NINETEENTH CONGRESS                  )
REPUBLIC OF THE PHILIPPINES    )
Second Regular session                     )
HOUSE OF REPRESENTATIVES
I!gf ugduced by Representative Rufus a. Rodrigufz
HOuse Bill NO.9an
EXPLANATORY NOTE
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This  Bill  seeks the  renewal  of the  legislative franchise  granted to  Manila  Electric Company
(MERALCO)  by virtue of Republic Act No. 9209 issued on June 9, 2003.
The renewal of this franchise is urged to ensure the continuous and uninterrupted supply and
distribution of quality and reliable electric service to the customers within  its franchise area  in
consideration  of the nature of the vital service it provides.  MERALCO serves thirty-eight (38)
cities  and  seventy-three  (73)  municipalities  and  is  home  to the  key  political  and  economic
centers of the Philippines, which includes major air and seaports, main offices of government,
and  centers  for  trade  and  commerce.  MERALCO  brings  reliable  and  world-class  electric
service to homes and supports the competitiveness of industrial and commercial customers that
totaled  more  than  7.6  million  in  number  by  the  end  of  2022.   For  the  year  2022  alone,
MERALCO delivered 48,916 Gwh of electricity to these end-users at an average retail rate of
Php9,52 per kilowatt-hour.  Electricity consumption  in the MERALCO  franchise area already
represented   more   than   50%   of   the   country's   total   electricity   consumption   in   20222.
MERALCO's  proven  track  record  over the  span  of  120  years  has  assisted  greatly  in  the
development of the country's key economic growth areas.
Vvhile many have said that Philippine power rates are among the highest in the region, a report
from the International Energy Consultants (lEC) clarified that tariffs in countries like Indonesia,
Malaysia,   and  Thailand  are  subsidized  fully  or  substantially  by  their  governments,  while
Philippine power prices are reflective of the actual cost of electric service.  Furthermore,  even
withtherecentspikesininternationalfuelpricesin2022,lECfoundthat"[i]fsubsidizedmarkets
are excluded,  then  Meralco's tariff is  13%  lower than the world  average".  The  resilience  of
MERALCO's tariffs has been attributed by IEC to "Meralco's ability to source low-cost PSAs
and a "generation contract portfolio [that] appears to be very well managed".  In fact, according
to lEC,  "[t]he increase in the generation charge [from 2018 to 2022] -although significant -
is much lower than it might have been without diligent contract management by Meralco." In
2022, around 91% of supply to captive customers was sourced from power supply contracts
that  were   procured   under   prevailing   regulations.   IEC   also   determined   that   "all   of  the
components of the regulated Meralco tariff are judged fair and reasonable by lEC, based on
comparisons with other markets and versus the underlying cost of electricity supply in Luzon".
In particular, with respect to the MERALCO component of the rate,  lEC concluded that "[t]he
Distribution Charge (2.56c/kwh @ 14% of the total) is 33% less than the average rate for the
marketssurveyed.Onthisbasis,lECjudgesthatthechargeiscertainlyfairandreasonable.
Observation  of residential  customer bills of Philippine  distribution  utilities  (DUs)  and  electric
cooperatives  (ECs)  in  2023  shows  that  the  effective  electricity  prices  fluctuated  due  to
generation  cost volatility from  sourcing  mix,  fuel  prices,  and  purchases from the Wholesale
Electricity  Spot  Market.  For distribution  charges,  MERALCO's  approved  distribution  rate Of
Php 1.35/kwh was approved by the ERC in 2022. Comparing among the approved distribution
rates  of the  18  private  DUs  show that the  MERALCO  rate  ranks  6th  lowest.   MERALCO's


average distribution rate is lower than the Php 2.22/kv\/h  in Tarlac City, Php 1.59/kwh in Cebu
City, and Php 1.42/kvvh in Davao City.
Recently, upon MERALCO's own initiative that was followed by an ERC decision directing the
refund of distribution-related charges arising from ERC's final review of 2012-2015 rates and
delays  in  the  regulatory  reset  process,   MERALCO  completed  a  Php48  billion  refund  to
customers, which brought MERALCO's distribution prices down further.
AspartofthesocietalobligationtomarginalizedcustomerswithinMERALCO'sfranchisearea,
MERALCO  implements  a  lifeline  mechanism  with  a  range  of  20%  to  100%  discount  to
customers with a monthly consumption of 100 kwh and below, subsidized by other customers.
The maximum discount and range of consumption are the largest among Philippine DUs.
Through its household electrification advocacy, MERALCO assisted 6,376 low-income families in
its franchise area allowing them access to electric service.  In the 40th Electric Power Industry
ReformAct(EPIRA)lmplementationStatusReport(fortheReportPeriodApril2022)prepared
by   the   Department   of   Energy,   it   reported   that   MERALCO   achieved   100%   household
electrification (based on the 2015 Census of Population and Housing).
