: iS
? RECEIVED
© ome U1 JUL 2017

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
17" CONGRESS
Second Regular Session

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House Bill No. 5961

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Introduced by Representative Wes Gatchalian
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EXPLANATORY NOTE

This bill aims to enhance the existing governance structure of the Energy
Regulatory Commission (ERC) by providing:

(1) additional qualifications and requirements for ERC Commissioners to ensure
board diversity;

(2) prohibitions and disqualifications for ERC Commissioners and their relatives
to prevent conflicts of interest;

(3) the separation of the Chairperson and CEO functions to assure a balance of
power;

(4) defined duties and responsibilities of the Chairperson, the Commission, and
the Executive Director to increase invididual and board accountability;

(5) open meetings during deliberations of the Commission to guarantee public
transparency;

(6) access to Information to enhance knowledge and education on regulatory
matters affecting public welfare; and

(7) abilities for violation of, among others, open meeting and access to
information provisions.

ERG, as the regulator, has a definitive role in safeguarding the interests of the
public, As such, its governance structure should foster independence, transparency, and
accountability. An evaluation of ERC’s governance structure using best practice
principles for regulatory policy and even the country’s Code of Corporate Governance
for Publicly Listed Companies shows areas for improvement,

Public utility at its core allows an individual to step into the shoes of the
sovereign, and just as how public service is public trust, the same exacting standards are
demanded from operators privileged with such. It is thus proper that regulators such as
the ERC are given all the tools and structures It needs to perform its crucial mandate and
functions.

ON WES GATCI IAN
Representative



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
17" CONGRESS
Second Regular Session

House Bill No. 5961

-

Introduced by Representative Wes Gatchalian

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AN ACT
ENHANCING THE GOVERNANCE STRUCTURE OF THE
ENERGY REGULATORY COMMISSION

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

CHAPTER |
GENERAL PROVISIONS

SECTION 1. Title, — This Act shall be known as the “Energy Regulatory Commission
Governance Act of 2017."

SECTION 2. Declaration of Policy.— The State recognizes the significant role of the
Energy Regulatory Commission in ensuring transparent and reasonable prices of
electricity in a regime of free and fair competition and full public accountability to achieve
Greater operational and ecanomic efficiency. Likewise, public interest domands the
Protection of consumers as they are affected by the rates and services of electric utilities
land other providers of electric power. Towards this end, the State shall

4) Establish a strong, independent, transparent, and accountable regulatory body; and

) Institutionalize a system to ensure the efficient and effective performance of the
functions and mandates of the regulatory body to enhance competitiveness in the electric
power industry.

SECTION 3. Scope. — This Act shall enhance the existing governance mechanisms of
the Energy Regulatory Commission to foster independence, transparency, and
accountability,

‘SECTION 4. Definition of Terms. — As used in this Act, the following words or terms shall
have the following meaning, unless provided otherwise:

2) “Career Executive Service Board” refers to the governing body of the Career Exacutive
Service (CES) created under Presidential Decree No. 1 Series of 1972:

) “Career Executive Service Eligibility” refers to the eligibility conferred to @ person who
passes the four-stage CES Eligibility Examination process and meets the other
requirements prescribed by the Career Executive Service Board,

€) “Career Executive Service Officer” refers to a person with CES eligibility appointed by
the President to a CES rank upon the recommendation by the Career Executive Service
Board;


4) “Commission” refers to the of the Energy Reguiatory
Conmrioaon rier Rapbks As 9196 conmoned of one) Chekecrn ene ur)
Com

exists;
9) “Electric Power Industry Participant” refers to any person or entity engaged in the
, transmission, distribution, or supply of electricity;
ny Regulatory Commission” refers to the regulatory agency created under

|) “Joint Congressional Power Commission” refers to the Commission created under
Republic Act No. 9136,

1) "Key ERC Personnel” refers to employees who hold executive or managerial positions
ln the ERC;

k) “Meeting” refers to a deliberation of the Commission with respect to any case, issue, or
matter within its jurisdiction; and

|) “Public Hearing” reters to an official proceeding of a government agency during which
the public is accorded the night to express its position on the subject matter at hand.

CHAPTER I
COMPOSITION OF THE COMMISSION

‘SECTION 5. The Commission, — The Commission shall be the sole governing body of
the ERC, and shall formulate its policies and direct its affairs.

