Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House BILL No. 2427

INTRODUCED BY REPRESENTATIVE ALFRED VARGAS

EXPLANATORY NOTE

‘The enactment of Republic Act 9136 carried with it the unbundling of the power sector.
Generation, transmission, distribution, and supply were privatized. Nevertheless,
distribution and transmission were declared public utilities, The regulation, which
includes performance, recoverable costs, and allowable margins, fell upon the Energy
Regulatory Commission (ERC)

ERC. As the regulator, has a definitive role in safeguarding the interest of the public. As
such, its governance structure should foster independence, transparency, and
accountability. An evaluation of ERC’s governance structure using best practice principles
for regulatory policy and even the country’s Code of Corporate Governance for Publicly
Listed Companies shows areas for improvement. An example is the separation of the
Chairperson and Chief Executive Officer functions, which is necessary to “foster an
appropriate balance of power, increased accountability, and better capacity for
independent decision-making.”

It is in this light that this measure is proposed. This bill aims to enhance the existing
governance structure of the ERC by providing (1) additional qualifications and
requirements for ERC Commissioners to ensure board diversity; (2) prohibitions and
disqualifications for ERC Commissioners ‘and their relatives to prevent conflicts of
interest: (3) the separation of the Chairperson and CEO functions to assure a balance of
power, (4) defined duties and responsibilities of the Chairperson, the Commission, and
the Executive Director to increase individual and board accountability; (5) open meetings
during deliberations of the Commission to guarantee public transparency: (6) access 10
information to enhance knowledge and education on regulatory matters effecting public
welfare; and (7) liabilities for violation of, among others, open meeting and access to
information provisions

OECD (2012) recommends that countries “develop a consistent policy covering the role
and functions of regulatory agencies in order to provide greater confidence that regulatory
decisions are made on an objective, impartial, and consistent basis, without conflict of
interest, bias or improper influence.” If is the hope of the author that these objectives be
fulfilled with the enactment of this bill into law. Thus, the immediate passage of this
measure is sought



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO._2427

INTRODUCED BY REPRESENTATIVE ALFRED VARGAS

AN ACT
ENHANCING THE GOVERNANCE STRUCTURE OF THE ENERGY
REGULATORY COMMISSION

Be t enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

CHAPTER I
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the “Energy Regulatory
Commission Governance Act of 2019.”

SECTION 2. Declaration of Policy. _ The State recognizes the significant role of the
Energy Regulatory Commission in ensuring transparent and reasonable prices of electricity
in a regime of free and fair competition and full public accountability to achieve greater
operational and economic efficiency. Likewise, public interest demands the protection of
consumers as they are affected by the rates and services of electric utilities and other
providers of electric power. Towards this end, the State shall.

a) Establish a strong, independent, transparent, and accountable regulatory body:
and

b) Institutionalize a system to ensure the efficient and effective performance of
the functions and mandates of the regulatory body to enhance competitiveness
in the electric power industry.

SECTION 3. Scope. ~ This Act shall enhance the existing governance mechanisms of the
Energy Regulatory Commission to foster independence, transparency, and accountability

SECTION 4. Definition of Terms. — As used in this Act, the following words or terms
shall have the following meaning, unless provided otherwise:

a) “Career Executive Service Board” refers to the governing body of the Career
Executive Service (CES) created under Presidential Decree No. 1 Series of
1972,


b) “Career Executive Service Eligibility” refers to the eligibility conferred to a
Person who passes the four-stage CES Eligibility Examination process and
meets the other requirements prescribed by the Career Executive Service
Board;

c) “Career Executive Service Officer” refers to a person with CES eligibility
appointed by the President to a CES rank upon the recommendation by the
Career Executive Service Board:

4) “Commission” refers to the decision-making body of the Energy Regulatory
Commission under Republic Act 9136 composed of one (1) Chairperson and
four (4) Commissioners;

©) “Consumer” refers to all captive and contestable customers who buy electricity
either from a distribution utility, a retail electricity supplier, or a generation
company;

f) “Deliberation” refers to a communication between or among members of the
Commission in a meeting: Provided, That a quorum exists;

8) “Electric Power Industry Participant” refers to any person or entity engaged in

the generation, transmission, distribution, or supply of electricity;

h

“Energy Regulatory Commission” refers to the regulatory agency created under
Republic Act No. 9136;

“Joint Congressional Power Commission” refers to the Commission created
under Republic Act No. 9136;

Jj) “Key ERC Personne!” refers to employees who hold executive or managerial

Positions in the ERC.

k

“Meeting” refers to a deliberation of the Commission with Tespect to any case,
issue, or matter within its jurisdiction; and

“Public Hearing” refers to an official proceeding of a government agency
during which the public is accorded the right to express its position on the
subject matter at hand.