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To support economic development and improve people's quality of life,  MERALCO invested
more than Php 220 billion from 2003 to 2022 for new connections, asset renewals,  and load
growlhprojectstoservemorecustomersandtheirexpandingelectricityneeds,whilecontinuing
to support government projects. These investments also helped improve operational efficiency
and enable a more resilient distribution network against natural or man-made calamities.
MERALCO continues to  improve  its performance  with customers experiencing  8°/o less power
interruptions  (from  2021's  1.41  times to  2022's  1.30 times) with  7%  shorter duration  (128.4
minutes in 2022 vs.  138.8 minutes in 2021 ). New customers in 2022 also experienced a much
shorter processing time with applications taking only an average of 2.20 days to process. This
was more than half a day shorter than the same figure in 2021  (2.96 days).
MERALCO has been consistently improving its System Loss and has returned the full amount
of pilferage recoveries to its customers in the form of lower generation costs. Even before the
enactment Of Republic Act No. 7832 which put a limit on the recoverable system loss charges
by  DUs  from  its  customers,  MERALCO  already  recognized  that  the  system  loss  charge


represents a significant portion of the customers' total  bill.  Thus,  from  a system  loss rate of
21.01%  in  1986,  MERALC0 was able to reduce its system  loss to just 5.77%  in 2022.  This
reduction  was  accomplished  over a  36-year period  through  a  comprehensive  and  intensive
system  loss  reduction  program.  Over the  period  from  2008 to  2022,  MERALCO  customer
savings due to lower-than-cap system loss performance has reached Php 56.2 billion.
In  addition  to  savings,  MERALCO  customers  also  benefit from  the full  amount  of pilferage
recoveries (or differential  bills collected  by MERALCO,  including surcharges) that is returned
to all DU customers in the form of Generation Charge discount.  For the period from 2005 up to
2022,  the total  amount of pilferage recoveries returned  by MERALC0 to its customers has
almost reached Php 10 billion.
MERALCO proactively supports the government's  goal to accelerate renewable energy  (RE)
development,   especially  through   programs   under  the   Renewable   Energy  Act  of  2008.
MERALCO  connected  the  country's  first  Net  Metering  (NM)  Program  customer  and  has
remained  as the  DU  with the  most  number of NM  participants than  all  other DUs  and  ECs
combined.   For 2023, the Energy Regulatory Commission  (ERC) said that ``majority of these
new [Net Metering] prosumers [were connected by] Meralco.  The utility also hosts a variety of
large  RE-based  generators,  providing  timely  connection  and  reliable  wheeling  service  to,
among others, the 30 MW Maibarara geothermal powerplant in Batangas, the 50 MW solar
plant of Power Source First Bulacan, and the 54MWAlternergy wind project in Rizal province. In
compliance  with  the  Renewable   Portfolio  Standards   (RPS)  and  after  the  conduct  of  a
Competitive Selection Process (CSP), MERALCO recently entered into a contract with Terra
Solar Philippines for the supply of 850MW of renewable energy. The resulting  PSA has been
approved by ERG and shall support the construction of the largest solar farm in the world.
MERALCO  is  not  just  powering  homes  and  businesses  across  the  country  -  it  is  also
illuminating the path for excellence in its field.
In the area of electrification, MERALCO has installed a microgrid pilot facility within the island of
Cagbalete  in  Quezon  province  in  efforts  to  learn  how  advancements   in  technology  and
renewable energy may be used  to bring  power to end-users  in remote and  unviable areas.
Under the  guidance  of the  ERC,  MERALCO  put  up  a  microgrid  with  a  centrally  controlled
solar-battery facility backed up by diesel generators in 2018. With a 60 kwp Solar PV array, a
150 kwh  Li-Ion  Battery Energy Storage System, two (2) units of 30 kw Diesel  Generators,
and its distribution system,  MERALCO  is now providing electric service to  136 households on
the island. MERALCO has shown that it is willing and able to utilize microgrid technology -the
sametechnologyprovidedunderRepublicAct11646ortheMicrogridAct-tobringseamless
MERALCO electric service to remote and unviable areas. Thus, MERALCO should be allowed
toexpandtheuseoftheseandotherinnovativetechnologiesforelectrificationoftheremaining
more than 600 households on Cagbalete Island and other areas.