All executive functions of the ERC shall rest on the Commission: Provided, That such
executive ‘shall be limited to the duties and responsibilities enumerated in
Section 11 of this Act

‘SECTION 6. Qualifications. ~ All members of the Commission shail be:
a) Natural-born citizens and residents of the Philippines;

economics,
finance, commerce, engineering, or other experience relevant to the energy sector with at
least ten (10) years of active practice in their respective fields of expertise.

No member shail have been a candidate for any elective national or local office in the
immediate preceding elections, whether regular or special: Provided further, That one (1)
‘shall be @ lawyer, one (1) shall be an economist, one (1) shall be an engineer, and one
(1) shall be a certified public accountant or have a background in finance.

SECTION 7, Requirements, — The members of the Commission shall, upon assumption

any employment,
pecuniary interest in an Electric Power Industry Participant;
b) Publicly disclose if his or her spouse, partner, and any relative by consanguinity or
affinity within the fourth civil degree is employed or has a consultancy or any connection
with, oF has any pecuniary interest in an Electric Power Industry Participant,


©) Divest through sale or legal disposition any and all interests in an Electric Power
Industry Participant; and
4d) Terminate employment or consultancy with any Electric Power Industry Participant.

SECTION 8. Prohibited Acts. ~The members of the Commission, within the duration of
their term, are prohibited trom:

a) Taking up any employment or consultancy arrangement with any Electric Power
Industry Participant;

b) Holding any connection to and any pecuniary interest in an Electric Power Industry
Participant,

1c) Holding any other office or employment; and

4) Directly or indirectly practicing any profession, participating in any business, or be
financially interested in any contract with, or any franchise, or special privileges granted
by the government or any subdivision, agency, or instrumentality thereof, including
‘government-owned and controlled corporations or their subsidiaries.

The members of the Commission, after the cessation of their service, are prohibited from:
2) Running for office in the election immediately succeeding their cessation from office,
and

b) Personally appearing or practicing as counsel or agent on any matter pending before
the Commission for two (2) years following the cessation of their service.

Any spouse, partner, and relative by consanguinity or affinity within the fourth civil degree

of the mombers of the Commission are prohibited from:

'8) Taking up any employment or consultancy arrangement with an Electric Power

Industry Participant during the inoumbency of the member of the Commission to whom

he or she is related to;

b) Holding any connection to and pecuniary interest in any Electric Power Industry

Participant during the incumbency of the member of the Commission to whom he of she

is related to;

¢c) Appearing as counsel or agent on any matter pending before the Commission or

transacting business directly or indirectly therein during the incumbency of the member of

the Commission lo whom he or sho i elated to, and within two (2) years from cessation
ir service.

SECTION 9. The Chairperson. ~ The Chairperson shall be from the fields of energy, law,
‘economics, finance, commerce, or engineering with at least ten (10) years of experience
in energy and/or public utility regulation: Provided, That the qualifications and
requirements in Sections 6 and 7 of this Act are complied with,

SECTION 10. Duties and Responsibilities of the Chairperson. ~The Chairperson shall:
‘a) Provide leadership direction for the Commission in matters such as but not limited to
development and determination of strategies and policies in order to effectively comply
with its mandate under Republic Act 9136;

'b) Ascertain that the strategies and policies agreed upon by the Commission are
effectively Implemented by the Executive Director;

©) Promote collaborative relationships and open communication between and among
members of the Commission;

) Set, in consultation with other members of the Commission, the Executive Director,
and the Secretariat, the Commission's meeting schedule and agenda lo take full account
of the important issues facing the Commission and the concems of management, and
‘ensure that adequate time is available for thorough discussion of each;


) Ensure that the members of the Commission undergo capacity building programs to
‘continuously enhance technical competence, are properly briefed on issues pending
before the Commission, and receive, in a timely manner, adequate, accurate, clear,
complete, and reliable information to fulfill their duties;

1) Preside over meetings of the Commission: Provided, That the Chairperson has the
right to vote on matters pending before the Commissian;

{g) Ascertain that all key and appropriate issues are discussed, deliberated upon, and
resolved by the Commission in a timely manner;

h) Create an environment that allows constructive discourse during open meetings,
executive sessions, and public hearings;

|) Ensure that the Commission's decisions are in furtherance of its mandate under
Republic Act 9136,

|) Secure that the Commission avoids acts which unduly influence, impede, or hamper
the Executive Director or any ERC employee from effectively fulfiling his or her duties
and responsibilities; and

k) Establish good corporate govemiance practices and procedures and promote the
highest standards of independence, transparency, integrity, and probity.

