEARING OR PRACTICING AS COUNSEL OR AGENT ON ANY MATTER PENDING BEFORE THE COMMISSION."

Section 3. Sec. 39 of Republic Act No. 9136 is hereby amended to read as

follows: "Sec. 39. Compensation and Other Emoluments for ERC Personnel. - The compensation and other emoluments for the [Chairman] CHAIRPERSON and members of the Commission and the ERC personnel shall be exempted from the coverage of Republic Act No. 6758, [otherwise known as] OR the Salary

Standardization Act. For this purpose, the schedule of compensation of the ERC personnel, except for the initial salaries and compensation of the [Chairman] CHAIRPERSON and members of the Commission, shall be submitted for approval by the President of the Philippines. The new schedule of compensation shall be implemented within six (6) months from the effectivity of this Act and may be upgraded by the President of the Philippines as the need arises: Provided, That in no case shall the rate be upgraded more than once a year. The [Chairman] CHAIRPERSON and members of the Commission shall initially be entitled to the same salaries, allowances and benefits as those of the Chief Justice and Associate Justices of the Supreme Court, respectively. The [Chairman] CHAIRPERSON and the members of the Commission, upon completion of their term or upon becoming eligible for retirement under existing laws, shall be entitled to the same retirement benefits and privileges provided for the Chief Justice and Associate Justices of the Court of Appeals, respectively. After completion of the term with the ERC, the [Chairman] CHAIRPERSON and Members of the Commissions shall be prohibited from accepting employment or appointment in any capacity with any regulated entity for a period of three (3) years following such completion. All Members and employees of the Commission shall be prohibited from appearing before the ERC for a period of three (3) years after said completion of term or termination of employment."

Section 4. Sec. 40 of Republic Act No. 9136 is hereby amended to read as

follows: "Sec. 40. Enhancement of Technical Competence. - The ERC shall establish rigorous training programs for its staff for the purpose of enhancing the technical competence of the ERC in the following areas: evaluation of technical performance and monitoring of compliance with service and performance standards, performance-based rate-setting reform, environmental standards and such other areas as will enable the ERC to adequately perform its duties and functions. FOR THIS PURPOSE, THE ERC SHALL ALLOT NO

•. LESS THAN FIFTEEN PERCENT (15%) OF ITS TOTAL ANNUAL APPROVED BUDGET FOR THE TRAINING AND UPGRADING OF SKILLS OF ITS PERSONNEL."

Section 5. Sec. 41 of Republic Act No. 9136 is hereby amended to read as

follows: "Sec. 41. Promotion of Consumer Interests. - The ERC shall handle consumer complaints and ensure the adequate promotion of consumer interests. THE ERC SHALL ESTABLISH GUIDELINES FOR DETERMINING LEGITIMATE REPRESENTATION OF CONSUMER ORGANIZATIONS FOR CONDUCTING FORUMS WHERE CONSUMERS CAN EXPRESS CONCERNS ON POLICIES AND REGULATIONS OUTSIDE THE FORMAL RULE-MAKING PROCESSES: PROVIDED, THAT THE DETERMINATION OF LEGITIMATE CONSUMER ORGANIZATION SHALL BE SUBJECT TO THE EXISTING RULES AND REGULATIONS ISSUED BY THE DEPARTMENT OF TRADE AND INDUSTRY. UNLESS CONSIDERED CONFIDENTIAL OR COVERED BY EXECUTIVE OR DELIBERATIVE PROCESSES, ALL PETITIONS, APPLICATIONS, AND REPORTORIAL REQUIREMENTS OF ELECTRIC POWER INDUSTRY PARTICIPANTS, INCLUDING ALL ANNEXES THERETO, AS WELL AS ORDERS, DECISIONS, AND RESOLUTIONS OF THE COMMISSION, SHALL BE POSTED ON THE ERC'S OFFICIAL WEBSITE WITHIN FIVE (5) DAYS FROM SUBMISSION OR PROMULGATION, AS THE CASE MAY BE. A SUPPORT DESK SHALL BE MADE AVAILABLE TO THE PUBLIC, WHICH WILL PROVIDE ASSISTANCE TO CONSUMERS FOR A BETTER UNDERSTANDING OF ALL PROCEEDINGS AND ISSUANCES OF THE COMMISSION, AS WELL AS ANY AND ALL MATTERS WHICH AFFECT