Wlth   big   data   and   information   technology-driven   industries   reaching   Philippine   shores,
MERALC0  is strengthening  its  network to support very  large,  and  power quality-conscious
customers called global hyperscalers. These customers require reliable and scalable power
supply,  a stable  electricity  grid,  high-capacity  infrastructure,  redundancy for backup  power,
abilitytoaccommodateincreasingpowerdemandsasthehyperscalerexpands,andrenewable
energy  sources  and  solutions  such  as  energy efficiency  and  power quality.  Digital  Edge,  a
global company engaged in building enterprise and hyperscale data centers, announced last
March 2023 that "Narra 1 "I, its first data center in the Philippines, is ready for service. Housed in
Binan,Laguna,itwillprovidecolocationandinterconnectionservicestotheregion.DigitalHalo,
another  hyperscaler,  is developing  a  70MW data  center campus  on  a  3.75-hectare


location in Cainta,  Rizal.  In addition to these,  PLDTs 54MW Vitro Data Center in Sta.  Rosa,
Laguna  is expected to  be completed this year.  The  market research group Statista  Market
lnsights predicts that for the Philippines,  "Revenue in the Data Center market is projected to
reach US$513.60m in 2024." MERALCO should thus be directed to continue to strengthen and
build up its network so that hyperscalers will continue to choose to locate in the Philippines.
MERALCO  is also home to the largest number of customers  participating  in  retail  customer
choice programs prescribed  by the  EPIRA and the Renewable  Energy Act. According  to the
records of the Philippine  Electricity Market Corporation  (PEMC),  as of end September 2023,
there  are   1,345  contestable  customers,   or  71%  of  the  registered   participants  in   Retail
Competition and Open Access (RCOA) and the Green Energy Option Program (GEOP), in the
MERALCO franchise  area. To  empower these  customers  in  their exercise  of retail  choice,
MERALCO  replaced their traditional  meters that measure  cumulative consumption  and  are
read once a month with more advanced meters capable of measuring and storing electricity
consumption at market trading intervals then transmitting them to the DU in near real-time. As
retail choice and other customer-empowerment programs advance and expand to create more
value for electricity end-users, MERALCO should be allowed to roll out the needed advanced
metering technology and supporting infrastructure.
In  addition  to empowering  customers  with  retail  choice,  MERALCO  has enabled  more  than
6,700 customers to install renewable energy systems in their homes under the NM program.
These MERALCO customers comprise more than half of the nation's 11,707 NM participants
(as of December 2023).  Further, soon after the release of the Net Metering  Rules by ERC in
July 2013, MERALCO connected the first NM customer in the country in December of the same
year. MERALCO also worked with the National Renewable Energy Board and the DOE to come
up  with  the  lst  Net  Metering  Reference  Guide  in  2015  with  the  assistance  of  Deutsche
Gesellschaft   fuir   Internationale   Zusammenarbeit   (GIZ).    Sharing    learnings   from    actual
experience,   MERALCO  again  worked  with  stakeholders  and  an  updated  version  of  the
guidebook was released in 2022. MERALCO and the NM program have empowered customers
to contribute to the renewable energy initiative while at the same time increasing the available
supply  that  can  be  utilized  by  others.  MERALCO  should  therefore  be  directed  to  further
broaden the participation of customers in the NM program.
MERALCO also looks for ways to empower even the most regular of customers. MERALCO
has put in place numerous platforms to avail of electric service. These include a cellular phone
app and a website where a customer can apply for electric service,  inquire about an on-going
application,  report an  incident or brownout,  or find the  nearest  business center.  MERALCO
has also set up multiple avenues so that customers can easily pay their regular monthly bills
at their most convenient time.  In addition to the business centers,  MERALCO customers can
payoverthecounteratbanks,shoppingmalls,throughphoneapps,creditcards,andelectronic
wallets.
For those  who  prefer to  prepay their electricity,  MERALCO  has  also  rolled-out  its  Prepaid
Electricity Service called "K-Load".  After the pilot in 2013, MERALCO has steadily expanded
the  program  that  is  now enjoyed  by  more  than  97,300  customers.  Prepaid  electricity  has
empowered customers to better manage their electricity consumption and costs. MERALCO
should be directed to expand this so that more Filipinos can take the reins of their electricity
consumption.
MERALCO   has  always  been  at  the  forefront  of  sustainability  and   is  one  of  the  largest
supporters of the DOE's DC2021-07-0023 entitled: "Providing for a Policy Framework on the
Guidelines for the Development,  Establishment, and Operation  of Electric Vehicle Charging
Stations  (EVCS)  in  the  Philippines".  By  the  end  of 2022,  MERALCO  had  already  installed


forty-nine (49) electric vehicle charging stations across Metro Manila and the provinces within its
franchise area. These stations utilize multiple charging protocols and support MERALCO's fleet
as it transitions to utilizing more and more electric vehicles. As the country moves towards more
sustainable transportation solutjons,  it would be advantageous that MERALCO be directed to
build up both its electric vehicle fleet and the needed supporting infrastructures such as charging
stations.
One of the technologies  at the comerstone of sustainability are Energy Storage Systems (ESS)
and MERALCO is leading the way, utilizing this technology to improve power quality,  minimize
power interruptions, and manage electricity consumption at peak periods.  In partnership with
Hitachi,  MERALCO  installed  two  (2)  units  of one  (1)  MW Battery  Energy  Storage Systems
(BESS) in the MERALCO distribution network that have been in operation since March 2019.
