L 
192% 
tIfCEIVED nv :I 
SENATE 
S.B. No. - 
Introduced by Senator JUAN PONCE ENRILE 
EXPLANATORY NOTE 
The Electric Power Industry Reform Act, also known as the EPIRA 
law, was enacted into law in 2001 to ensure the quality and reliability of the 
supply of elechic power that would translate to lower consumption costs. 
However, the passage of the law was accompanied by increases in 
electric bills, confusion in the implementation and enforcement of the 
provisions of the law and inevitably caused a haphazard market behavior in 
the electric power industry. 
The EPIRA law became evidently anti-poor, anti-people, benefiting 
only a selected number of power generators and distributors. It resulted in 
electricity cost that is more burdensome on the part of the consumers. At the 
same time, the issues the law originally intended to resolve were not 
properly addressed. 
It is therefore in our national interest to pass an amendatory bill that 
will clarify vague and conflicting provisions of the law, afford protection to 
end-users of electricity and to level the playing field for all the industry 
players. We need a pragmatic and substantial solution to make the cost of 
electricity affordable to the consumers while recognizing the right of the 
electric power industry players to a just and reasonable return on their 
investments. 
This bill seeks to lessen the hardship on electricity consumers by 
preventing certain industry players to pass on the costs of their 
inefficiencies, mistakes and questionable onerous contracts or dealings. 
In view of the foregoing , approval of this bill is earnestly sought. 


, 
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,P 
L -. 
YHIRTEENTH CONGRESS OF THE REPUBLlC ) 
OF THE PHILIPPINES 
First Regular Session 
Introduced by Senator JUAN PONCE ENRILE 
AN ACT 
REVISING REPUBLIC ACT NO. 9136 ENTITLED "AN ACT ORDAINING 
REFORMS IN THE ELECTRIC POWER INDUSTRY, AMENDING FOR THE 
PURPOSE CERTAIN LAWS AND FOR OTHER PURPOSES" 
Be it enacted bv the Senate and House of Reuresentatives of the Philipuines in Conpress 
assembled: 
Section 1. Republic Act No. 9136, otherwise known as the Electric Power Industry 
Reform Act of 2001, is hereby revised to read as follows: 
. 
"CHAPTER I 
"TITLE AND DECLARATION OF POLICY 
"SEC. 1. 
Short Title. - This Act, HEREINAFTER REFERRED 
TO AS THE ACT, shall be lcnown as the "Electric Power Industry Reform Act 
of 2001". [It shall hereinafter be referred to as the Act.] 
"SEC. 2. 
Declaration of Policy. - 
It is hereby declared the policy 
of the State: 
(a) 
To ensure and accelerate the [total electrification of] PROVISION 
OF ELECTRIC SERVICE TO EVERY COMMUNITY IN the country; 
(b) 
To ensure the quality, reliability, security, and affordability of the 
supply of electric power; 
(c) 
To ensure transparent, JUST and reasonable prices of electricity in 
THE COUNTRY UNDER a regime of free and fair competition and full [public] 
accountability TO THE END-USERS OF ELECTRICITY AND, AT THE 
SAME TIME, to achieve greater operational [and economic] ECONOMY, 
efficiency, AND VIABILITY and TO enhance the competitiveness of Philippine 
products in the [global] WORLD market; 
(d) 
To ENCOURAGE, PROMOTE, AND enhance, the tinflow] 
FLOW of private capital TO, and broaden the ownership base of, the power 
generation, transmission, and distribution sectors[;] OF THE ELECTRIC 
POWER INDUSTRY; 
(e) 
To THE EXTENT IT IS LEGALLY ALLOWABLE AND 
JUSTIFIED, TO ensure A fair and non-discriminatory treatment of BOTH THE 
public and private [sector1 entities ENGAGED IN THE ELECTRIC POWER 
INDUSTRY in CONNECTION WITH the process of restructuring the [electric 
power] SAID industry; 
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( f )  
To protect the [public] interest OF THE GENERAL PUBLIC 
AND THE INTEREST OF THE END-USERS OF ELECTRICITY, as [it is] 
THESE INTERESTS ARE affected by the WHEELING CHARGES, rates, 
and services of THE electric TRANSMISSION, SUB-TRANSMISSION,'IR 
DISTRIBUTION utilities [and] OR BY THE PRICES OF THE other 
providers of electric power[;] UNDER THIS ACT; 
(g) 
To assure socially and environmentally compatible energy sources 
and ELECTRIC POWER infrastructure; 
(h) 
To SEARCH FOR AND promote the utilization of indigenous, 
[and] new, and renewable energy SOURCES AND resources in [power] THE 
generation OF ELECTRIC POWER in order to reduce THE dependence OF 
THE COUNTRY on imported energy[;] SOURCES AND RESOURCES; 
(i) 
To provide for [an] THE MOST ADVANTAGEOUS, 
BENEFICIAL, orderly, and transparent SALE, DISPOSITION, AND 
privatization of the GENERATION ASSETS, TRANSMISSION AND SUB- 
TRANSMISSION assets [and], REAL ESTATE ASSETS, OTHER 
DISPOSABLE ASSETS, IPP CONTRACTS, AND liabilities of the National 
Power Corporation (NPC); 
(i) 
To establish a TRULY IMPARTIAL, DEPENDABLE, strong, 
and [purely] independent regulatory [body] GOVERNMENT AGENCY and 
system [to ensure consumer protection], WHICH SHALL PROTECT THE 
THE SAME TIME, RECOGNIZE THE RIGHT OF THE ELECTRIC 
POWER INDUSTRY PARTICIPANTS TO A JUST AND REASONABLE 
RETURN ON THEIR INVESTMENTS, 
AND 
WHICH SHALL 
PROMOTE, FOSTER, and enhance [the competitive] COMPETITION IN 
THE operation of the electricity market[; and] OF THE COUNTRY; AND 
GENERAL PUBLIC AND THE END-USERS OF ELECTRICITY AND, AT 
(k) 
To encourage [the efficient use of energy and] AND PROMOTE 
ECONOMY AND EFFICIENCY IN THE UTILIZATION OF ELECTRIC 
AND IN THE other modalities of THE [d]Demand [s]Side [mIManagement. 
POWER IN THE COUNTRY BY THE END-USERS OF ELECTRICITY, 
"SEC. 3. 
Scope. - This Act shall provide [a] THE framework for 
the GRADUAL restructuring of the electric power industry[, including the]; 
FOR THE BENEFICIAL SALE, DISPOSITION, AND privatization of the 
[assets of NPC, the] GENERATION ASSETS, TRANSMISSION AND SUB- 
TRANSMISSION 
ASSETS, 
REAL 
ESTATE 
ASSETS, 
OTHER 
DISPOSABLE ASSETS, IPP CONTRACTS, AND LIABILITIES OF NPC; 
FOR THE ORDERLY transition to the desired competitive MARKET 
structure[, and the definition] IN THE ELECTRIC POWER INDUSTRY, 
AND FOR THE CLEAR DEFINITION, DIVISION, AND ASSIGNMENT of 
the responsibilities of the various CONCERNED government agencies and 
private entities[.] THAT ARE INVOLVED IN THE ELECTRIC POWER 
INDUSTRY. 
"SEC. 4. 
(A) 
"AFFILIATE"/"ASSOCIATED 
ENTITY OR PERSON 
Definition of Terms. - 
REFERS TO ANY ENTITY OR PERSON WHICH, ALONE OR 
TOGETHER WITH ANY OTHER ENTITY OR PERSON, DIRECTLY OR 
INDIRECTLY, THROUGH ONE OR MORE INTERMEDIARIES, 
CONTROLS, IS CONTROLLED BY, OR IS UNDER COMMON 
CONTROL WITH ANOTHER ENTITY OR PERSON. 


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[(all (B) 
"Aggregator" refers to a person or entity[, engaged] 
WHICH, 
WITHOUT A 
LEGISLATIVE FRANCHISE, IS DULY 
LICENSED BY THE COMMISSION TO ENGAGE in consolidating electric 
power demand of end-users OF ELECTRICITY in [the] A contestable market[,] 
WITHIN A FRANCHISE TERRITORY OF ANOTHER PARTY for the 
purpose of purchasing and reselling electricity TO SUCH END-USERS on a 
group basis; 
Kb)l (C) 
"Ancillary Services" refer to those services that are 
necessary to support the transmission of capacity and energy from SOURCES 
AND resources to loads while maintaining reliable operation of the transmission 
system in accordance with good utility [practice] PRACTICES and the Grid 
Code WHICH IS REQUIRED to be adopted in accordance with this Act; 
Kc)l (D) 
"Captive Market" refers to [electricity end-users who do 
not have the choice of a supplier of electricity, as may be determined by the 
Energy Regulatory Commission (ERC) in accordance with this Act;] THAT 
MARKET, WHICH SHALL BE DETERMINED BY THE COMMISSION 
IN ACCORDANCE WITH THIS ACT, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING, CONSISTING OF 
END-USERS OF ELECTRICITY IN A FRANCHISE TERRITORY OF A 
DISTRIBUTION UTILITY THAT CANNOT CHOOSE THEIR SUPPLIER 
OF ELECTRICITY; 
I(4l (E) 
"Central Dispatch" refers to the [process of issuing] 
ISSUANCE OF direct instructions BY THE GRID OPERATOR to electric 
power industry participants [by the grid operator] IN ORDER to achieve the 
[economic] MOST ECONOMICAL operation, and THE maintenance of THE 
HIGHEST DEGREE OF quality, stability, reliability, and security, of the 
transmission system; 
[(ell (F) 
"Co-Generation Facility" refers to a facility [which] THAT 
produces electrical [and/or] AND OR mechanical energy and OTHER forms of 
useful thermal energy, such as heat or steam, which are used for 
RESIDENTIAL, industrial, OR commercial heating or cooling purposes through 
the sequential use of energy; 
[(Ql (GI 
"Commission" refers to the decision-making body of the 
[ERC] ENERGY REGULATORY COMMISSION (ERC) composed of a 
Chairman and four (4) members as provided under Section 138 hereof) 37 OF 
THIS 
ACT[;]. 
FOR 
PURPOSES 
OF 
CONSTRUING 
AND 
INTERPRETING THE RELEVANT PROVISIONS OF THIS ACT, THE 
TERMS "COMMISSION", "ENERGY REGULATORY COMMISSION", 
AND "ERC" SHALL, UNLESS THE CONTEXT CLEARLY INDICATES 
OTHERWISE, SHALL REFER TO THE ONE AND THE SAME ENTITY, 
[(s)l (H) 
"Concession Contract" refers [to the award by the 
government] TO A CONTRACT FROM THE NATIONAL GOVERNMENT 
OR FROM ANY OF ITS AUTHORIZED INSTRUMENTALITIES, 
WHICH GRANTS to a qualified private entity [ofj the PRIVILEGE OF AND 
THE responsibility for financing, operating, expanding, maintaining, and 
managing specific [Government-owned assets;] NATIONAL GOVERNMENT 
DISPOSABLE ASSETS; 
[(h)l (1) 
"Contestable Market" refers to [the electricity end-users 
who have a choice of a supplier of electricity, as may be determined by the ERC 
in accordance with this Act;] THAT MARKET, WHICH SHALL BE 


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DETERMINED BY THE COMMISSION IN ACCORDANCE WITH THIS 
ACT, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
WITHIN A FRANCHISE TERRITORY OF A DISTRIBUTION UTILITY 
THAT CAN CHOOSE THEIR SUPPLIER OF ELECTRICITY; 
PUBLIC HEARING, CONSISTING OF END-USERS OF ELECTRICITY 
(J) "CONTROL" REFERS TO THE POWER TO DIRECT OR 
CAUSE THE DIRECTION OF THE MANAGEMENT POLICIES OF AN 
ENTITY OR PERSON BY CONTRACT, AGENCY, OR OTHERWISE. 
[(ill (K) 
"Customer Service Charge" refers to [the] AN AMOUNT 
WHICH IS A component [in] OF the retail rate AND WHICH IS intended [for 
the cost recovery of customer-related services including,] TO RECOVER THE 
PRUDENT, JUST, AND REASONABLE COST OF ELECTRIC END- 
USER-RELATED SERVICES SUCH AS, but not limited to, meter reading, 
billing administration and collection; 
[@I (L) 
"Demand Side Management" refers to THE measures, 
DECISIONS, AND ACTIONS undertaken by distribution utilities to encourage 
end-users OF ELECTRICITY [in the proper management of their load to 
achieve] TO PROPERLY MANAGE THEIR LOADS IN ORDER TO 
ACHIEVE ECONOMY AND efficiency in the utilization of fixed 
infrastructures [in the system;] THAT ARE USED AND USEFUL IN THE 
ELECTRIC POWER SYSTEM; 
[(k)] (M) 
"Department of Energy" or "DOE" refers to the 
NATIONAL government [agency] INSTRUMENTALITY created [pursuant to 
Republic Act No. 7638 whose expanded functions are provided herein;] UNDER 
REPUBLIC ACT NO. 7638; 
I(U (N) 
"Department, o f  Finance" or "DOF" refers to the 
NATIONAL government [agency] INSTRUMENTALITY created [pursuant to] 
UNDER Executive Order No. 127[;], SERIES OF 1987; 
[(m)] (0) 
"Distribution Code" refers to a compilation of rules [and 
regulations governing electric utilities in the] INTENDED TO GOVERN AND 
GUIDE 
ELECTRIC 
DISTRIBUTION 
UTILITIES 
IN 
THE 
MANAGEMENT, operation, and maintenance of their distribution systems[, 
which includes, among others, the standards for service and performance, and 
defines and establishes the relationship of the distribution systems with the 
facilities or installations of the parties connected thereto;]. 
IT SHALL 
INCLUDE, AMONG OTHERS, THE RULES AND STANDARDS TO BE 
OBSERVED BY DISTRIBUTION UTILITIES IN RENDERING THEIR 
SERVICES TO THEIR END-USERS OF ELECTRICITY AND IN 
MEASURING THE EFFICIENCY OF THEIR PERFORMANCE, AND 
THE RULES AND STANDARDS THAT SHALL GOVERN THE 
RELATIONSHIP OF THEIR DISTRIBUTION SYSTEMS WITH THE 
FACILITIES OR INSTALLATIONS OF OTHER PARTIES CONNECTED 
TO SUCH DISTRIBUTION SYSTEMS; 
i 
[(n)l (P) 
"Distribution of Electricity" refers to the conveyance 
OR RETAIL SALE of electric power by a distribution utility TO ITS 
USERS OF ELECTRICITY through its distribution system pursuant to t 
provisions of this Act; 
[(o)] (Q) "Distribution System" refers to the system of wires and 
associated facilities belonging to [a franchised distribution utility, extending] A 
DISTRIBUTION UTILITY IN ITS FRANCHISE TERRITORY, WHICH 
EXTENDS between the delivery points [on] OF the transmission or sub- 
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transmission system [or generator connection and] OF THE TRANSCO OR OF 
A GENERATION COMPANY, AS THE CASE MAY BE, AND the point of 
connection OF SUCH WIRES AND ASSOCIATED FACILITIES to the 
premises of the [end-user;] END-USERS OF ELECTRICITY; 
[(p)] (R) "Distribution Wheeling Charge" refers to the [cost or charge 
regulated by the ERC] THE AMOUNT AUTHORIZED BY THE 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING, TO BE CHARGED for the use of [a] THE 
distribution system [andlor the availment of related services;] OF A 
DISTRIBUTION UTILITY AND OR FOR THE USE OF OTHER 
RELATED SERVICES OF A DISTRIBUTION UTILITY; 
1(4)1 (S) 
"Distributioi Utility" refers to any electric cooperative, TO 
ANY private corporation, TO ANY government-owned DISTRIBUTION utility, 
or TO ANY existing local government unit, which has an exclusive franchise to 
operate a distribution system [in accordance with this Act;] IN A SPECIFIC 
GEOGRAPHICAL AREA UNDER THIS ACT: 
[(r)l (T) 
"Electric Cooperative" refers to a distribution utility 
organized pursuant to Presidential Decree No. 269, as amended, or as otherwise 
provided in this Act; 
[6)l (U) 
"Electric Power Industry Participant" refers to any person 
or entity engaged OR WHO SHALL ENGAGE in the generation, transmission, 
distribution, or supply of electricity; 
-. . 
Wl (V) 
YEnd-user" refers to any person or entity requiring] 
THAT REQUIRE OR HAVE ACTUAL ACCESS TO the supply and delivery 
of electricity for [its own use;] THEIR OWN USE. FOR PURPOSES OF 
CONSTRUING AND INTERPRETING THE RELEVANT PROVISIONS 
OF THIS ACT, THE TERM "END-USERS OF ELECTRICITY" SHALL 
BE IDENTICAL IN MEANING TO THE TERM "CONSUMERS OF 
ELECTRICITY", 
AND 
THE PLURAL 
SHALL INCLUDE THE 
SINGULAR AND VICE VERSA, UNLESS THE CONTEXT CLEARLY 
INDICATES OTHERWISE; 
"END-USERS OF ELECTRICITY" REFER TO PERSONS OR ENTITIES 
[(u)] (W) 
"Energy Regulatory Board" or "ERB" refers to the 
[independent,] NOW DEFUNCT quasi-judicial regulatory body created under 
Executive Order No. 172, as amended; 
l(v)l (XI 
"Energy Regulatory Commission" or "ERC" refers to the 
regulatory agency created [herein;] UNDER SECTION 37 OF THIS ACT AND 
ALSO DEFINED IN PARAGRAPH (H) OF THIS SECTION; 
i 
[(w)] (Y) 
"Franchise [Area] TERRITORY" refers to a SPECIFIC 
geographical area [exclusively] assigned or granted EXCLUSIVELY UNDER A 
FRANCHISE to a distribution utility for THE distribution of electricity; 
I(4l (2) 
"Generation Company" refers to any NATURAL OR 
JURIDICAL person or entity auth,@rized by the [ERC to operate facilities used in 
the generation of electricity;] COMMISSION TO OPERATE AND OR OWN 
ELECTRIC POWER PLANT OR PLANTS AND OTHER RELATED 
FACILITIES FOR THE GENERATION AND SALE OF ELECTRICITY; 
[(y)] (AA) 
"Generation of Electricity" refers to the production of 
[electricity] ELECTRIC POWER AND ENERGY by a generation company, or 


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BY a co-generation facility, [pursuant to] IN ACCORANCE WITH the 
provisions of this Act; 
1 
[(z)] (BB) 
"Grid" refers to the high voltage backbone system of 
interconnected transmission lines, substations, and OTHER related facilities; 
[(aa)] (CC) 
"Grid Code" refers to [the set] A COMPILATION of rules 
and regulations [governing] WHICH SHALL GOVERN the safe, EFFICIENT, 
and reliable operation, MANAGEMENT, maintenance, [and] development, 
AND EXPANSION of the high voltage backbone transmission system and its 
OTHER related facilities; 
[(bb)] (DD) 
"Independent Power Producer" or "IPP" refers to an 
existing [power generating entity] GENERATION COMPANY, which is not 
owned by NPC[;] AND WITH WHOM NPC OR A DISTRIBUTION 
UTILITY HAS A VALID AND EXISTING PURCHASED POWER 
CONTRACT; 
[(cc)] (EE) 
"Inter-Class Cross Subsidy" refers to an amount charged by 
distribution utilities to RESIDENTIAL, industrial [and], commercial [end-users 
as well as to], AND other subsidizing [customer sectors] END-USERS OF 
ELECTRICITY in order to [reduce electricity rates of other customer sectors] 
COMPENSATE FOR THE REDUCED ELECTRIC RATES CHARGE TO 
OTHER 
CLASS OF END-USERS OF ELECTRICITY, such as [the] 
CERTAIN 
residential end-users[,] OF ELECTRICITY, hospitals, and 
streetlights; 
[(dd)] (FF) 
"Inter-Regional Grid Cross Subsidy" refers to [an] THE 
amount embedded in the [electricity rates of NPC charged to its customers] 
ELECTRICITY RATES THAT NPC COLLECTS FROM END-USERS OF 
ELECTRICITY located in a viable regional grid in order to [reduce the 
electricity] COMPENSATE FOR THE REDUCED ELECTRICITY rates in a 
less viable regional grid; 
[(ee)] (GG) 
"Intra-Regional Grid Cross Subsidy" refers to [an] THE 
amount embedded in the [electricity rates of NPC charged to] ELECTRICITY 
RATES THAT NPC COLLECTS FROM distribution utilities [and non- 
utilities] with higher load factor [andlor] AND OR delivery voltage in order to 
[reduce the electricity rates charged to] COMPENSATE FOR THE REDUCED 
ELECTRICITY RATES THAT NPC COLLECTS FROM distribution 
utilities with lower load factor [andor] AND OR delivery voltage located in the 
same regional grid; 
[(ff)] (HH) 
"IPP Administrator" refers to A qualified independent 
ENTITY OR entities [appointed by] THAT PSALM Corporation [who] shall 
APPOINT TO EFFICIENTLY administer, conserve, and manage the SAbE 
OF THE contracted ELECTRIC energy output of [NPC] NPC'S IPP contract$ 
[(gg)] (11) 
"Isolated Distribution System" refers to the backbone 
system of wires and associated facilities not directly connected to the national 
transmission system; 
[(hh)] (JS) 
"Lifeline Rate" refers to [the] A SPECIAL subsidized 
given to MARGINALIZED low-income [captive market] end-users OF 
ELECTRICITY IN THE CAPTIVE MARKET OF A FRANCHISE 
TERRITORY, AND who cannot afford to pay [at full cost;] THE FULL RATE 
ELECTRICITY IN THE SAME FRANCHISE TERRITORY; 
AUTHORIZED TO BE COLLECTED FROM OTHER END-USERS OF 
. 


