SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
FIRST REGULAR SESSION 
SENATE 
SENATE BILL NO. 
222 
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INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
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EXPLANATORY NOTE 
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The Philippines is endowed with energy resources that are relatively 
abundant. Moreover, the 1987 Philippine Constitution promises that the 
development of these energy resources shall inure to the benefit of the Filipino 
people. Sadly, the promise remained as such - a promise - until substantial 
reforms began recently when this Congress enacted Republic Act 9513, 
otherwise known as the Renewable Energy Act of 2008. 
However, much is left to be desired with respect to other indigenous 
sources of energy. Government impositions associated with making available 
such resources for electricity generation are more burdensome than those 
applied on imported fuels such that rates of electricity generated using 
indigenous energy resources are rendered artificially high. 
Take for example, as of May 2010, government royalties on indigenous 
natural gas was around P L46/kWh, which was 5 to 8 times more than the 
taxes imposed on imported fuels such as coal, oil and liquefied natural gas. If 
taxes and royalties were to be removed on both indigenous and imported fuels, 
the rates of electricity generated using indigenous energy resources would be 
substantially lower. Moreover, between indigenous petroleum which is 
intensively used for generating electricity and other local extractive industries 
such as mining, the former is being subjected to royalties of about 60% while 
the latter enjoys a much lower tax rate of 3%. 
Thus, instead of enjoying electricity rates, the Filipino is effectively being 
penalized for utilizing its own energy resources. In addition, because of 
disparities, the country's energy self-sufficiency is being held on tight leash of 
its own making - a regrettable stance in the face of volatile energy prices in the 
international markets. 
These policy anomalies are not present in our Asian neighbors similarly 
endowed with natural resources such as Thailand, Indonesia, Malaysia and 
Vietnam. With royalties/taxes on oil and gas in these countries,are comparable 
with those' in our country, domestic use of these indigenous natural resources 
are affordd,d substantially lower prices unlike in our case. 
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It's about time that the Filipino people should fully benefit from its 
energy resources by removing disparities in the tax/royalty treatment of 
indigenous resources not covered by the Renewable Energy Act of 2008. This 
will directly result in reducing the commodity prices of these energy resources 
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as they are utilized for electricity generation, which reduction will translate into 
lower electricity rates to the Filipino consumers. In the Meralco franchise area 
alone, a reduction of government royalties will mean a reduction of electricity 
rates. 
Further, a reduction of the natural gas royalties to lower the cost of 
electricity to industrial loads would induce economic output growth on account 
of greater competitiveness and productivity of Philippine industries. Needless to 
say, the ordinary Filipino, especially the marginal end-user of electricity, has 
long been in need of respite from electricity rates. 
In consideration of the foregoing, this bill seeks to lower the government 
share in the exploration, development and production of indigenous energy 
resources other than those already covered by the Renewable Energy Act of 
2008. It is sought to ultimately lower electricity rates to the Filipino consumers 
in a significant and sustainable manner. 
Thus, passage of this bill is earnestly sought. 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
FIRST REGULAR SESSION 
SENATE 
SENATE BILL NO. 
222 
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INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
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AN ACT D~RECTING THE REDUCTION OF ELECTRICITY ·RATES THROUGH 
THE UTiLIZATION OF THE GOVERNMENT SHARE IN THE DISCOVERY, 
EXPLORATION, DEVELOPMENT AND/OR PRODUCTION OF INDIGENOUS 
SOURCES OF ENERGY FOR THE PURPOSE OF LOWERING THE COST OF 
ELECTRICITY 
Be it enacted by- the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. This Act shall be known as the "Electricity Rate Reduction Act 
of 2013". 
SECTION 2. Declaration of Policy. - It is hereby the policy of the State that, 
to the end-users of electricity: (i) the government impositions relating to 
indigenous sources of energy shall be effectively at par with or more favorable 
than analogous impositions on imported fuels in keeping with the 
Constitutional precept of preserving the benefits of the national patrimony to 
the Filipino people; (ii) the competitiveness of indigenous sources of energy vis-
a-vis imported fuels shall be ensured thereby increasing the country's energy 
self-sufficiency; and (iii) the true and lower cost of electricity generated from 
indigenous sources of energy shall be reflected in view of the economic goal 
under the Constitution of increasing the amount of goods and services 
produced by the nation for the benefit of the people. 