Located along circuits that serve both end-users and a 3.82 MW Solar Farm,  MERALCO uses
the   BESS  to  improve   power  quality  and   provide  voltage  support;   properly   integrate   a
renewable energy source with variable output; and, reduce costs to consumers through peak
shaving. The use of the BESS allows MERALCO to defer the construction of more expensive
system  upgrades.  With  these  benefits that can accrue to consumers,  DUs  like  MERALCO
should be explicitly allowed to own and operate ESS.
With  the  MERALCO  distribution  network  serving  as  the  host  to  many  renewable  energy
generators,  such  as  wind  farms  and  solar  arrays  like  Power  Source  First  Bulacan  and
Alternergy,  MERALCO  can  utilize  the  technology  of  distributed  energy  resources  -  or  power
sources connected directly to the distribution network -in building network resilience. With the
generators   much   closer  to   end-users,   customers   enjoy   better   power   quality,   shorter
restoration  times,   and   potentially   less   interruptions.   As   a  forerunner  in   this   customer-
benefitting technology,  it would only be reasonable that MERALCO be allowed to continue to
strengthen its network with additional and more extensive distributed energy resources.
Throughout its long and storied history, MERALCO has garnered a multitude of recognitions,
solidifying its position as a model distribution utility.  In an award given last December 6, 2023,
the DOE has recognized MERALCO forthree (3) key policy directives of the Department: first,
ensuring adequate and reliable electric power supply in the country as prescribed under DOE
Department   Circular   (DC)    No.    2010-03-0003;    second,    full    compliance    to    reportorial
requirements and pertinent data in the formulation of the power development plan  specified in
DOE DC No. 2015-04-0002; and third, ensuring effective and successful transition towards the
implementation of Retail Competition and Open Access (RCOA) as contained  DOE  DC  No.
2013-05-0006.
For  its  part,  the  ERC,  on  August  4,  2023,  issued  a  certification  that  MERALCO  is  in  full
compliance   with    the    reportorial    requirements    of   the   Commission,    including    system
performance.  These  reports  cover the  regular  monthly  submission  on  rates;  revenue  and
remittances; and, electric service standards and utility performance, among others.
As a testament to the quality and reliability of service that MERALCO provides, electricity end-
users in areas outside of MERALCO have taken steps to request for MERALCO service when
what  they  receive  from  the  current  provider  has  proven  inadequate.  As  early  as  2008,
Evercrest Golf Club Resort,  Gulod Resort,  Chateau  Royale Sports & Country Club,  and  the
Metropolitan  Medical  Center  relayed  to  their  DU  that  they  experience  nearly  daily  power
interruptions  affecting their ability to  serve their customers  and  patients.  Failing to  obtain  a
response  or solution,  they  sought the  court's  assistance  to  direct  MERALCO,  the  service
provider closest to them in Tagaytay City, to take over their electric service.
In a decision rendered on August 30,  2018, the Regional Trial Court Branch  14 in Nasugbu,


Batangas issued a decision on the matter stating,  among others, that "MERALCO,..has the
capability to provide adequate and reliable electric power supply to plaintiff's establishments.
Its  area  of  operation  includes  the  province  of  Cavite  or  until  the  boundary  of  Nasugbu,
Batangas.   Plaintiff's  establishments  are  located  just  several   meters  away  from   the   said
boundary.  Batelec I  has failed to provide  bulk energy  needs of plaintiff s establishments but
may well be provided by MERALCO with great reliability and efficiency".
In a similar move, the Sangguniang  Bayan of Nasugbu,  Batangas issued Resolution 368  last
December 4, 2023 endorsing the transfer of electric service in the municipality to MERALCO.
This resolution was in response to a petition signed by more than 22,500 Nasugbu residents and
business  owners  seeking  better  electric  service  because  they  could  no  longer  bear  the
"exorbitant electricity  bills,  frequent power interruptions,  and  poor service quality that cause
disruption to day-to-day 1 ives" from their provider.