THE ELECTRICITY RATES CHARGED TO CONSUMERS: PROVIDED, THAT THE INFORMATION IS NOT CONFIDENTIAL IN NATURE. EVERY CONSUMER HAS THE RIGHT TO INFORMATION AND SHALL, UPON REQUEST, BE GIVEN ACCESS TO SUCH INFORMATION OF PUBLIC CONCERN AND WITHIN THE CONTROL OF THE COMMISSION: PROVIDED, THAT SAID ACCESS SHALL NOT BE GRANTED IF: a) THE INFORMATION IS CONSIDERED CONFIDENTIAL UNDER THE ERC RULES OF PRACTICE AND PROCEDURE; b) THE INFORMATION CONSISTS OF MINUTES OR RECORDS OF ADVICE GIVEN, OR OF OPINIONS EXPRESSED DURING DECISION-MAKING OR POLICY FORMULATION IN THE COURSE OF EXECUTIVE SESSIONS; c) THE INFORMATION REQUESTED CONSISTS OF DRAFTS OF ORDERS, RESOLUTIONS, DECISIONS, OR MEMORANDA OF THE COMMISSION IN THE EXERCISE OF ITS REGULATORY FUNCTION; OR d) THE INFORMATION REQUESTED PERTAINS TO TRADE SECRETS, SENSITIVE, OR OTHER PROPRIETARY INFORMATION, WHENEVER THE REVELATION THEREOF WOULD PREJUDICE THE INTERESTS OF A NATURAL OR JURIDICAL PERSON IN TRADE, INDUSTRIAL, FINANCIAL, OR COMMERCIAL COMPETITION."

Section 6. Section 43 of Republic Act No. 9136 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] THE ERC SHALL HAVE THE AUTHORITY to issue cease and desist orders after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured industry:

'• (a) xxx (b) Within six (6) months from the effectivity of this Act, AND REGULARLY THEREAFTER promulgate, REVIEW OR AMEND, WHEN NECESSARY, IN COORDINATION WITH THE DOE, and enforce, in accordance with law, THE Philippine [National] Grid Code and THE PHILIPPINE [a] Distribution Code which shall include, but not limited to, the following: XXX (f) [In the public interest,] IN THE INTEREST OF THE PUBLIC, establish and enforce a methodology for setting AND BENCHMARKING transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of the regulated entities, THE MODE OF PROCUREMENT OF THE NECESSARY POWER SUPPLY FOR DISTRIBUTION UTILITIES AND ANCILLARY SERVICES OF TRANSCO OR ITS CONCESSIONAIRE, AND COMPLIANCE WITH OTHER DOE AND ERC POLICIES AND REGULATIONS. The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may adopt alternative forms of internationally-accepted rate-setting methodology AND BENCHMARKING as it may deem appropriate. The rate-setting methodology AND BENCHMARKING so adopted and applied must ensure a reasonable price of electricity. The rates prescribed shall be non-discriminatory, COMPETITIVE AND TRANSPARENT. To achieve this objective and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of system losses prescribed in Section 10 of Republic Act No. 7832, is hereby

. • • • amended and shall be replaced by caps which shall be determined by the ERC based on load density, sales mix, cost of service, delivery voltage and other technical considerations it may promulgate. The ERC shall determine such form or rate-setting methodology, which shall promote efficiency. In case the rate-setting methodology used is RORB, it shall be subject to the following guidelines: XXX THE ERC SHALL LIKEWISE ESTABLISH A RATE-SETTING METHODOLOGY FOR NEWLY FRANCHISED PRIVATE DISTRIBUTION UTILITIES, TAKING INTO ACCOUNT THE SAME FACTORS STATED UNDER THIS SUBSECTION, AND ENSURING THAT THE APPLICABLE RETAIL RATES AND DISTRIBUTION WHEELING RATES ARE DETERMINED WITHIN THE TIMELINE PROVIDED IN SECTION 13 OF R.A. 11234, OR THE ENERGY VIRTUAL ONE-STOP SHOP (EVOSS) ACT, FROM THE FILING OF THE RELEVANT APPLICATION. (i) Allow the TRANSCO to charge user fees for ancillary services to all electric power industry participants or self-generating entities connected to the grid. Such fees shall be [fixed] DETERMINED by the ERC after due notice and public hearing; XXX V) TO ORGANIZE AND ADMINISTER THE TRANSMISSION GRID RELIABILITY MANAGEMENT COMMITTEE, WHICH SHALL BE TASKED TO DEVELOP, IMPROVE, AND CONDUCT AUDIT IN COMPLIANCE WITH THE GRID CODE AND OTHER RELATED ISSUANCES, TO MONITOR AND REPORT TO THE ERC ANY VIOLATIONS AGAINST THE TRANSMISSION GRID CODE, TO

