TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE 
S.B. No.
»f thi? •»*/
25 AUG-7 Pl:U
RycetvitiY:
Introduced by SEN. WIN GATCHALIAN
AN ACT ENHANCING THE COMPETITIVE SELECTION PROCESS FOR POWER 
SUPPLY AGREEMENTS IN THE ELECTRIC POWER SECTOR
EXPLANATORY NOTE
Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 
2001, declares it the policy of the State to ensure the quality, reliability, security, and 
affordability of supply of electric power, to ensure transparent and reasonable prices 
of electricity in the regime of free and fair competition and full public accountability, 
and to protect the public interest as it is effected by the rates and services of electric 
utilities and other providers of electric power.
The use of a competitive process to cultivate private sector participation in the 
generation sector has long been recognized by the Department of Energy (DOE) in 
order to ensure that the distribution utilities (DUs) are able to meet the demand for 
its Captive Market at the least cost manner. The DOE have released various policy 
issuances mandating a Competitive Selection Process (CSP) for the procurement of 
power supply agreements. Under these issuances, only the DU can initiate the conduct 
the CSP. Moreover, the government is not allowed to administer or conduct the CSP. 
However, there are instances when a DU fails to meet its demand because the DU 
failed to initiate the conduct of the CSP or because of the delays in the CSP process.
In order to ensure that a CSP is conducted in a timely manner, this measure grants 
the government through the power to initiate the conduct of CSP for the DU either by 
itself or by designating the same to a third party auctioneer or the National Power


Corporation under specific instances. This measure also allows the DU to designate 
the government through the DOE to conduct the CSP.
immediate passage of this measure is spdght.
N GATCHAI


TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S.B. No. 1081
of rhr
25 AUG-7 PI :U
RECiVBIY:
Introduced by Senator WIN GATCHALIAN
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AN ACT ENHANCING THE COMPETITIVE SELECTION PROCESS FOR POWER 
SUPPLY AGREEMENTS IN THE ELECTRIC POWER SECTOR
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
SECTION 1. Short Title. - This Act shall be known as the "Enhanced CSP Act".
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to;
(a) Ensure the quality, reliability, security, and affordability of electric power 
supply;
(b) Make certain that procurement of power supply agreements by distribution 
utilities engenders transparency, enhances certainty of supply, and guarantees 
stability of electricity prices to captive consumers; and
(c) Protect public interest by ensuring least cost rates and quality of service to 
captive customers while the country has not yet transitioned to full retail 
competition.
SEC. 3. Scope and Application. - This Act shall apply to all distribution utilities 
in the procurement of supply for their captive market including those in the off-grid 
areas.


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SEC. 4. Definition of Terms. - For purposes of this Act, the following terms shall 
be defined as stated below: Provided, That other terms used in this Act but not defined 
herein shall be understood to mean the way they are defined in Republic Act No. 9136, 
otherwise known as the Electric Power Industry Reform Act of 2001, and its 
implementing rules and regulations:
(a) Captive market refers to the electricity end-users who do not have the choice 
of a supplier of electricity, as determined by the ERC in accordance with 
Republic Act No. 9136;
(b) Competitive selection process (CSP) refers to a procedure wherein a distribution 
utility or a group of distribution utilities, on their own or through a demand 
aggregator, undertake a transparent and competitive procurement of power 
supply agreements, in accordance with the provisions of this Act;
(c) Distribution utility (DU) refers to any electric cooperative, private corporation, 
government-owned utility, or existing local government unit which has a 
franchise to operate a distribution system in accordance with its franchise and 
Republic Act No. 9136, including those whose franchise area covers economic 
zones;
(d) Electric cooperative (EC) refers to a DU organized pursuant to Presidential 
Decree No. 269, otherwise known as the National Electrification Administration 
Decree as amended;
(e) Off-grid refers to areas that are not connected to the main high voltage 
backbone system;
(f) Power Supply Agreement (PSA) refers to a contract between a generation 
company and a supply aggregator or a DU whereby the latter purchases 
electricity from the former;
(g) Third party auctioneer (TPA) refers to a natural or juridical person designated 
by the DU or by the DOE to coordinate and administer the conduct of a CSP;
Sec. 5. Conduct of CSP by the Government- At the option of the DU, it may 
designate the DOE to conduct the CSP for the procurement of its PSAs. Provided 
that, in the following instances, the DOE may, motu proprio, decide that a CSP shall 
be conducted for a DU:


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(a) When a DU experiences power outages beyond the allowable standard to be 
determined by ERC and such outages are attributable to shortage of power 
supply for the past year, and the DU has failed to undertake measures to 
resolve these issues despite notices from the DOE or the ERC; or
(b) When DOE anticipates that the DU shall be unable to meet its demand due to 
an increase in demand in the franchise area covered by DU and the DU has 
failed to undertake measures to procure additional supply despite notices from 
the DOE.
In the event that the DOE decides that a CSP shall be conducted for a DU, the DOE 
may conduct the CSP or delegate the conduct of the CSP to a Third Party Auctioneer 
(TPA) or the National Power Corporation (NPC), in the case of off-grid DUs, to conduct 
the CSP.
SEC. 6. The Department of Energy. - In addition to its powers and functions 
under Republic Act No. 7638, otherwise known as the Department of Energy Act of 
1992, as amended, the DOE:
(a) May conduct the CSP upon the designation of the DU or motu proprio pursuant 
to Section 5 of this Act;
(b) Shall exercise its supervisory power over the CSP by ensuring that the general 
principles provided in this Act are complied with.
SEC. 6. The Energy Regulatory Commission. - In addition to its powers and 
functions in Republic Act No. 9136, the ERC shall determine the allowable standards 
for power outages pursuant to Section 4 of this Act;
SEC. 7. Implementing Rules and Regulations. -The DOE, in consultation with 
ERC, National Electrification Administration, National Power Corporation, and public 
and private stakeholders shall formulate the implementing rules and regulations of 
this Act within thirty days (30) from its effectivity.


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SEC. 8. Separability Clause. - If any portion or provision of this Act is declared 
to be unconstitutional, the remainder of this Act or any provisions not affected thereby 
shall remain in force and effect.
SEC. 9. Repealing Clause. - Any law, presidential decree or issuance, executive 
order, letter of instruction, rule or regulation inconsistent with the provisions of this 
Act is hereby repealed or modified accordingly.
SEC. 10. Effectivity. - This Act shall take effect fifteen (15) days following its 
complete publication in the Official Gazette or a national newspaper of general 
circulation.
Approved,