On  multiple  occasions,   MERALCO   has  taken  the  opportunity  to  share  its  expertise  and
resources  with  other  distribution   utilities  and  end-users  in  areas  outside  MERALCO  by
providing assistance and support following natural disasters, such as typhoons and floods. After
Typhoon   "Pablo"   slammed   into   Southern   Mindanao  on   December  4,   2012,   MERALCO
travelled to Mindanao to assist the hard-hit Davao Oriental  Electric Cooperative  (DORECO)
and assist in bringing back the electric service.  In 2013, in the aftermath of typhoon "Yolanda",
MERALCO crews, bringing with them forty (40) generators, helped power-restoration efforts in
Tacloban,   Leyte  and  other  areas  across  the  country.   MERALCO  also  provided  power
restoration  assistance   in   Batanes  after  the  destruction   brought  by  typhoon   "Ferdie"   in
September 2016. The Meralco contingent had to perform restoration activities manually due to
the unavailability of mechanized equipment and vehicles. In November of 2020, in the wake of
typhoon  "Rolly",  MERALCO joined  the  Power Restoration  Rapid  Deployment  (PRRD)  Task
Force Kapatid to help in the power restoration in Albay, Catanduanes, and parts of Camarines
Sur.  Right before Christmas  in 2021,  MERALCO  crews travelled to the province of Cebu  in
supportoftherestorationeffortsoftheVisayanElectricCompany(VECO)andMactanElectric
Co. (MECO) that were devastated by typhoon "Odette''. Just last July 2023, MERALCO crews
travelled to  llocos  Norte to  assist the  llocos  Norte  Electric Cooperative  (lNEC)  in  restoring
power after the passage of typhoon  "Egay".  These are  in  addition to  restoration assistance
provided in Albay after typhoon "Glenda" (2014); Sorsogon and Oriental Mindoro after typhoon
``Nona"  (2015);  Cagayan  and  lsabela  after  typhoon  "Lawin"  (2016);  and,  the  Bicol  Region,
Oriental Mindoro, and Quezon Province after typhoon "Nina" (2016).
MERALCO assisted in various ways including sending personnel, equipment, tools, and repair
providing   relief   good;   and   dohations   in   partnership   with   the   One   Meralco
(OMF);  and,  providing  lighting  facilities  such  as generators,  solar "liter of light"
materials;
Foundation
streetlights, and household solar lamps.
In 2020, as the world wrestled with the COVID pandemic, MERALCO worked with the COVID-
19  Inter-Agency Task Force (IATF) to provide support  to the Department of Public Works and
Highways  (DPWH)  in  the  establishment  and  operation  of quarantine  facilities  and  support
groups. These facilities included the Ninoy Aquino Stadium COVID-19 Treatment Facility, the
East Avenue Medical Center Mortuary Freezer, and the Ciudad Victoria Philippine Arena Mega
Quarantine Facility.
Since 2014,  under the direction of the  DOE and  ERC,  MERALCO and volunteer customers
have been  implementing the  lnterruptible Load  Program  (ILP) to ration  limited  power supply
in the grid when power interruptions are imminent. As of end-September 2023,  there are 110
MERALCOcustomerswithatotalcommittedde-loadingcapacityof539.26MWthathavesigned
up with  MERALCO and with  Retail  Electricity Suppliers  as  lLP  Participants.  Since  Meralco


started implementation in 2014, lLP was activated 27 times in MERALCO's area, and because
of the support of lLP participants, the program has successfully spared as many as 1.8 million
households from power interruptions.
MERALCO is also a dependable  partner of the government in the roll-out of the Build- Better-
More    program,    multiple    Public-Private-Partnership    initiatives,    and    other    projects    in
coordination with the Department of Public Works and Highways (DPWH) and the Department of
Transportation  (DOTr).  These  include  the  Connector  Road  between  the  North  Luzon  and
South Luzon Express Ways; the Skyway Stage 3; the Metro Rail Transit Line 7 (MRT-7);  and,
Cavite-Laguna  Expressway.  From the period 2019 to 2023,  MERALCO has relocated a total
of 14,479 electric poles in line with the completion of these and other projects.
It  is  our obligation  as  representatives  of the  people to  ensure that  all  electricity end-  users
within the franchise of MERALCO continue to enjoy safe, reliable and efficient service  at fair
and reasonable prices.  It is therefore imperative that the State give its support to the renewal
of MERALCO's franchise  so that  it  may  continue  to  deliver the  benefits  of accessible  and
reliable power at a fair and reasonable price to residents, businesses, industries, government
agencies, and all electricity end-users in its franchise area.
In view of the foregoing, approval of this bill is earnestly requested.