INVESTIGATE AND PROVIDE RESOLUTIONS ON GRID SIGNIFICANT INCIDENTS, AND TO RECOMMEND PENALTIES FOR NON-CONFORMANCE AND VIOLATIONS THEREOF; W) TO ORGANIZE AND ADMINISTER THE DISTRIBUTION GRID RELIABILITY MANAGEMENT COMMITTEE, WHICH SHALL BE TASKED TO DEVELOP, IMPROVE, AND CONDUCT AUDIT IN COMPLIANCE WITH DISTRIBUTION RELIABILITY STANDARDS, TO MONITOR AND REPORT TO THE ERC ANY VIOLATIONS OF THE DISTRIBUTION GRID CODE, TO INVESTIGATE AND PROVIDE RESOLUTIONS ON GRID SIGNIFICANT INCIDENTS, AND TO RECOMMEND PENALTIES FOR NON-COMPLIANCE AND VIOLATIONS THEREOF; AND X) SUMMARILY PUNISH FOR CONTEMPT, BY A FINE NOT LESS THAN FIVE THOUSAND PESOS (P5,000.00) BUT NOT EXCEEDING ONE HUNDRED THOUSAND PESOS (P100,000.00), IN REAL TERMS, OR BY IMPRISONMENT NOT EXCEEDING TEN (10) DAYS, OR BOTH, ANY PERSON GUILTY OF ANY ACT INTENDED TO INTERRUPT THE HEARING, SESSION, OR ANY PROCEEDING BEFORE THE COMMISSION, OR WHEN A PERSON REFUSES TO BE SWORN IN AS A WITNESS, OR TO ANSWER AS SUCH WHEN LAWFULLY REQUIRED TO DO SO IN ANY HEARING, SESSION, OR INVESTIGATION DULY HELD BY THE COMMISSION, ITS MEMBERS OR REPRESENTATIVES. TO ENFORCE THE PROVISIONS OF THIS SECTION, THE ERC MAY, IF NECESSARY, REQUEST THE ASSISTANCE OF THE PHILIPPINE NATIONAL POLICE FOR THE EXECUTION OF ANY ORDER MADE FOR SAID PURPOSE. All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published in at least [twice for two successive weeks

in in two (2) newspapers of nationwide circulation] ONE (1) NEWSPAPER OF GENERAL CIRCULATION, AND BE POSTED ELECTRONICALLY ON THE OFFICIAL WEBSITE OF THE ERC."

Section 7. Sec. 44 of Republic Act No. 9136 is hereby amended to read as

follows: "SEC. 44. [Transfer of Powers and Functions. The powers and functions of the Energy Regulatory Board not inconsistent with the provisions of this Act are hereby transferred to the ERC.] REVIEW BY THE ERC. - IN THE EXERCISE OF ITS QUASI-JUDICIAL AND REGULATORY FUNCTIONS, THE ERC SHALL IMPLEMENT REGULAR, SUMMARY AND ADMINISTRATIVE PROCEEDINGS, AND OTHER PROCESSES THAT SHALL PROMOTE TRANSPARENCY, EXPEDIENCY AND CONSISTENCY."