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[(ii)] (KK) 
"National Electrification Administration" or "NEA" refers 
to the government agency created under Presidential Decree No. 269, as amended, 
[and] whose additional mandate is [further set forth herein;] SET FORTH IN 
THIS ACT; 
10j)l (LL) 
"National Power Corporation" or "NPC" refers to the 
government corporation created under Republic Act No. 6395, as mended; 
I(!&)] (MM) "National Transmission Corporation" or ["TRANSCO"] 
"THE 
TRANSCO" 
refers 
to 
the 
GOVERNMENT-OWNED-AND- 
CONTROLLED corporation [organized pursuant to this Act to acquire all the 
transmission assets of the NPC;] CREATED UNDER SECTION 8 OF THIS 
ACT TO ASSUME THE ELECTRIC TRANSMISStON AND SUB- 
TRANSMISSION FUNCTIONS8 OF NPC AND TO ACQUIRE ALL OF 
NPC'S TRANSMISSION AND SUB-TRANSMISSION ASSETS AND 
OTHER RELATED FACILITIES AND ASSETS, INCLUDING NPC'S 
TRANSMISSION AND SUB-TRANSMISSION SYSTEMS AND THE 
GRID; 
NATIONWIDE 
FRANCHISE FOR THE OPERATION OF THE 
[@)I (") 
"Open Access" refers to the [system of allowing] 
PRIVILEGE GRANTED TO any qualified,person [the use of] TO USE THE 
transmission[, andor] AND SUB-TRANSMISSION FACILITIES AND 
ASSETS AND OR THE distribution system and associated facilities OF ANY 
PUBLIC OR PRIVATE PERSON OR ENTITY, subject to the payment of 
JUST AND REASONABLE transmission [and/or] AND OR distribution [retail] 
wheeling [rates] CHARGES duly approved by the ERC, 
AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC HEARING; .''I 
[(mm) ] (00) "Philippine Energy Plan" or "PEP" refers to the overall 
energy program formulated and updated yearly by the DOE and submitted to 
Congress pursuant to Republic Act No. 7638; 
[(nn)] (PP) 
"Power Development Program" or "PDP" refers to the 
indicative plan [for] TO BE PREPARED AND FORMULATED AND 
UPDATED YEARLY BY THE DOE, IN COORDINATION WITH THE 
GENERATION COMPANIES, THE NATIONAL 
TRANSMISSION 
CORPORATION, AND THE DISTRIBUTION UTILITIES, FOR THE 
PURPOSE OF MEETING AND managing electricity demand through energy- 
efficient programs and for the PURPOSE OF upgrading, [expansion, 
rehabilitation, repair, and maintenance of power generation and transmission 
facilities, formulated and updated yearly by the DOE in coordination with the 
generation, transmission and distribution utility companies;] EXPANDING, 
REHABILITATING, 
REPAIRING, 
AND 
MAINTAINING 
THE 
ELECTRIC POWER GENERATION FACILITIES AND ASSETS, AND 
FACILITIES; 
THE TRANSMISSION AND 
SUB-TRANSMISSION ASSETS AND 
[(oo)] (QQ) 
"Power Sector Assets and Liabilities Management 
Corporation" or "PSALM Corp." refers to the GOVERNMENT-OWNED-AND- 
CONTROLLED corporation created [pursuant to Section 49 hereof;] IN 
SECTION 46 OF THIS ACT; 
[(pp)] (RR) "Privatizatiol;" refers to the sale, disposition, [change,] and 
transfer of ownership and control of [assets and IPP contracts, from the 
Government or a government corporation to a private person or entity;] THE 
GENERATION 
ASSETS 
AND 
RELATED 
FACILITIES, 
THE 
TRANSMISSION 
AND 
SUB-TRANSMISSION 
ASSETS 
AND 
FACILITIES, REAL ESTATE ASSETS, OTHER DISPOSABLE ASSETS, 
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IPP CONTRACTS, AND LIABILITIES OF NPC TO A PRIVATE PERSON 
OR PERSONS, OR TO A PRIVATE ENTITY OR ENTITIES; 
> 
[(qq)] (SS) 
"Renewable Energy Resources" [refers] REFER to energy 
resources, [that do not have an upper limit on the] THAT ARE 
REPLENISHABLE, WITHOUT ANY LIMIT AS TO THEIR total quantity 
to be used[. Such resources are renewable on a regular basis and the renewable 
rate 
is 
rapid 
enough to 
consider], 
AND 
WHOSE 
RATES 
OF 
REPLENISHMENT ARE ALMOST CONSTANT AND RAPID ENOUGH 
TO ENSURE availability over an indefinite time[. These include, among others,], 
SUCH AS biomass, solar, wind, hydro, and ocean energy; 
[(IT)] (TT) 
"Restructuring" refers to the [process of reorganizing] 
REORGANIZATION OF the electric power industry in order to introduce 
[higher efficiency, greater innovation and end-user choice. It shall he understood 
as covering a range of alternatives enhancing exposure of the industry to 
competitive market forces;] AND PROMOTE A HIGHER DEGREE OF 
CHOICE, AND A WIDER RANGE OF ALTERNATIVES THAT WILL 
ENSURE AND ENHANCE THE EXPOSURE OF THE INDUSTRY TO 
COMPETITIVE MARKET FORCES; 
EFFICIENCY, GREATER AND USEFUL INNOVATIONS, END-USERS' 
[(ss)] (UU) 
"Retail Rate" refers to the total [price paid by end-users 
consisting of] SUM OF THE AMOUNTS OF UNBUNDLED JUST AND 
REASONABLE CHARGES THAT END-USERS OF ELECTRICITY PAY 
FOR EACH KILOWATT-HOUR OF ELECTRICITY ACTUALLY 
CONSUMED BY THEM AND SHALL INCLUDE the charges for generation, 
transmission and related ancillary services[,] AND FOR distribution, supply, and 
other related charges for THE RENDITION OF electric service[;] TO THE 
END-USERS OF ELECTRICITY; 
[(tt)] (VV) 
"Small Power Utilities Group" or SPUG" refers to the 
functional [unit of NPC] AND OPERATING UNIT OF NPC THAT HAS 
BEEN created to pursue AND IMPLEMENT THE missionary electrification 
function[;] AND OPERATION OF NPC; 
[(uu)] (WW) 
"Stranded contract costs of NPC or OF A distribution 
utility" refer to the excess of the contracted cost of electricity under [eligible 
contracts] THE ELIGIBLE INDEPENDENT POWER PRODUCER (IPP) 
CONTRACTS OF NPC OR OF A DISTRIBUTION UTILITY over the actual 
selling price of [the contracted energy output of such contracts in the market. 
Such contracts shall have been approved by the ERB as of December 31, 2000;] 
THAT CONTRACTED ELECTRICITY FROM SUCH IPP CONTRACTS 
IN THE MARKET: PROVIDED, THAT IPP CONTRACTS, TO BE 
DEEMED ELIGIBLE, HAD BEEN APPROVED BY THE ERB ON OR 
BEFORE DECEMBER 31,2000; 
[(vv)] (XX) 
"Stranded Debts of NPC" refer to [any] ITS unpaid 
financial obligations [of NPC which have not been liquidated by the proceeds 
from the sales and privatization of NPC assets;], WHICH HAVE NOT BEEN 
LIQUIDATED OR OFFSET BY THE PROCEEDS FROM THE SALE, 
DISPOSITION, AND OR PRIVATIZATION OF NPC'S GENERATION, 
FACILITIES, REAL ESTATE ASSETS, OTHER DISPOSABLE ASSETS, 
AND IPP CONTRACTS; 
TRANSMISSION 
AND 
SUB-TRANSMISSION 
ASSETS 
AND 
. 
[(ww)] (YY) "Sub-transmission Assets" refer to [the] ALL ASSETS 
AND facilities related to the power delivery service below the transmission 
voltages and, based on the functional assignment of assets [including], SHALL 


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s 
, 
INCLUDE, but SHALL not BE limited to, step-down transformers used solely 
by load customers, associated [switchyard/substation] SWITCHYARD AND OR 
SUBSTATION, control and protective equipment, reactive compensation 
equipment to improve customer power factor, overhead lines, and the land where 
such [facilities/equipment are located. These include NPC assets linking the 
transmission system and the distribution system which are neither classified as 
generation nor transmission;] FACILITIES AND OR EQUIPMENT ARE 
LOCATED, AS WELL AS ASSETS OF NPC LINKING THE 
TRANSMISSION SYSTEM AND THE DISTRIBUTION SYSTEM, 
WHICH ARE CLASSIFIED NEITHER AS GENERATION ASSETS NOR 
AS TRANSMISSION ASSETS: 
[(xx)] (22) 
["Supplier" refers] "SUPPLIER OF ELECTRICITY" 
REFERS, 
UNLESS 
THE 
CONTEXT 
CLEARLY 
SUGGESTS 
OTHERWISE, to any person or entity authorized by the [ERC] COMMISSION 
to sell, broker, market, or aggregate electricity to the end-users[;], AND DOES 
NOT INCLUDE A PERSON OR ENTITY ENGAGED IN THE 
DISTRIBUTION OF ELECTRICITY; 
GENERATION, 
TRANSMISSION, 
SUB-TRANSMISSION, 
AND 
[(yy)] (AAA) "Supplier's Charge" refers to the charge imposed by AN 
electricity [suppliers] SUPPLIER for the sale of electricity to end-users[, 
excluding] IN THE CONTESTABLE MARKET, EXCLUDING the charges 
for generation AND THE WHEELING CHARGES FOR transmission and 
distribution [wheeling]; 
[(zz)] (BBB) "Supply of Electricity" [means the sale of electricity by a 
party other than a generator or a distributor in the franchise area of a distribution 
utility, using the wires of the distribution utility concerned;] SHALL REFER, 
UNLESS THE CONTEXT SUGGESTS OTHERWISE, TO THE BUSINESS 
OF 
BUYING 
AND 
SELLING, 
BROKERING, 
MARKETING 
ELECTRICITY BY A PERSON OR ENTITY, OTHER THAN A 
USERS OF ELECTRICITY, OR OF AGGREGATING DEMANDS FOR 
TERRITORY OF A DISTRIBUTION UTILITY, USING FOR THE 
PURPOSE THE WIRES AND FACILITIES OF THE DISTRIBUTION 
UTILITY CONCERNED; 
GENERATION COMPANY OR A DISTRIBUTION UTILITY, TO END- 
SUCH END-USERS 
OF ELECTRICITY, 
IN THE 
FRANCHISE 
[(aaa)] (CCC) "Transmission Charge" refers to the regulated cost or 
[charges] CHARGE AUTHORIZED BY THE COMMISSION for the use of a 
transmission system which may include the [availment] USE of 
ancillary 
services; 
l(bbb)l (DDD) 
"Transmission Development Plan" or "TDP" refers 
to the PART OF THE POWER DEVELOPMENT program PREPARED 
AND FORMULATED BY THE DOE JOINTLY WITH THE TRANSCO 
AND TO BE IMPLEMENTED BY THE LATTER IN ACCORDANCE 
WITH THIS ACT for managing the transmission system [through] AND FOR 
THE efficient planning [for the] OF ITS expansion, upgrading, rehabilitation, 
repair, and maintenance[, to be formulated by DOE and implemented by the 
TRANSCO pursuant to this Act]; 
. 
[(ccc)] WEE) "Transmission of Electricity" refers to the conveyance of 
electricity through the high voltage backbone system; and 
[(ddd)l (FFF) "Universal Charge" refers to the charge, if any, [imposed 
for the recovery of the stranded cost and other purposes pursuant to Section 34 
hereof.] TO BE DETERMINED, FIXED, AND APPROVED BY THE 


t 
10 
3 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING, IN ACCORDANCE WITH AND FOR THE 
PURPOSES MENTIONED IN SECTION 33 OF THIS ACT. 
"CHAPTER I1 
"ORGANIZATION AND OPERATION OF THE ELECTRIC 
POWER INDUSTRY 
"SEC. 5. Organization. - The electric power industry shall be divyded. 
into four (4) sectors, namely: [g]Generation[;] SECTOR, [t]Transmission[;] 
SECTOR, [dIDistribution SECTOR, and [s]Supply SECTOR. 
"SEC. 6. 
Generatim Sector. - Generation of electric power[,] IS a 
business affected with public interest[,] AND shall be competitive and open. 
Upon the effectivity of this Act, any new generation company OR 
ENTITY shall, before it operates, secure from the [Energy Regulatory 
Commission (ERC)] COMMISSION a certificate 'of ADHERENCE TO AND 
compliance [pursuant to] WITH the standards set forth in this Act, WITH THE 
GRID CODE, WITH THE DISPATCH SYSTEM, AND WITH THE 
WHOLESALE ELECTRICITY SPOT MARKET RULES, as well as WITH 
health, safety, and environmental [clearances from the] STANDARDS AND 
REQUIREMENTS OF appropriate government agencies under existing laws. 
Any law to the contrary notwithstanding, IT IS HEREBY DECLARED 
THAT UPON THE EFFECTIVITY OF THIS ACT power generation shall not 
be [considered] DEEMED a public utility operation. [For this purpose, any] 
ANY person or entity WHICH IS NOW engaged or which shall engage in power 
generation and supply of electricity shall not be required to secure a national 
franchise. 
Upon THE implementation of retail competition and open access, the 
prices charged by a generation company for the supply of electricity shall not be 
subject to ANY KIND OF regulation by the [ERC] COMMISSION, except as 
otherwise provided in this Act. 
[Pursuant to the objective of lowering] IN ORDER TO LOWER 
electricity rates to end-users, sales of [generated power] ELECTRICITY by 
generation companies shall be value-added tax zero-rated. 
The [ERC shall, in determining] COMMISSION, IN ORDER TO 
DETERMINE the existence OF ABUSE of market power [abuse] or OTHER 
anti-competitive behavior, IS HEREBY AUTHOFUZED TO require [from] 
generation companies [the submission ofj TO SUBMIT their financial 
statements[.] AT ANYTIME. 
"SEC. 7. 
Transmission Sector. - The transmission of eleG@ic 
power shall be a regulated common electricity carrier business, subject to the 
ratemaking [powers of the ERC.] AUTHORITY OF THE COMMISSION. 
The [ERC] COMMISSION shall set the standards of the v 
transmission that shall [distinguish] SET APART the transmission AS 
from the sub-transmission assets. Pending the issuance of such [new] standard 
the distinction between the transmission ASSETS and sub-transmission assets 
shall be as follows: THE TRANSMISSION ASSETS SHALL BE 230 kilovolts 
and above in the Luzon Grid[,]; 69 kilovolts and above in the Visayas GRID and 
in the isolated distribution systems[,]; and 138 kilovolts and above in the 


I 1  
? 
Mindanao Grid: Provided, That for the Visayas’ and the isolated distribution 
[system, should] SYSTEMS, IF the 69 kilovolt line DOES not form part of the 
main transmission grid and [be] IS directly connected to the substation of the 
distribution utility, it shall form part of the sub-transmission system. 
“SEC. 8. 
Creation of the National Transmission Company. - 
There 
is hereby created a National Transmission Corporation, hereinafter referred to as 
TIIE TRANSCO, which shall assume the electrical transmission functions of the 
National Power Corporation (NPC), and WHICH SHALL have the powers and 
OTHER functions hereinafter granted. The TRANSCO shall ALSO assume the 
authority and responsibility of NPC for the planning, construction and centralized 
operation and maintenance of [its] NPC’S high voltage transmission facilities, 
including grid interconnections and ancillary services. 
Within six (6) months from the effectivity of this Act, the transmission 
and sub-transmission ASSETS AND facilities of NPC and all other assets related 
to transmission operations, including the nationwide franchise of NPC for the 
operation of the transmission syitem and the grid, shall be transferred IPSO 
FACTO AND IN TOTO to the TRANSCO. The TRANSCO shall be wholly 
owned by the Power Sector Assets and Liabilities Management Corporation 
(PSALM Gorp.)[.] CREATED IN SECTION 46 OF THIS ACT. 
The sub-transmission functions [and], assets, FACILITIES, AND 
LIABILITIES, IF ANY, shall be segregated from the transmission functions, 
assets, FACILITIES, and liabilities for transparency and 
[disposal] 
DISPOSITION: Provided, That IN THE MEANTIME the sub-transmission 
FUNCTIONS, assets, AND FACILITIES shall be PERFORMED, operated, 
and maintained by THE TRANSCO until [their disposal] SUCH FUNCTIONS, 
ASSETS, AND FACILITIES ARE SOLD OR OTHERWISE DISPOSED 
AND TRANSFERRED to qualified distribution utilities which are [in a position] 
CAPABLE to take over the responsibility for PERFORMING, operatkg, 
maintaining, upgrading, and expanding said assets[.] AND FACILITIES. All 
transmission and sub-transmission related liabilities of NPC shall be transferred to 
and SHALL BE assumed by the PSALM Corp. 
THE TRANSCO shall negotiate with and thereafter, 
transfer such 
functions, assets, FACILITIES, and associated liabilities to the qualified 
distribution utility or utilities connected to such subtransmission ASSETS AND 
facilities not later than two (2) years from the effectivity of this Act or FROM the 
start of open access, whichever comes earlier: Provided, That in (the] case [of] 
THE WINNING BIDDER OR BIDDERS ARE electric cooperatives, the 
TRANSCO shall grant THEM concessional financing over a period of twenty 
(20) years: 
Provided, however, That the installment payments to THE 
TRANSCO for the [acquisition ofl sub-transmission ASSETS AND facilities 
shall be given [first priority] by the WINNING electric cooperatives [out of] 
FIRST PREFERENCE TO the net income derived from such ASSETS AND 
facilities. 
The TRANSCO shall [determine the disposal value of the 
subtransmission assets based on the revenue potential of such assets.] HIRE AT 
LEAST TWO INDEPENDENT, COMPETENT, AND REPUTABLE 
APPRAISERS TO ESTABLISH AND DETERMINE, FOR THE PURPOSE 
OF DISPOSING SAID SUBTRANSMISSION ASSETS AND FACILITIES, 
THEIR TRUE AND FAIR MARKET VALUE BASED ON THEIR 
REVENUE POTENTIAL. 
[In case of disagreement in] DISPUTES OR DISAGREEMENTS IN 
THE valuation, procedures, ownership participation, and other issues[, the ERC 
shall resolve such issues.] RELATED TO THE DISPOSITION OF THE 
SUBTRANSMISSION 
ASSETS 
AND 
FACILITIES 
SHALL 
BE 
.


J~ 
,' 12 
RESOLVED EXPEDITIOUSLY BY THE COMMISSION, AFL'EI1 DUE 
NOTICE TO ALL INTERESTED PARTIES ANI) PUBLIC HEARING. 
The ACQUISITION AND take ovcr [by a distribution utility1 of any 
subtransmission FIJNCTION, assct [shall not causc], AND FACILITY BY A 
DISTKIBUTION UTILITY OR BY DIS'I'IZIDUTION UTILITIES, AS TIiE 
CASE MAY BE, MUST NOT RJ:SULT IN a diminution of TI-IE QIJALII'Y 
AND REI.IABII.ITY OF IHE scrvicc [and quality] I3EING 1tENI)EItED to 
the end-users[. Whcre there are1 OF ELECTRICITY. IN TIIE EVENT THAT 
two or more [connected] distribution utilities[, thcl AIW. C0NNE:CTED TO 
THE SAME SUBL'I1ANSMISSION ASSEI AND FACILITY, A consortitnu 
orjuritlical entity shall hc formed [by and] TO ACQUIRE ANI) TAKE OVER 
THE SIJIiTIUNSMISSION FUNCTION, ASSET, ANI) FACIIATY, AND 
THE CONSOHI'IUM 011 JUItIDICAL ENTITY SHALL BE composed [ofl 
BY all of [them and] SUCH DISTRIBUTION UTILITIES. IN SlJCll A 
DISTIUBUTION U'TILIL'IES INVOLVED SHALL BE PROPORTIONATE 
TO THEIR RESPECTlVE LOAD REQUIREMENTS, UNLESS THEY 
AGREE OTHERWISE AMONG THEMSELVES. THE CONSOICI'IIJM 011 
JURIDICAL ENTI'L'Y SMALL, therealter [shall], be granted a franchise BY 
THE COMMISSION lo l'EI1FOKM AND opcrate the submiismission 
FUNCTION, assct, AND FACILI'TY [by the I<l<C]. 
CASE, 'rm SUBSCRIPTION RIGHTS OF 
EACH 
OF 
THE 
[The subscription rights of each distributiori utility involved shall bc 
proportionate to their load rcquircmcnts, unless otherwise agreed by thc partics]. 
[Asidc from the] EXCEPT FOR TIIE PSALM Corp., THE: 'I'KANSCO, 
and THE connected distribution utilitics, no [third] OTHKR ptlrty shall bc 
allowed ANY SHAKE IN THE ownership ANI) or 
IN THE management 
[participation], in whole or in part, lin such sub-transmission] OF 'THE 
CONSORTIUM OH .IURIl)ICAL entity[.l 'L'IIAT SHALL ACQUIRK ANI) 
FACILITY. 
TAKE OVER 'THE SUB-'TRANSMISSION FUNClION, ASSET, AND 
The TRANSCO may cxcrcise the power of emincnt domain suhject to the 
requiremcnts of the Constitution arid existing laws. 
Except as provided 
OTHERWISE !herein] IN THIS ACT, no pcrson, company, or entity, othcr than 
the TRANSCO, shall own m y  tranvniission ASSETS AND facilities IN THE 
COUNTRY, 
[Prior to] BEFORE the transfer of the transmission functions by NPC to 
TRANSCO[,] and before the promulgation of the Grid Code, [ERC] THE 
COMMISSION shall [ensure] SEE TO IT that NPC shall provide to all electric 
power industry participants open and non-discriminatory access to [its] NPC'S 
transmission system. 
Any violation [thereofl OF THE PRECEDING 
SENTENCE OF THIS PARAGRAPH shall [be subject] RENDER THE 
PARTY RESPONSIBLE FOR SUCH VIOLATION LIABLE to the 
APPROPRIATE fines and penalties imposed [herein.] IN SECTION 44 OF 
THIS ACT. 
"SEC. 9. Functions and Responsibilities. - Upon the effectivity of this 
Act, the TRANSCO shall have the following functions and responsibilities: 
(a) 
[Act] TO ACT as the [system] GRID operator of the nationwide 
electrical transmission and subtransmission system, THAT SHALL be 
transferred to it by NPC; 
(b) 
[Provide open and] TO PROVIDE POWER DELIVERY 
SERVICE THROUGH non-discriminatory OPEN access to its transmission 


