Power Franchise Review Act

Gotten TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL -8 P5:26 First Regular Session SENATE Senate Bill No. 253 Introduced by Senator Erwin Tulfo AN ACT INSTITUTING A PERIODIC REVIEW OF FRANCHISES GRANTED TO POWER DISTRIBUTION UTILITIES AND ELECTRIC COOPERATIVES, PROVIDING GROUNDS FOR THE SUSPENSION, AMENDMENT OR REVOCATION OF FRANCHISES OF NON-PERFORMING ENTITIES, AND FOR OTHER PURPOSES EXPLANATORY NOTE Access to affordable, reliable, and sustainable electricity is indispensable to national development, economic productivity, and the daily lives of Filipino families. The grant of a legislative franchise to power distribution utilities and electric cooperatives is not merely a privilege, but a responsibility to provide the public with reliable, affordable, and efficient electricity services. Under prevailing practice, the usual term for a franchise is twenty-five (25) years, subject to renewal by Congress. Consequently, Congress is only able to formally review the performance of a franchise holder during its application for renewal. The long interval leaves the public with limited opportunities to hold non-performing or abusive electric utilities accountable. During the intervening years, these utilities may have already committed violations, imposed unreasonable rates, failed to provide reliable electricity, or neglected unserved or underserved areas.

While regulatory bodies such as the National Electrification Administration (NEA) and the Energy Regulatory Commission (ERC) conduct their own reviews and evaluations, such findings do not automatically impact the status of the franchise granted by Congress. This disconnect between regulatory review and legislative oversight creates a gap in accountability that leaves consumers vulnerable to poor service, high rates, and operational inefficiency. This bill seeks to close that gap by instituting a periodic franchise review mechanism to be conducted every five (5) years, ensuring that all power distribution utilities and electric cooperatives are held accountable to the Filipino people. The review will focus on affordability, reliability, regulatory compliance, financial viability, and electrification efforts. Should a franchise holder consistently fail to meet these standards, Congress is empowered to suspend, amend, or revoke the franchise accordingly. A non-performing utility that is the sole service provider in an area shall be given a reasonable opportunity to address its deficiencies before any suspension, amendment or revocation of franchise is recommended, ensuring that consumers are not left without power while corrective actions are implemented. Ultimately, this measure affirms that legislative franchises are not permanent entitlements but conditional privileges that must be earned and maintained through consistent, excellent performance, and that such privilege may be revoked if it fails to meet the needs of the Filipino people. In view of the foregoing, approval of this bill is earnestly sought. ERWIN TULFO

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL -8 P5:26 First Regular Session PIE! SENATE Senate Bill No. 253 Introduced by Senator Erwin Tulfo AN ACT INSTITUTING A PERIODIC REVIEW OF FRANCHISES GRANTED TO POWER DISTRIBUTION UTILITIES AND ELECTRIC COOPERATIVES, PROVIDING GROUNDS FOR THE SUSPENSION, AMENDMENT OR REVOCATION OF FRANCHISES OF NON-PERFORMING ENTITIES, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the

"Power Franchise Review Act."

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

5 of the State to ensure that the supply of electricity to the public is affordable, reliable, sustainable, and efficient. The privilege of operating a public utility, such as power distribution, must be exercised with the highest regard for public welfare. Accordingly, franchises granted to power distribution utilities and electric cooperatives shall be subject to periodic performance reviews to ensure continued service to the Filipino people.

SEC. 3. Periodic Franchise Review. - All legislative franchises

granted to power distribution utilities and electric cooperatives shall be

subject to a mandatory performance review every five (5) years from the effectivity of this Act or from the grant or renewal of their franchise, whichever is later. The performance review shall assess the utility's compliance with the following standards: a. Affordability of electricity rates relative to national and regional benchmarks; b. Service reliability and systems loss; c. Customer satisfaction and complaints resolution; d. Operational efficiency, and infrastructure development; e. Compliance with regulatory obligations; f. Support for the integration and promotion of renewable energy; and g. Financial and institutional viability.

SEC. 4. Franchise Review Committee. - The periodic review

under this Act shall be conducted by a Franchise Review Committee (FRC) which shall be composed of: a. The Chairpersons of the Committee on Energy of the Senate and the House of Representatives, respectively, as Co-Chairpersons; b. Secretary of the Department of Energy (DOE); c. Chairperson of the Energy Regulatory Commission (ERC); d. Administrator of the National Electrification Administration (NEA); and e. Two (2) Representatives from consumer advocacy groups.

SEC. 5. Grounds for Suspension, Amendment, or Revocation of

Franchise. - Upon the recommendation of the FRC, Congress may suspend, amend or revoke the franchise of a power distribution utility or electric cooperative on any of the following grounds: a. Unjustified failure to provide affordable electricity in comparison to the national or regional average rates; b. Frequent power interruptions and/or consistent failure to provide reliable electricity services;

c. Gross neglect or repeated violations of regulatory requirements imposed by the DOE, ERC, or NEA; d. Financial mismanagement or operational inefficiency endangering continued operations; e. Failure to meet electrification targets particularly in unserved or underserved areas; or f. Consistently receiving the lowest performance rating from NEA or ERC, as applicable, for at least three (3) consecutive years.

SEC. 6. Procedure for Franchise Suspension, Amendment, or

12 Revocation. - The findings and recommendations of the FRC shall be transmitted to both houses of Congress. Congress shall have the sole authority to suspend, amend, or revoke a franchise through legislation, following due process, including public hearings involving affected consumers, stakeholders, and the concerned utility: Provided, that in areas served by only one power distribution utility or electric cooperative, the concerned power utility or electric cooperative shall be afforded reasonable opportunity to remedy its deficiencies before Congress takes action on the FRC recommendation. In such cases, the FRC shall develop a remedial plan with clear timelines and deliverables to guide compliance.

SEC. 7. Separability Clause. - If any part or provision of this Act

is held invalid or unconstitutional, the other parts or provisions thereof not so declared shall remain valid and effective.

SEC. 8. Repealing Clause. - All other laws, decrees, orders,

issuances, rules, and regulations or parts thereof, which are inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 9. Effectivity. - This Act shall take effect within fifteen (15)

days following its complete publication in the Official Gazette or in two (2) newspapers of general circulation. Approved,