Section 8. New Sections, designated as Sec. 44(A), 44(B), 44(C), 44(D), and

44(E) of Republic Act No. 9136, are hereby inserted to read as follows: "SEC. 44(A). POWER SUPPLY AGREEMENTS. - THE DOE SHALL ISSUE THE POLICIES ON THE PROCUREMENT PROCESS FOR ANY POWER SUPPLY AGREEMENT WHICH SHALL OBSERVE THE PRINCIPLES OF TRANSPARENCY, COMPETITIVENESS, ACCOUNTABILITY, IMPARTIALITY AND EFFICIENCY. THE RESULTING POWER SUPPLY AGREEMENTS SHALL EMBODY THE PRINCIPLES OF QUALITY, AFFORDABILITY, SUSTAINABILITY AND RELIABILITY OF SUPPLY OF ELECTRIC POWER. THE ERC SHALL REVIEW AND APPROVE THE POWER SUPPLY AGREEMENT IN ACCORDANCE WITH ITS POWERS UNDER SECTION 43(W) OF THIS ACT.

SEC. 44(B). BENCHMARK PRICES AND RATES. - THE ERC SHALL

DETERMINE THE BENCHMARK FOR THE RANGE OF PRICES AND RATES THAT ARE DEEMED REASONABLE FOR BOTH THE END-USERS

• • AND THE OPERATIONS OF GENERATION, TRANSMISSION, AND DISTRIBUTION ENTITIES. LOAD DENSITY, SALES MIX, COST OF SERVICE, DELIVERY VOLTAGE, RESOURCE AND FUEL, LOCATION AND OTHER TECHNICAL FACTORS SHALL BE CONSIDERED IN THE BENCHMARK DETERMINATION. THE ERC SHALL PUBLISH THE BENCHMARK PRICES AND RATES, WHICH SHALL BE REGULARLY UPDATED.

SEC. 44(C). PROCEEDINGS IN THE ERC. - CASES FILED BEFORE

THE ERC SHALL BE DECIDED THROUGH REGULAR PROCEEDINGS; PROVIDED, HOWEVER, THAT CASES RELATED TO CONTRACTS OR SUBMISSIONS THAT ARE CERTIFIED BY THE DOE PURSUANT TO THIS ACT AND WITHIN THE BENCHMARK DETERMINED BY THE ERC, INCLUDING POWER SUPPLY AGREEMENTS, SHALL BE DECIDED THROUGH THE SUMMARY PROCEEDINGS OF THE ERC, WITHOUT NEED OF A HEARING. DECISIONS IN SUMMARY PROCEEDINGS SHALL BE LIMITED TO THE DETERMINATION OF COMPLIANCE OF THE CONTRACTS OR SUBMISSIONS WITH APPLICABLE RULES AND REGULATIONS; PROVIDED FURTHER, THAT OTHER CONTRACTS OR SUBMISSIONS THAT ARE NOT SUBJECT TO BENCHMARKING MAY BE DECIDED THROUGH SUMMARY PROCEEDINGS UPON DETERMINATION OF ERC.

SEC. 44(D). ADMINISTRATIVE DECISIONS. - MATTERS

REFERRING TO THE PERMITTING AND LICENSING MANDATE OF THE ERC AND DO NOT REQUIRE HEARINGS SHALL BE SUBJECT TO ADMINISTRATIVE PROCEEDINGS. ADMINISTRATIVE ISSUES SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING SUBMISSIONS BY GENERATION, TRANSMISSION, AND DISTRIBUTION ENTITIES:

• • i. APPLICATIONS RELATED TO THE RELIABILITY AND VIABILITY OF ASSETS, SYSTEMS AND OPERATIONS; ii. ANNUAL OR REGULAR SUBMISSIONS, WHETHER ON TECHNICAL, LEGAL OR FINANCIAL MATTERS; ili. SUBMISSIONS AND REPORTS INCLUDED IN THE REVIEW FOR REGULATORY RESET; AND ANY OTHER CONTRACTS OR APPLICATIONS iv. DETERMINED BY THE ERC AS SUBJECT TO ADMINISTRATIVE DECISION BY THE CHAIRPERSON. ADMINISTRATIVE PROCEEDINGS SHALL BE DECIDED BY THE CHAIRPERSON OF THE ERC. THE CHAIRPERSON MAY DELEGATE THIS AUTHORITY TO A MEMBER OF THE COMMISSION OR ANY OFFICER NOT LOWER THAN THE LEVEL OF A DIRECTOR.

