Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

3676

HOUSE BILL NO,

Introduced by REP. BEN EVARDONE
Lone District, Eastern Samar

EXPLANATORY NOTE

Republic Act 9136, otherwise known as the EPIRA Law, was passed in 2001 to
ensure that reliable and affordable electricity is enjoyed by every consumer in a regime
of fair competition and free enterprise. For this reason, the law mandated the
privatization of the generation and distribution sectors.

After more than a decade of EPIRA experience, Filipinos have yet to see and feel
the promised outcomes of this law. In fact, as many might have rightly observed, what
was being avoided by the law still happened—sky high power rate. Seemingly, the very
purpose upon which EPIRA was enacted has been ignored and defeated.

In the 2011 review on EPIRA by IBON Foundation and other development
organizations, it was found out that power rates have doubled since EPIRA’s
implementation. In that same year, the Philippines was reported to have had the highest.
electricity rates in Asia in 2010, according to a study by Australia-based International
Energy Consultants. Further, more than half of the total generation capacity, the entire
transmission system and a large part of the distribution are now controlled by a few
large companies, such that after privatization, only three groups control 52 percent of
generation capacity.

Now, under EPIRA, only a few corporations dominate in both the generation and
distribution sectors, to the detriment of the Filipino power consumers. ‘This set-up has
recently fueled allegations of collusion among players in the generation sector and/or
with those in the distribution chain,

Carefully looking at the EPIRA law, there is a ban on cross-ownership of any
distribution or generation company to own a share in the National Transmission
Corporation (TRANSCO) and vice-versa. ‘There is no such ban between the generation
companies and distribution utilities, This failure to provide a ban on cross-ownership
between generation companies and distribution utilities would later on become a key
factor to the soaring electricity rates in the country, as the only safeguard EPIRA
provided was to prevent distribution utilities from sourcing more than 50 percent of its
total power demand from bilateral contracts with its related generation companies.

This proves inadequate as seen in the current situation in the power sector.
This bill proposes to amend R.A 9136 so as to address and prevent vertical

integration in generation and distribution subsector leading to blatant monopolistic
control of the country’s electricity sector,


Specifically, the bill seeks to prohibit cross-ownership between generation
companies and distribution utilities. If enacted, this measure would mandate
distribution companies holding ownership shares in generation companies to divest
assets and vice versa.

‘Through these amendments, it is anticipated that genuine competition would
take place with the possible emergence of small players who will have a fighting chance
to survive a de-monopolized industry, avoid a few companies to dictate prices of
electricity and for more importantly, to avoid soaring electricity prices in the future,

In view of the foregoing, the immediate enactment of this measure is earnestly
sought,

BEN EVARDONE


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HoUsE BILLNo, 387 6

Introduced by REP. BEN EVARDONE
Lone District, Eastern Samar

AN ACT
AMENDING REPUBLIC ACT No. 9136, OTHERWISE KNOWN AS THE
“ELECTRIC POWER INDUSTRY REFORM ACT OF 2001",
AND FOR OTHER PURPOSES

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

SECTION 1. Section 45 of Republic Act No. 9136 is hereby amended to read as
follows:

“Sec, 45, Cross Ownership, Market Power Abuse and Anti-
Competitive 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
market.

NO DISTRIBUTION UTILITY, OR ITS RESPECTIVE SUBSIDIARY OR
AFFILIATE OR STOCKHOLDERS OR OFFICIAL OR DIRECTOR OR ANY OF THEIR
RELATIVES WITHIN THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR
AFFINITY, SHALL BE ALLOWED TO HOLD ANY INTEREST, DIRECTLY OR
INDIRECTLY, IN ANY GENERATION COMPANY. LIKEWISE, NO GENERATION
COMPANY, OR ITS RESPECTIVE SUBSIDIARY OR AFFILIATE OR
STOCKHOLDERS OR OFFICIAL OR DIRECTOR OR ANY OF THEIR RELATIVES
WITHIN THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR AFFINITY,
SHALL BE ALLOWED TO HOLD ANY INTEREST, DIRECTLY OR INDIRECTLY, IN
ANY DISTRIBUTION COMPANY: PROVIDED, THAT THE DISTRIBUTION
UTILITY, ITS RESPECTIVE SUBSIDIARY OR AFFILIATE OR STOCKHOLDER OR
OFFICIAL OF A DISTRIBUTION UTILITY HOLDING AN INTEREST IN ANY
GENERATION COMPANY, AND VICE VERSA, AT THE TIME OF THE PASSAGE OF
THIS ACT, SHALL BE REQUIRED TO DIVEST THE SAME WITHIN ONE (1) YEAR
FROM THE EFFECTIVITY OF THIS ACT.

No generation company or distribution utility, or its respective
subsidiary or affiliate or stockholder or official of a generation company or
distribution utility, or other entity engaged in generating and supplying
electricity specified by ERC shall be allowed to hold any interest, direct or
indirect, in TRANSCO or its concessionaire. Likewise, the TRANSCO, or its


concessionaire or any of its stockholders or officials or any of their relatives
within the fourth civil degree of consanguinity or affinity, shall not hold any
interest, whether direct or indirect, in any generation company or distribution
utility, Except for government-appointed representatives, no person who is an
officer or director of TRANSCO or its concessionaire shall be an officer or
director of any generation company, distribution utility or supplier, A
GENERATION COMPANY MAY BE PERMITTED TO HOLD INTEREST, DIRECTLY
OR INDIRECTLY, IN ANOTHER GENERATION COMPANY: PROVIDED, THAT
THE EXTENT OF SUCH INTEREST SHALL BE LESS THAN THE AMOUNT OF
SHARES NEEDED TO VOTE ONE MEMBER OF THE BOARD OF DIRECTORS.

XXX”
SEC. 2, Repealing Clause. - All laws, Presidential Decrees, Issuances,
Executive Orders, Letters of Instruction, rules and regulations inconsistent

with the provisions of this Act are hereby repealed or modified accordingly.

SEC. 3. Effectivity Clause. - This Act shall take effect fifteen (15) days from
the date of its publication in at least two (2) newspapers of general circulation,

Approved,