1
4 RECEIVED

Republic of the Philippines DATE:
HOUSE OF REPRESENTATIVES
CONGRESS OF THE PHILIPPINES —TN®

Quezon City, Metro Manila ‘ BY:

i
SEVENTEENTH CONGRESS|
First Regular Session

1222

REGISTRATION UNIT
| iis AND INDEX SERVICE

House Bill No.

Introduced by Honorable REYNALDO V. UMALI

EXPLANATORY NOTE

‘The energy sector fuels our country’s development and the government is left
with a formidable challenge and gigantic task of addressing issues and concerns
affecting the sector. We owe it to the people we represent and as consumers
ourselves, we are affected by any unfavorable situation.

The Electric Power Industry Reform Act of 2001 or EPIRA vowed to ensure
and accelerate the total electrification of the country, to ensure the quality,
reliability, security and affordability of the supply of electric power, to ensure
transparent and reasonable prices of electricity in a regime of free and fair
competition and full public accountability, to enhance the inflow of private capital
and broaden ownership base of the power generation, transmission and
distribution sectors, to ensure fair and non-discriminatory treatment of public and
private sector entities in the process of restructuring the electric power industry,
and to protect the public interest as it is affected by the rates and services of
electric utilities and other providers of electric power.

However, after fifteen years of implementation of the EPIRA, we note that our
country has the highest retail electricity rate in the ASEAN region and about the
Oth in the rest of the world today. With this nerve-rocking situation, we may need
to take one step backward and assess if EPIRA had indeed achieved its objectives.

So, this bill seeks to amend some provisions of the EPIRA to address and
resolve the issues and concerns in the Philippine energy sector.

Hence, the approval of this bill is earnestly sought.

REYNALDO V. UMALI
Representative
Second District, Province of Oriental Mindoro

Republic of the Philippines

HOUSE °F REPRESENTATIVES



HOUSE OF REPRESENTATIVES
CONGRESS OF THE PHILIPPINES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 1222

Introduced by Honorable REYNALDO V. UMALI

AN ACT DECLARING POWER INFRASTRUCTURE PROJECTS AS PROJECTS OF
NATIONAL SIGNIFICANCE, AMENDING FOR THE PURPOSE CERTAIN
PROVISIONS OF REPUBLIC ACT NUMBERED 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 2 of EPIRA is hereby amended to include a new sub-
paragraph (e) and renumber the succeeding paragraphs to read as follows:

SE

>, 2, Declaration of Policy. - It is hereby declared the policy of the State:
(a) To ensure and accelerate the total electrification of the country;
(b) To ensure the quality, reliability, security and affordability of the supply
of electric power;

(c) To ensure 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 and enhance the competitiveness of
Philippine products in the global market;

{d) To enhance the inflow of private capital and broaden the ownership

base of the power generation, transmission and distribution sectors;

(ce) To ENSURE TIMELY COMPLETION OF POWER PROJECTS FOR
ENERGY SECURITY AND MINIMIZE COSTS BY DECLARING POWER


INFRASTRUCTURES AS PROJECTS OF NATIONAL SIGNIFICANCE, IMBUED
WITH PUBLIC INTEREST;

([(@)] To ensure fair and non-discriminatory treatment of public and
private sector entities in the process of restructuring the electric power
industry;

(g(0] To protect the public interest as it is affected by the rates and
services of electric utilities and other providers of electric power;

(h)[(@)] To assure socially and environmentally compatible energy sources

and infrastructure;

()[(h)] To promote the utilization of indigenous and new and renewable
energy resources in power generation in order to reduce dependence on

imported energy;

()|G)] To provide for an orderly and transparent privatization of the assets
and liabilities of the National Power Corporation (NPC);

{k)[G)] To establish a strong and purely independent regulatory body and
system to ensure consumer protection and enhance the competitive operation
of the electricity market; and

()[(k)] To encourage the effic
demand side management.

ent use of energy and other modalities of

SECTION 2. A new section to be designated as Section 6-A is hereby added after
Section 6, to read as follows:

SEC. 6-A. POWER INFRASTRUCTURE PROJECTS OF NATIONAL
SIGNIFICANCE. - THE PRESIDENT MAY, UPON THE CERTIFICATION AND
RECOMMENDATION OF THE DOE SECRETARY, CLASSIFY CERTAIN POWER
INFRASTRUCTURE PROJECTS, INCLUDING BUT NOT LIMITED TO GENERATION,
TRANSMISSION AND DISTRIBUTION FACILITIES, UNDERTAKEN UNDER THIS
ACT AS PROJECTS OF NATIONAL SIGNIFICANCE WHICH SHALL BE ENTITLED
‘TO THE FOLLOWING INCENTIVES:

1) ALL REAL PROPERTIES WHICH ARE ACTUALLY AND DIRECTLY
USED FOR THE PROJECT SHALL BE EXEMPTED FROM ANY AND ALL REAL


PROPERTY TAXES LEVIED UNDER REPUBLIC ACT NO. 7160, OTHERWISE
KNOWN AS THE “LOCAL GOVERNMENT CODE OF 1991,” AS AMENDED;