SEC. 44(E). RULES AND APPEALS. - FROM THE DATE THE CASE

IS SUBMITTED FOR FINAL RESOLUTION, THE ERC SHALL PROMULGATE DECISIONS WITHIN THIRTY (30) DAYS FOR ADMINISTRATIVE PROCESSES, SIXTY (60) DAYS FOR SUMMARY QUASI-JUDICIAL PROCESSES, AND ONE HUNDRED EIGHTY (180) DAYS FOR REGULAR QUASI-JUDICIAL PROCESSES. THE ERC SHALL DETERMINE THE TIMELINES FOR ITS OTHER PROCESSES PURSUANT TO RA 11234, AND OTHER APPLICABLE LAWS AND REGULATIONS. MOTIONS FOR RECONSIDERATION OF A DECISION THROUGH REGULAR, SUMMARY, OR ADMINISTRATIVE PROCEEDINGS OF THE COMMISSION SHALL BE FILED WITHIN FIFTEEN (15) DAYS AFTER THE RECEIPT OF THE DECISION. THE ERC SHALL RESOLVE THE MOTION FOR RECONSIDERATION WITHIN THIRTY (30) DAYS FROM RECEIPT OF THE MOTION.

• • APPEALS SHALL BE FILED IN ACCORDANCE WITH THE RULES OF COURT. WITHIN SIX (6) MONTHS FROM THE EFFECTIVITY OF THIS ACT, THE ERC SHALL ISSUE THE RULES OF PROCEDURE FOR REGULAR AND SUMMARY QUASI-JUDICIAL, AND ADMINISTRATIVE PROCEEDINGS, AS PROVIDED FOR IN THIS ACT. THE RULES OF PROCEDURE TO BE ISSUED BY THE ERC SHALL GOVERN ALL CASES FILED AFTER THE EFFECTIVITY OF SUCH RULES, AND ALL PENDING PROCEEDINGS, EXCEPT TO THE EXTENT THAT IN THE OPINION OF THE COMMISSION, THEIR APPLICATION WOULD NOT BE FEASIBLE, CAUSE UNDUE DELAY OR WOULD WORK INJUSTICE, IN WHICH CASE THE RULES UNDER WHICH THE CASES WERE FILED SHALL GOVERN."

Section 9. Sec. 45 of Republic Act No. 9136 is hereby amended to read as

follows: "Sec. 45. Cross Ownership, Market Power Abuse and Anticompetitive Behavior. - No participant in the electricity industry or any other person may engage in any anti-competitive behavior including, but not limited to, cross- subsidization, price or market manipulation, or other unfair trade practices detrimental to the encouragement and protection of contestable markets. Xxx To promote true market competition and prevent harmful monopoly and market power abuse, the ERC shall enforce the following safeguards: a) xxx b) Distribution utilities may enter into bilateral power supply contracts subject to review by the ERC: Provided, That such review shall only be required for distribution utilities whose markets have not reached household demand level.

For the purpose of preventing market power abuse between associated firms engaged in generation and distribution, no distribution utility shall be allowed to source from bilateral power supply contracts more than fifty percent (50%) of its total demand from an associated firm engaged in generation but such limitation, however, shall not prejudice contracts entered into prior to the effectivity of this Act. An associated firm with respect to another entity refers to any person which, alone or together with any other person, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such entity: PROVIDED, FURTHER, THAT CONTROL, AS DEFINED IN SECTION 49(F) OF REPUBLIC ACT NO. 10667, OR THE PHILIPPINE COMPETITION ACT, REFERS TO THE ABILITY TO SUBSTANTIALLY INFLUENCE OR DIRECT THE ACTIONS OR DECISIONS OF AN ENTITY, WHETHER BY CONTRACT, AGENCY, OR OTHERWISE; and XXX = The ERC, IN COORDINATION WITH THE PCC, shall within one (1) year from the effectivity of this Act, promulgate rules and regulations to ensure and promote competition, encourage market development and customer choice and discourage/penalize abuse of market power, cartelization and any anti- competitive or discriminatory behavior, in order to further the intent of this Act and protect the public interest. Such rules and regulations shall define the following: [(a) the relevant markets for purposes of establishing abuse or misuse of monopoly or market position;] XXX."