NINETEENTH CONGRESS                  )
REPUBLIC OF THE PHILIPPINES    )
Second Regular session                     )
HOUSE OF REPRESENTATIVES
l!p±roduced by Representative Rufus a. Rodri_g±±±z
HOuse Bill NOsm
AN ACT
RENEWING FOR ANOTHER TWENTY FIVE YEARS THE FRANCHISE GRANTED TO THE
MANILA    ELECTRIC    COMPANY   TO    CONSTRUCT,    OPERATE,   AND    MAINTAIN   A
DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE ENDi
USERS  IN  THE  CITIES/MUNICIPALITIES OF  METRO  MANILA,  BULACAN,  CAVITE AND
RIZAL, AND CERTAIN CITIES/MUNICIPALITIES/BARANGAYS IN  BATANGAS,  LACUNA,
QUEZON AND  PAMPANGA,  EFFECTIVE  UPON  THE  EXPIRATION  OF  ITS  FRANCHISE
GRANTED UNDER REPUBLIC ACT NO. 9209
Be  it enacted  by the  Senate  and the  House of Representatives Of the  Philippine  Congress
assembled:
SECTION 1. Nature and Scope of Franchise. -Subject to the provisions of the Constitution
and applicable laws, rules and regulations, there is hereby granted to Manila Electric Company
(MERALCO), hereunder referred to as the grantee,  its successors or assigns, a franchise to
construct, operate and maintain in the public interest and commercial purposes, a distribution
system for the conveyance of electric power to the end-users in the cities and municipalities
of  Caloocan,   Las   Pifias,   Makati,   Malabon,   Mandaluyong,   Manila,   Marikina,   Muntinlupa,
Navotas,  Parafiaque,  Pasay,  Pasig,  Pateros, Quezon City, San Juan, Taguig and Valenzuela
of  Metro  Manila;  cities  and  municipalities  of Angat,   Balagtas,   Baliuag,  Bocaue,   Bulacan,
Bustos,  Calumpit,   Dofia  R.  Trinidad,  Guiguinto,   Hagonoy,   Malolos,  Marilao,   Meycauayan,
Norzagaray, Obando, Pandi, Paombong, Plaridel, Pulilan, San lldefonso, San Jose del Monte,
San  Miguel,  San  Rafael  and  Sta.  Maria,  Province  of  Bulacan;  cities  and  municipalities  of
Alfonso, Amadeo,  Bacoor,  Carmona,  Cavite,  Dasmarifias,  Gen. Alvarez,  Gen.  E. Aguinaldo,
Gen. Trias,  lmus,  lndang,  Kawit,  Magallanes,  Maragondon,  Mendez Nufiez,  Naic,  Noveleta,
Rosario,  Silang, Tagaytay, Tanza, Ternate and Trece Martires,  Province of Cavite;  cities and
municipalities    of   Angono,   Antipolo,    Baras,    Binangonan,    Cainta,    Cardona,    Jala-Jala,
Montalban, Morong, Pililla, San Mateo, Tanay, Taytay and Teresa, Province of Rizal; cities and
municipalities of Batangas,  San  Pascual  and  Sto.  Tomas,  Province of Batangas;  cities  and
municipalities   of  Alaminos,   Bay,   Bifian,   Cabuyao,   Calamba,   Calauan,   Liliw,   Los   Bafios,
Luisiana, Magdalena, Majayjay, Nagcarlan, Pila, Rizal, San Pablo, San Pedro, Sta. Cruz, Sta.
Rosa  and  Victoria,   Province  of  Laguna;  cities  and  municipalities  of  Candelaria,   Dolores,
Lucban,  Lucena,  Mauban,  Pagbilao,  Sampaloc,  San Antonio,  Sariaya,  Tayabas  and Tiaong,
Province  of Quezon;  barangays  of  Balucuc  and  Calantipe  in Apalit,  Pampanga;  Barangay
Concepcion in San Simon, Pampanga; and barangays of Bahay Pare, Barangca, Dulong llog,
Mangumbali,    Mandili,    Mapaniqui,    Paligui,    Pangclara,    Pulong   Gubat,    Pulong    Palazan,
Salapungan, Vizal San Pablo, Vizal Santo Cristo and Vizal Sto. Nifio in Candaba, Pampanga.
Nothing  herein shall  prevent the grantee from extending service to other persons or
entities  located  outside  its  franchise  area  as  may  be  directed  by  a  court  of  competent
jurisdiction.
As used in this Act,  distribution system  refers to the system of wires and associated
facilities  including  sub-transmission  lines,  belonging  to  or  used  by  a franchised  distribution
utilityextendingbetweenthedeliverypointonthenationaltransmissionsystemorgenerating
facility and the metering point/facility of the end-user.


SECTION  2.  Manner of Operations of Facilities. -All  electric distribution facilities,  lines
and systems for electric services owned, maintained, operated or managed by the grantee, its
successors or assigns shall be operated and maintained at all times in a superior manner, and
it shall be the duty of the grantee,  its successors or assigns, whenever required to do so by
the Energy Regulatory Commission or its legal successor,  hereafter referred to as the ERC,
to modify,  improve and change such facilities or systems in such manner and to such extent
as  the  progress  in  science  and  improvements  in  the  electric  power  services  may  render
reasonable and proper and in accordance with uniform standards as may be promulgated by
the ERC.
Vvhenever practicable  and  for  purposes  of maintaining  order,  safety  and  aesthetics
along the highways,  roads,  streets,  alleys or right-of-way, the grantee may allow the  use of
free  spaces  in  its  poles,  facilities  or  right-of-way  by  interested  parties  upon  reasonable
compensation  to  the  grantee.  The  ERC,  shall  decide  in  case  of dispute  or  disagreement
between the parties.