2) ‘THE SUM OF ALL LOCAL TAXES IMPOSED BY A PROVINCE, CITY
OR MUNICIPALITY PURSUANT TO REPUBLIC ACT NO. 7160, AS AMENDED, ON
THE PROPONENT SHALL NOT EXCEED FIFTY PERCENT (50%) OF ONE PERCENT
(1%) OF THE GROSS SALES OR RECEIPTS OF THE PRECEDING CALENDAR
YEAR;

3) THE REQUIRED BUSINESS PERMITS, INCLUDING ANY RENEWALS
THEREOF, SHALL BE DEEMED TO HAVE BEEN AUTOMATICALLY GRANTED OR
ISSUED TO THE WINNING PROJECT PROPONENT UPON TENDER OF THE
REQUIRED TAXES AND FEES TO THE APPROPRIATE LOCAL GOVERNMENT
UNIT.

SECTION 3. Section 47 of the EPIRA is hereby amended to read as follows:

. 47. NPC Privatization. Except for the assets of SPUG, THE AGUS AND
PULANGUI COMPLEXES, ALL EXISTING IPP CONTRACTS OF NPC AND OTHER
POWER PLANTS OWNED AND OPERATED BY THE GOVERNMENT IN MINDANAO,
the generation assets, real estate, and other disposable assets [as well as IPP
contracts of NPC] shall be privatized in accordance with this Act. Within six (6)
months from the effectivity of this Act, the PSALM Corporation shall submit a plan
for the endorsement by the Joint Congressional Power Commission and the

approval of the President of the Philippines, on the total privatization of the
generation assets, real estate, AND other disposable assets [as well as existing IPP
contracts of NPC] and thereafter, implement the same in accordance with the
following guidelines, except as provided for in paragraph (f) herein:

XXX

() The Agus and the Pulangui complexes, ALL REMAINING IPP
CONTRACTS OF NPC AND OTHER EXISTING POWER PLANTS OWNED AND
OPERATED BY THE GOVERNMENT IN MINDANAO shall be excluded from [among]
the generation [companies] ASSETS OF NPC that will be [initially] privatized. Their
ownership shall be transferred to the PSALM Corporation and both COMPLEXES
AND SUCH POWER PLANTS IN MINDANAO shall continue to be operated,
MAINTAINED AND REHABILITATED by PSALM THROUGH THE NPC. [Said
complexes may be privatized not earlier than ten (10) years from the effectivity of
this Act, and,} [e] Except for Agus II, THE AGUS AND THE PULANGUI


COMPLEXES, ALL REMAINING IPP CONTRACTS OF NPC AND OTHER POWER
PLANTS OWNED AND OPERATED BY THE GOVERNMENT IN MINDANAO shall not
be subject to Build-Operate-Transfer (BOT), Build-Rehabilitate-Operate-Transfer
(B-R-O-T) and other variations thereof pursuant to Republic Act No. 6957, as
amended by Republic Act No. 7718. [The privatization of Agus and Pulangui
complexes shall be left to the discretion of PSALM Corporation in consultation with

Congress;]
SECTION 4. Section 80 of the EPIRA is hereby amended to read as follows:

“SEC. 80. Applicability and Repealing Clause ~ ‘The applicability provisions of
Commonwealth Act No, 146, as amended, otherwise known as the “Public Service
Act”; Republic Act 6395, as amended, revising the charter of NPC; Presidential
Decree 269, as amended, referred to as the National Electrification Decree; Republic
Act 7638, otherwise known as the “Department of Energy Act of 1992
Order 172, as amended, creating the ERB; Republic Act 7832 otherwise known as
the “Anti-Electricity and Electric Transmission Lines / Materials Pilferage Act of
1994”, shall continue to have full force and effect except insofar as they are
inconsistent with this Act.

; Executive

‘The provision with respect to electric power of Section [11] 12(c) of Republic
Act 7916, as amended, and Section 5(f) of Republic Act 7227, are hereby repealed or
modified accordingly.

Presidential Decree No. 40 and all laws, dec:

ees, rules and regulations, or
portion thereof, inconsistent with this Act are hereby repealed or modified

accordingly.”

SECTION &. Implementing Rules and Regulations. The DOE shall, in
consultation with relevant government agencies, electric power industry
participants, non-government organizations and end-users, promulgate the
implementing rules and regulations of this act within six (6) months from its
effectivity, subject to the approval of the Joint Congressional Power Commission
(sere).

SECTION 6. 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 effect.


SECTION 7. Repealing Clause. All laws, decrees, orders and rules and
regulations which are inconsistent with this Act are hereby amended, repealed, or
modified accordingly.

SECTION 8. 2ffectivity. This Act shall take effect on the fifteenth (15%) day
following its publication in at least two (2) newspapers of general circulation.

Approved,