SECTION 11. Duties and Responsibilities of the Members of the Commission. ~In
addition to the functions enumerated in Republic Act 9136, the members of the
Commission shall:

4) Regularly attend and actively participate in the meetings of the Commission where any
CaS@, ISSUE, OF matter within its jurisdiction is under consideration;

+b) Recommend to the Chairperson the inclusion in the agenda of any case, issue, or
‘matter deemed appropriate in the performance of the Commission's functions;

©) Be properly informed about and thoroughly analyze cases, issues, and matters
pending before the Commission;

4) Take part in continuous education and capacity building programs of the Commission
to enhance technical competence;

®) Abstain from acts which unduly influence, impede, or hamper the Executive Director or
any ERC employee from effectively fulfiling his or her duties and responsibiliies;

£) Appoint the Executive Director of the ERC: Provided, That the requirements, prohibited
acts, qualifications, and duties and responsibilities stated in Sections 7, 8, 12, and 13 of
this Act are complied with;

‘9) Act on the selection and appointment of Key ERC Personnel: Provided, That the
Selection process for Key ERC Personnel must be in accordance with ERC’s Enhanced
Merit Selection Plan and/or other plans related to personnel selection duly approved by
the Commission;

hh) Review and act on the endorsement of the proposed ERC budget: Provided, That
Such endorsement must come from the Executive Director and must be substantiated
with suporting documents;

i) Initiate, motu poprio or upon formal complaint, investigations against the Executive
Director and act upon these investigations: Provided, That such investigation is without
Projudice to the filing of administrative or criminal cases against the Executive Director;
and

J) Perform in good faith and to the best of its ability, the functions stated in Republic Act
9136 and the duties and responsibilities specified in this Act.

CHAPTER Ill
ERC OPERATIONS

SECTION 12. The Executive Director. ~ The Commission, acting collectively, shall
appoint an Executive Director who shall act as the Chief Executive Officer of ERC until
‘resignation, retirement, ot unless terminated earlier for cause. The Executive Director


‘who shall be a Career Executive Service Officer of the ERC, shall have relevant
‘experience in any of the fields of law, economics, commerce, management, finance, or
‘engineering for at least ten (10) years, and shall be subject fo the same requirements
and prohibitions as indicated in Sections 7 and 8 of this Act.

When an Executive Director who has rendered at least ten (10) years service in such
capacity retires, he or she shail receive during the duration of his or her natural life,
‘retirement benefits equivalent to his or her last salary plus representation and other
allowances.

SECTION 13. Duties and Responsibilities of the Executive Director. ~ The duties and
‘responsibilities of the Executive Director shall include but shall not be limited to:

18) Developing and proposing, for the Commission's approval, the operationalization of
tho strategies and policies agreed upon by the Commission;

) Effectively executing the approved operationalization of the strategies and policies
agreed upon by the Commission;

c) Leading the management of the daily operations of ERC in accordance with the plans
‘and within the budget approved by the Commission;

4d) Assuming full responsibility for the overall supervision and control of all divisions, units,
‘and services of the ERC;

€) Assigning to each division, unit, and service of the ERC such duties that are
considered necessary or expedient;

1) Coordinating the workings of the divisions, units, and services of the ERC;

9) Establishing a mechanism for capacity building for all employees of the ERC to
Continuously enhance technical competence: Provided, That such mechanism will based
on the principle of meritocracy;

k) Ensuring compliance with the ERC’s Enhanced Merit Selection Plan and/or other plans
rolated to personnel selection duly approved by the Commission when It comes to the
hiring and promotion of employees;

h) Leading the management to ensure effective working relationships with the
Commission by regularly communicating with the Chairperson to review key
developments, issues, opportunities, and concerns;

|) Ensuring that the management gives priority to providing documents and reports which
contain relevant, accurate, timely, and clear information necessary for the Commission to
fulfil its duties;

|) Maintaining regular dialogue with the Commission while ensuring that the Commission.
especially the Chairperson, is alarted to forthcoming complex, contentious, sensitive, or
strategic issues facing the ERC;

k) Advising the Commission on any matter referred to the Executive Director;

|) Managing the affairs of the ERC in accordance with good corporate governance
practices and procedures while promoting the highest standards of independence,
transparency, integrity, and probity;