SECTION 3. Definition of Terms - As used in this Act: 
(a) 
"Department of Energy or DOE" refers to the government agency 
created pursuant to Republic Act No. 7638; 
(b) 
"Energy Ragulatory Commission or Commission" refers to the 
independent quasi-judicial regulatory agency created pursuant to 
Republic Act No. 9136; 
(c) 
"Government Share" refers to the amount due the national 
government and local government units from the discovery, 
exploration, development and/ or production of indigenous energy 
resources under new and existing service contracts pursuant to 
relevant laws; 
(d) 
"Indigenous Sources of Energy" refers to energy sources that are 
native to the Philippines except those that are subject or covered 
by Republic Act No. 9513 or the Renewable Energy Act of 2008; 


(e) 
"Net Proceeds from the Sale of the Energy Resource" refers to the 
difference between the gross proceeds from the sale of such energy 
resource and the sum of expenses allowed to be recovered under 
the relevant service contract. 
SECTION 4. Government Share - Notwithstanding any law to the contrary, the 
Government share shall henceforth be utilized and applied to reduce the 
commodity price of the indigenous energy resources sold by a service 
contractor for generation of electricity such that the Government Share is 
effectively reduced, as it is hereby reduced, to three percent (3%) of the net 
proceeds from the sale of the energy resource over the life of the relevant 
service contract. 
The commodity price reduction under the preceding section shall be fully 
reflected as a reduction in the price of electricity produced by generation 
companies utilizing the indigenous energy resource. The commodity price 
reduction shall be subject to annual adjustment or reconciliation to ensure 
that such reduction shall be revenue-neutral to the service contractor. 
SECTION 5. Utilization of the Reduction in the Electricit:y Price - In order 
that end-users will fully benefit from the reduction in the electricity price of any 
generation company utilizing the indigenous energy resource: 
(a) Any distribution utility obtaining supply from said generation company 
shall pass on the full reduction in electricity price to its end-user 
customers, thereby lowering the retail rates of electricity; and 
(b) Any end-user which said generation-company may serve during the 
implementation of retail competition and open access as provided for 
under Section 31 of Republic Act No. 9139 shall also be included 
among those to which the reduction in electricity price shall be passed 
on. 
The Commission shall determine the reduction in electricity rates to end-
users across end-user classifications, giving priority to efficient end-users such 
as industrial loads for maximum multiplier effect on the national economy and 
marginalized end-users for more meaningful benefits. 
SECTION 6. Implementing Rules and Regulations - Within three (3) months 
from the effectivity of this Act, the Department of Energy, in consultation with 
the Commlssion, shall issue the rules and regulations implementing the same: 
Provided, That the provisions on the utilization of the Government Share for the 
reduction of the commodity price of the indigenous energy shall take effect 
immediately. 
For ease .of implementation, the Department of Energy shall pursue 
amendments to the relevant existing service contracts to provide for the 
reduced Government Share under Section 4 above: Provided, That the rights of 
the concerned service contractors shall not be impaired thereby; and Provided, 
further, That the Department of Energy shall ensure that reduction of 
Government Share shall be fully reflected in the reduction of electricity rates to 
end-users in accordance with Sections 4, 5 and 6 herein. In any event, the 
implementation of this Act shall not be dependent upon such amendments 
being adopted by the parties. 
SECTION 7. Separabilit:y Clause - If for any reason, any provision of this Act 
or any part thereof shall be held unconstitutional or invalid, the other parts or 


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provisions of this Act, which are not affected thereby, shall remain in force and 
effect. 
SECTION 8. Repealing Clause -
All laws, decrees, orders, rules and 
regulations including Presidential Decree No. 87, or parts thereof, which are 
inconsistent with any provisions of this Act are hereby repealed, amended or 
modified accordingly. 
SECTION 9. Effectivity Clause - This Act shall take effect fifteen (15) days 
after its complete publication in at least two newspapers of general circulation. 
Approved,