.+ 
13 
system to all [electricity] QUALIFIED AND AUTHORIZED 
users[;], 
SUBJECT TO THE PAYMENT OF TWNSMISSION WHEELING 
CHARGE APPROVED BY THE COMMISSION, AFTER DUE NOTICE 
TO ALL INTERESTED PARTIES AND PUBLIC HEARING. TRANSCO, 
SHALL NOT, IN ANY WAY BY VIRTUE OF THIS PROVISION, 
ENGAGE IN RETAILING OF ELECTRICITY, WHICH IS A FUNCTION 
OF DISTRIBUTION UTILITIES: 
3 
(c) 
[Ensure] TO ENSURE and maintain the reliability, adequacy, 
security, stability, and integrity of the nationwide electrical TRANSMISSION 
grid in accordance with the performance standards for the operation and 
maintenance of the NATIONWIDE ELECTRICAL TRANSMISSION grid, as 
set forth in a Grid Code to be adopted and promulgated by the [ERC] 
COMMISSION within six (6) months from the effectivity of this Act; 
(d) 
[Improve] TO IMPROVE and expand its transmission ASSETS 
AND facilities, consistent with the Grid Code and the Transmission Development 
Plan (TDP) to be promulgated pursuant to this Act, IN ORDER to adequately 
serve generation companies, distribution utilities, and suppliers [requiring] THAT 
REQUIRE transmission service [and/or] AND OR ancillary services through the 
transmission system: Provided, That THE TRANSCO shall submit any plan for 
THE expansion or improvement of its ASSETS AND facilities for approval by 
the [ERC;] COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED 
PARTIES AND PUBLIC HEARING; 
(e) 
Sobject to SUCH technical constraints THAT MAY EXIST OR 
ARISE, IF ANY, AND TAKING INTO ACCOUNT ANY OUTSTANDING 
BILATERAL CONTRACTS, the [grid] SYSTEM operator of the TRANSCO 
shall provide central dispatch of all ELECTRIC generation PLANT facilities 
connected, directly or indirectly, to the transmission system in accordance with 
the dispatch schedule submitted by the market operator[, taking into account 
outstanding bilateral contracts]; PROVIDED HOWEVER, THAT SUCH 
TRANSCO'S SYSTEM OPERATION CHARGES AS THE OPERATING 
BUDGET WHEN ITS SCHEDULE AND DISPATCH FUNCTIONS 
REQUIRE COMPLETE INDEPENDENCE FROM TRANSCO AS THE 
GRID OWNER and 
SYSTEM OPERATOR SHALL BE ALLOWED SPIN-OFF USING 
(f) 
THE TRANSCO, JOINTLY WITH THE DOE, shall undertake 
the preparation AND FORMULATION of the TDP, WHICH SHALL BE 
APPROVED BY THE DOE. 
In the preparation AND FORMULATION of the TDP, THE TRANSCO 
AND THE DOE shall consult the other [participants of the] electric power 
industry [such as1 PARTICIPANTS, ESPECIALLY the generation companies, 
distribution utilities, and the [electricity] end-users[.] OF ELECTRICITY. The 
TDP shall be [submitted to the DOE for integration] INTEGRATED with the 
Power Development Program and the Philippine Energy Plan, BOTH OF 
WHICH ARE provided for in Republic Act No. 7638, otherwise known as "the 
Department of Energy Act of 1992". 
[A] SUBJECT TO THE PRIOR AUTHORIZATION OF THE 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING, A generation company may develop and own or 
operate dedicated AND LIMITED point-to-point [limited] transmission ASSETS 
AND facilities that are consistent with the TDP[: Provided, That], IF IT IS 
CLEARLY SHOWN THAT such TRANSMISSION ASSETS AND facilities 
are required [only for the purpose df connecting] AND TO BE USED SOLELY 
BY THE GENERATION COMPANY TO CONNECT ITSELF to the 


14 
transmission system[,and are used solely by the generating facility, subject to 
prior authorization by the ERC: 
Provided, further, That in] OF THE 
TRANSCO. IN the event that such LIMITED TRANSMISSION assets AND 
FACILITIES are required for competitive purposes, ownership of the same shall 
be transferred to the TRANSCO at a fair market price[: Provided, finulZy, That 
in]. IN case of ANY DISPUTE OR disagreement on the fair market price OF 
SUCH TRANSMISSION ASSETS AND 
FACILITIES, the 
(ERC] 
COMMISSION shall determine the fair market [value of the asset.1 PRICE OF 
SAID LIMITED TRANSMISSION ASSETS AND FACILITIES, AFTER 
DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING. 
"SEC. 10. 
Corporate Powers of the TRANSCO. - [As a corporate 
entity,] THE TRANSCO shall have the following corporate powers: 
(a) 
To have continuous succession under its corporate name until 
otherwise provided by law; 
@) 
To adopt and use a corporate seal and to change, alter or modify 
the same, if necessary; 
(c) 
(d) 
To sue and be sued[;] IN ITS NAME; 
To enter into [a contract] ANY LAWFUL CONTRACT, and TO 
execute any AND ALL [instrument] INSTRUMENTS necessary or convenient 
for the [purpose] PURPOSES for which it is created; 
(e) 
To borrow funds from any source, whether private or public, 
foreign or domestic, and issue OR FLOAT bonds and other evidence of 
indebtedness: 
Provided, That in the case of [the] bond issues OR 
FLOATATIONS, it shall be subject to the approval of the President of the 
Philippines, upon THE recommendation of the Secretary of Finance: Provided, 
further, That foreign loans shall be obtained in accordance with existing laws, 
AND WITH THE rules and regulations of the Bangko Sentral ng Pilipinas; 
(0 
To maintain a provident fund which [consists of] SHALL 
CONSIST OF THE REGULAR MONTHLY contributions [made by both the] 
OF THE TRANSCO and OF its officials and employees, and [their] THE 
earnings OF SUCH REGULAR MONTHLY CONTRIBUTIONS. 
THE 
PROVIDENT FUND SHALL Bk EARMARKED for the payment of benefits 
to such officials and employees or their heirs, under such terms and conditions as 
[it] THE BOARD OF DIRECTORS OF THE TRANSCO may prescribe; 
(9) 
To do any [act] AND ALL ACTS necessary or proper to carry out 
the [purpose] PURPOSES for which [it] THE TRANSCO is created, or which, 
from time to time, may be declared by the BOARD OF DIRECTORS OF THE 
TRANSCO [Board as] TO BE necessary, PROPER, useful, incidental or 
auxiliary to accomplish [its] THE TRANSCO'S purposes and objectives; and Jlf 
(h) 
Generally, to USE AND exercise ANY, AND all OF the powers 
AND PREROGATIVES of a corporation under the corporation law OF THE 
PHILIPPINES, insofar as they are not inconsistent with this Act. 
. 
"SEC. 11. 
THE TRANSCO Board of Directors. - [All the] THE 
powers of the TRANSCO shall he vested in and SHALL BE exercised by a 
Board of Directors[. The Board], WHICH shall be composed of a Chairman and 
six (6) members. The Secretary of the Department of ENERGY (DOE) shall 
[bel SERVE AS the ex oflcio Chairman of the Board. THE TRANSCO 
PRESIDENT SHALL SERVE AS THE VICE-CHAIRMAN. The other 


b~ 
t
‘
 
15 
members of the BOARD OF DIRECTORS OF THE TRANSCO [Board shall 
include] ARE the PSALM PRESIDENT, the Secretary of the Department of 
PUBLIC WORKS AND HIGHWAYS, and three (3) [members to] PRIVATE 
INDIVIDUAL CITIZENS OF THE PHILIPPINES, WHO SHALL be 
appointed hy the President[, each representing] AND WHO SHALL EACH, 
RESPECTIVELY, BE DESIGNATED TO REPRESENT Luzon, THE 
Visayas, and Mindanao. 
The SAID THREE (3) PRIVATE INDIVIDUAL members of the Board 
[so] WHO ARE appointed by the President of the Philippines shall serve for a 
SINGLE, NON-EXTENDIBLE, AND NON-RENEWABLE term of six (6) 
years, except that any person appointed to fill-in a vacancy shall serve only FOR 
the REMAINING un-expired term of [hisher] HIS OR HER predecessor in 
office. All THE THREE (3) PRIVATE INDIVIDUAL members of the Board 
shall be professionals of GOOD REPUTE AND 
WELL-KNOWN 
INTEGRITY AND recognized competence and expertise in the fields of 
engineering, finance, economics, law, or business management. No member of 
the Board or any of his relatives within the fourth civil degree of consanguinity or 
affinity shall have any interest, either as investor, officer or director, in any 
generation company or distribution utility or other entity engaged in [transmitting, 
generating and supplying electricity specified by ERC.] THE TRANSMISSION, 
GENERATION, OR SUPPLY OF ELECTRICITY. 
“SEC. 12. 
Powers and Duties ofthe Board. - The following [are] 
SHALL BE the powers of the Board: 
(a) 
To provide strategic direction for THE TRANSCO, and TO 
formulate medium and long-term PLANS AND strategies [pursuant to the vision, 
mission, and objectives of TRANSCO;] IN ACCORDANCE WITH THE 
MISSION, OBJECTIVES, PURPOSES, AND VISION FOR WHICH THE 
TRANSCO WAS CREATED; 
(b) 
To FORMULATE, develop, and adopt policies and measures for 
the efficient and effective management and operation of THE TRANSCO; 
(c) 
To DETERMINE, organize, AND re-organize[, and determine] 
the organizational structure and staffing pattern of THE TRANSCO; TO 
CREATE, abolish, and OR [create] RECREATE offices and positions; TO fix 
the number of its officers and employees; TO REMOVE FOR CAUSE OR TO 
transfer [and re-align] OR REASSIGN such officers and [personnel] 
EMPLOYEES; AND TO fix [their compensation, allowance, and benefits;], 
WITHIN JUST AND REASONABLE LIMITS, THE COMPENSATION, 
ALLOWANCE, 
AND 
BENEFITS 
OF 
SAID 
OFFICERS 
AND 
EMPLOYEES: 
(d) 
To fix the compensation of the President of THE TRANSCO, and 
to appoint and fix the compensation of THE other corporate officers OF THE 
CORPORATION; 
(e) 
[For cause, to] TO suspend or remove FOR CAUSE any 
corporate officer appointed by the Board; AND 
(0 
To adopt [and] SUCH set OF guidelines [for] AS MAY BE 
NEEDED TO GOVERN the employment of personnel on the basis of merit, 
technical competence, and moral [character; and] RECTITUDE. 


16 
[(g) 
write-off bad debts.] 
Any provisions of the law to the contrary notwithstanding, to 
"SEC. 13. 
Board Meetings. - The Board shall meet [as oflen as 
may be] REGULARLY ONCE EVERY MONTH, WITHOUT ANY NEED 
OF CALL, ON A DAY FIXED IN A RESOLUTION OF THE BOARD FOR 
THAT PURPOSE, AND IN A SPECIAL MEETING, WHEN IT IS necessary, 
upon the call of the Chairman of the Board or by a majority of the [Board] 
members[.] OF THE BOARD. THE MINUTES OF EVERY MEETING OF 
THE BOARD SHALL INDICATE WHETHER THE MEETING IS A 
REGULAR OR A SPECIAL MEETING AND THE PRINCIPAL 
MATTERS TAKEN DURING EVERY SUCH MEETING. 
"SEC. 14. 
Board Per Diems and Allowances. - The members of the 
Board shall receive A REASONABLE per diem for each regular or special 
meeting of the Board actually attended by them[, and, upon approval of the 
Secretary of the Department of Finance, such other allowances as the Board may 
prescribe.]. 
THE AMOUNT OF SUCH PER DIEM SHALL BE 
COMMENSURATE TO THE STATURE AND RESPONSIBILITY OF 
THE MEMBERS OF THE BOARD AND SHALL BE DETERMINED AND 
FIXED BY THE PRESIDENT OF THE PHILIPPINES. THE MEMBERS 
OF THE BOARD MAY ALSO RECEIVE SUCH OTHER JUSTIFIED AND 
REASONABLE ALLOWANCES AS THE PRESIDENT OF THE 
PHILIPPINES MAY AUTHORIZE AND PRESCRIBE. 
"SEC. 15. 
Quorum. - The presence of at least four (4) members of 
the Board shall constitute a quorum[, which shall be necessary] for the transaction 
of any business[. The], AND THE affirmative vote of a majority of ALL the 
members [present in a quorum] OF THE BOARD shall be [adequate] 
REQUIRED for the approval of any [resolution, decision or order, except when 
the Board shall otherwise agree that a greater vote is required.] DECISION, 
ORDER, RESOLUTION, CONTRACT, OR PROCUREMENT. 
"SEC. 16. 
Powers of the President of TRANSCO. - The President 
of THE TRANSCO shall be appointed by the President of the Philippines. In the 
absence of the EX OFFZCZO Chairman OF THE BOARD, the President OF 
THE TRANSCO , AS VICE-CHAIRMAN, shall preside over THE [Board] 
meetingsf.] OF THE BOARD. 
The President of THE TRANSCO shall be the Chief Executive Officer of 
[TRANSCO] THE CORPORATION and shall have the following powers and 
duties: 
(a) 
To execute and administer the DECISIONS, policies, and 
measures approved by the Board, and TO ASSUME AND take responsibility for 
the efficient AND HONEST discharge of THE management functions[;] IN 
THE TRANSCO; 
(b) 
To oversee the preparation of the budget of THE TRANSCO[;] 
AND TO PRESENT IT TO THE BOARD OF DIRECTORS AND OTHER 
HIGHER AUTHORITIES AND OR OFFICES FOR APPROVAL; 
(c) 
To direct and supervise the operation and internal administration of 
THE TRANSCO and, for this purpose, HE may delegate some or any ofhis 
administrative responsibilities and duties to other officers of THE TRANSCO; 
(d) 
Subject to [the] SUCH guidelines and policies [set up] AS MAY 
BE ADOPTED by the Board, [to] HE MAY appoint and fix the number and 
THE compensation, ALLOWANCE, AND BENEFITS of subordinate omcials 
. 


z 
17 
i 
.! 
and employees of THE TRANSCO[;], and HE MAY, for cause, [to] remove, 
suspend, or otherwise discipline any SUCH subordinate [employee] OFFICIALS 
AND EMPLOYEES of THE TRANSCO; 
(e) 
To submit an annual report to the Board on the activities, 
PROBLEMS, PLANS, PROGRAMS, and achievements of THE TRANSCO at 
the close of each fiscal year, and upon approval thereof, HE SHALL submit a 
copy OF THE SAME to the President of the Philippines and to such other 
agencies as may be required by law; 
(f) 
To represent THE TRANSCO in all ITS dealings and transactions 
with other offices, agencies, and instrumentalities of the Government and with all 
OTHER persons and [other] entities, private or public, domestic or foreign; and 
(g) 
To exercise ALL such other powers and duties as may be vested in 
OR DELEGATED TO him by the Board from time to time. 
"SEC. 17. 
Exemptionfrom the Salary Standardization Law. - [The 
salaries] EXCEPT WHEN DELEGATED BY THE BOARD TO THE 
PRESIDENT OF THE TRANSCO UNDER PARAGRAPH (D) OF THE 
PRECEDING SECTION 16 OF THIS ACT, THE COMPENSATION, 
ALLOWANCE, and benefits of ALL OTHER OFFICERS AND employees [in 
the TRANSCO] OF THE TRANSCO SHALL BE FIXED BY THE BOARD 
AND shall be [exempt] EXEMPTED from Republic Act No. 6758 [and shall be 
fixed by the TRANSCO Board.]. 
"SEC. 18. 
Projts. - [The] UNTIL AND UNLESS THE PSALM 
CORP. IS DIVESTED OF THE OWNERSHIP OF THE TRANSCO 
THROUGH AN ABSOLUTE SALE OF THE TRANSCO TO ANOTHER 
PARTY BY VIRTUE OF SECTION 21 OF THIS ACT, THE net profit, if 
any, of THE TRANSCO shall be remitted to the PSALM Coy. not later than 
ninety (90) days COUNTED FROM THE DAY IMMEDIATELY after THE 
END OF the immediately preceding quarter. 
"SEC. 19. 
Transmission Charges. - The transmission charges ofthe 
TRANSCO shall be filed with and approved by the [ERC pursuant to] 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING, IN ACCORDANCE WITH THE APPLICABLE 
PROVISIONS OF Paragraph (0 of Section [43 hereof] 42 OF THIS ACT. 
IMPROVEMENTS OR EXPANSION PROJECTS OF THE 
CHARGES TO DISTRIBUTION UTILITIES SHALL BE PRESENTED TO 
THE NATIONAL ECONOMIC DEVELOPMENT AUTHORITY (NEDA) 
FOR THOROUGH ECONOMIC FEASIBILITY EVALUATION BEFORE 
SUCH 
IMPROVEMENTS 
OR 
EXPANSION 
PROJECTS 
ARE 
SUBMITTED TO THE COMMISSION FOR APPROVAL. 
TRANSCO THAT WILL RESULT IN ANY INCREASE IN THE PASS-ON 
"SEC. 20. 
THE TRANSCO Related Businesses. - THE TRANSCO 
[may] IS HEREBY AUTHORIZED TO engage, DIRECTLY OR 
INDIRECTLY, in any BUSINESS related TO ITS MAIN business Iwhich 
maximizes] IN ORDER TO MAXIMIZE THE utilization of its assets[:] AND 
RESOURCES: Provided, That WHERE ASSETS FORMING PART OF 
THE RATE BASE OF THE TRANSCO ARE UTILIZED IN SUCH 
RELATED BUSINESS, a portion of the net income derived from such 
[undertaking utilizing assets which form part of the rate base] RELATED 
BUSINESS, WHICH PORTION SHALL NOT BE LESS THAN FIFTY 
PERCENT (50%) OF SUCH NET INCOME, shall be used to reduce THE 
transmission RATE OR wheeling Irates as determined by the ERC. Such portion 


4 
18 
i 
,L 
< 
of net income used to reduce the transmission wheeling rates shall not exceed 
fifty percent (50%) of the net income derived from such undertaking.] CHARGE 
PASSED-ON TO THE END-USERS OF ELECTRICITY. 
Separate accounts shall be maintained for each RELATED business 
lundertaking] to ensure that the transmission business shall neither subsidize in 
<any way such RELATED business [undertaking] nor encumber [its] THE 
TRANSCO'S 
transmission assets in any way to suppgrt such RELATED 
business. 
"SEC. 21. 
TRANSCO Privatization. - Within six (6) months from 
the effectivity of this Act, the PSALM Corp. shall submit a plan ON THE 
PRIVATIZATION OF THE TRANSCO for the endorsement by the Joint 
Power Commission TO, and FOR the approval o€, the President of the 
Philippines. [The] THEREAFTER, THE 
President of the Philippines 
[thereafter] shall direct THE PSALM Corp. to [award, in] CONDUCT AN oRen 
competitive PUBLIC bidding, AND AWARD THE OWNERSHIP AND 
CONTROL OF THE TRANSCO THROUGH A CONTRACT OF SALE, 
OR AWARD THE ADMINISTRATION, MANAGEMENT, OPERATION, 
AND 
MAINTENANCE, 
AS 
WELL 
AS 
THE 
PRESERVATION, 
IMPROVEMENT, AND OR EXPANSION OF the transmission ASSETS 
AND facilities, including THE grid interconnections and ancillary services 
THROUGH A CONCESSION CONTRACT to [a] THE qualified [party either 
through an outright sale or a concession contract.] WINNING BIDDER. The 
[buyer/concessionaire] BUYER OR CONCESSIONAIRE, AS THE CASE 
MAY BE, shall be responsible for the EFFICIENT ADMINISTRATION, 
MANAGEMENT, OPERATION, AND MAINTENANCE, AS WELL AS 
FOR THE PRESERVATION, improvement, AND OR expansion[, operation, 
and/or maintenance of its] OF THE transmission assets and [the] FACILITIES, 
INCLUDING THE GRID INTERCONNECTIONS AND ANCILLARY 
SERVICES AND THE ADMINISTRATION, MANAGEMENT, AND FOR 
THE operation of any related business[.] OR BUSINESSES. The award [shall 
result in maximum] TO THE QUALIFIED WINNING BIDDER MUST BE 
BASED ON THE MOST ADVANTAGEOUS, 
BENEFICIAL, AND 
OPTIMAL present value [of proceeds] to the national government. In case a 
concession contract is awarded, the concessionaire shall [have a] BE GIVEN AN 
INITIAL CONCESSION contract period of twenty-five (25) years, subject to 
review and renewal for a maximum period of another twenty-five (25) years. 
IF THE AWARDEE OF THE CONCESSION CONTRACT IS 
MERELY 
HIRED 
UNDER 
A 
COMPENSATION SCHEME 
TO 
ADMINISTER, MANAGE, OPERATE, MAINTAIN, PRESERVE, AND TO 
FINANCE AND 
SUPERVISE THE IMPROVEMENTS AND 
OR 
EXPANSIONS OF THE ELECTRIC TRANSMISSION ASSETS AND 
FACILITIES AND THE GRID INTERCONNECTIONS AND THE 
ANCILLARY SERVICES FOR THE TRANSCO, THE AWARDEE OF 
THE CONCESSION CONTRACT SHALL NOT BE REQUIRED TO 
OBTAIN A NATIONAL FRANCHISE, AND NEITHER SHALL HE OR IT 
BE 
REQUIRED 
TO 
QUALIFY 
UNDER 
THE 
NATIONALITY 
REQUIREMENTS OF THE CONSTITUTION FOR PUBLIC UTILITY 
OPERATORS. 
n / 
HOWEVER, IF THE AWARDEE OF THE CONCESSION 
CONTRACT TAKES OVER THE POSSESSION AND CONTROL OF 
THE ELECTRIC TRANSMISSION ASSETS AND FACILITIES AND THE 
GRID INTERCONNECTIONS AND ANCILLARY SERVICES, AS A 
LESSEE THEREOF, AND ADMINISTERS, MANAGES, MAINTAINS, 
OPERATES, IMPROVES, AND EXPANDS THEM AS HIS OR ITS OWN 
BUSINESS, THEN IN THAT CASE THE AWARDEE OF THE 