'™m) Initiating investigations and recommending administrative sanctions against erring
employees, without prejudice to the filing of any criminal action against the concemed

employee;

1) Regularly submitting to the Commission updates on the operations of ERC; and
©) Performing such other duties as the Commission may assign,

All decisions of the Executive Director involving budgeting and disbursement of funds
shall be subject to the approval of the Commission

CHAPTER IV
TRANSPARENCY AND ACCOUNTABILITY


SECTION 14. Open Meeting. — All meetings of the Commission shail be open to the
public: Provided, That the public may only participate during public hearings: Provided
further, That a live web streaming or any related technology of the open meeting shall be
posted: Provided finally, That the transcript of stenographic notes and minutes of the
‘open meeting shall be made available to the public, whether on the website or otherwise,
within one (1) week from the date of the open meeting,

The Commission, upon a majority vote, may decide to meet in an executive session:
Provided, That before going into an executive session, the Commission must convene in
‘an open meeting, identity the reason for the executive session while stating all the
subjects that may be revealed without compromising the purpose for which the executive
‘session was called, declare whether the Commission will reconvene in an open meeting
at the end of the executive session, and take a roll cal vote to enter into executive
‘session.

Executive sessions may be called for the following reasons;

8) To discuss the discipline or dismissal of or complaints or charges brought against a
public officer, employee. or staff of ERC; and

3) To caus trade secrets, condental, competivey-senstve, or other proprietary
Information,

SECTION 15, Public Notice of Open Meetings. ~ The Commission shail provide the
public with notice of its meeting and the agenda at least seven (7) working days before
the scheduled date of the meeting: Provided, That for emergency meetings, the notice
‘may be posted within a reasonable time prior to the meeting: Provided further, That
public notices shall be posted in a manner easily accessible to the public such as but not
limited to actual and web posting.

SECTION 16, Orders, Decisions, and Resolutions. ~ All orders, decisions, and
resolutions shall undergo deliberations and once approved by the required number of
votes during open meetings provided a quorum is present, shall forthwith be promulgated
within thirty (30) days from date of the open meeting and published online in accordance
with Section 18 hereof,

SECTION 17. Support Desk. — A support desk shall be made available to the public
which will supply assistance to Consumers for a better understanding of all proceedings
and issuances of the Commission as well as any and all matters which affect the
electricity rates charged to Consumers: Provided, That the matter shall not be
confidential information.

‘Anew office may be created for this Support Desk should the Commission deem it
necessary,

SECTION 18. Online Publication. — All petitions, applications, and reportorial
fequirements of Electric Power Industry Participants, including all annexes thereto,
‘except for those considered as confidential information, as well as orders, decisions, and
resolutions of the Commission, shall be posted on the ERC website within five (5) days
from submission in the case of petitions, applications, and reportorial requirements, or
‘promulgation in the case of orders, decisions, and resolutions.


SECTION 19. Access to Information, ~ Every Consumer has a right to information and
shall, on request, be given access to any information of public concem under the control
of the Commission: Provided, That the access to information shall nat be granted it:

4) The information is considered confidential information under the ERC Rules of
Practice and Procedure;

b) The information consists of minutes or records of advice given, or of opinions
‘expressed during decision-making or policy formulation in the course of executive
sessions;

) The information requested consists of drafts of orders, resolutions, decisions, or
memoranda of the Commission in the exercise of its regulatory function; and

4) The information requested pertains to trade secrets, competitively-sensitive, or other
proprietary information, whenever the revelation thereof would prejudice the interests of a
Natural or juridical person in trade, industrial, financial, or commercial competition.

‘SECTION 20. Procedure of Access. — Any person who desires to obtain information shall
‘submit, free of charge, a request to the Commission personally, by mall, or through
electronic means. Within fifteen (15) working days from the receipt thereof or as soon as
practicable, the Commission shall comply with the request: Provided, That the period
‘may be extended if a fortuitous event occurred, the information requested requires a
search of the Commission's field offices ar an examination of voluminous records, or
‘other analogous cases.