. • ••

Section 10. Section 46 of Republic Act No. 9136 is hereby amended to read as follows:

"SEC. 46. Fines and Penalties. - The FOLLOWING fines and penalties [that] shall be imposed [by the ERE] for any violation of or non-compliance with this Act or the IRR [shall range from a minimum of Fifty thousand pesos (P50,000.00) to a maximum of Fifty million pesos (P50,000,000.00)]: A) ADMINISTRATIVE FINES AND PENALTIES. - BY ANY JURIDICAL ENTITIES ENGAGED IN THE GENERATION, TRANSMISSION, DISTRIBUTION AND SUPPLY OF ELECTRICITY, THE FINE SHALL RANGE FROM A MINIMUM OF FIFTY THOUSAND PESOS (P50,000.00) TO A MAXIMUM OF FIVE HUNDRED MILLION PESOS (P500,000,000.00). THE COMMISSION MAY ORDER THAT SUCH AMOUNT OF FINES AND PENALTIES IMPOSED FOR VIOLATION OF THIS ACT BE IMMEDIATELY APPLIED AS REFUND IN THE RATES CHARGED BY THE OFFENDING ENTITY TO THE END-USERS AFFECTED BY SUCH VIOLATION OR NON-COMPLIANCE. THE ERC SHALL PROMULGATE THE SCHEDULE OF PENALTIES, WITH CONSIDERATION OF THE CIRCUMSTANCES SURROUNDING THE VIOLATION OR NONCOMPLIANCE, SUCH AS, BUT NOT LIMITED TO, RECIDIVISM, PERIOD OF NONCOMPLIANCE, OR ABUSE OF MARKET POWER, CARTELIZATION, OR ANTI-COMPETITIVE OR DISCRIMINATORY BEHAVIOR. THE ERC MAY IMPOSE THESE PENALTIES FOR EVERY DAY OF VIOLATION, DELAY, OR NONCOMPLIANCE. The administrative sanction that may be imposed by the ERC shall be without prejudice to the filing of a criminal action, if warranted.

. • •• B) CRIMINAL AND CIVIL LIABILITIES. - BY ANY PERSON, A FINE OF NOT LESS THAN FIFTY THOUSAND PESOS (P50,000.00) BUT NOT MORE THAN FIFTY MILLION PESOS (P50,000,000.00), OR BY IMPRISONMENT OF NOT LOWER THAN SIX (6) YEARS AND ONE (1) DAY AND NOT HIGHER THAN TWELVE (12) YEARS, OR BOTH, AT THE DISCRETION OF THE COURT. WHEN THE ENTITIES INVOLVED ARE JURIDICAL PERSONS, THE PENALTY OF IMPRISONMENT SHALL BE IMPOSED ON ITS OFFICERS, DIRECTORS, OR EMPLOYEES HOLDING MANAGERIAL POSITIONS, WHO ARE KNOWINGLY AND WILLFULLY RESPONSIBLE FOR SUCH VIOLATION. THIS RULE SHALL APPLY TO THE MEMBERS OF THE BOARD WHO KNOWINGLY OR BY NEGLECT ALLOWS THE COMMISSION OR OMISSION UNDER THE LAW. To ensure compliance with this Act, the CRIMINAL AND CIVIL PENALTIES [penalty of prision correccional or a fine ranging from Five thousand pesos (P5,000.00) to Five million pesos (P5,000,000.00), oF both, at the discretion of the court,] shall be imposed on any person, including but not limited to the president, member of the board, Chief Executive Officer or Chief Operating Officer of the corporation, partnership, or any other entity involved, found guilty of violating or refusing to comply with any provision of this Act or its IRR, other than those provided herein. If the offender is a government official or employee, he OR SHE shall, in addition, be dismissed from the government service with prejudice to reinstatement and with perpetual or temporary disqualification from holding any elective or appointive office.