4 
19 
I 
z 
L 
CONCESSION CONTRACT MUST OBTAIN A NATIONAL FRANCHISE 
THEREFOR, AND HE OR IT MUST QUALIFY UNDER THE 
NATIONALITY REQUIREMENTS OF THE CONSTITUTION FOR 
PUBLIC UTILITY OPERATORS. 
[In any case, the awardee shall] THE AWARDEE, WHETHER 
UNDER A CONTRACT OF SALE OR UNDER A CONCESSION 
CONTRACT, MUST comply with the Grid Code and the TDP [as approved]. 
The CONTRACT OF sale [agreement/concession] OR THE CONCESSION 
contract, AS THE CASE MAY BE, shall linclude, but not limited to, the 
provision for] PROVIDE, AMONG OTHERS, SUCH performance and 
financial guarantees or [any] other covenants [which] THAT the national 
government may require. [Failure to comply with such obligations shall result in 
the imposition of appropriate sanctions or penalties by the ERC.] THE 
FAILURE OF THE AWARDEE TO COMPLY WITH ANY OF SUCH 
GUARANTEES OR COVENANTS SHALL CONSTITUTE A DEFAULT 
ON THE PART OF THE AWARDEE AND SHALL CAUSE THE 
IMMEDIATE 
RESCISSION 
AND 
CANCELLATION 
OF 
THE 
CONTRACT OF SALE OR OF THE CONCESSION CONTRACT AND, IN 
ADDITION, THE IMPOSITION OF APPROPRIATE SANCTIONS, 
FlNES, OR PENALTLES BY THE COMMISSION IN ACCORDANCE 
WITH SECTION 44 OF THIS ACT. 
The awardee [shall] MUST be financially and technically capable AND 
SOUND, with proven domestic [and/or] AND OR international experience and 
expertise as a leading transmission system operator. Such experience must be 
with a transmission system of comparable capacity and coverage as THAT OF 
the Philippines. 
“SEC. 22. 
Distribution Sector. - The distribution of electricity to 
end-users [shall bel IS a regulated common carrier business. [requiring] IT 
REQUIRES a national franchise[.] AND A COMPLIANCE WlTH THE 
NATIONALITY 
REQUIREMENTS 
OF 
THE 
CONSTITUTION. 
[Distribution] SUBJECT TO THE REGULATION OF THE COMMISSION, 
DISTRIBUTION of electric power to [all] end-users OF ELECTRICITY may 
be undertaken by QUALIFIED private distribution utilities, BY ELECTUC 
cooperatives, BY local government units presently undertaking this functibn 
[and], OR BY other duly authorized AND QUALIFIED entitiesl, subject to 
regulation by the ERC.]. 
“SEC. 23. 
Functions of Distribution Utilities. - [A] EVERY 
distribution utility [shall have] HAS the obligation AND RESPONSIBILITY 
UNDER THIS ACT to provide, WITHIN ITS FRANCHISE TERR’ITORY, 
ELECTRIC distribution services and connections to its system, IN 
ACCORDANCE WITH THE PROVISIONS OF THE DISTRIBUTION 
CODE, for [any] EVERY end-user OF ELECTRICITY [within its franchise 
area consistent with the distribution code. Any entity engaged therein] THAT 
APPLIES FOR SUCH SERVICES AND CONNECTIONS. 
THE 
PROVISIONS OF THE DISTRIBUTION CODE SHALL BE CONSISTENT 
WITH 
THE 
PROVISIONS OF THIS ACT. 
EVERY 
SUCH 
DISTRIBUTION UTILITY shall provide open and non-discriminatory access to 
its distribution system to all QUALIFIED users[.] WITHIN ITS FRANCHISE 
TERRITORY. 
[Any] A distribution utility shall be entitled to impose and collect JUST 
AND REASONABLE distribution wheeling charges and connection fees from 
such [end-users as approved by the ERC.] QUALIFIED USERS, AS MAY BE 
APPROVED BY THE COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING. 


20 
A distribution utility [shall have the] HAS AN obligation AND 
RESPONSIBILITY to supply electricity in the MOST ECONOMICAL AND 
least cost manner to its captive market, subject to the collection of JUST AND 
REASONABLE retail rate, dhly approved [by the ERC.] BY THE 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING. 
To achieve economies of scale in utility operations, distribution utilities 
may, after due notice TO ALL INTERESTED PARTIES and public hearing, 
pursue structural and operational reforms such as, but not limited to, joint actions 
between or among the distribution utilities, subject to [the] SUCH guidelines AS 
MAY BE issued by the [ERC. Such] COMMISSION, PROVIDED SUCH 
joint actions shall result in improved efficiencies, reliability of service, reduction 
of costs, and compliance [to] WITH the performance standards THAT SHALL 
BE prescribed in the [IRR] IMPLEMENTING RULES AND REGULATIONS 
(IRR) of this Act. 
. 
Distribution utilities shall submit to the [ERC] COMMISSION 
a 
statement of their compliance with the technical specifications prescribed in the 
Distribution Code and IN the performance standards prescribed in the [IRR] 
IMPLEMENTING RULES AND REGULATIONS of this Act. Distribution 
utilities which [do not] FAIL TO comply with any of the prescribed technical 
specifications [and] IN THE DISTRIBUTION CODE AND IN THE 
performance standards shall submit to the [ERC] COMMISSION a plan [to 
comply,] OF COMPLIANCE, within three (3) years, with THE said prescribed 
technical specifications [and] IN THE DISTRIBUTION CODE AND IN THE 
performance standards. The [ERC] COMMISSION shall, within sixty (60) days 
upon receipt of such plan, evaluate the same and notify the distribution utility 
concerned of [its] THE COMMISSION'S action. Failure ON THE PART OF 
ANY DISTRIBUTION UTILITY to submit a feasible and credible plan [and/or] 
OF COMPLIANCE AND OR failure to implement the same shall serve as 
grounds for the imposition of appropriate sanctions, fines, or penalties. 
Distribution utilities shall prepare and submit to the DOE their annual 
distribution development plans. [In the case of] FOR electric cooperatives, such 
plans shall be submitted through the National Electrification Administration. 
[Distribution utilities] A PRIVATE OR GOVERNMENT-OWNED 
DISTRIBUTION UTILITY shall provide, WITHIN A REASONABLE TIME 
FROM THE REQUIREMENT THEREOF, universal service [within their 
franchise, over a reasonable time from the requirement thereo€, including unviable 
areas, as part of their social obligations,] IN THE VIABLE AREAS OF ITS 
AS PART OF ITS SOCIAL OBLIGATIONS, in a manner that shall sustain 
[the] ITS economic viability [of the utility], subject to the approval by the [ERC 
in the case of private or government-owned utilities. To this end, distribution 
utilities] COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED 
PARTIES AND PUBLIC HEARING. EVERY DISTRIBUTION UTILITY 
shall submit to the DOE [their plans] ITS PLAN for serving such areas as part of 
[their] ITS distribution development [plans] PLAN. Areas [which a franchised] 
IN THE FRANCHISE TERRITORY OF A distribution utility WHICH IT 
cannot SERVICE or does not find viable ENOUGH TO SERVICE may be 
transferred to another distribution utility, if any is available, [who will] THAT 
CAN provide the service, subject to THE approval by [ERC.] THE 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING. In [cases where] THE EVENT THAT A franchise 
[holders fail and/or refuse] HOLDER FAILS AND OR REFUSES to service 
[any] AN area within [their] ITS franchise territory and [allowed] another 
FRANCHISE TERRITORY, AS'WELL AS IN THE NON-VIABLE AREAS 


21 
. 
I 
DISTRIBUTION utility IS AUTHORIZED ANI) ALLOWED BY THE 
COMMISSION to service the same, [then] THE FRANCHISE HOLDER 
OVER THE SAID AREA CANNOT THEREAFTER CLAIM IT BACK 
AND THEREBY DISTURB the status quo [shall be respected.] IN FAVOR OF 
THE DISTRIBUTION UTILITY THAT HAS BEEN AUTHORIZED AND 
ALLOWED BY THE COMMISSION TO SERVICE THE SAID AREA. 
.? 
Distribution utilities [may exercise] ARE HEREBY GRANTED the 
power of eminent domain, subject to [the] SUCH requirements [of] AND 
LIMITATIONS, IF ANY, IMPOSED BY the Constitution and ANY existing 
[laws] LAW. 
The distribution 
wheeling charges of distribution utilities shall be filed with and approved fiy the 
ERC pursuant to] BY THE COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING, IN ACCORDANCE 
WITH THE APPLICABLE PROVISIONS OF Paragraph (f) of Section 143 
hereofl42 OF THIS ACT. 
"SEC. 24. 
Distribution Wheeling Charge. - 
"SEC. 25. 
Retail Rate. - The retail rates [charged by] THAT 
distribution utilities SHALL CHARGE for [the supply of electricity] 
PROVlDING DISTRIBUTION SERVICES AND CONNECTIONS TO 
END-USERS OF ELECTRICITY in [their] THE captive market OF THEIR 
RESPECTIVE FRANCHISE TERRITORIES shall be [subject to regulation] 
FILED WITH AND APPROVFD by the [ERC] COMMISSION, AFTER 
DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING. THE RETAIL RATES SHALL BE based on the principle of full 
recovery of prudent, JUST, and reasonable economic costs RESPECTIVELY 
incurred[, or such other principles that will promote efficiency as may be 
determined by the ERC.] BY THE DISTRIBUTION UTILITIES. 
IN 
MAKING OR SETTING THE RETAIL RATES THAT DISTRIBUTION 
UTILITIES MAY 
CHARGE FOR 
PROVIDING DISTRIBUTION 
THEIR RESPECTIVE FRANCHISE TERRITORIES, THE COMMISSION 
MUST 
OBSERVE 
AND 
COMPLY 
WITH 
THE 
APPLICABLE 
PROVISIONS OF PARAGRAPH (F) OF SECTION 42 OF THIS ACT. 
SERVICES AND CONNECTIONS TO END-USERS OF ELECTRICITY IN 
Every distribution utility shall identify and segregate in its bills to ITS 
end-users OF ELECTRICITY the components of [the] ITS retail rate, as 
[defined] REQUIRED in this Act. 
"SEC. 26. 
Distribution Related Businesses. - [Distribution utilities] 
SUBJECT TO THE APPROVAL OF THE COMMISSION, AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC HEARING, A 
DISTRIBUTION UTILITY may, directly or indirectly, engage in any 
BUSINESS related TO ITS MAIN business [undertaking which maximizes] IN 
ORDER TO MAXIMIZE the utilization of [their] ITS assets[:] AND 
RESOURCES: Provided, That WHERE ASSETS FORMING PART OF 
THE RATE BASE ARE UTILIZED IN SUCH RELATED BUSINESS, a 
portion of the net income derived from such [undertaking utilizing assets which 
form part of the rate base] RELATED BUSINESS, WHICH PORTION 
SHALL NOT BE LESS THAN FIFTY PERCENT (50%) OF SUCH NET 
INCOME, shall be used to reduce its distribution wheeling [charges] CHARGE 
AND RETAIL RATE [as determined] APPROVED by the [ERC: Provided, 
further, That such portion of net income used to reduce their distribution 
wheeling charges shall not exceed fifty percent (50%) of the net income derived 
from such undertaking: Provided, finally, That separate accounts are maintained 
for each business undertaking to ensure that the distribution business shall neither 


~* 
22 
subsidize in any way such business undertaking nor encumber its distribution 
assets in any way to support such business.] COMMISSION. 
SEPARATE ACCOUNTS SHALL BE MAINTAINED FOR EACH 
RELATED BUSINESS TO ENSURE THAT THE DISTRIBUTION 
BUSINESS SHALL NEITHER SUBSIDIZE, IN ANY WAY, SUCH 
RELATED 
BUSINESS 
NOR ENCUMBER, 
IN 
ANY WAY, 
ITS 
DISTRIBUTION ASSETS TO SUPPORT SUCH RELATED BUSINESS. 
“SEC. 27. 
Franchising Power in the Electric Power Sector. - 
[The] 
UPON THE EFFECTIVITY OF THIS ACT, THE power to grant fianchises to 
persons engaged in the transmission and distribution of electricity shall be vested 
exclusively in the Congress of the Philippines. [and all] ALL laws inconsistent 
with [this Act] THE -PRECEDING SENTENCE OF THIS SECTION 
particularly, but not limited to, Section 43 of PD 269, otherwise known as the 
“National Electrification Decree,” are hereby [deemed] repealed or modified 
accordingly: Provided, That all existing franchises shall be allowed to RUN their 
full term: Provided, further, That in the case of electric cooperatives, renewals 
and cancellations shall remain with the National Electrification Commission 
under the National Electrification Administration for five (5) more years [after] 
FROM the enactment of this Act. 
. 
[“SEC. 28. 
De-Monopolization and Shareholding Dispersal. - In 
compliance with the constitutional mandate for dispersal of ownership and de- 
monopolization of public utilities, the holdings of persons, natural or juridical, 
including directors, officers, stockholders and related interests, in a distribution 
utility and their respective holding companies shall not exceed twenty-five (25%) 
percent of the voting shares of stock unless the utility or the company holding the 
shares or its controlling stockholders are already listed in the Philippine Stock 
Exchange (PSE): Provided, That controlling stockholders of small distribution 
utilities are hereby required to list in the PSE within five (5) years from the 
enactment of this Act if they already own the stocks. New controlling 
stockholders shall undertake such listing within five (5) years from the time they 
acquire ownership and control. A small distribution company is one whose peak 
demand is equal to or less than Ten megawatts (lOMW).] 
[The ERC shall, within sixty (60) days from the effectivity of this Act, 
promulgate the rules and regulations to implement and effect this provision.] 
[This Section shall not apply to electric cooperatives.] 
“SEC. [29] 28.Supply Sector. - The supply sector is a business affected 
with public interest. Except for distribution utilities and electric cooperatives with 
respect to their RESPECTIVE existing fianchise [areas] TERRITORIES, all 
suppliers of electricity to the contptable market [shall require] MUST HAVE a 
license from the [ERC.] COMMISSION. 
For this purpose, the [ERC] COMMISSION shall promulgate THE 
NECESSARY rules and regulations [prescribing], NOT INCONSISTENT 
WITH THE PROVISIONS OF THIS ACT, THAT SHALL PRESCRIBE the 
qualifications of [electricity] suppliers [which] OF ELECTRICITY. 
SUCH 
QUALIFICATIONS shall include, among other requirements, a demonstration 
of their technical [capability,] AND financial [capability,] CAPABILITIES and 
creditworthiness: Provided, That the [ERC] COMMISSION shall have THE 
authority to require [electricity] suppliers OF ELECTRICITY to furnish [a1 
SURETY bond OR BONDS, or ANY other [evidence of the ability of a supplier] 
ANALOGOUS GUARANTEE INSTRUMENTS SATISFACTORY TO TKE 
COMMISSION, TO DEMONSTRATE AND ENSURE THEIR ABILlTY 
AND CAPACITY, AS SUPPLIERS OF ELECTRICITY, to withstand market 


disturbances [or other] AND OTHER RISKS AND events that may increase'rthe 
cost of providing service.] THEIR COSTS IN FULFILLING THEIR 
COMMITMENTS, AS SUPPLIERS OF ELECTRICITY, TO PROVIDE 
THE QUALITY AND LEVEL OF SERVICES THEY OFFER TO THEIR 
CUSTOMERS. 
Any law to the contrary notwithstanding, supply of electricity to the 
contestable market shall not be [considered] DEEMED a public utility operation. 
[For this purpose, any] ANY person or entity [which shall] THAT APPLIES TO 
THE COMMISSION FOR A LICENSE T O  engage in the [supply of 
electricity] BUSINESS AS SUPPLIER OF ELECTRICITY to the contestable 
market shall not be required TO HAVE OR to secure a national franchise. 
The prices [to be charged by suppliers] THAT SUPPLIERS OF 
ELECTRICITY SHALL CHARGE for the supply of electricity to the 
contestable market shall not be subject to regulation by the [ERC.] 
COMMISSKON. 
[Electricity suppliers] SUPPLIERS OF ELECTRICTY shall be subject 
to [the] rules and regulations [concerning] THAT MAY BE PROMULGATED 
BY 
THE 
COMMISSION GOVERNING abuse of market power, 
CONSPIRACIES IN RESTRAINT OF TRADE, cartelization, and other anti- 
competitive or discriminatory behavior [to be promulgated by the ERC.] THAT 
ARE INIMICAL TO THE INTEREST OF THE GENERAL PUBLIC AND 
THE ENDJJSERS OF ELECTRICITY. 
[In its billings to end-users, every supplier] EVERY SUPPLIER OF 
ELECTRICITY shall identify and segregate IN HIS OR ITS BILLINGS TO 
HIS OR ITS END-USERS OF ELECTRICITY the components of HIS OR its 
[supplier's] charge, as defined [herein] IN THIS ACT. 
"SEC. 
[30]29. Wholesale Electriciry Spot Market. - Within one (1) year 
from the effectivity of this Act, the DOE shall establish a [wjWholesale 
[eIElectricity [s]Spot [m]Market, HEREIN AFTER REFERRED TO AS THE 
WESM, composed of the [wholesale electricity spot market] WESM participants. 
The [market] WESM shall provide the mechanism for identifying and setting the 
price of actual variations from the quantities transacted under contracts between 
THE sellers and THE purchasers of electricity[.] IN THE WESM. 
Jointly with ALL the electric power industry participants, the DOE shall 
formulate the detailed rules for the [wholesale electricity spot market.] WESM. 
Said rules shall provide the [mechanism for] SYSTEM AND MANNER OF 
determining the price of electricity not covered hy bilateral contracts between 
THE sellers and THE purchasers of electricity users. [The price determination 
methodology contained in said rulesJ THE METHOD CONTAINED IN THE 
SAID RULES FOR DETERMINING THE PRICE OF ELECTRICITY IN 
THE WESM shall be subject to the approval of [ERC.] 
THE COMMISSION, 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING. Said rules shall also EMBODY AND reflect accepted economic 
principles [and] THAT SHALL provide a level playing field to all electric power 
industry participants. The rules shall FURTHERMORE provide, among others, 
procedures for: 
(a) 
Establishing the merit order dispatch instructions for each time 
period; 
(b) 
Determining the market-clearing price for each time period; 


24 
(c) 
Administering the market, including criteria for admission to [and 
termination] OR DISMISSAL from the market [which includes], AS WELL AS 
ANY REQUIRED security or performance [bond requirements] BOND, voting 
rights of the participants, surveillance, [and] assurance of compliance [ofl BY the 
participants with the rules, and the formation of the [wholesale electricity spot 
market governing body] GOVERNING BODY OF THE WESM; 
(d) 
Prescribing guidelines for the market operation in system 
emergencies; and 
(e) 
Amending the SAID rules. 
The [wholesale electricity spot market] WESM shall be implemented by a 
market operator in accordance with the [wholesale electricity spot markets] 
WESM rules. The market operator shall be an autonomous group[,] to be 
constituted by DOE[,] with equitable representation from electric power industry 
participants[,] AND initially under the administrative supervision of the 
TRANSCO. The market operator shall undertake the preparatory work and THE 
initial operation of the [wholesale electricity spot market] WESM. Not later than 
one (1) year after the implementation of the [wholesale electricity spot market] 
WESM, an independent entity shall be formed and the functions, assets ‘hd 
liabilities of the market operator shall be transferred to such INDEPENDENT 
entity with the joint endorsement of the DOE and the electric power industry 
participants. Thereafter, the administrative supervision of the TRANSCO over 
[such entity shall cease.] THE WESM AND THE INDEPENDENT MARKET 
OPERATOR SHALL CEASE AND TERMINATE. 
Subject to the compliance with the membership criteria, all (generating] 
GENERATION companies, distribution utilities, suppliers OF ELECTRICITY, 
bulk [consumers/end-users] CONSUMERS AND OR END-USERS OF 
ELECTRICITY and other similar entities authorized by the [ERC shall be] 
COMMMISSION ARE eligible to become members of the [wholesale 
electricity spot market] WESM. 
The (ERC] COMMISSION may authorize other similar entities to 
become eligible as members, either directly or indirectly, of the [wholesale 
electricity spot market] WESM. All [generating] GENERATION companies, 
distribution utilities, suppliers OF ELECTRICITY, bulk [consumerslend-users] 
END-USERS OF ELECTRICITY and other similar entities authorized by the 
[ERC] COMMISSION, whether direct or indirect members of the [wholesale 
electricity spot market] WESM, shall be bound by the [wholesale electricity spot 
market] WESM rules with respect to transactions in [that market] THE WESM. 
NEA may, in exchange for adequate security and a guarantee fee, act as a 
guarantor for THE purchases of electricity in the [wholesale electricity spot 
market] WESM by any electric cooperative or small distribution utility to support 
[their] THE credit standing OF THE LATTER, consistent with the provisions 
hereof. For this purpose, the authorized capital stock of NEA is INCREASED, 
AS IT IS hereby increased, to Fifteen billion pesos (Pl5,000,000,000.00). 
All electric cooperatives [which have] WITH outstanding uncollected 
billings to any local government unit shall report such billings to NEA [which] 
AND NEA shall, in turn, report the same to the Department of Budget and 
Management (DBM) for collection pursuant to Executive Order 190, issued on 
December 21, 1999. 
The cost of administering and operating the [wholesale electricity spot 
market] WESM shall be recovered by the market operator through a charge 
imposed to all market members: Provided, That such charge shall be filed with 