SECTION  3.  Excavation  and  Restoration  Works.  -  For  the  purpose  of  erecting  and
maintaining  poles  and other supports for said facilities,  wires,  or other conductors or for the
purpose of laying and  maintaining said  poles,  facilities, wires,  cables,  or other conductors,  it
shall  be  lawful  for the  grantee,  its  successors  and  assigns,  with  the  prior  approval  of the
Department  of Public Works  and  Highways  (DPWH)  or the  local  government  units  (LGUs)
concerned,  as may be appropriate, to make excavations or lay conduits in any of the public
places, highways, streets, lanes, alleys,  venues, sidewalks or bridges of said provinces, cities,
and/or municipalities without need of compensation: Provided however, That any public place,
highway,  street,  lane,  alley,  avenue,  sidewalk  or  bridge  disturbed,  altered  or  changed  by
reason of the erection of poles or other supports,  or the laying of wires,  other conductors or
conduits, shall be immediately repaired and properly restored at the expense of the grantee,
its successors and assigns, in accordance with the standards set by the DPWH and concerned
LGUs.
ln the event that the DPWH or LGU requires the relocation of electric subtransmission
and   distribution   lines   along,   upon,   under  and   across   publicly   owned   lands   and   public
thoroughfares,  including,  without  limitation,  all  roads,  highways,  streets,  alleys,  bridges  and
causeways,  for  the  primary  purpose  of  the  government,  the  grantee  shall   be  properly
compensated for such relocation.
SECTION 4. Responsibility to the Public. -The grantee shall supply electricity to its captive
market in the least cost manner. The grantee may supply electricity to the contestable market
subject to conditions that may be prescribed in applicable laws, rules and regulations.    In the
interest of the  public good  and  as far as feasible  and whenever required  by the  ERC,  the
grantee shall modify, improve, or change its facilities, poles, lines, systems and equipment for
the  purpose  of  providing  efficient  and  reliable  service  and  reduced  electricity  costs.  The
grantee shall charge reasonable, just and competitive power rates for its services to all types
of consumers within  its franchised  area.  In  support of providing  universal  service  in  off-grid
and  other areas where  generation  companies  cannot supply  power,  the grantee  may  also
construct, acquire, own, operate and maintain generating facilities within its franchise area.
The grantee shall have the obligation to provide open and nondiscriminatory access to
its distribution system and services for any end-user within  its franchise area consistent with
Republic Act No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001",
as may be amended. The grantee shall not engage in any activity that will constitute an abuse
of market power such as but not limited to, unfair trade practices, monopolistic schemes and
any other activities that will hinder competitiveness or businesses and industries.
SECTION 5. Rates for Services. -The retail rates to its captive market and charges for the
distribution of electric power by the grantee to its end-user shall be regulated by and subject
to the approval of the ERC.


The grantee shall identify and segregate in its bill to the end-users the components of
the  retail  rate  pursuant to  Republic Act  No.  9136,  unless  otherwise  amended.  Such  rates
charged by the grantee to the end-users shall be made public and transparent. The grantee
shall  implement lifeline rate to marginalized end-users as mandated  under Republic Act No.
9136, as amended.
SECTION  6.  Promotion  of Consumer Interests.  - The  herein  grantee  shall  establish  a
consumer  desk that  will  handle  consumer  complaints  and  ensure  adequate  promotion  of
consumer interests. The grantee shall act with dispatch on all complaints brought before it.
SECTION 7. Right of the Government. -A special right is hereby reserved to the President
of the  Philippines  in  times  of war,  rebellion,  public  peril,  calamity,  emergency,  disaster,  or
disturbance of peace and order to temporarily take over and operate the distribution system
of   the   grantee   or   to   authorize   the   temporary   use   and   operation   thereof   by   any
agency/department of the government, upon due compensation to the grantee, its successors
or assignees, for the use of the said distribution system during the period when they shall be
operated.
SECTION   8.   Right  of  Eminent  Domain-  Subject  to  the   limitations   and   procedures
prescribed by law, the grantee is authorized to exercise the power of eminent domain insofar
as it may be reasonably necessary for the efficient establishment,  improvement,  upgrading,
rehabilitation, maintenance, and operation of services. The grantee is authorized to install and
maintain its poles, wires, and other facilities over, under, and across public property, including
streets, highways, forest reserves, parks, and other similar property of the government of the
Philippines,  its branches or any of its instrumentalities. The grantee may acquire such private
property as is actually necessary for the realization of the purposes for which this franchise is
granted,  including,  but not limited to poles, wires,  cables, transformers,  switching equipment
and  stations,  buildings,  infrastructure,  machineries  and  equipment  previously,  currently  or
actually used,  or intended to be used, or have been abandoned,  unused or underutilized,  or
which  obstructs its facilities,  for the operation  of a distribution system for the conveyance of
electric  power  to  end  users  in  its  franchise  area:     Provided,  That  proper  expropriation
proceedings shall have been instituted and just compensation paid.
