Republic of the Philippines , oy 7.

HOUSE OF REPRESENTATIVES ? ste °)
( sic 28 JUL 2014

WS — th to Aa

Hr

Quezon City

SIXTEENTH CONGRESS
Second Regular Session a

HOUSE BILL NO, A761

Introduced by Honorable Alfredo “Albee” B, Benitez

EXPLANATORY NOTE

The passage of the Electric Power Industry Reform Act in 2001 generated hopes
not only for a more accessible power supply over the all the regions of the country but
also for more affordable power rates. The law supposedly promotes “transparent and

reasonable prices of electricity in a regime of free and fair competition”.

Unfortunately, thirteen years after the approval of EPIRA, its intention of
bringing down the rates through the cultivation of market competition remains elusive.
Electricity rates in the Philippines are among the highest in the region (NSCB, 2013)
‘The Trade Union Congress of the Philippines reports that 11 to 15 percent of Filipino

workers’ take home pay goes to the cost of electricity alone,

While the EPIRA included safeguards against the monopolistic control of the
local power industry by introducing the Wholesale Electricity Spot Market and
prohibited cross-ownership, some private corporations have still found ways to
circumvent the law through the loopholes in the approved policy. For instance, even
with the introduction of WESM, distribution utilities are still allowed to enter into
bilateral supply contracts. The 2013 USAID study reported that majority of the energy
sales in WESM are not spot sales. Some 90 percent of the power purchases are instead
bilateral agreements. Possible collusion seems to occur when currently some companies
that have interests in both a distribution and generation utility become participants in

bilateral agreement,and thus negate the intention of the EPIRA.


This bill seeks to amend the provision in EPIRA allowing Distribution Utilities
(DUs) to enter into bilateral power supply agreements and which the role of ERC is only
to evaluate Power Supply Agreements (PSAs). ‘The bill mandates ERC to conduct the

s between

transparent and competitive selection process in power supply contr:

Distribution Utilities and gen h amendment to EPIRA will provide

ration companies. S

nable

for a closer scrutiny of power contracts and will make DOE accountable for quest

transactions between the distribution and generation sectors,

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

earnestly sought.

LFRE®O “ALBEE” B. BENIT!



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRI
Second Regular Sessi

jn

4761

HOUSE BILL NO.

Introduced by Honorable Alfredo “Albee” B. Benitez

AN ACT REQUIRING THE ENERGY REGULATORY COMMISSION TO CONDUCT A
TRANSPARENT BIDDING PROCESS FOR POWER SUPPLY, AMENDING FOR TE
PURPOS! ION 45, B OF REPUBLIC ACT NO. 9136, C SE KNOWN AS THE,
“ELECTRIC POWER INDUSTRY REFORM ACT OF 2001"

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

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

“Section 45.
Behavior. -x xx

‘oss Ownership, Market Power Abuse and Anti-Competitive

XXX
XxX
(a) xxx

(b) [Distribution utilities may enter into bilateral power supply contracts subject to
review by ERC THE ENERGY REGULATORY COMMISSION (ERC) SHALI
UNDERTAKE A TRANSPARENT AND COMPETITIVE BIDDING PROCESS FOR THE
SUPPLY OF ELECTRICITY TO BE PARTICIPATED BY DISTRIBUTION UTILITIES:
(DUs). THE DU AWARDED WITH THE WINNING BID SHALL ENTER INTO A



BILATERAL POWER SUPPLY AGREEMENT WITH THE GENERATION COMPANY
WHERE THE POWER WAS SOURCED. THE POWER SUPPLY AGREEMENT SHALL
BE SUBMITTED TO ERC, WITHIN THIRTY DAYS AFTER THE BIDDING, FOR
FINAL APPROVAL.

THE ERC SHALL CREATE AN OFFICE WITHIN THE COMMISSION WHICH SHALL
BE TASKED TO CONDUCT THE BIDDING FOR POWER SUPPLY AGREEMENTS
AND SHALL REVIEW FINAL AGREEMENT DOCUMENTS OF THE DU AND
GENERATION COMPANY, AS WELL AS MONITOR THE EXECUTION AND
IMPLEMENTATION OF CONTRACTS.

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,