CHAPTER IL
COMPOSITION OF THE COMMISSION

SECTION 5. The Commission. — The Commission shall be the sole governing body of
the ERC, and shall formulate its policies and direct its affairs

All executive functions of the ERC shall rest on the Commission: Provided, That
such executive functions shall be limited to the duties and responsibilities enumerated in
Section 11 of this Act.


SECTION 6, Qualifications. — All members of the Commission shall be:
a) Natural-born citizens and residents of the Philippines;
b) At least thirty-five (35) years of age:
©) Of good moral character;
4) Of recognized probity and independence; and
©) Of distinguished competence in any of the following fields: energy, law,
economics, finance, commerce, engineering, or other ‘experience relevant to the
energy sector with at least ten (10) years of active practice in their respective
fields of expertise
No member shall have been a candidate for any elective national or local office
in the immediate preceding elections, whether regular or special: Provided further, That
‘one (1) shall be a lawyer, one (1) shall be an ‘economist, one (1) shall be an engineer, and

one (1) shall be a certified public accountant or have a background in finance.

SECTION 7. Requirements. ~ The members of the Commission shall, upon assumption
of office:

a) Publicly disclose any employment, consultancy, or any connection with, and
any pecuniary interest in an Electric Power Industry Participant:

b

Publicly disclose if his or her spouse, partner, and any relative by consanguinity
or affinity within the fourth civil degree is employed or has a consultancy or
any connection with, or has any pecuniary interest in an Electric Power Industry
Participant;

©

Divest through sale or legal disposition any all interests in an Electric Power
Industry Participant; and

d) Terminate employment or consultancy with any Electric Power Industry
Participant.

SECTION 8. Prohibited Acts. — The members of the Commission, within the duration of
their term, are prohibited from

a) Taking up any employment or consultancy arrangement with any Electric
Power Industry Participant,

b) Holding any connection to and any pecuniary interest in an Electric Power
Industry Participant,

©) Holding any other office or employment; and


d) Directly or indirectly practicing any profession, participating in any business,
or be financially interested in any contract with, or any franchise, or special
privileges granted by the goverment or any subdivision, agency, or
instrumentality thereof, including government-owned and controlled
corporations or their subsidiaries.

‘The members of the Commission, after the cessation of their service, are
prohibited from

) Running for office in the election immediately succeeding their cessation
from office; and

b) Personally appearing or practicing as counsel or agent on any matter
Pending before the Commission for two (2) years following the cessation
of their service

Any spouse, partner, and relative by consanguinity or affinity within the fourth
civil degree of the members of the Commission are prohibited from:

a) Taking up any employment or consultancy arrangement with an Electric Power
Industry Participant during the incumbency of the member of the Commission
to whom he or she is related to;

b) Holding any connection to and Pecuniary interest in any Electric Power
Industry Participant during the incumbency of the member of the Commission
to whom he or she is related to;

©) Appearing as counsel or agent or any matter pending before the Commission

or transacting business directly or indirectly therein during the incumbency of
the member of the Commission to whom he or she is related to, and within two
(2) years from cessation of their service

SECTION 9. The Chairperson. ~ The Chairperson shall be from the fields of energy,
aw, economics, finance, commerce, or engineering with at least ten (10) years of
experience in energy and/or public utility regulation: Provided, That the qualifications and
requirements in Sections 6 and 7 of this Act are complied with

SECTION 10. Duties and Responsibilities of the Chairperson. — The Chairperson shall.
a) Provide leadership direction for the Commission in matters such as but not
limited to development and determination of strategies and policies in order to
effectively comply with its mandate under Republic Act 9136;

b) Ascertain that the strategies and policies agreed upon by the Commission are
effectively implemented by the Executive Director:

©) Promote collaborative relationships and open communication between and
among members of the Commission;


4) Set, in consultation with other members of the Commission, the Executive
Director, and the Secretariat, the Commission's meeting schedule and agenda
to take full account of the important issues facing the Commission and the
concerns of management, and ensure that adequate time is available for
thorough discussion of each;

¢)