. • If the offender is an alien, he OR SHE may, in addition to the penalties prescribed, be deported without further proceedings after service of sentence. C) OFFER OF COMPROMISE. - ANY PERSON OR ENTITY SUBJECT TO AN ADMINISTRATIVE PROCEEDING IN THE COMMISSION THAT MAY RESULT IN THE IMPOSITION OF FINES, REFUNDS AND/OR PENALTIES, PURSUANT TO THIS SECTION, MAY ENTER A PLEA OF NOLO CONTENDERE, IN WHICH SUCH PERSON OR ENTITY DOES NOT ACCEPT NOR DENY RESPONSIBILITY FOR THE CHARGES BUT AGREES TO ACCEPT THE OBLIGATION TO PAY FINES, REFUNDS AND/OR PENALTIES AS IF ALREADY FOUND LIABLE. THE PLEA CANNOT BE USED AGAINST SUCH PERSON OR ENTITY TO PROVE LIABILITY IN A CRIMINAL ACTION NOR IN ANOTHER CAUSE OF ACTION: PROVIDED, THAT A PLEA OF NOLO CONTENDERE MAY BE ENTERED ONLY WITH THE PRIOR APPROVAL OF THE COMMISSION EN BANC WHICH SHALL ACCEPT IT ONLY AFTER WEIGHING ITS EFFECT ON THE PARTIES AND THE CONSUMERS: PROVIDED, FURTHER, THAT SHOULD THE COMMISSION ACCEPT THE PLEA OF NOLO CONTENDERE, THE FINE, REFUND AND/OR PENALTY TO BE ADJUDGED FOR PAYMENT SHALL NOT BE LESS THAN FIFTY PERCENT (50%) OF THE CORRESPONDING FINE, REFUND AND/OR PENALTY FOR THE SUBJECT OFFENSE: PROVIDED, FURTHERMORE, THAT ANY PERSON OR ENTITY CANNOT ENTER INTO A PLEA OF NOLO CONTENDERE FOR A VIOLATION OF ITS FRANCHISE OR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY, AND SUCH OTHER CASES AS DETERMINED BY THE COMMISSION: PROVIDED, FINALLY, THAT THE COMMISSION SHALL ISSUE GUIDELINES FOR THIS PROVISION, SUBJECT TO PUBLIC CONSULTATION.

D) ROLE OF THE DEPARTMENT OF JUSTICE. - CIVIL AND CRIMINAL ACTIONS AND PROCEEDINGS INSTITUTED ON BEHALF OF THE GOVERNMENT UNDER THE AUTHORITY OF THIS ACT OR OTHER LAWS ENFORCED BY THE ERC SHALL BE BROUGHT IN THE NAME OF THE GOVERNMENT OF THE PHILIPPINES AND SHALL BE PROSECUTED AND HANDLED BY THE ERC WITH THE ASSISTANCE OF THE DEPARTMENT OF JUSTICE (DOJ): PROVIDED, THAT THE DETERMINATION OF THE EXISTENCE OF PROBABLE CAUSE AND THE SUBSEQUENT FILING OF ANY CRIMINAL OR CIVIL CASE WITH THE PROPER COURT AGAINST VIOLATORS OF THIS ACT SHALL EXCLUSIVELY BELONG TO THE DOJ: PROVIDED, HOWEVER, THAT NO CIVIL OR CRIMINAL ACTION FOR THE RECOVERY OF DUTIES OR THE ENFORCEMENT OF ANY FINE, PENALTY OR FORFEITURE UNDER THIS ACT SHALL BE FILED IN COURT WITHOUT THE APPROVAL OF THE ERC. E) ADJUSTMENT OF FINES AND PENALTIES. - THE FINES AND PENALTIES MAY BE ADJUSTED TO ITS PRESENT VALUE EVERY FIVE (5) YEARS USING THE CONSUMER PRICE INDEX (CPI) AS PUBLISHED BY THE PHILIPPINE STATISTICS AUTHORITY. XXX"

Sec. 11. Separability Clause. - If any provision of part hereof is held invalid or

unconstitutional, the remainder of the law or the provision or part not otherwise affected shall remain in full force and effect.

Sec. 12. Repealing Clause. - Any law, presidential decree or issuance, executive

order, letter of instruction, rule or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

Sec. 13. Implementing Rules and Regulations. - The DOE and ERC shall, in

consultation with relevant government agencies and all stakeholders, promulgate the

Implementing Rules and Regulation (IRR) of the Act within six (6) months from the effectivity of this Act.

Sec. 14. Effectivity. - This Act shall take effect fifteen (15) days after its

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