SEVENTEENTH CONGRESS OF THE ) =
REPUBLIC OF THE PHILIPPINES ) f 3
Third Regular Session ) ce Otter ol spe Beecetarp

SELIG 18 AUG 28 P207

COMMITTEE REPORT No. 426 F
Submitted by the Committees on Energy and Finance _ AUG 2 8 2018
Re: Senate Bill No. 1950
Recommending its approval in substitution of Senate Bill No. 924

Sponsor: Senator Sherwin T. Gatchalian

MR. PRESIDENT:

The Committee on Energy and the Committee on Finance, to which was referred
Senate Bill No. 924, introduced by Senator Ralph Recto, entitled:

“AN ACT REDUCING ELECTRICITY RATES BY ALLOCATING THE NET
NATIONAL GOVERNMENT SHARE FROM THE MALAMPAYA NATURAL GAS
PROJECT FOR THE PAYMENT OF THE STRANDED CONTRACT COSTS AND
STRANDED DEBTS OF THE NATIONAL POWER CORPORATION”

have considered the same and have the honor to report it back to the Senate
with the recommendation that the attached bill, Senate Bill No.
entitled

“AN ACT REDUCING ELECTRICITY RATES BY ALLOCATING THE NET
NATIONAL GOVERNMENT SHARE FROM THE MALAMPAYA NATURAL GAS
PROJECT FOR THE PAYMENT OF THE STRANDED CONTRACT COSTS AND
STRANDED DEBTS OF THE NATIONAL POWER CORPORATION”

be approved in substitution of Senate Bill No. 924, with Senators Recto and
Gatchalian as authors thereof.



Respectfully submitted

LOREN B. LEGARDA
Committee on Finance;
Member, Committee on Energy

VICE CHAIRPERSONS:

v J ( de Ayn”

ICHARD J. GORDON
Committee on Energy;
lember, Committee on Finance

GREGORIO B. HONASAN II
Committee on Energy;
Committee on Finance

MARIA LOU: “Nancy” S. BINAY
Committee on Energy;
Member, Committee on Finance

PAOLO AQUINO “Bam” BENIGNO IV
Committee on Finance;
Member, Committee on Energy

CYNTHIA A. VILLAR
Committee on Finance;
Member, Committee on Energy

“SONNY M. ANGARA

Committee on Finance

PANFILO M. LACSON
Committee on Finance

JOSEPH VICTOR G. EJERCITO
Committee on Finance;
Member, Committee on Energy

MEMBERS:

GRACE POE
Committee on Energy;
Committee

EMMANU!
Committee on Energy

JOEL VILLANUEVA
Committee on Energy;
Committee on Finance

”’D. PACQUIAO ANTONIO “Sonny” F. TRILLANES IV
Committee on Energy;
Committee on Finance



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F “Chis” G, BSCUDEO FRANCIS “Kiko” PANGILINAN
Committee on Energy; Committee on Energy;
Committee on Finance Committee on Finance

LEILA M. DE LIMA RISK HOWfIvEROS!
Committee on Energy AN: Came on Finance,
wt May iuleypell ake

AQUILINO “KOKO” PIMENTEL II |
_Committee on Finance

EX-OFFICIO MEMBERS:

EL “Migz” F. ZUBIRI
Majority Floor Leader

IN M. DRILON
ity Floor Leader

RALPH.
Presidént Pro-Tempore

HON. VICENTE C. SOTTO III
President
Senate of the Philippines


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18

Seventeenth Congress of the )
Republic of the Philippines ) hi
Third Regular Session ) 7.
SENATE
"18 AUG 28 P2907
s.B. No. 1950

(In Substitution of Senate Bill No. 924)
RECE
Prepared and submitted jointly by the Committees on Energy and mall

with Senators Recto and Gatchalian, as authors thereof

AN ACT
REDUCING ELECTRICITY RATES BY ALLOCATING THE NET NATIONAL
GOVERNMENT SHARE FROM THE MALAMPAYA NATURAL GAS PROJECT
FOR THE PAYMENT OF THE STRANDED CONTRACT COSTS AND
STRANDED DEBTS OF THE NATIONAL POWER CORPORATION

Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled:

Section 1. Short Title. - This Act shall be known as the “Murang Kuryente
Act”.

Section 2. Declaration of Policy. - It is hereby declared the policy of the State
to protect public interest by ensuring the provision of reliable, secure, and
affordable supply of electric power to consumers. Towards this end, the State
shall implement policies and programs to ensure transparent and reasonable
prices of electricity to consumers by minimizing the universal charges for

stranded contract costs and stranded debts.

Section 3. Definition of Terms. - For purposes of this Act, the following

terms shall be defined as stated below:

a) Energy Regulatory Board (ERB) ~ refers to the independent, quasi-
judicial regulatory body created under Executive Order No. 172 “Creating
the Energy Regulatory Board”;

b) Energy Regulatory Commission (ERC) ~ refers to the independent
quasi-judicial body created under Republic Act No. 9136 otherwise
known as the “Electric Power Industry Reform Act of 2001”;



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c) Department of Budget and Management (DBM) — refers to the
government agency created pursuant to Title XVII, Chapter 1, Section 3
of Executive Order No. 292 or the “Administrative Code of 1987”;

d) Department of Energy (DOE) - refers to the government agency created
pursuant to Republic Act No. 7638 or the “Department of Energy Act of
1992”, and whose functions were expanded by Republic Act No. 9136 or
the “Electric Power Industry Reform Act of 2001”;