Ensure that the members of the Commission undergo capacity building
Programs to continuously enhance technical competence, are properly briefed
on issues pending before the Commission, and receive, in a timely manner,
adequate, accurate, clear, complete, and reliable information to fulfill their
duties,

f) Preside over meeting of the Commission; Provided, That the Chairperson has
the right to vote on matters pending before the Commission,

8) Ascertain that all key and appropriate issues are discussed, deliberated upon,
and resolved by the Commission in a timely manner:

h

Create an environment that allows constructive discourse during open
meetings, executive sessions, and public hearings;

1) Ensure that the Commission’s decisions are in furtherance of its mandate under
Republic Act 9136;

Secure that the Commission avoids acts which unduly influence, impede, or
hamper the Executive Director or any ERC employee from effectively fulfilling
his or her duties and responsibilities; and

k

Establish good corporate governance practices and procedures and promote the
highest standards of independence, transparency, integrity, and probity,

SECTION 11. Duties and Responsibilities of the Members of the Commission, — In
addition to the functions enumerated in Republic Act 9136, the members of the
Commission shall.

4) Regularly attend and actively participate in the meetings of the Commission
where any case, issue, or matter within its jurisdiction is under consideration;

5) Recommend to the Chairperson the inclusion in the agenda of any case, issue,
or matter deemed appropriate in the performance of the Commission's
functions,

c) Be properly informed about and thoroughly analyze cases, issues, and matters
pending before the Commission:

4) Take part in continuous education and capacity building programs of the
Commission to enhance technical competence;


S

Abstain from acts which unduly influence, impede, or hamper the Executive
Director or any ERC employee from effectively fulfilling his or her duties and
responsibilities;

f) Appoint the Executive Director of the ERC. Provided, That the requirements,
Prohibited acts, qualifications, and duties and responsibilities stated in Sections
7, 8, 12, and 13 of this Act are complied with;

Act on the selection and appointment of Key ERC Personnel: Provided, That
the selection process for Key ERC Personnel must be in accordance with ERC’s
Enhanced Merit Selection Plan and/or other plans related to personnel selection
duly approved by the Commission;

8

h

Review and act on the endorsement of the proposed ERC budget: Provide, That
such endorsement must come from the Executive Director and must be
substantiated with supporting documents;

Initiate, motu poprio or upon formal complaint, investigations against the
Executive Director and act upon these investigations: Provided, That such
investigation is without prejudice to the filing of administrative or criminal
cases against the Executive Director; and

J) Perform in good faith and to the best of its ability, the functions stated in
Republic Act 9136 and the duties and responsibilities specified in this Act.

CHAPTER IL
ERC OPERATIONS

SECTION 12. The Executive Director. ~ The Commission, acting collectively, shall
appoint an Executive Director who shalll act as the Chief Executive Officer of ERC until
resignation, retirement, or unless terminated earlier for cause. The Executive Director who
shall be a Career Executive Service Officer of the ERC, shall have relevant experience in
any of the fields of law, economics, commerce, management, finance, or engineering for
at least ten (10) years, and shall be subject to the same requirements and prohibitions as
indicated in Sections 7 and 8 of this Act

When an Executive Director who has rendered at least ten (10) years of service in
Such capacity retires, he or she shall receive during the duration of his or her natural life,
retirement benefits equivalent to his or her last salary plus representation and other
allowances.

SECTION 13. Duties and Responsibilities of the Executive Director. - The duties and
responsibilities of the Executive Director shall include but shall ‘not be limited to:

4) Developing and proposing, for the Commission's approval, the
operationalization of the strategies and policies agreed upon by the
Commission,


b

Effectively executing the approved operationalization of the strategies and
policies agreed upon by the Commission:

©) Leading the management of the daily operations of ERC in accordance with the
plans and within the budget approved by the Commission;

d

Assuming full responsibility for the overall supervision and control of all
division, units, and services of the ERC,

¢

Assigning to each division, unit, and service of the ERC such duties that are
considered necessary or expedient,

f) Coordinating the workings of the divisions, units, and services of the ERC;

Establishing a mechanism for capacity building for all employees of the ERC
{0 continuously enhance technical competence: Provided, ‘That such
mechanism will based on the principle of meritocracy;

8

h

Ensuring compliance with the ERC’s Enhanced Merit Selection Plan and/or
other plans related to personnel selection duly approved by the Commission
when it comes to the hiring and promotion of employees;