2s 
and approved by the [ERC.] COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING. 
. 
In cases of national and international security emergencies or natural 
calamities, the [ERC] COMMISSION is hereby empowered to suspend the 
operation of the [wholesale electricity spot market] WESM or declare a 
temporary [wholesale electricity spot market] WESM failure. 
TO ENCOURAGE AND PROMOTE THE DEVELOPMENT OF 
THE WESM, DISTRIBUTION UTILITIES WITH DEMAND LEVELS OF 
NOT LESS THAN 100 MEGAWATTS ARE REQUIRED, FOR THE FIRST 
THREE 
(3) 
YEARS 
IMMEDIATELY 
FOLLOWING 
THE 
ESTABLISHMENT OF THE WESM, TO SOURCE FROM THE WESM 
AT 
LEAST TEN 
PERCENT (10%) OF THEIR 
SUPPLY OF 
ELECTRICITY FOR RETAIL TO END-USERS. THEREAFTER, THE 
SAID TEN PERCENT (10%) SHALL GRADUALLY BE INCREASED AT 
THE RATE OF TWO PERCENT (2%) EVERY YEAR UP TO THE 
EIGHTH (8'") 
YEAR FROM THE ESTABLISHMENT OF THE WESM IN 
ORDER TO REACH A LEVEL OF TWENTY PERCENT (20%) ON THE 
SAID EIGHTH (8'") 
YEAR WHERE IT SHALL REMAIN UNTIL 
ADJUSTED FURTHER UPWARD BY CONGRESS. 
"SEC. [3 1130. Retail Competition and Open Access. - Any law to the 
contrary notwithstanding, retail competition and open access on distribution wires 
OF DISTRIBUTION UTILITIES shall he implemented not later than three (3) 
years [upon the] FROM THE DATE OF THE effectivity of this Act, subject to 
the following conditions: 
(a) 
[Establishment] THE ESTABLISHMENT of the [w] 
Wholesale 
[eIElectricity [s]Spot [m]Market (WESM); 
(b) [Approval] THE APPROVAL of THE unbundled transmission and 
distribution wheeling charges[;] BY THE COMMISSION; 
(c) [Initial] THE 
INITIAL implementation of the cross subsidy 
removal scheme; 
(d) [Privatization] THE 
PRIVATIZATION of at least [seventy 
(70%) percent] FIFTY PERCENT (50%) of the total capacity of [generating] 
THE GENERATION assets of NPC in Luzon and THE Visayas; [and] 
(e) [Transfer] THE TRANSFER of the management and control of at 
least [seventy percent (70%)] FIFTY PERCENT (50%) of the total energy 
output of ALL power plants under contract with NPC to the IPP 
Administrators[.]; AND 
(F) 
IN THE FRANCHISE TERRITORIES OF ELECTRIC 
COOPERATIVES, THE TRANSFER OF THE SUB-TRANSMISSION 
ASSETS 
AND 
FACILITIES 
IN 
ACCO-RDANCE WITH 
THE 
APPLICABLE PROVISIONS OF THIS ACT TO THE CONNECTED 
ELECTRIC COOPERATIVES. 
Upon the initial implementation of open access, the 
[ERC] 
COMMISSION shaIl [allow] CONSTITUTE IN A FORMAL ORDER TO 
BE ISSUED AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING all [electricity] end-users OF ELECTRICITY with 
a monthly average peak demand of [at least] NOT LESS THAN one megawatt 
(IMW) for the IMMEDIATELY preceding twelve (12) BILLING months to be 


26 
the contestable market. 
[Two] AFTER TWO 
(2) years [thereafter,] 
IMMEDIATELY FOLLOWING THE INITIAL IMPLEMENTATION OF 
OPEN ACCESS, the threshold level for the contestable market shall be reduced 
to seven hundred fifty kilowatts (750kW). At [this] THAT level, aggregators , 
shall be allowed to supply electricity to end-users whose aggregate demand within 
a contiguous area is at least seven bundred fifty kilowatts (7501cW). [Subsequently 
and every] EVERY year thereafter, the [ERC] COMMISSION shall REVIEW 
AND evaluate the performance of the CONTESTABLE market!. On] AND, ON 
the basis of such YEARLY REVIEW AND evaluation, [it] THE 
COMMISSION shall gradually reduce the threshold level until [it reaches] THE 
CONTESTABLE MARKET SHALL FINALLY COVER the household 
[demand level.] END-USERS OF ELECTRICITY. In the case of electric 
cooperatives, retail competition and open access shall be implemented not earlier 
than five (5) years [upon] FROM the effectivity of this Act. 
“SEC. [32]31. /NPC Stranded Debt and Contract Cost Recovery..] NPCS 
STRANDED DEBTS AND STRANDED CONTRACT COSTS RECOVERY. 
- [Stranded debt] THE STRANDED DEBTS of NPC [shall] refer to [any] ITS 
unpaid financial obligations [of NPC.], WHICH ARE NOT LIQUIDATED OR 
OFFSET BY THE PROCEEDS FROM THE SALE, DISPOSITION, AND 
OR 
PRIVATIZATION 
OF 
NPC’S 
GENERATION 
ASSETS, 
TRANSMlSSION AND SUBTRANSMISSION ASSETS AND FACILITFES, 
REAL ESTATE ASSETS, OTHER DISPOSABLE ASSETS, AND IPP 
CONTRACTS. 
[Stranded] THE STRANDED contract costs of NPC [shall] refer to the 
excess of the contracted cost of electricity under THE eligible [IPP] 
INDEPENDENT POWER PRODUCER (IPP) contracts of NPC WITH ITS 
IPPs over the actual selling price of [the] THAT contracted [energy output of 
such contracts] ELECTRICITY FROM SUCH IPP CONTRACTS in the 
market. [Such contracts shall] INDEPENDENT POWER PRODUCER 
CONTRACTS OF NPC SHALL BE DEEMED ELIGIBLE CONTRACTS 
TO APPLY FOR STRANDED CONTRACT COSTS RECOVERY ONLY 
IF SUCH CONTRACTS have been approved by the ERE! [as oq ON OR 
BEFOW December 3 1,2000. 
The national government shall directly assume a portion of the financial 
obligations of NPC in an amount not [to exceed] LESS THAN Two hundred 
billion pesos (P200, 000,000,000.00). 
The [ERC] COMMISSION shall veritl the reasonable [amounts and 
determine the manner and duration for the full recovery of stranded debt and 
stranded contract costs as defined herein:], ACTUAL, AND AGGREGATE 
AMOUNTS OF THE STRANDED DEBTS AS WELL AS THE JUST AND 
REASONABLE, ACTUAL, AND AGGREGATE AMOUNTS OF THE 
STRANDED 
CONTRACT COSTS OF NPC 
THAT 
MUST 
BE 
RECOVERED, IF ANY, AND SHALL APPROVE AND DETERMINE THE 
MANNER AND DURATION FOR THE FULL RECOVERY OF BOTH, 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING: Provided, That the duration for such FULL recovery shall not be 
[shorter] LESS than fifteen (15) years nor [longer] MORE than twenty-five (25) 
years. The [ERC] COMMISSION shall, at the end of the first year [of] FROM 
the implementation of [stranded cost recovery] THE STRANDED DEBTS AND 
STRANDED CONTRACT COSTS RECOVERY, and every year thereafter, 
conduct a review OF ALL RELEVANT FACTS to determine whether there [is] 
HAS BEEN AN under-recovery or over-recovery [and adjust (true-up) the level 
of stranded cost recovery charge accordingly.] FROM THE STRANDED 
DEBTS AND THE STRANDED CONTRACT COSTS RECOVERY 
CHARGE. 
IN THE EVENT OF UNDER-RECOVERY OR OVER- 
. 
. 


21 
> 
RECOVERY, THE COMMISSION SHALL, AFTER DUE NOTICE TO 
ALL INTERESTED PARTIES AND PUBLIC HEARING, ADJUST THE 
RATE OF THE SAID STRANDED DEBTS AND STRANDED CONTRACT 
COSTS RECOVERY CHARGE ACCORDINGLY. Any amount [to 'be 
included for stranded cost recovery] REPRESENTING THE STRANDED 
DEBTS AND STRANDED CONTRACT COSTS RECOVERY CHARGE 
shall he reflected as a separate item in the [consumer billing statement.] 
ELECTRIC END-USER'S MONTHLY BILLING STATEMENTS. 
IN CASE OF OVER-RECOVERY, THE AMOUNT OVER- 
RECOVERED SHALL BE REFUNDED TO THE END-USERS OF 
ELECTRICITY IN THE AREAS WHERE THE OVER-RECOVERY 
OCCURRED, WITH INTEREST EQUAL 
TO THE NATIONAL 
RATE, COMPUTED ON THE BASIS OF THE AMOUNT OF EACH 
MONTHLY BILLING STATEMENT UNTIL THE TOTAL OVER- 
RECOVERED AMOUNT IS FULLY REFUNDED. THE COMMISSION IS 
HEREBY AUTHORIZED TO ADOPT SUCH FAIR AND REASONABLE 
FORMULA AND PROCEDURE TO EFFECT THE SAID REFUND. 
GOVERNMENT'S NINETY-DAY TREASURY BILL BORROWING 
"SEC. [33]32. Distribution /Utilities] UTILITY'S Stranded Contract 
Costs Recovery, - [Stranded] THE STRANDED contract costs of A 
distribution [utilities shall] UTILITY refer to the excess of the contracted cost of 
electricity under THE eligible INDEPENDENT POWER PRODUCER (IPP) 
contracts of [such utilities] THE DISTRIBUTION UTILITY WITH ITS IPPs 
over the actual selling price of [such contracts] THAT CONTRACTED 
ELECTRICITY FROM SUCH IPP CONTRACTS in the market. [Such 
contracts shall] INDEPENDENT POWER PRODUCER CONTRACTS OF 
THE DISTRIBUTION UTILITY SHALL BE DEEMED ELIGIBLE 
CONTRACTS TO APPLY FOR STRANDED CONTRACT COSTS 
RECOVERY ONLY IF SUCH CONTRACTS have been approved by the ERB 
[as ofj ON OR BEFORE December 3 1,2000. 
A distribution utility [shall] WITH ELIGIBLE IPP CONTRACTS 
MAY BE ALLOWED TO recover ITS stranded contract costs[: Provided, 
however,That] ONLY IF such STRANDED CONTRACT costs [of the IPPs of 
distribution utilities are subject to] ARE FOUND, AFTER A THOROUGH 
review by [ERC in order to determine fairness and reasonableness] THE 
COMMISSION, TO BE FAIR AND REASONABLE in relation to OR IN 
COMPARISON WITH the average price of SIMILAR OR COMPARABLE 
land-based [IPP projects] IPP CONTRACTS entered into by NPC, at the time 
[they were contracted. The ERC] OR AS NEAR A TIME AS THE SAID IPP 
CONTRACTS OF THE DISTRIBUTION UTILITY WERE CONCLUDED. 
IN REVIEWING AND COMPARING THE SAID AVERAGE PRICE OF 
ELIGIBLE IPP CONTRACTS OF THE DISTRIBUTION UTILITY, THE 
COMMISSION shall take into consideration all RELEVANT factors that affect 
the total cost of [NPC] NPC'S IPP generation projects, including direct or indirect 
subsidies or incentives provided by the Government. 
Within one (1) year from the start of open access, any distribution utility 
that [seeks] INTENDS TO SEEK THE recovery of stranded contract costs shall 
file with the [ERC] COMMISSION A notice of such intent [together with], 
STATING WITH SUFFICIENT PARTICULARITY an estimate of THE 
AGGREGATE AMOUNT OF such [obligations, including the] STRANDED 
CONTRACT COSTS AND ITS present value [thereof] and SUBMITTING AT 
THE SAME TIME such [other] supporting EVIDENCE AND OR data as may 
be required by the [ERC.] COMMISSION TO ASSESS AND DETERMINE 
THE MERIT AND VALIDITY OF THE ALLEGED STRANDED 
CONTRACT COSTS. 
Any distribution utility that does not file SUCH 


28 
NOTICE OF INTENT, WITH THE NECESSARY SUPPORTING 
EVIDENTIAL REQUIREMENTS, within the [date] specified PERIOD OF 
TIME shall not be [eligible for such recovery.] ENTITLED TO RECOVER 
ANY STRANDED CONTRACT COSTS. 
Any distribution utility [which seeks] THAT INTENDS to recover 
stranded [cost] CONTRACT COSTS shall have a duty to mitigate 
BEFOREHAND its potential stranded contract costs by making [reasonable best] 
REAL efforts [to]: 
(a) 
TO reduce the costs of its existing contracts with [IPPs] ITS 
INDEPENDENT POWER PRODUCERS (IPPS) to [a level not exceeding] 
THE EXTENT OF AT LEAST EQUAL TO the average buying price [of] 
FROM other COMPARABLE land-based electric power [generators;] 
GENERATION COMPANIES; and 
@) 
TO submit to an annual [earnings] FINANCIAL review AND 
AUDIT by the [ERC and use] COMMISSION UNTIL THE END OF THE 
STRANDED CONTRACT COSTS RECOVERY PERIOD SO THAT its 
earnings above its authorized rate of return, IF ANY, SHALL BE USED to 
reduce the book value of [contracts until the end of the stranded cost recovery 
period.] ITS TPP CONTRACTS. 
BILATERAL CONTRACTS CONCLUDED BY A DISTRIBUT~N 
UTILITY WITHOUT OPEN COMPETITIVE PUBLIC BIDDING, 
SPECIALLY 
WITH 
SISTER 
OR 
AFFILIATED 
GENERATION 
COMPANY OR COMPANIES, MUST BE SUBJECTED TO STRINGENT 
MITIGATXON EXAMINATION TO ELIMINATE ABOVE MARKET 
PRICES, 
INDICES, 
COST 
FACTORS, 
OTHER 
PREFERRED 
PROVISIONS, AND ARRANGEMENTS THAT SHALL INCREASE THE 
PASS-ON COSTS TO THE END-USERS OF ELECTRICITY. 
THE STRANDED CONTRACT COSTS RECOVERIES ALLOWED 
AFTER THE ABOVE-MENTIONED MITIGATION EXAMINATION 
SHALL BE COLLECTED ONLY FROM CUSTOMERS 
OF THE 
DISTRIBUTION UTILITY CONCERNED IN ITS OWN FRANCHISE 
SUBSIDIES. 
TERRITORY, AFTER THE ELIMINATION OF THE INTER-GRID 
[Other] IN CONDUCTING THE REVIEW OF THE STRANDED 
CONTRACT 
COSTS 
OF 
A 
DISTKIBUTION 
UTILITY, 
THE 
COMMISSION MAY UTILIZE FOR THAT PURPOSE OTHER mitigating 
measures which are reasonably known and generally accepted within the electric 
power industry [shall be utilized]. The [ERC] COMMISSION shall not require 
the distribution utility to take a loss to reduce ITS stranded contract costs or TO 
divest ITSELF OF assets, unless the divestiture is imposed as a penalty [as 
provided herein.] 
IN ACCORDANCE 
WITH THE APPLICABLE 
PROVISIONS OF THIS ACT. 
The [relevant] distribution utility CONCERNED shall submit to the 
[ERC] COMMISSION quarterly reports showing the amount of THE stranded 
CONTRACT costs ALREADY recovered and the REMAINING balance 
[remaining], IF ANY, YET to be recovered. 
Within three (3) months [from] IMMEDIATELY FOLLOWING the 
submission of the application for THE stranded [cost] CONTRACT COSTS 
recovery by the [relevant] distribution [utilities,] UTILITY CONCERNED, the 
[ERC] COMMISSION shall verify the JUST AND reasonable [amounts] 
AMOUNT TO BE RECOVERED, IF ANY, and SHALL APPROVE THE 
. 


29 
SAME AND determine the manner and duration for the full recovery of THE 
stranded contract costs [as defined herein:], AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING: 
Provided, That the 
duration for such recovery shall not be [shorter] LESS than fifteen (15) years nor 
[longer] MORE than twenty-five (25) years. Any amount [to be included.for 
stranded cost recovery] REPRESENTING THE STRANDED CONTRACT 
COSTS RECOVERY CHARGE shall be reflected as a separate item in the 
[consumer billing statement.] ELECTRIC END-USER'S 
MONTHLY 
BILLING STATEMENTS. 
The [ERC] COMMISSION shall, at the end of the first year [ofl FROM 
the implementation of THE stranded [cost] CONTRACT COSTS recovery, and 
every year thereafter, conduct [a] AN ANALYSIS AND review OF ALL 
RELEVANT FACTS to determine whether there' [is] HAS BEEN AN under- 
recovery or over-recovery FROM THE STRANDED CONTRACT COSTS 
RECOVERY CHARGE and adjust [(true-up) the level of] THE RATE OF 
THE SAID stranded [cost] CONTRACT COSTS recovery charge accordingly. 
In case of an over-recovery, the [ERC] COMMISSION shall ensure that any 
excess amount shall be remitted to the Special Trust Fund created under Section 
[34 hereof.] 33 OF THIS ACT. A separate TRUST account shall be created for 
these amounts, which shall be held in trust for any future claims of distribution 
utilities for stranded [cost] CONTRACT COSTS recovery. At the end of the 
stranded [cost] CONTRACT COSTS recovery period, any remaining amount in 
[this] THE SAID TRUST account shall be used to reduce the electricity rates 
CHARGED to the end-users[.] OF ELECTRICITY. 
"SEC. [34]33. Universal Charge. - Within one (1) year from the 
effectivity of this Act, a universal charge to be determined, fixed, and approved 
by the [ERC,] COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND QUBLIC HEARING, shall be imposed on all 
[electricity] end-users OF ELECTRICITY, ON THE BASIS OF 
THE 
NUMBER OF KILOWATT HOURS OF ELECTRICITY RESPECTIVELY 
CONSUMED BY THEM, for the following purposes' 
(a) 
[Payment for] FOR the PAYMENT OF THE AMOUNT OF 
stranded debts OF NPC in excess of the amount TO BE assumed by the National 
Government [and] AS PROVIDED UNDER SECTION 31 OF THIS ACT, 
FOR THE PAYMENT OF JUST AND REASONABLE AMOUNT OF 
stranded contract costs of NPC [and as well as qualified] FROM ITS 
INDEPENDENT POWER PRODUCER CONTRACTS, AND FOR THE 
PAYMENT OF JUST AND REASONABLE AMOUNT OF stranded contract 
costs of distribution utilities [resulting from] THAT MAY ARISE FROM 
THEIR RESPECTIVE ELIGIBLE IPP CONTRACTS BECAUSE OF the 
restructuring of the ELECTRIC POWER industry; 
(b) 
[Missionary electrification] FOR THE PAYMENT OF 
PRUDENT, JUST AND REASONABLE COSTS OF MISSIONARY 
ELECTRIFICATION PROJECTS; 
I 
-"; 
(c) 
[The] FOR THE PAYMENT OF THE AMOUNT FOR THE 
equalization of the taxes and royalties applied to indigenous or renewable sources 
of energy vis-&vis imported energy fuels; 
(d) 
[An] FOR THE PAYMENT OF THE AMOUNT OF AN 
environmental charge equivalent to one-fourth of one centavo per kilowatt-hour 
(PO.O025/kWh), which shall accrue to an environmental fund [to], AND WHICH 
SHALL be used solely for [watershed] THE rehabilitation and management(. 
Said fund shall be managed by NPC under existing arrangements;] OF THE 


30 
WATERSHED AREAS. THE SAID ENVIRONMENTAL FUND SHALL 
BE 
UNDER 
THE 
RESPONSIBILITY, ADMINISTRATION, AND 
MANAGEMENT OF THE NPC; and 
(e) 
[A charge to account for all forms oq FOR THE PAYMENT OF 
THE 
CHARGE 
REPRESENTING THE 
RECOVERY 
OF 
THE 
AGGREGATE AMOUNT OF ALL cross-subsidies AUTHORIZED UNDER 
THIS ACT, WHICH CROSS-SUBSIDIES SHALL EXIST ONLY for a 
period not [exceeding] TO EXCEED three (3) years[.] FROM THE DATE OF 
THE IMPOSITION OF THE UNIVERSAL CHARGE PROVIDED IN THIS 
SECTION. 
The universal charge [shall be a] UNDER THIS SECTION IS non- 
bypassable [charge which] AND 
shall be passed on and collected PER 
BILLING MONTH BY THE DISTRIBUTION UTILITIES from all THEIR 
RESPECTIVE end-users OF ELECTRICITY on [a monthly] THE basis [by 
the distribution utilities.] OF THE NUMBER OF KILOWATT HOURS OF 
USERS OF ELECTRICITY PER BILLING MONTH. Collections by the 
distribution utilities and the TRANSCO in any given BILLING month shall be 
remitted to the PSALM Corp. on or before the fifteenth (15th) DAY of the 
succeeding month, net of any amount due to the distribution utility. [Any end-user 
or self-generating entity not connected to a distribution utility shall remit its 
corresponding universal charge directly to the TRANSCO.] 
ELECTRICITY ACTUALLY CONSUMED BY EACH OF SUCH END- 
-. . 
THE SELF-GENERATED ELECTRICITY OF AN END-USER WHO 
OR WHICH IS NOT DIRECTLY CONNECTED TO THE DISTRIBUTION 
SYSTEM OF A DISTRIBUTION UTILITY OR TO THE TRANSMISSION 
GRID AND ITS SUBTRANSMISSION FACILITIES SHALL NOT BE 
SUBJECT TO OR LIABLE FOR THE UNIVERSAL CHARGE IMPOSED 
IN THIS SECTION. 
HOWEVER, EVEN IF THE END USER WHO OR WHICH 
GENERATES ELECTRICITY FOR ITS OWN USE FROM ITS OWN 
GENERATION FACILITY IS CONNECTED TO THE DISTRIBUTION 
SYSTEM OF A DISTRIBUTION UTILITY OR TO THE TRANSMISSION 
SYSTEM OF TRANSCO, THE SAME SHALL NOT BE SUBJECT TO 
THE 
UNIVERSAL 
CHARGE 
IF 
THE 
SELF 
GENERATED 
ELECTRICITY DOES NOT PASS THROUGH THE DISTRIBUTION 
SYSTEM OF A DISTRIBUTION UTILITY OR OF THE TRANSMISSION 
SYSTEM OF TRANSCO. 
The PSALM Corp., [as] BEING THE CUSTODIAN AND administrator 
of the [fund,] UNIVERSAL CHARGE HEREIN PROVIDED, shall create a 
Special Trust Fund ACCOUNT, which shall be USED, AND FROM WHICH 
SHALL BE disbursed only SUCH AMOUNTS AS MAY BE NEEDED 
STRICTLY, for the purposes specified [herein] IN THIS SECTION in an open 
and transparent manner. PSALM SHALL APPOINT A CONSUMER OR A 
REPRESENTATIVE FROM A CONSUMER GROUP ACTIVE IN THE 
ELECTRICITY 
INDUSTRY 
WHO 
SHALL 
MONITOR 
THE 
DISBURSEMENT OF FUNDS. All amounts collected for the universal charge 
shall be ALLOCATED AND distributed EXPEDlTIOUSLY FOR THE 
PAYMENT OF THE OBLIGATIONS SPECIFIED IN (A), (B), (C), (D), 
AND (E) ABOVE AND to [the] THEIR respective beneficiaries, within [a] 
SUCH reasonable period [to be provided by the ERC.] OF TIME AS SHALL 
BE DETERMINED BY THE COMMISSION. 