SECTION 21, Access and Processing Fees. ~The Commission may charge a
reasonable fee which shall in no case exceed the actual cost of reproduction, copying, or
transcription of the information requested: Provided, That the Commission may waive the
fees whenever it is satisfied that the person who requested is indigent or that the cost of
reproduction is negligible.

SECTION 22. Exemption from Compliance. ~ The Commission is excused from
‘complying with @ subsequent identical or substantially similar request from the same
requesting party: Provided, That It has previously complied with a similar request for
Information unless a reasonable interval has lapsed between compliance with the
previous request and the making of the current request.

SECTION 23. Administrative Offenses and Penalties. - Any ERC official or employee
‘who refuses to comply with Section 14 of this Act shall be suspended from service for six
(6) months and one (1) day to one (1) year without pay on the first offense, and shall be
dismissed from service and be perpetually disqualified from re-employment in any
government agency or instrumentality on the second offense,

Any ERC official or employee who refuses to comply with, of fails to perform the acts
required within the specified period of time in Sections 15. 16, and 18, shall be
feprimanded on the first offense, shall be suspended from service for one (1) to thirty (30)
days on the second offense, and shall be dismissed from service and be perpetually
disqualified from re-employment in any government agency or instrumentality on the third
offense,

‘Any ERC official or employee who refuses to comply with, or fails to act on a request for
Information pursuant to Sections 19 and 20 of this Act shall be suspended from service
{or six (6) months and one (1) day to one (1) year without pay on the first offense, and


‘shall be dismissed from service and be perpetually disqualified from re-employment in
‘any government agency or instrumentality on the second offense,

‘SECTION 24. Criminal Offenses and Penalties, ~ The penalty of imprisonment of not less
than one (1) month but not more than six (6) months and a fine ranging trom ten
thousand pesos (Php 10,000.00) to one hundred thousand pesos (Php 100,000.00) shall
‘be imposed upon any ERC official or employee who:

(1) Falsely denies or conceals the existence of information that is @ proper subject for
disclosure under Section 19 of this Act;

(2) Destroys, or causes to be destroyed, information and/or documents being requested
‘that Is @ proper subject of disclosure under Section 19 under this Act for the purposes of
frustrating the requesting party's access thereto;

(3) Divulges or releases information covered by confidentiality under Sections 14 and 19
Of this Act;

the violation committed in this Act is induced by and/or assisted by a private Individual
oF corporation, partnership, or any kind of judicial entity, the penalty provided herein shall
be Imposed on its executive officer and/or other officials responsible therefor: Provided,
That they shall suffer, in addition to the penalties provided herein, the automatic
revocation of their license to operate,

CHAPTER IV
GENERAL PROVISIONS

SECTION 25, Transitory Provision. ~ The current members of the Commission shall
continue to serve in such capacity until the complation of their term,

The qualifications, requirements, and prohibitions stated in Sections 6, 7, and 8 of this
‘Act shall apply to new members of the Commission,

The current Chairperson shall immediately divest himself of his role and powers as the
Chief Executive Officer of the Commission upon the effectivity of this Act.

The current Executive Director shall assume the duties and responsibilities laid out in
Section 13 of this Act upon the effectivity of this Act: Provided, That upon such
assumption, the current Executive Director shall immediately comply with the
fequirements and prohibitions stated in Sections 7 and 8 of this Act: Provided further,
That the current Executive Director shall serve as such until his resignation, retirement or
termination for cause,

SECTION 26. Oversight Committee, — Upon the effectivity of this Act, the JCPC
established under Republic Act No, 9136 or the Electric Power Industry Reform Act of
2001 shail exercise oversight powers over the implementation of this Act.


SECTION 27. 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 in effect.

SECTION 28. Repealing Clause. — All laws, decrees, orders, rules and regulations or
parts thereof which are inconsistent with or contrary to the provisions of this Act are
hereby repealed, amended or modified accordingly.

‘SECTION 29. Effectivity. ~ This Act shall take effect fiteen (15) days after its publication
In at least two (2) national newspapers of general circulation

Approved,