Leading the management to ensure effective working relationships with the
Commission by regularly communicating with the Chairperson to review key
developments, issues, opportunities, and concerns;

J) Ensuring that the management gives priority to providing documents and
reports which contain relevant, accurate, timely, and clear information

necessary for the Commission to fulfill its duties;

k

Maintaining regular dialogue with the Commission while ensuring that the
Commission, especially the Chairperson, is alerted to forthcoming ‘complex,
contentious, sensitive, or strategic issues facing the ERC;

Advising the Commission on any matter referred to the Executive Director;

m) Managing the affairs of the ERC in accordance with good corporate governance
Practices and procedures while promoting the highest standards of
independence, transparency, integrity, and probity;

n) Initiating investigations and recommending administrative sanctions against
erring employees, without Prejudice to the filing of any criminal action against
the concerned employee:

©) Regularly submitting to the Commission updates on the operations of ERC; and

P) Performing such other duties as the Commission may assign


All decisions of the Executive Director involving budgeting and disbursement
of funds shall be subject to the approval of the Commission

CHAPTER IV
TRANSPARENCY AND ACCOUNTABILITY

SECTION 14. Open Meeting. ~ All meetings of the Commission shall be open to the
Public: Provided, That the public may only participate during public hearings: Provided
further, That a live web streaming or any related technology of the open meeting shall be
Posted: Provided finally, That the transcript of stenographic notes and minutes of the open
‘meeting shall be made available to the public, whether on the website or otherwise, within
one (1) week from the date of the open meeting.

The Commission, upon a majority vote, may decide to meet in an executive
session: Provided, That before going into an executive session, the Commission must
Convene in an open meeting, identify the reason for the executive session while stating all
the subjects that may be revealed without compromising the purpose for which the
executive session was called, declare whether the Commission will reconvene in an open
‘meeting at the end of the executive session, and take a roll call vote to enter into executive
session.

Executive sessions may be called for the following reasons

8) To discuss the discipline or dismissal of or complaints or charges brought against
a public officer, employee, or staff of ERC: and

b) To discuss trade secrets, confidential, competitively-sensitive, or other Proprietary
information.

SECTION IS. Public Notice of Open Meeting. ~ The Commission shall provide the
Public with notice ofits meeting and the agenda at least seven (7) working days before the
Scheduled date of the meeting: Provided, That for emergency meetings, the notice may be
Posted within a reasonable time prior to the meeting: Provided further, That public notices
shall be posted in a manner easily accessible to the public such as but not limited to actual
and web posting

SECTION 16. Orders, Decisions, and Resolutions. — All orders, decisions, and
resolutions shal undergo deliberations and once approved by the required number of votes
during open meetings provided a quorum is present, shall forthwith be promulgated within
thirty (30) days from date of the open meeting and published online in accordance with
Section 18 hereof.


SECTION 17. Support Desk. ~ a support desk shall be made available to the public
Which will supply 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 charges to Consumers: Provided, That the matter shall not be confidential
information.

A new office may be created for this Support Desk should the Commission deem
it necessary.

SECTION 18. Online Publication. — All petitions, applications, and reportorial
requirements of Electric Power Industry Participants, including all annexes thereto, except
for those considered as confidential information, as well as orders, decisions, and
resolutions of the Commission, shall be posted on the ERC website within five (5) days
from submission in the case of Petitions, applications, and reportorial requirements, or
promulgation in the case of orders, decisions, and resolutions.

SECTION 19, Access to Information. — Every Consumer has a right to information and
shall, on request, be given access to any information of public concern under the control
of the Commission: Provided, That the access to information shall not be granted if,

a) The information is considered confidential information under the ERC Rules
and 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;

°)

‘The information requested consists of drafts of orders, resolutions, decisions,
oF memoranda of the Commission in the exercise of its regulatory function,
and

4) The information requested pertains to trade secrets, competitively-sensitive, or
other proprietary information, whenever the revelation thereof would prejudice
the interests of @ natural or juridical person in trade, industrial, financial, or
‘commercial competition

SECTION 20. Procedure or Access. - Any person who desires to obtain information
shall submit, free of charge, a request to the Commission personally, by mail. or through
clectronic means. Within fifteen (15) working days from the receipt thereof or as soon ae
practicable, the Commission shall comply with the request: Provided, That the period may
be extended ifa fortuitous event occurred, the information requested requires » search of
the Commission's field offices or an examination of voluminous records, or other
analogous cases.