F 
31 
1 
"SEC. [35]34. Royalties, Returns and Tax Rates for Indigenous Energy 
Resources. - The provisions of Section 79 of Commonwealth Act No. 137 
(C.A. No. 137) and any law to the contrary notwithstanding, the President of the 
Philippines [shall] IS HEREBY DIRECTED TO reduce the SHARE, royalties, 
returns, and taxes [collected] OF THE NATIONAL GOVERNMENT for the 
exploitation of all indigenous sources of energy, including but not limited. to, 
natural gas and geothermal steam, so as to effect parity of [tax] treatment [with 
the existing rates for] FOR TAX PURPOSES BETWEEN imported coal, crude 
oil, bunker fuel, [and] other imported fuels[.] AND INDIGENOUS SOURCES 
OF ENERGY, ESPECIALLY NATURAL GAS AND GEOTHERMAL 
STEAM. 
To ensure [lower rates] CHEAPER ELECTRICITY for end-users, the 
[ERC shall] COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED 
PARTIES AND PUBLIC HEARING, IS HEREBY DIRECTED TO FIND 
WAYS AND MEANS AND TO EXERT EVERY EFFORT TO forthwith 
reduce the PRICES AND OR rates of ELECTRIC power from aU indigenous 
sources of energy AND THE GRID'S GENERATION MIX OR PORTFOLIO 
OF PLANTS. 
"SeC. [36]35. Unbundling of Rates and Functions. - Within THE six 
(6) months [from] IMMEDIATELY FOLLOWING the effectivity of this Act, 
NPC shall file [with the ERC its revised rates.] A PETITION FOR THE 
APPROVAL OF ITS REVISED RATES BY THE COMMISSION, AFTER 
DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING. The EXISTING rates of NPC shall be unbundled between ITS 
transmission SECTOR and generation [rates] SECTOR, and the rates shall 
reflect the respective costs of providing each KIND OF service[. Inter-grid] 
BEING RENDERED. THE INTER-GRID and intra-grid cross subsidies [for 
both the transmission and the generation rates] IN THE EXISTING NPC 
RATES, IF ANY, BOTH IN THE TRANSMISSION SECTOR AND IN 
THE GENERATION SECTOR, shall be removed in accordance with THE 
APPLICABLE PROVISIONS OF this Act. 
Within THE six (6) months [from] IMMEDIATELY FOLLOWING the 
effectivity of this Act, each distribution utility shall [file its revised rates for the 
approval by the ERC.] ALSO FILE A PETITION FOR THE APPROVAL OF 
ITS REVISED RATES BY THE COMMISSION, AFTER DUE NOTICE 
TO ALL INTERESTED PARTIES AND PUBLIC HEARING. 
The 
distribution wheeling charge OF A DISTRIBUTION UTILITY TO 
SUPPLIERS 
OF 
ELECTRICITY 
shall 
be 
unbundled 
from 
the 
DISTRIBUTION UTILITY'S retail rate [and the rates] TO ITS END-USERS 
OF ELECTRICITY. BOTH THE WHEELING CHARGE AND THE 
RETAIL RATE OF A DISTRIBUTION UTILITY shall reflect the respecfive 
costs of providing each AND EVERY KIND OF service[. 
For both the 
distribution retail wheeling and supplier's charges,] BEING RENDERED, AND 
BOTH SHALL BE REFLECTED SEPARATELY IN THE DISTRIBUTION 
OF ELECTRICITY. 
THE inter-class subsidies shall be removed [in 
accordance with this Act.] BOTH FROM THE DISTRIBUTION UTILITY'S 
WHEELING CHARGE TO SUPPLIERS OF ELECTRICITY AND FROM 
OF ELECTRICITY, IN ACCORDANCE WITH THE APPLICABLE 
PROVISIONS OF THIS ACT. 
UTILITY'S MONTHLY BILLING STATEMENTS TO ITS END-USERS 
THE DISTRIBUTION UTILITY'S RETAIL RATE TO ITS END-USERS 
Within THE six (6) months [from] IMMEDIATELY FOLLOWING the 
date of [submission of revised rates by NPC and each distribution utility, the ERC 
shall notify the entities of their approval.] THE FILING BY NPC OR BY A 


I* 
32 
. .  
DISTRIBUTION UTILITY, AS THE CASE MAY BE, OF ITS PETITION 
FOR THE APPROVAL OF ITS REVISED RATES, THE COMMISSION 
SHALL FORTHWITH ACT ON THE PETITION, AND THEREAFTER 
THE 
COMMISSION 
SHALL 
ACCORDINGLY 
NOTIFY 
THE 
INTERESTED PARTIES OF ITS DECISION THEREON. 
Any electric power industry participant shall functionally and structurally 
unbundle its business activities and OR ITS rates in accordance with the [sectors 
as identified in] SECTOR TO WHICH IT BELONGS ACCORDING TO 
Section 5 [hereof.] OF THIS ACT. The [ERC] COMMISSION shall ensure 
AND ENFORCE full compliance with this provision. 
"CHAPTER 111 
"ROLE OF THE DEPARTMENT OF ENERGY 
"SEC. 137136. Powers and Functions ofthe DOE. - In addition to its 
existing powers and functions, the DOE is hereby [mandated] ASSIGNED AND 
DIRECTED to supervise the restructuring of the [electricity] ELECTRIC 
POWER industry. In pursuance thereof, Section 5 of RA 7638 otherwise known 
as "The Department of Energy Act of 1992" is hereby amended to read as 
follows: 
.
"(a) 
Formulate policies for the planning v d  implementation of a 
comprehensive program for the efficient supply and economical use of energy, 
WHICH WILL BE consistent with the approved national economic plan, [and] 
with the policies on environmental protection, [and] conservation, and 
maintenance of ecological balance, and WHICH SHALL provide a mechanism 
for the integration, rationalization, and coordination of the various energy 
programs of the Government; 
(b) 
Develop and update annually the existing Philippine Energy Plan, 
hereinafter referred to as 'The [Plan] PEP, which shall provide for an integrated 
and comprehensive exploration, development, utilization, distribution, and 
conservation of energy resources, with [preferential .bias for] PREFERENCE IN 
FAVOR OF environment-friendly, indigenous, and low-cost sources of energy. 
The plan shall include [a policy direction towards the privatization of government 
agencies related to energy, deregulation of the power and energy industry, and] 
WAYS AND MEANS TOWARD THE reduction of dependency OF THE 
COUNTRY on oil-fired plants. Said Plan shall be submitted to Congress not later 
than the fifteenth day of September and every year thereafter; 
(c) 
Prepare and update annually a Power Development Program (PDP) 
and integrate the same into the [Philippine Energy Plan.] PEP. The PDF shall 
consider and integrate the individual or joint development plans FOR the 
transmission, generation, and distribution sectors o f  the electric power industry, 
which are submitted to the Department: Provided, however, That the [ERC] 
COMMISSION shall have exclusive authority [covering] TO ISSUE AND 
IMPLEMENT the Grid Code, THE DISTRIBUTION CODE, and [the] SUCH 
OTHER pertinent rules and regulations [it] THAT THE COMMISSION may 
issue; 
(d) 
Ensure the AVAILABILITY, ADEQUACY, reliability, quality, 
and security of THE supply of electric power; 
(e) 
Following the restructuring of the [electricity sector] ELECTRIC 
POWER INDUSTRY, the DOE shall, among others: 


33 
(i) 
Encourage INVESTMENTS FROM THE private sector 
[investments] in the 
[electricity sector] ELECTRIC POWER 
INDUSTRY and promote THE development of indigenous and 
renewable SOURCES OF energy [sources]; 
(ii) 
Facilitate and encourage reforms in the structure and 
operations of distribution utilities [for] IN ORDER TO ATTAIN greater 
efficiency and lower costs[;] OF ELECTRICITY, 
. 
(iii) 
In consultation with other government agencies, promote a 
system of incentives to encourage [industry participants, including new 
generating companies and end-users to provide adequate and reliable 
electric supply;] AND ENLARGE NEW PARTICIPANTS IN THE 
ELECTRIC 
POWER 
INDUSTRY, 
ESPECIALLY 
TO 
ENCOURAGE 
THE 
ENTRY 
OF 
NEW 
GENERATION 
USERS OF ELECTRICITY, WHICH WILL IN TURN PROVIDE 
THE COUNTRY WITH AN ADEQUATE, RELIABLE, AND 
CHEAPER SUPPLY OF ELECTRICITY; and 
COMPANIES AND TO ENLARGE THE NUMBER OF END- 
(iv) 
Undertake, 
in 
coordination 
with 
the 
[ERC] 
COMMISSION, NPC, PSALM, NEA and the Philippine Information 
Agency (PIA), SUCH information campaign THAT MAY BE NEEDED 
to educate the public on the restructuring of the [electricity sector] 
ELECTRIC POWER INDUSTRY and ON THE privatization of THE 
NPC assets; 
(f) 
Jointly with the electric power industry participants, establish the 
[wholesale electricity spot market] WESM and formulate the detailed rules 
[governing the operations thereof;] TO GOVERN ITS OPERATIONS; 
(g) 
Establish and 
administer programs for the 
exploration, 
transportation, marketing, distribution, utilization, conservation, stockpiling, and 
storage of energy resources of all forms, whether conventional or non- 
conventional; 
(h) 
Exercise supervision and control over all government activities 
[relative to] THAT HAVE TO DO WITH energy projects in order to attain A 
WELL COORDINATED EFFORT TO ACCOMPLISH the goals embodied 
in Section 2 of RA 7638; 
(i) 
Develop policies and procedures and, as appropriate, [promote] a 
system of energy development incentives to enable and encourage electric power 
industry participants to provide adequate SUPPLY capacity to meet 
INCREASED demand including, among others, reserve requirements[;] QF 
THE COUNTRY; 
.
(j) 
Monitor THE ACTIVITIES OF THE private sector [activities 
relative to energy projects in order to attain the goals of the restructuring, 
privatization, and modernization of the electric power sector as provided for under 
existing laws:] REGARDING ENERGY PROJECTS IN ORDER TO 
ACCOMPLISH 
THE 
GOALS 
AND 
OBJECTIVES 
OF 
THE 
RESTRUCTURING, 
PRIVATIZING, AND ' MODERNIZING THE 
ELECTRIC POWER INDUSTRY IN ACCORDANCE WITH THE 
MANDATE OF EXISTING LAWS; Provided, That the Department shall 
endeavor to provide [for] an environment THAT IS conducive to A free and 
active private sector INVOLVEMENT, participation, and investment in all 
energy activities[;] OF THE COUNTRY; 


c 
34 
(k) 
Assess the requirements of, determine priorities for, provide 
direction to, and disseminate information resulting from energy research and 
development programs for the optimal development of various forms of energy 
production and utilization technologies; 
(1) 
Formulate and implement [programs, including) A PROGRAM 
OF PENALTIES FOR THE INJUDICIOUS OR INEFFICIENT USE OF 
ECONOMY, AS WELL AS a system of [providing] incentives [and penalties,] 
for the judicious and efficient use of energy, SUCH AS CO-GENERATION 
SYSTEMS, 
DISTRIBIJTED 
GENERATION, 
DEMAND-SIDE 
MANAGEMENT SYSTEM, AND RENEWABLE ENERGY [in all energy- 
consuming sectors of the economy]; 
ENERGY 
IN ALL 
ENERGY-CONSUMING 
SECTORS 
OF THE 
(m) 
Formulate and implement a program for the accelerated 
development of non-conventional energy [systems] SOURCES and the 
promotion and commercialization of its applications; 
(n) 
Devise ways and means of [giving] EXTENDING direct benefit 
to the INHABITANTS OF A REGION, province, city, [or] AND municipality[, 
especially the community, and people affected, and equitable preferential benefit 
to the region] that hosts the energy resource [and/or the energy-generating] AND 
OR THE ENERGY-GENERATION facility[:] OR FACILITIES: Provided, 
however, That the INHABITANTS OF THE other REGIONS, provinces, cities, 
AND municipalities[, or regions] shall not be deprived of their energy 
requirements; 
. 
(0) 
Encourage private enterprises engaged in energy projects, 
including corporations, cooperatives, and similar collective organizations, to 
broaden the base of their ownership and thereby encourage the widest public 
ownership of energy-oriented [corporations;] ENTERPRISES; 
(p) 
Formulate such rules and regulations [as], NOT INCONSISTENT 
WITH THE PROVISIONS OF THIS ACT, WHICH may be necessary to 
implement the objectives of this Act; and 
(9) 
Exercise such other powers as may be necessary or incidental to 
attain the objectives of this Act." 
"CHAPTER IV 
"REGULATION OF THE ELECTRIC POWER INDUSTRY 
"SEC. [38]37. Creation of the Energy Regulatory Commission. - There 
is hereby created an IMPARTIAL, TRULY independent, AND quasi-judicial 
regulatory body to be [named the Energy Regulatory Commission (ERC). For 
this purpose,] KNOWN AS "THE COMMISSION". EXECUTIVE ORDER 
NO. 172, SERIES OF 1987, AS AMENDED, IS HEREBY REPEALED IN 
TOTO, AND the [existing] Energy Regulatory Board (ERB) created [under 
Executive Order No. 172, as amended,] THEREUNDER is hereby abolished[.] 
AND 
ALL 
ITS 
POWERS ,ARE FORMALLY 
AND 
TOTALLY 
TERMINATED. 
The Commission shall be composed of a Chairman and four (4) 
ASSOCIATE members to be appointed by the President of the Philippines. The 
Chairman and the ASSOCIATE members of the Commission shall be natural- 
born citizens OF THE PHILIPPINES and PERMANENT residents [of the 


? 
35 
1
1
 
Philippines,] THEREOF FOR THE LAST FIVE YEARS IMMEDIATELY 
PRECEDING THEIR APPOINTMENTS. THEY SHALL BE REPUTABLE 
INDIVIDUAL persons of good moral character, at least thirty-five (35) years of 
age, and [of] POSSESSING KNOWN AND recognized PROFESSIONAL 
competence in [any ofj the [followingJ field[s:] OF EITHER energy, law, 
economics, finance, commerce, OR ACCOUNTANCY, or engineering[, with]. 
EXCEPT 
FOR 
THE 
MEMBERS 
FROM 
THE 
LAW 
AND 
ACCOUNTANCY PROFESSIONS, THE THREE OTHER MEMBERS 
MUST HAVE at least [three (3)j FIVE (5) years OF actual, ACT1VE;and 
distinguished PROFESSIONAL experience in their respective fields [of 
expertise: Provided, That out ofl. OF the ifour (4)] FIVE (5) members of the 
Commission, at least one (1) OF THEM shall be a REPUTABLE AND 
RESPECTED member of the Philippine Bar with at least ten (IO) years OF 
DISTINGUISHED experience in the active practice of THE law, and 
ANOTHER one (1) shall be a REPUTABLE AND RESPECTED certified 
public accountant, ALSO with at least ten (10) years OF DISTINGUISHED 
experience in THE active practice[.] OF THE PROFESSION OF 
ACCOUNTANCY. 
Within three (3) months from the creation of the [ERC] COMMISSION, 
the Chairman shall submit [for the approval by] TO the President of the 
Philippines FOR HIS APPROVAL [the] A new organizational structure and A 
LIST ORplantilla OF positions necessary to carry out the powers and functions 
of the [ERC.] COMMISSION. 
The Chairman of the Commission, who shall be a RESPECTED, 
REPUTABLE, AND DISTINGUISHED member of the Philippine Bar, shall 
act as the Chief Executive Officer of the Commission. 
All members of the Commission shall have a FIXED, NON- 
RENEWABLE, AND NON-EXTENDIBLE term of seven (7) years[: Provided, 
That for]. FOR the first appointees, the Chairman shall hold office for seven (7) 
years[,]; two (2) ASSOCIATE members shall hold office for five (5) years; and 
the [other] LAST two (2) ASSOCIATE members shall hold office for three (3) 
years: Provided[, further], That appointment to any future vacancy shall only be 
for the unexpired term of the predecessor[: Provided, finally, That there shall be 
no reappointment and in no case shall any member serve for more than seven (7) 
years in the Commission]. 
The Chairman and THE ASSOCIATE members of the Commission shall 
assume office at the beginning of their RESPECTIVE terms: Provided, That, if 
upon the effectivity of this Act, the Cornmission has not been constituted, and the 
new staffing pattern [and] OR pluntilla OF positions [have] HAS not been 
approved and OR filled-up, the [current Board and existing personnel of ERB] 
MEMBERS 
AND 
PERSONNEL 
OF THE 
DEFUNCT 
ENERGY 
REGULATORY BOARD shall continue to hold office[.] UNTIL THEY ARE 
CORRESPONDINGLY REPLACED. 
[The existing] ANY OF THE personnel of the DEFUNCT ERB, if HE 
OR SHE IS qualified AND HAS NOT BEEN THE SUBJECT OF ANY 
ADMINISTRATIVE OR CRIMINAL CASE OF DERELICTION OF DUTY 
OR OF MALFEASANCE OR MISFEASANCE IN OFFICE, shall be given 
preference in [the] filling [up of] THE NEW STAFFING PATTERN OR 
pluntilla OF positions created in [the ERC,] AND FOR THE COMMISSION, 
subject to SUCH REQUIREMENTS OF existing civil service rules and 
regulations. 
[Members] ALL THE MEMBERS of the Commission shall enjoy 
security of tenure, and THEY shall not be suspended or removed from office 
. 


0 
36 
[except] ON ANY GROUND OTHER THAN for A just cause as PROVIDED 
AND specified by law. 
The Chairman and the ASSOCIATE members of the Commission [or any 
ofJ AND their relatives within the fourth civil degree of consanguinity or affinity, 
WHETHER SUCH PERSONAL RELATIONS ARE legitimate, [or] common 
law, [shall be] OR OTHERWISE, ARE prohibited from holding any interest 
whatsoever, either as investor, stockholder, officer, or director, in any company or 
entity engaged in the business of transmitting, generating, supplying, 
AGGREGATING, or distributing [any form of energy and must, therefore, 
divest through sale or legal disposition of any and all interests in the energy sector 
upon assumption of office.] ELECTRICITY. UPON THE ASSUMPTION BY 
THE CHAIRMAN AND THE ASSOCIATE MEMBERS OF THE 
COMMISSION OF THEIR RESPECTIVE POSITIONS, THE CHAIRMAN 
AND THE ASSOCIATE MEMBERS OF THE COMMISSION AND THEIR 
RESPECTIVE RELATIVES WITHIN THE PROSCRIBED DEGREE OF 
PERSONAL RELATIONS MUST DIVEST THEMSELVES OF ALL 
THEIR PROHIBITED INTEREST, THROUGH REAL ARMS LENGTH 
TRANSACTIONS OR OTHER VALID FORMS OF DISPOSITION, AND 
OR RESIGN FROM ALL THEIR PROSCRIBED POSITIONS IN THE 
ELECTRIC POWER INDUSTRY. 
The presence of at least three (3) members of the Commission shall 
constitute a quorum [and the majority] IN EVERY OFFICIAL AND FORMAL 
MEETING AND OR HEARING OF THE COMMISSION. 
THE vote of 
[two (2) members in a meeting where a quorum is present] A MAJORITY OF 
THE QUORUM shall be necessary for the adoption of [any] A VALID rule, 
ruling, order, resolution, decision or other OFFICIAL AND FORMAL act of the 
Commission in the exercise of its quasi-judicial functions: Provided, That. .in 
fixing 
THE 
TRANSMISSION, 
SUBTRANSMISSION, 
AND 
DISTRIBUTION WHEELING CHARGES AND THE TRANSMISSION, 
SUBTRANSMISSION, AND DISTRIBUTION rates and tariffs[,] AS WELL 
AS IN RENDERING ANY ORDER OR DECISION ON ANY ISSUE OR 
MATTER THAT SHALL RESULT IN AN INCREASE IN THE 
affirmative vote of AT LEAST three (3) members OF THE COMMISSION 
shall be required. 
FINANCIAL BURDEN TO THE END-USERS OF ELECTRICITY, 
an 
"SEC.[ 39138. Compensation and Other Emoluments for [ERC] THE 
COMMISSION Personnel. 
-The 
compensation and [other emoluments] 
ALLOWANCES for the Chairman and THE ASSOCIATE members of the 
Commission [and the ERC personnel] AS WELL AS THE SALARIES AND 
ALLOWANCES OF THE COMMISSION PERSONNEL shall be exempted 
from [the coverage oq Republic Act No. 6758, otherwise known as the "Salary 
Standardization Act". For this purpose, the schedule of [compensation of the ERC 
personnel,] SALARIES AND ALLOWANCES OF THE COMMISSION 
PERSONNEL, except for the initial [salaries and] compensation AND 
ALLOWANCES of the Chairman and THE ASSOCIATE members of the 
Commission, shall be submitted for approval by the President of the Philippines. 
The new schedule of compensation OR SALARIES AND ALLOWANCES 
shall be implemented within six (6) months from the effectivity of this Act, and 
SAID COMPENSATION OR SALARIES AND ALLOWANCES may be 
upgraded by the President of the Philippines as the need arises: Provided, That in 
no case shall the rate OF SUCH COMPENSATION OR SALARIES AND 
ALLOWANCES be upgraded mor6 than once a year. 
.
The Chairman and THE ASSOCIATE members of the Commission shall 
initialfy be entitled to the same [salaries] COMPENSATION, allowances, and 
benefits as those of the Presiding Justice and Associate Justices of the Supreme 