) Department of Finance (DOF) ~ refers to the government agency created
pursuant to Title II, Chapter 1, Section 1 of Executive Order No. 292 or
the “Administrative Code of 1987”;

f) Joint Congressional Power Commission (JCPC) - refers to the
congressional commission constituted under Section 62 of Republic Act
No. 9136 or the “Electric Power Industry Reform Act of 2001”;

g) Malampaya Fund - refers to the existing and future net government
share from the net production proceeds of the Malampaya Natural Gas
Project pursuant to Presidential Decree No. 87 or the “Oil Exploration
and Development Act of 1972” and Service Contract 38. This
government share forms part of a Special Fund used to finance energy
resource development and exploitation programs pursuant to
Presidential Decree No. 910 “Creating an Energy Development Board,
Defining Its Powers and Functions, Providing Funds, Therefor, and For
Other Purposes”;

h) Malampaya Natural Gas Project ~ refers to Service Contract 38 in

offshore Northwest Palawan;

National Power Corporation (NPC) — refers to the government
corporation created under Republic Act No. 6395 otherwise known as
“An Act Revising the Charter of the National Power Corporation”, as
amended, and whose additional mandate is further set in Republic Act
No. 9136 otherwise known as the “Electric Power Industry Reform Act of
2001”;

j) Net Government Share - refers to the sixty percent (60%) share of the
national government from the net production proceeds of Service
Contract 38 pursuant to Presidential Decree No. 87 or the “Oil
Exploration and Development Act of 1972” after the deductions provided
by Presidential Decree No. 910 “Creating an Energy Development Board,
Defining Its Powers and Functions, Providing Funds, Therefor, and For
Other Purposes”;



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k) Net National Government Share ~ refers to the share of the national
government from the net government share after the deduction from the
net government share of the local government share pursuant to Section
290 of Republic Act No. 7160 otherwise known as the “Local Government
Code of 1991”;

|) Power Sector Assets and Liabilities Management Corporation
(PSALM) — refers to the government corporation created pursuant to
Section 49 of Republic Act No. 9136 otherwise known as the “Electric
Power Industry Reform Act of 2001” which assumed all of NPC’s
obligations and stranded contract costs;

m) Stranded Contract Costs of NPC or Distribution Utility — refer to the
excess of the contracted cost of electricity under eligible independent
power producer contracts over the actual selling price of the contracted
energy output of such contracts in the market. Such contract shall have
been approved by the ERB as of December 31, 2000; and

n) Stranded Debts of NPC - refer to any unpaid financial obligations of the
NPC which have not been liquidated by the proceeds from the sales and
privatization of NPC assets.

Section 4. Use of Malampaya Fund for Payment of Stranded Contract
Costs and Stranded Debt. - All proceeds of the Net National Government
Share from the Malampaya Fund, shall be allocated solely for the payment of
Stranded Contract Costs and Stranded Debts transferred to and assumed by
the PSALM pursuant to Section 49 of Republic Act No. 9136, otherwise known
as the “Electric Power Industry Reform Act of 2001”, including all anticipated
shortfalls in the course of payment of such liabilities after applying the
PSALM's collections from privatization of the NPC’s assets, independent power
producers’ contracts, and proceeds from operations of existing assets: Provided,
That upon final resolution in favor of the National Government of any ongoing
dispute over the Net National Government Share, the amount shall be allocated
solely for the purpose specified in this Act.

The Net National Government Share from the Malampaya Fund shall be
remitted to a Special Trust Fund to be administered by the PSALM: Provided,
That the amounts herein allocated shall be included in the General

Appropriations Act. The DBM shall provide a timely release of the amounts



allocated and appropriated to the PSALM in accordance with its debt and

independent power producer payment schedule.

When the Stranded Contract Costs, Stranded Debts, and anticipated shortfalls
in the course of the payment of such liabilities are fully paid before the
termination of the corporate life of the PSALM, the Net National Government
Share, shall accrue back to the Special Fund used to finance energy resource
development and exploitation programs created under Presidential Decree No.
910 “Creating an Energy Development Board, Defining Its Powers and
Functions, Providing Funds, Therefor, and For Other Purposes’.

Section 5. Regular Reports. - The PSALM shall submit an annual projected
cash flow statement and actual cash flow statement of the Stranded Contract
Costs, Stranded Debts, and anticipated shortfalls as well as its debt payment
and independent power producer contract payment schedule to the DOE, ERC,
DOF, DBM, and the JCPC; Provided, That the submission of the annual
projected cash flow statement shall be on or before June 30 of the preceding
year and that of the annual actual cash flow statement shall be on or before
June 30 of the succeeding year. The PSALM shall regularly coordinate with the
DOE, DOF, and the DBM to ensure consistent record-keeping of remittances to
and disbursements from the Malampaya Fund and the Special Trust Fund
created under this Act. The PSALM shall make all reports available to the
public through its website.

Section 6. Congressional Oversight. - Upon the effectivity of this Act, the

JCPC shall exercise oversight powers over its implementation.

Section 7. Implementing Rules and Regulations. - Within sixty (60) days
from the effectivity of this Act, the DOF, in consultation with DOE, DBM, and
the PSALM shall provide the necessary rules and regulations for the proper
disposition of the said funds and the effective implementation of this Act.

Section 8. Repealing Clause. - All laws, decreed, issuances, rules and
regulations or parts thereof inconsistent with the provisions of this Act are
hereby repealed, amended or modified accordingly.



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Section 9. Effectivity. - This Act shall take effect fifteen (15) days from the
date of publication in the Official gazette or in at least two (2) newspapers of

general circulation.

Approved,