SECTION 21. Access and Processing Fees. - The Commission may charge a reasonable
fee which shall in no case exceed the actual cost of reproduction, copying, or transcription
of the information requested: Provided, That the Commission may waive the fees
Whenever it is satisfied that the person who requested is indigent or that the cost of
reproduction is negligible.


SECTION 22. Exemption from Compliance. — The Commission is excused from
complying with a subsequent identical or substantially similar request from the same
infonaung Party: Provided, That is has previously complied with a similar request for
information unless a reasonable imterval has lapsed between compliance with the previous
Fequest and the making of the current request.

SECTION 23. Administrative Offenses and Penalties. - Any ERC official or employee
Iwho refuses to comply with Section 14 of this Act shall be suspended from service ray six
(6) months and one (1) day to one (1) year without pay on the first offense, and shall be
dismissed from service and be perpetually disqualified from re-employment in any
government agency or instrumentality on the second offense

Any ERC official or employee who refuses to comply with, or fails to perform the
acts required within the specified period of time in Sections 15, 16, and 18. shall be

days on the second offense, and shall be dismissed from service and be perpetually
disqualified from re-employment in any government agency or instrumentality on the third
offense

Any ERC official or employee who refuses to comply with, or fails to act ona
Fequest for information pursuant to Section 19 and 20 of this Act shall be suspended from
Service for six (6) months and one (1) day to one (1) year without pay on the first offense,
and shall be dismissed from service and be perpetually disqualified from re-employment
in any government agency or instrumentality on the second offense.

SECTION 24. Criminal Offenses and Penalties. ~ The penalty of imprisonment of not
less than one (1) month but not more than six (6) months and a fine ranging from ten
thousand pesos (P10,000.00) to one hundred thousand Pesos (P100,000.00) shall be
imposed upon any ERC official or employee who:

1) Falsely denies or conceals the existence of information that is a proper subject
for disclosure under Section 19 of this Act:

2) Destroys, or causes to be destroyed, information and/or documents being
requested that is a proper subject of disclosure under Section 19 under this Act
for the purposes of frustrating the requesting Party’s access thereto;

3

Divulges or release information covered by confidentiality under Sections 14
and 19 of this Act;

4

Divulges or releases information that is altered, tampered, or modified to the
extent that the released information materially differs from the original
contents of the document: Provided, That altering or modifying a document
for the purpose of severing an exempt information from non-exempt
information in a single document shall not be punishable under this Section.


{Fhe violation committed inthis Act is induced by and/or assisted by a private
individual or corporation, partnership, or any kind of judicial entity, the penalty provided
herein shall be imposed on its executive officer and/or other officials responsible therefor
Provided, That they shall suffer, in addition to the penalties provided herein, the automatic
revocation of their license to operate.

CHAPTER IV
GENERAL PROVISIONS

SECTION 25, Transitory Provision. — The current members of the Commission shall
Continue to serve in such capacity until the completion of their term.

‘The qualifications, requirements, and prohibitions stated in Sections 6, 7, and 8 of
this Act shall apply to new members of the Commission

‘The current Chairperson shall immediately divest himself of his role and powers
as the Chief Executive Officer of the Commission upon the effectivity of this Act

The current Executive Director shall assume the duties and responsibilities laid out
in Section 13 of this Act upon the effectivity of this Act; Provided. That upon such
pecumption, the current Executive Director shall immediately comply with the
Tpduirements and prohibitions stated in Sections7 and 8 this Act: Provided further, ‘That
the current Executive Director shall serve as such until his resignation, retirement or
termination for cause.

SECTION 26, Oversight Committee. — Upon the effectivity of this Act, the JCPC
Sstablished under Republic Act No. 9136 or the Electric Power Industry Reform Act of
2001 shall exercise oversight powers over the implementation of this Act

SECTION 27. Separability Clause. — If for any reason, any provision of this Act is
declared unconstitutional or invalid, the other parts or Provisions hereof which are not
affected thereby shall continue to be in full force and in effect

SECTION 28, Repealing Clause. — Ail laws, decrees, orders, rules and regulations or
parts thereof which are inconsistent with or contrary to the provisions of this Act arc
hereby repealed, amended or modified accordingly,

SECTION 29, Effectivity. — This Act shall take effect fifteen (15) days after its
Publication in at least two (2) national newspapers of, ‘general circulation.

Approved,