> 
37 
Court, respectively. The Chairman and the ASSOCIATE members of the 
Commission shall, upon completion of their term OF OFFICE or upon becoming 
eligible for retirement under existing laws, he entitled to the same retirement 
benefits and privileges provided for the Presiding Justice and Associate Justices 
of the Supreme Court, respectively 
“SEC. 140139. Enhancement of Technical Competence. - The [ERC] 
COMMISSION shall establish rigorous training programs for its staff [for the 
purpose of enhancing the] AND PERSONNEL TO ENHANCE THEIR 
technical competence AND 
THAT of the [ERC in the following keas: 
evaluation of technical performance and monitoring of] COMMISSION IN 
ORDER TO STRENGTHEN ITS KNOWLEDGE AND CAPACITY TO 
MONITOR AND EVALUATE THE TECHNICAL CAPABILITIES AND 
OVERALL PERFORMANCE OF THE ELECTRIC POWER INDUSTRY 
PARTICIPANTS, INCLUDING THEIR compliance with THE service [and], 
performance, [standards, performance-based rate-setting reform, environmental 
standards, and such other areas as will] AND ENVIRONMENTAL 
STANDARDS, AS WELL AS WITH THE REFORMS PROVIDED IN THIS 
ACT, AND ABOVE ALL TO enable the [ERC] COMMISSION to adequately 
perform its duties and EFFICIENTLY ACCOMPLISH ITS functions. 
“SEC. [41]40. Promotion of 
Consumer Interests. - The [ERC] 
COMMISSION shall [handle] ATTEND AND RESPOND EXPEDITIOUSLY 
TO THE [consumer] complaints OF END-USERS OF ELECTRICITY, and IT 
SHALL ensure AND SAFEGUARD the adequate, EFFECTIVE, AND 
SUSTAINED promotion [of consumer interests.] AND PROTECTION OF 
THE INTERESTS OF END-USERS OF ELECTRICITY. 
“SEC. [42]41. Budget of the [ERG‘.] COMMZSSION. - The amount of 
One Hundred fifty million pesos (PlSO,OOO,OOO.OO) is hereby allocated from the 
existing budget of the DEFUNCT ERB for the initial operation of the (ERC.] 
COMMISSION. Any balance shall initially be sourced from the Office of the 
President of the Philippines. Thereafter, the annual budget of the [ERC] 
COMMISSION shall be included in the [regular] GENERAL or special 
appropriations[.] OF THE NATIO~VAL 
GOVERNMENT. 
“SEC. [43]42. Functions of the [ERC.] COMMZSSZON - The [ERC] 
COMMISSION shall, AMONG OTHERS: (1) promote competitioni,]; (2) 
encourage market development[,]; 
(3) PROTECT 
END-USERS OF 
ELECTRICITY 
FROM 
DISCRIMINATORY, 
UNFAIR, 
OR 
CONFISCATORY 
RATES; 
(4) 
ensure 
[customer], 
UPON 
THE 
choice; and (5) CONTROL, 
PREVENT, AND penalize abuse of market power 
in the restructured [electricity] ELECTRIC POWER industry. [In appropriate 
cases, the ERC] THE COMMISSION is authorized to issue A cease and desist 
order, WHENEVER IT IS NEEDED TO SERVE THE INTEREST OF THE 
PUBLIC OR THE INTEREST OF JUSTICE, after due notice TO ALL 
INTERESTED PARTIES and PUBLIC hearing. [Towards this end, it shall]-IN 
ADDITION, THE COMMISSION SHALL PERFORM AND EXERCISE 
AND be responsible for the following [key] POWERS AND functions [in the 
restructured industry1 : 
ESTABLISHMENT OF THE CONTESTABLE MARKET, END-USER’S 
.“ 
(a) 
Enforce the implementing rules and regulations of this Act[;], 
WHICH ARE NOT INCONSISTENT WITH ANY OF ITS PROVISIONS; 
(b) 
Within six (6) months [from] IMMEDIATELY FOLLOWING 
the effectivity of this Act, promulgate and enforce; in accordance with [law,] 
. 


38 
6 
THE APPLICABLE PROVISIONS OF THIS ACT, a National Grid Code and 
a Distribution Code, which shall include, but not limited to, the following: 
(i) Performance standards for TRANSCO 0 & M Concessionaire, 
distribution utilities, and suppliers: Provided, That in the establishment of 
the SAID performance standards, the nature and function of the entities 
shall CAREFULLY be considered; [and] 
(ii) 
Financial capability standards for the 
[generating] 
GENERATION companies, the TRANSCO, THE distribution utilities, 
and THE suppliers: Provided, That in the formulation of the SAID 
financial capability standards, the nature and function of the [entity] 
ENTITIES shall CAREFULLY be considered: Provided, ,further, That 
[such] SAID standards are set to ensure that the electric power industry 
participants meet the minimum financial standards to protect the public 
interest[. Determine fix, and approve, after due notice and public hearings 
the universal charge, to he imposed on all electricity end-users pursuant to 
Section 34 hereofl; AND 
,' 
(111) 
DETERMINE, FIX, AND APPROVE, AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING, THE ITEMIZED AMOUNTS OF THE UNIVERSAL 
ELECTRICITY PURSUANT TO SECTION 33 OF THIS ACT. 
(c) 
CHARGE TO BE IMPOSED ON ALL 
END-USERS OF 
Enforce the rules and regulations governing the operations of the 
[electricity spot market] WESM and the activities of the spot market operator and 
other participants in the spot market, for the purpose of ensuring a greater AND 
RELIABLE supply and rational pricing of electricity; 
(d) 
Determine the [level] AMOUNT AND EXTENT of crbss 
subsidies in the existing retail rate until the same is FINALLY removed pursuant 
to Section [74 hereof;] 71 OF THIS ACT; 
(e) 
Amend, REVISE, or revoke, after due notice TO ALL 
INTERESTED PARTIES and PUBLIC hearing, the authority to operate [of] 
GRANTED TO any person or entity which fails to comply with the 
PERTINENT provisions [hereof, the IRR, or any] OF THIS ACT, OR WITH 
ANY OF THE IMPLEMENTING RULES AND REGULATIONS OF THIS 
ACT, OR WITH ANY DECISION, order, or resolution of the [ERC.] 
COMMISSION. In the event a divestment, CESSATION, OR DESISTANCE 
is required, the [ERC] COMMISSION .shall, THROUGH A FORMAL 
ORDER FOR THAT PURPOSE, allow the affected party [sufficient time] A 
REASONABLE TIME to remedy the infraction, or [for] TO UNDERTAKE an 
orderly disposal OF THE MATTER, ACTIVITY, OR BUSINESS 
INVOLVED, AS THE CASE MAY BE, but [shall] in no case SHALL THE 
SAID REASONABLE TIME exceed twelve (12) months from the issuance of 
the SAID FORMAL order[;] OF THE COMMISSION; 
(f) 
[In the public interest establish] ESTABLISH and enforce [a 
methodology for setting] IN THE INTEREST OF THE GENERAL PUBLIC 
AFTER 
TAKING 
INTO 
ACCOUNT 
ALL 
RELEVANT 
CONSIDERATIONS, 
INCLUDING 
THE 
EFFICIENCY 
OR 
INEFFICIENCY OF .THE REGULATED ENTITIES, AND AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC HEARING, 
JUST 
AND 
REASONABLE' transmission 
and 
distribution 
NON- 
DISCRIMINATORY wheeling [rates and] CHARGES, AS WELL AS JUST 
AND REASONABLE NON-DISCRIMINATORY retail rates for the captive 
AND IN THE INTEREST OF THE END-USERS OF ELECTRICITY, 


I '  39 
, 
market of [a] distribution [utility, taking into account all relevant considerations, 
including the efficiency or inefficiency of the regulated entities. The rates must be 
such as to] UTILITIES, WHICH SHALL allow the recovery of ALL just and 
reasonable costs[,] and [a] GIVE A JUST AND reasonable return on THE rate 
base (RORB) OF THE REGULATED ENTITIES to enable [the entity] THEM 
to operate viably[. The ERC may adopt alternative forms of internationally- 
accepted rate-setting methodology as it may deem appropriate. The rate-setting 
methodology so adopted and applied must ensure a reasonable price of electricity. 
The rates prescribed shall be non-discriminatory. To achieve this objective and to 
ensure the complete removal of cross subsidies, the cap on the recoverable rate of 
system losses prescribed in Section 10 of Republic Act No. 7832, is hereby 
amended and shall be replaced by caps which shall be determined by the ERC 
based on load density, sales mix, cost of service, delivery voltage and other 
technical considerations it may promulgate. The ERC shall determine such form 
of rate-setting methodology, which shall promote efficiency. In case the rate 
setting methodology used is RORB, it shall be subject to the following 
guidelines:], AND WHICH SHALL ENSURE A JUST AND REASONABLE 
PRICE OF ELECTRICITY. 
IN DETERMINING A JUST AND REASONABLE RETURN ON 
THE RATE BASE OF THE TRANSCO OR OF A DISTRIBUTION 
UTILITY, THE COMMISSION MUST OBSERVE THE FOLLOWING 
GUIDELINES: 
(I) THE RATE BASE SHALL CONSIST OF THE AVERAGE 
VALUE OF ALL ASSETS, FACILITIES, PROPERTY, AND 
PERMANENT IMPROVEMENTS OF THE TRANSCO OR OF THE 
DISTRIBUTION UTILITY, AT THE BEGINNING AND AT THE 
END OF ITS FISCAL YEAR, AS SHOWN IN THE PROPERTY 
ACCOUNTS OF THE TRANSCO OR OF THE DISTRIBUTION 
UTILITY, AS THE CASE MAY BE, WHICH ARE DIRECTLY 
USED AND USEFUL IN PROVIDING THE SERVICE TO THE 
ALLOWANCE FOR DEPRECIATION TAKEN FOR THE YEAR 
ON THE REGULATED ENTITY'S DEPRECIABLE ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS, 
PLUS 
TWO 
MONTHS 
PRUDENT 
OPERATING CAPITAL.,' 
END-USERS 
OF 
ELECTRICITY, 
LESS 
THE 
ACCRUED 
(11) THE VALUE OF THE FRANCHISE OF THE TRANSCO 
OR OF THE DISTRIBUTION UTILITY 
SHALL NOT BE 
INCLUDED IN THE RATE BASE FOR PURPOSES OF 
RATEMAKING. 
(111) 
THE 
VALUE 
OF 
ANY 
ASSET, 
FACILITY, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS 
NOT 
ACTUALLY USED AND USEFUL FOR THE PURPOSE OF 
RENDERING THE SERVICE OF THE TRANSCO OR OF THE 
DISTRIBUTION UTILITY SHALL NOT BE INCLUDED IN THE 
RATE BASE, HOWEVER USEFUL THE ASSET, FACILITY, 
BEEN IN THE PAST OR MAY YET BE IN THE FUTURE. 
PROPERTY, AND PERMANENT IMPROVEMENTS MAY  HA^ 
(IV) THE VALUE OF REAL OR PERSONAL PROPERTY 
PURCHASED AND HELD BY THE TRANSCO OR BY THE 
DISTRIBUTION UTILITY FOR THE NEEDS OF POSSIBLE 
FUTURE GROWTH SHALL NOT LIKEWISE BE INCLUDED IN 
THE RATE BASE. 
.


40 
(V) 
THE 
COST 
OF 
OVER-ADEQUATE 
ASSETS, 
FACILITIES, PROPERTY, AND PERMANENT IMPROVEMENTS 
SHALL NOT SIMILARLY BE ALLOWED TO BE INCLUDED IN 
THE 
RATE 
BASE 
OF THE TRANSCO OR 
OF THE 
- 
DISTRIBUTION UTILITY. 
(VI) 
THE TOTAL AMOUNT 
OF ALL 
DEPOSITS 
OF ELECTRICITY AS A CONDITION OF RENDITION AND 
CONTINUATION OF SERVICE, INCLUDING THE TOTAL 
AMOUNT OF ACCUMULATED INTERESTS THEREON, SHALL 
NOT 
BE 
INCLUDED IN THE RATE 
BASE 
OF THE 
DISTRIBUTION UTILITY. 
REQUIRED BY A DISTRIBUTION UTILITY FROM END-USERS 
(VII) THE VALUE OF NEWLY CONSTRUCTED OR 
INSTALLED 
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS 
WHICH 
ARE 
TO 
BE 
INCLUDED IN THE RATE BASE SHALL BE THE PRUDENT 
ORIGINAL COSTS OF SUCH NEWLY CONSTRUCTED OR 
INSTALLED 
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT IMPROVEMENTS. 
. 
(VIII) FOR ASSETS, FACILITIES, PROPERTY, AND 
PERMANENT IMPROVEMENTS WHICH ARE NOT NEWLY 
CONSTRUCTED OR 
INSTALLED, THEIR VALUE, 
FOR 
PURPOSES OF DETERMINING THE RATE BASE, SHALL BE 
THEIR 
CURRENT TOTAL 
REVALUATION 
VALUE, 
IN 
ACCORDANCE WITH THE REVALUATION AUTHORIZED 
UNDER THIS ACT, AS SHOWN IN THE PROPERTY ACCOUNTS 
OF THE TRANSCO OR OF THE DISTRIBUTION UTILITY, LESS 
THE 
TOTAL 
ACCUMULATED 
ALLOWANCES 
FOR 
DEPRECIATION TAKEN BY THE REGULATED ENTITIES 
EVERY FISCAL YEAR ON THEIR DEPRECIABLE ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMAMENT 
IMPROVEMENTS. 
(IX) 
A 
REASONABLE 
ALLOWANCE 
FOR 
DEPRECIATION BASED ON A RATE CONSISTENTLY APPLIED 
IN 
ACCORDANCE 
WITH 
WIDELY 
ACCEPTED 
AND 
RECOGNIZED ACCOUNTING RULES SHALL BE TAKEN 
EVERY FISCAL YEAR ON EACH OF THE DEPRECIABLE 
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS OF THE TRANSCO OR OF A DISTRIBUTION 
UTILITY. SUCH YEARLY ALLOWANCE FOR DEPRECIATION 
ON EACH OF THE DEPRECIABLE ASSETS, FACILITIES, 
PROPERTY, AND PERMANENT IMPROVEMENTS SHALL BE 
DETERMINED, FIXED, AND KEPT IN A PROPER AND 
ADEQUATE DEPRECIATION ACCOUNTS WHICH SHALL BE 
CARRIED AND RECORDED IN THE BOOKS OF THE TRANSCO 
OR OF THE DISTRIBUTION UTILITY, IN ACCORDANCE WITH 
SUCH RULES, REGULATIONS, AND IN SUCH FORMS OF THE 
ACCOUNTS AS THE COMMISSION MAY PRESCRIBE FOR THE 
PROTECTION OF THE STOCKHOLDERS, BONDHOLDERS, 
CREDITORS, AND THE GENERAL PUBLIC, ESPECIALLY THE 
. 
END-USERS OF ELECTRICITY. 
(X) THE TRANSCO OR THE DISTRIBUTION UTILITY 
SHALL CONSISTENTLY CONFORM TO ITS DEPRECIATION 
RATE OR RATES SO DETERMINED AND FIXED, AND SHALL 
, 


41 
SET ASIDE THE MONEYS SO ALLOTTED FOR SUCH 
DEPRECIATION ALLOWANCES OUT OF ITS EARNINGS IN A 
DEPRECIATION FUND, AND IT SHALL CARRY THE SAME IN 
A DEPRECIATION FUND ACCOUNT. THE INCOME FROM 
INVESTMENTS OF THE MONEYS IN SUCH DEPRECIATION 
FUND ACCOUNT SHALL BE INCLUDED AND RECORDED IN 
SUCH DEPRECIATION FUND ACCOUNT AND SHALL FORM A 
PART OF THE DEPRECIATION FUND. 
(XI) THE DEPRECIATION FUND SHALL NOT BE 
EXPENDED OTHERWISE THAN FOR NEW CONSTRUCTIONS, 
OR 
FOR 
THE 
IMPROVEMENTS, 
REPLACEMENTS, 
EXTENSIONS, 
OR 
ENHANCEMENT 
OF 
THE 
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS 
OF 
THE 
TRANSCO 
OR 
OF 
THE 
DISTRIBUTION UTILITY THAT SHALL RAISE AND IMPROVE 
THE DEGREE OF EFFICIENCY AND QUALITY OF THE 
SERVICE TO BE RENDERED BY THE TRANSCO OR BY THE 
DISTRIBUTION UTILITY. 
(XII) 
ANY 
(AMOUNT 
DRAWN 
FROM 
THE 
DEPRECIATION FUND AND USED FOR THE IMPROVEMENT, 
REPLACEMENT, EXTENSION, OR ENHANCEMENT OF THE 
ASSETS, FACILITIES, 
PROPERTY, AND PERMANENT 
IMPROVEMENTS 
OF 
THE 
TRANSCO 
OR 
OF 
THE 
DISTRIBUTION UTILITY, OR FOR THE CONSTRUCTION OF 
ANY NEW ASSET, FACILITY, PROPERTY, AND PERMANENT 
IMPROVEMENT 
OF 
THE 
TRANSCO 
OR 
OF 
THE 
DISTRIBUTION UTILITY, SHALL BECOME PART OF THE 
RATE BASE. 
[(i)] (XIII) 
[For purposes of determining the rate base, the] 
THE TRANSCO or [any] A distribution utility [may be allowedl IS 
AUTHORIZED to revalue its [eligible] assets [not more th$, 
FACILITIES, PROPERTY, AND PERMANENT IMPROVEMENTS 
CONSTITUTING ITS RATE BASE once every three (3) years [by an] 
ESTABLISHED, 
REPUTABLE, 
AND 
independent 
appraisal 
company[:], 
IN 
ACCORDANCE 
WITH 
SOUND 
AND 
CONSISTENTLY MAINTAINED METHOD OF VALUATION: 
Provided, however, That [ERC] THE COMMISSION may [give an 
exemption in case of unusual] TEMPORARILY SUSPEND THE 
AFORESAID THREE YEAR LIMITATION IN THE EVENT OF 
EXTRAORDINARY INFLATION OR devaluation[:] OF THE PESO 
AND ONLY FOR THE PERIOD THAT SUCH EXTRAORDINARY 
INFLATION OR DEVALUATION LASTS: Provided, further, That 
the [ERC] COMMISSION, IN THAT EVENT, shall exert [efforts to] 
EVERY EFFORT TO PREVENT AND OR minimize THE STEEP 
AND 
RAPID ESCALATION OF THE price 
[shocks] OF 
ELECTRICITY in order to protect the [consumers;] END-USERS OF 
ELECTRICITY. 
THROUGH THE SERVICES OF AN EXPERIENCED, WELL- 
(XIV) A JUST AND REASONABLE RATE OF RETURN ON 
THE RATE BASE OF THE TRANSCO OR OF A DISTRIBUTION 
UTILITY SHALL NOT EXCEED TWELVE PERCENTUM (12%) 
PER ANNUM OF SUCH RATE BASE. 
(XV) THE CAP ON THE RECOVERABLE RATE OF A 
JUST AND REASONABLE SYSTEMS LOSS PRESCRIBED IN 


42 
SECTION 10 OF REPUBLIC ACT NO. 7832 SHALL BE 
MAINTAINED IN THE DENSELY POPULATED CITIES, URBAN 
CENTERS, AND 
MUNICIPALITIES OF THE 
COUNTRY: 
PROUDED, THAT IT SHALL BE ACCORDINGLY AMENDED 
AND REPLACED IN AREAS OTHER THAN THE DENSELY 
POPULATED 
CITIES, 
URBAN 
CENTERS, 
AND 
MUNICIPALITIES OF THE COUNTRY BY CAPS WHICH SHALL 
BE DETERMINED AND FIXED BY THE COMMISSION, AFTER 
DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING, BASED ON LOAD DENSITY, SALES MIX, COST OF 
SERVICE, DELIVERY VOLTAGE, AND OTHER TECHNICAL 
CONSIDERATIONS 
THAT 
THE 
COMMISSION 
MAY 
PROMULGATE: PROVZDED FURTHER, THAT ANY NEW CAP 
FOR RECOVERABLE SYSTEM LOSS IN AREAS OTHER THAN 
THE DENSELY POPULATED CITIES, URBAN CENTERS, AND 
MUNICIPALITIES OF THE COUNTRY SHALL ALSO TAKE 
INTO CONSIDERATION AND PROVIDE FOR A JUST AND 
REASONABLE SYSTEMS LOSS FOR THE INEFFICIENCIES OF 
THE 
SYSTEMS 
OF 
ELECTRIC 
COOPERATIVES 
IN 
PERFORMING 
THEIR 
MISSIONARY 
ELECTRIFICATION 
FUNCTIONS. 
@VI) CORPORATE INCOME TAX LEVIED ON THE NET 
TAXABLE 
INCOME 
OF 
THE 
TRANSCO 
OR 
OF 
A 
DISTRIBUTION UTILITY SHALL 
NOT, 
DIRECTLY 
OR 
INDIRECTLY, BE PASSED ON TO THE 
END-USERS OF 
ELECTRICITY. 
- 
[(ii)] (XVII) Interest expenses [are not allowable] OF THE 
TRANSCO OR OF A DISTRIBUTION UTILITY SHALL NOT BE 
ALLOWED AS deductions [from permissible] FOR PURPOSES OF 
DETERMINING A JUST AND REASONABLE return on rate base[;]. 
(XVIII) 
NEGLIGENT 
OR 
WASTEFUL 
LOSSES, 
INCLUDING LOSSES DUE TO UNNECESSARY ERRORS IN 
CONSTRUCTION OR IN EQUIPMENT PROCUREMENT, AS 
WELL AS LOSSES DUE TO LACK OF ORDINARY ECONOMY, 
PRUDENCE, 
FORESIGHT, 
AND 
EFFICIENCY 
IN 
MANAGEMENT, INCURRED BY THE TRANSCO OR BY A 
DISTRIBUTION UTILITY SHALL NOT BE PERMITTED AS 
OPERATING CHARGES AND, THEREFORE, SHALL NOT BE 
ALLOWED 
AS 
DEDUCTIONS 
FOR 
PURPOSES 
OF 
RATEMAKING. 
(XIX) THE AMOUNT OF PENALTIES AND OR COSTS-OF 
REMEDIES ARISING FROM ANY VIOLATION OF CONTRACT 
BY THE TRANSCO OR BY A DISTRIBUTION UTILITY SHALL 
NOT BE PASSED ON TO THE END-USERS OF ELECTRICITY. 
[(iii)] (XX) 
[In] FOR PURPOSES OF determining [eligible] 
THE JUST AND REASONABLE cost of services that will be passed on 
to 
the 
end-users[,] 
OF 
ELECTRICITY, 
the 
[ERC] 
THE 
COMMISSION shall establish minimum efficiency performance 
standards for the TRANSCO and THE distribution utilities, including 
systems losses, interruption frequency rates, and collection efficiency[;] 
OF THE REGULATED ENTITIES. 
[(iv)] (XXI) 
[Further, in] IN determining THE rate base[,] OF 
THE TRANSCO OR OF ANY DISTRIBUTION UTILITY, THE 