Provided,  further,  That upon the filing  of the  petition for expropriation,  or at any time
thereafter, and after due notice to the owner of the property to be expropriated and the deposit
in a bank located in the franchise area of the full amount of the assessed value of the property
or properties, the grantee shall be entitled to immediate possession,  operation,  control,  use
and disposition of the properties sought to be expropriated, including the power of demolition,
if necessary, notwithstanding the pendency of other issues before the court, including the final
determination  of the  amount  of just  compensation  to  be  paid.  The  court  may  appoint  a
representative from the ERC, or its legal successor, as a trial commissioner in determining the
amount of just compensation.  The  court  may  consider the tax declarations,  current audited
financial statements,  and  rate-setting applications of the owner or owners of the property or
properties being expropriated in order to determine their assessed value.
SECTION 9. Term of Franchise. -This franchise shall be for a term of twenty five (25) years
from the expiration of the current franchise granted under Republic Act No.  9209,  unless the
franchise granted under this Act is sooner revoked or cancelled by Congress for any violation
of the terms and/or provisions of the franchise herein granted.
The grantee shall apply for a new franchise before its expiration date.
SECTION 11. Warranty in Favor of National and Local Governments. -The grantee shall
hold the national, provincial, city, and municipal governments of the Philippines harmless from
all  claims,  accounts,  demands  or  actions  arising  out  of  accidents  or  injuries,  whether  to
property or persons,  caused during the construction,  installation, operation and maintenance
of the distribution system of the grantee.


SECTION 12. Liability for Damages. -The grantee shall be liable for any injury and damage
arising  from  or  caused  by  accident  to  persons  and  property  by  reason  of  any  defective
construction  of any  infrastructure  built  pursuant to  the  operation  of  its  business  under this
franchise or of any neglect or omission to keep its poles and wires in a safe condition.
SECTION 13. Sale, Lease, Transfer, Usufruct, or Assignment of Franchise -The grantee
shall not lease, transfer, grant the usufruct of or sell this franchise or the rights and privileges
acquired thereunder to any  person, firm,  company,  corporation or other commercial  or legal
entity,  nor merge with any other corporation or entity,  nor shall the controlling  interest of the
grantee   be   transferred   whether   in   whole   or   in   part,   and   whether   simultaneously   or
contemporaneously, to any such person, firm, company, corporation or entity without the prior
approval  of  the  Congress  of  the  Philippines,  except  to  a  wholly-owned  subsidiary  of  the
grantee or where the grantee is the surviving corporation:  Provided, That any such transfer,
sale or assignment js in accordance with the constitutional limitations. Any person or entity to
which this franchise is sold,  transferred or assigned shall  be subject to the same conditions,
terms,  restrictions and limitations of this Act.
SECTION  14.  Reportorial  Requirement.  -The  grantee shall  submit  an  annual  report of
finances and operations to the Congress of the Philippines.
SECTION 15. Equality Clause, -ln the event that any individual, partnership or corporation
shall receive any advantage, favor, privilege, exemption, or immunity granted under an existing
permit or power distribution franchise, or which may hereafter be granted, such terms and/or
provisions shall be deemed part hereof and shall operate equally in favor of the herein grantee:
Provided, That any terms and/or provisions herein granted which  are not contained  in other
franchise  that  may  hereafter  be  granted  shall  likewise  be  enjoyed  by  the  future  grantees:
Provided,   however,   That  the  foregoing   shall   neither  apply  to   nor  affect  the   provisions
concerning territory covered by the franchise and the life-span of the franchise.
SECTION 16, Applicability Clause. -The grantee shall comply with and be subject to the
provisions of Commonwealth Act No.  146,  otherwise known as the "Public Services Act," as
amended,  and  Republic Act  No.  9136,  otherwise  known  as  the  "Electric  Power  Industry
Reform Act of 2001."
SECTION  17.  Repealing and Nonexclusivify clause. -This franchise shall be subject to
amendment, alteration or repeal  by the Congress of the Philippines when the public interest
so requires and shall not be interpreted as an exclusive grant of the privileges herein provided
for.
SECTION 18. Separability Clause. -lf for any reason, any of the sections or provisions 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.
SECTloN 19. Repealing clause. -All other laws, decrees, orders, resolutions,  instructions
and  rules  and  regulations  or  parts  thereof,  which  are  inconsistent  herewith,  are  hereby
deemed repealed or modified accordingly.
SECTION 20. Effectivify clause. -This Act shall take effect fifteen (15) days from the date
of its publication, upon the initiative of the grantee, in the Official Gazette or in any newspaper
of general circulation in the Philippines.
Approved,