43 
COMMISSION SHALL NOT ALLOW the TRANSCO or any 
. 
distribution utility [shall not be allowed] to include THE COSTS OF 
management inefficiencies [like cost], SUCH AS, BUT NOT LIMITED 
TO, THE COSTS of project delays not [excused] EXCUSABLE by 
force majeure[,] OR THE penalties and related interest CHARGES 
ARISING during construqtion [applicable to these unexcused delays; and] 
PERIOD BECAUSE OF SAID INEXCUSABLE DELAYS. 
[(v)] (XXII) Any 
significant operating 
costs 
or 
project 
investments of the TRANSCO and OF A distribution [utilities] 
UTILITY, which shall become part of the rate base, shall be subject to 
[verification by the ERC] THE APPROVAL OF THE COMMISSION, 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
PUBLIC HEARING, IN ORDER to ensure that the [contracting and] 
procurement of the equipment, assets, and 
OR services [have been 
subjected to] AS WELL AS THE TERMS AND CONDITIONS OF 
THE 
CONTRACT 
OR 
CONTRACTS 
COVERING 
SUCH 
PROCUREMENT SHALL BE DONE IN ACCORDANCE WITH 
OPEN COMPETITIVE PUBLIC BIDDING AND IN COMPLIANCE 
WITH THE REQUIREMENTS OF EXISTING APPLICABLE 
PROCUREMENT LAWS, AS WELL AS IN ACCORDANCE WITH 
transparent and accepted indusky procurement and purchasing practices 
[to protect the public interest.], SO THAT THE INTEREST OF THE 
ELECTRICITY SHALL BE PROTECTED. 
GENERAL PUBLIC AND THAT OF THE 
END-USERS OF 
(XXIII) 
IN 
ASCERTAINING, 
FOR 
RATEMAKING 
PURPOSES, THE COST OF OR INVESTMENT IN 
ASSETS, 
FACILITIES, PROPERTY, AND PERMANENT IMPROVEMENTS 
WHICH SHALL BE USED AND USEFUL IN PROVIDING THE 
COST OR INVESTMENT SHALL NOT INCLUDE OUTLAYS OR 
ALLOWANCES 
FOR 
RECKLESS, 
EXTRAVAGANT, 
UNNECESSARY, OR INOPPORTUNE EXPENDITURES OR 
COSTS OF CONSTRUCTION. 
ELECTRIC SERVICE TO END-USERS OF ELECTRICITY, SUCH 
THE COMMISSION, TO PROMOTE EFFICIENCY AND 
FAIRNESS IN THE ELECTRIC POWER INDUSTRY AND WHEN 
JUSTIFIED AND DEMANDED BY THE NATIONAL INTEREST, 
MAY ADOPT, AFTER DUE NOTICE TO ALL INTERESTED 
, PARTIES AND PUBLIC HEARING, ANY OTHER ALTERNATIVE 
RATEMAKENG THAT SHALL BEST SERVE THE MUTUAL 
ELECTRICITY, 
AND 
THE 
ELECTRIC 
INDUSTRY 
PARTICIPANTS. 
FORM OF INTERNATIONALLY-ACCEPTED METHOD OF 
INTEREST OF THE GENERAL PUBLIC, THE END-USERS OF 
IN EVERY CASE, THE RATEMAKING METHOD SO 
ADOPTED 
AND 
APPLIED 
MUST 
BE 
NEITHER 
CONFISCATORY 
TO 
THE 
TRANSCO 
OR 
TO 
THE 
DISTRIBUTION UTILITIES, AND MUST FURTHERMORE 
ENSURE THAT THE PRICE OF ELECTRICITY IS JUST AND 
REASONABLE. 
EXTORTIONARY TO THE END-USERS OF ELECTRICITY NOR 
THE RATEMAKING POWER HEREIN GRANTED TO 
THE COMMISSION MUST BE EXERCISED IN SUCH..A 
MANNER THAT EVERY DOUBT MUST BE RESOLVED IN 


44 
FAVOR OF THE PROTECTION OF THE RIGHTS OF THE 
GENERAL PUBLIC. 
THE COMMISSION IS HEREBY AUTHORIZED TO 
DIVIDE 
THE 
FRANCHISE 
AREA 
OR 
AREAS 
OF 
A 
SUCH DIVISION OR DIVISIONS WILL PROMOTE GREATER 
EFFICIENCY, LOWER PRICE OF ELECTRICITY TO END- 
USERS, 
TRANSPARENCY, 
AND 
MORE 
EFFECTIVE 
REGULATION OF THE REGULATED ENTITIES IN THE 
ELECTRIC POWER INDUSTRY. 
DISTRIBUTION UTILITY INTO SUB-AREA OR SUB-AREAS, IF 
IN ALL CASES OF RATE-MAKING, THE SOLICITOR 
. 
GENERAL MUST BE NOTIFIED OF AND SHALL APPEAR IN 
THE 
PROCEEDINGS 
BEFORE 
THE 
COMMISSION 
TO 
REPRESENT THE GOVERNMENT THEREIN SO THAT THE 
INTEREST OF THE GENERAL PUBLIC AND THE INTEREST 
OF THE END-USERS OF ELECTRICITY WILL BE PROTECTED. 
SIMILARLY, THE COMMISSION ON AUDIT (COA) IS 
HEREBY REQUIRED TO ASSIST THE COMMISSION, WHEN 
NEEDED BY THE LATTER, TO VERIFY AND VALIDATE THE 
FACTS AND FIGURES INVOLVED IN ANY RATEMAKING 
PROCEEDINGS BEFORE THE COMMISSION. 
(g) 
Three (3) years after the imposition of the universal charge, ensure 
that the charges of the TRANSCO or OF any distribution utility shall [bear] 
INCLUDE no cross subsidies between THE grids, within [grids,] A GRID, or 
between classes of [customers] END-USERS OF ELECTRICITY, except as 
provided [herein;] IN THIS ACT; 
. 
(h) 
Review and approve any changes [on] IN the terms and conditions 
of service of the TRANSCO or OF any distribution utility; 
(i) 
Allow the TRANSCO to charge user fees for ancillary services to 
all electric power industry participants or self-generating entities connected to the 
grid. Such fees shall be fixed by the [ERC] COMMISSION after due notice TO 
ALL INTERESTED PARTIES and public hearing; 
(i) 
Set a lifeline rate for [the marginalized end-users;] DESERVING 
LOW-INCOME END-USERS OF ELECTRICITY; 
(k) 
Monitor and take SUCH APPROPRIATE measures in 
accordance with this Act to penalize ANY abuse of market power, ANY 
cartelization, and OR ANY anti-competitive or discriminatory behavior by any 
electric power industry participant; 
(1) 
Impose fines AND or penalties for any non-compliance with or 
breach of ANY PROVISION OF this Act, [the IRR] OR OF ANY 
PROVISION OF THE IMPLEMENTING RULES AND REGULATIONS of 
this Act, and [the] OR OF ANY DECISION, ORDERS, RESOLUTIONS, 
rules, and regulations which [it] THE COMMISSION promulgates or 
administers; 
(m) 
Tale any other action THAT HAS BEEN delegated to it [pursuant 
to] UNDER this Act; 
(n) 
[Before the end ofj ON OR BEFORE April THIRTY (30) of 
each year, submit to the Office of the President of the Philippines and TO THE 


45 
Congress[,] OF THE PHILIPPINES, WITH A copy furnished TO the DOE, an 
annual report containing ALL such matters or cases which have been filed before 
or referred to it during the preceding year, the actions and proceedings undertaken 
BY IT IN CONNECTION THEREWITH, and its decision or resolution in each 
AND EVERY case. The [ERC] COMMISSION shall make SUFFICIENT 
copies of such reports AND MAKE THEM available to any interested party 
upon payment of a REASONABLE charge which (reflects1 SHALL BE 
SUFFICIENT TO COVER, AT LEAST, the printing costs. The [ERC] 
COMMISSION shall publish all its decisions involving rates and THOSE 
INVOLVING anti-competitive cases in at least one (1) newspaper of general 
circulation, [andlor] AND OR post THE SAME electronically, and circulate to 
all interested electric power industry participants copies of its DECISIONS OR 
resolutions to MAKE KNOWN AND ensure A fair and impartial treatment[;] 
OF EVERYONE AFFECTED; 
(0) 
Monitor ALL the activities in the generation and supply SIDE of 
the electric power industry [with the end in view of promoting] IN ORDER TO 
PROMOTE free market competition THEREIN and [ensuring] IN ORDER TO 
ENSURE that the allocation or pass through of bulk purchase cost by 
[distributors] DISTRIBUTION UTILITIES is transparent[,] AND non- 
discriminatory and that any existing subsidies, IF SUCH WERE THE CASE, 
shall he divided pro-rata among all retail suppliers; 
(p) 
Act on applications for or modifications of certificates of public 
convenience [and/or] AND OR necessity, licenses, or permits of franchised 
[electric] DISTRIBUTION utilities in accordance with law; and revoke, review, 
and modify such certificates, licenses or permits in appropriate cases, such as 
FOR INSTANCE in cases of violations of the Grid Code, THE Distribution 
Code, and [other] THE rules and regulations issued by the [ERC] 
COMMISSION in accordance with [law;] THE PROVISIONS OF THIS 
ACT; 
(q) 
Act on THE applications for [cost recovery and] JUST AND 
REASONABLE 
COSTS 
RECOVERIES 
AND 
FOR 
JUST 
AND 
REASONABLE return on THE demand side management projects; 
(r) 
In the exercise of its investigative and quasi-judicial powers, act 
against any ELECTRIC POWER INDUSTRY participant or player [in the 
energy sector] for violations of any law, rule, and regulation governing the same, 
including the rules on cross-ownership, anti-competitive practices, abuse of 
market positions, and OTHER similar or related acts by any ELECTRIC 
POWER INDUSTRY participant [in the energy sector] or by any person, as may 
be provided by law, and require any person or entity to submit any report or 'aata 
conducted BY THE COMMISSION pursuant to this Act; 
[relative] THAT MAY BE RELEVANT to any investigation or hearing BEING 
(s) 
[Inspect,] IN THE EXERCISE OF ITS QUASI-JUDICIAL 
POWER, INSPECT AT ANY TIME, on its own DIRECTLY or through [duly 
authorized] representatives[,] DULY AUTHORIZED BY IT, the premises, 
books of accounts, and records of any person or entity [at any time, in the exercise 
of its quasi-judicial power] for purposes of determining the existence of any anti- 
competitive behavior [and/or] AND OR market power abuse [and] OR any 
violation of rules and regulations issued by the [ERC;] COMMISSION; it.
(t) 
Perform such other regulatory €unctions as [are] MAY BE 
appropriate and necessary [in order] to ensure the successful restructuring and 
modernization of the electric power industry, [such as,] INCLUDING, but not 
limited to, the ADOPTION AND ENFORCEMENT OF rules and guidelines, 
NOT INCONSISTENT WITH THE PROVISIONS OF THIS ACT, under 


46 
,' 
which generation companies, THE TRANSCO, AND THE distribution utilities 
[which], WHOSE SHARES OF STOCK are not YET publicly listed IN THE 
PHILIPPINE STOCK EXCHANGE (PSE), shall offer and sell to the 
GENERAL public [a portion],' WITH PRIORITY AND PREFERENCE 
GIVEN TO END-USERS OF ELECTRICITY, not less than fifteen percent 
(15%) of their RESPECTIVE common shares of stocks: Provided, however, 
That generation companies[,] AND distribution utilities [or their respective 
holding companies] that arc already listed in the PSE TO THE EXTENT OF AT 
LEAST FIFTEEN PERCENT OF THEIR RESPECTIVE COMMON 
SHARES OF STOCK are deemed [in compliance. For existing companies, 
such) 
TO 
HAVE 
COMPLIED 
WITH 
THIS 
REQUIREMENT, 
GENERATION COMPANIES, THE TRANSCO, AND DISTRIBUTION 
UTILITIES WHICH ARE NOT YET LISTED IN THE PSE, OR 
GENERATION COMPANIES AND DISTRIBUTION UTILITIES WHICH, 
THOUGH ALREADY LISTED IN THE PSE, HAVE NOT YET REACHED 
THE MINIMUM FIFTEEN PERCENT (15%) LISTING REQUIREMEaT, 
SHALL COMPLY OR COMPLETE WITH THE REQUIRED LISTING 
AND public offering [shall be implemented] not later than five (5) years from the 
effectivity of this Act. New GENERATION companies AND DISTRIBUTION 
UTILITIES shall implement their respective LISTING AND public offerings 
not later than five (5) years from the issuance of their certificate of compliance[;] 
OR CONGRESSIONAL FRANCHISE, AS THE CASE MAY BE; and 
(u) 
The [ERC] COMMISSION shall have [the] original and exclusive 
jurisdiction over all cases contesting rates, fees, fines, and penalties [imposed by 
the ERC in] ARISING FROM OR IMPOSED UNDER THE PROVISIONS 
OF THIS ACT, AS WELL AS OVER ALL CASES ARISING FROM the 
exercise of the above-mentioned powers, functions and responsibilities, and [over 
all cases] OR involving disputes between and among ELECTRIC POWER 
INDUSTRY participants or players [in the energy sector]. 
All notices of hearings to be conducted by the [ERC] COMMISSION for 
the purpose of fixing rates or fees shall be published at least twice for two 
successive weeks in two (2) newspapers of nationwide circulation. 
"[SEC. 44. 
Transfer of Powers and Functions. - The powers and 
functions of the Energy Regulatory Board not inconsistent with the provisions oi" 
this Act are hereby transferred to the [ERC] COMMISSION. The foregoing 
transfer of powers and functions shall include all applicable funds and 
appropriations, records, equipment, property and personnel as may be necessary.] 
"SEC. 145143. Cross Ownkrsk@, Market Power Abuse and Anti- 
Competitive Behavior. - No participant in the [electricity] ELECTRIC 
POWER industry [or any other person may] SHALL engage in any KIND OF 
anti-competitive behavior, including, but not limited to, cross-subsidization, price 
or market manipulation, or ANY other unfair trade practices THAT ARE 
detrimental to the DEVELOPMENT, encouragement, and protection of THE 
contestable markets. 
No 
generation 
company, 
distribution 
utility, 
A 
COMPANY 
SUPPLYING ELECTRICITY, or ANY OF its [respective subsidiary or 
affiliate or stockholder or official of a generation company or distribution utility, 
or other entity engaged in generating and supplying electricity specified by ERC] 
SUBSIDIARIES, AFFILIATES, STOCKHOLDERS, OFFICIALS, OR 
STOCKHOLDERS OF SUCH SUBSIDIARIES OR AFFILIATES, OR ANY 
RELATIVES 
OF 
SUCH 
STOCKHOLDERS, 
OFFICIALS, 
OR 
DIRECTORS within the fourth civil degree of consanguinity or affinity, shall be 
allowed to HAVE AND hold, DIRECTLY OR INDIRECTLY, any interest[, 
DIRECTORS, 
OR THE OFFICIALS, DIRECTORS, OR O T H ~ R  


47 
I 
rl 
directly or indirectly,] in THE TRANSCO or [its] IN THE TRANSCO'S 
concessionaire. Likewise, the TRANSCO, or its concessionaire, or any of [its] 
THE stockholders, [or] officials, OR DIRECTORS OF THE TRANSCO OR 
ITS CONCESSIONAIRE, or 
any 
[of their] 
relatives OF SUCH 
STOCKHOLDERS, OFFICIALS OR DIRECTORS OF THE TRANSCO 
OR ITS CONCESSIONAIRE within the fourth civil degree of consanguinity or 
affinity, shall not BE ALLOWED TO HAVE AND hold, DIRECTLY OR 
INDIRECTLY, any interest[, whether directly or indirectly,] in any generation 
company, [or] distribution utility[.], OR A COMPANY SUPPLYING 
ELECTRICITY. Except for ex oflcio government-appointed representatives, no 
[person who is an] officer or director, OR STOCKHOLDER of the TRANSCO 
or 
[its] OFFICER, DIRECTOR, OR STOCKHOLDER OF THE 
TRANSCO'S concessionaire shall be an officer or director of any generation 
company, distribution utility, or [supplier.] A COMPANY SUPPLYING 
ELECTRICITY. 
NO DISTRIBUTION UTILITY OR ANY OF ITS SUBSIDIARIES, 
AFFILIATES, STOCKHOLDERS, OFFICIALS, OR DIRECTORS, OR 
THE OFFICIALS, DIRECTORS, OR OTHER STOCKHOLDERS OF 
SUCH SUBSIDIARIES OR AFFILIATES, INCLUDING THE RELATIVES 
OF SUCH STOCKHOLDERS, OFFICIALS, OR DIRECTORS WITHIN 
THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR AFFINITY 
SHALL BE ALLOWED TO HAVE AND HOLD, DIRECTLY OR 
INDIRECTLY, ANY INTEREST IN ANY GENERATION COMPANY. 
NEITHER MAY ANY GENERATION COMPANY OR ANY OF ITS 
SUBSIDIARIES, AFFILIATES, STOCKHOLDERS, OFFICIALS, OR 
DIRECTORS, OR THE OFFICIALS, DIRECTORS, OR OTHER 
STOCKHOLDERS 
OF SUCH SUBSIDIARIES OR AFFILIATES, 
INCLUDING 
THE 
RELATIVES 
OF 
SUCH 
STOCKHOLDERS, 
OFPICIALS, OR DIRECTORS WITHIN THE FOURTH CIVIL DEGREE 
OF CONSANGUINITY OR AFFINITY BE ALLOWED TO HAVE AND 
HOLD, DIRECTLY OR INDIRECTLY, ANY INTEREST IN ANY 
DISTRIBUTION UTILITY: 
PROVZDED, THAT ANY DISTRIBUTION 
UTILITY OR GENERATION COMPANY, AS THE CASE MAY BE, 
HOLDING ANY SUCH PROSCRIBED INTEREST IN A GENERATION 
COMPANY OR DISTRIBUTION UTILITY, AT THE TIME OF THE 
ENACTMENT OF THIS ACT, SHALL DIVEST ITS PROSCRIBED 
INTEREST IN SUCH GENERATION COMPANY OR DISTRIBUTION 
UTILITY NOT LATER THAN THE END OF THE YEAR TWO 
THOUSAND EIGHT (2008). 
To promote true market competition and prevent harmful monopoly and 
market power abuse, the [ERC] COMMISSION shall enforce the following 
safeguards: 
(a) 
No company or related group [can] SHALL BE ALLOWED TO 
own, operate or control more than thirty percent (30%) of the installed generating 
capacity of a grid [and/or] AND OR twenty-five (25%) of the [national] installed 
NATIONAL generating capacity. "Related group" includes a person's business 
interests, including its subsidiaries, affiliates, directors or officers or any of their 
relatives by consanguinity or affinity, legitimate or common law, within the 
fourth civil degree; 
(b) 
Distribution utilities may enter into bilateral power supply 
CONTRACT OR contracts subject to review by the [ERC:] COMMISSION, 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING: Provided, That [such review shall only be required for distribution 
utilities whose markets have not reached household demand level. For the purpose 
of preventing market power abuse between associated firms engaged in 


48 
generation and distribution, no distribution utility shall be allowed to source from 
bilateral power supply contracts more than fifty percent (50%) of its total demkd 
from an associated firm engaged in generation but such limitation, however, shall 
not prejudice contracts entered into prior to the effectivity of this Act. An 
associated firm with respect to another entity refers to any person which, alone or 
together with any other person, directly or indirectly, through one or more 
intermediaries, controls, is controlled by, or is under common control with, such 
entity; and] FOR THE PROTECTION OF CAPTIVE MARKETS AND IN 
ORDER 
TO 
ENSURE 
HEALTHY 
COMPETITION 
IN 
THE 
GENERATION SECTOR OF THE ELECTRIC POWER INDUSTRY, 
SIXTY MEGAWATTS (60 MW) OR MORE SHALL BE SUBJECT TO 
OPEN COMPETITIVE PUBLIC BIDDING CONDUCTED BY A BID 
COMMITTEE UNDER THE SUPERVISION OF THE COMMISSION 
AND 
COMPOSED OF REPRESENTATIVE EACH FROM THE 
NATIONAL ECONOMIC DEVELOPMENT AUTHORITY (NEUA), THE 
DEPARTMENT OF ENERGY (DOE), THE DISTRIBUTION UTILITY 
CONCERNED, 
AND 
AN 
EXPERIENCED 
AND 
REPUTABLE 
SELECTED BY THE COMMISSION. 
BILATERAL POWER SUPPLY CONTRACT OR CONTRACTS OF 
REPRESENTATIVE OF THE ELECTRIC END-USERS GROUPS 
, 
IN ORDER TO PREVENT ABUSE OF MAFNET POWER AND 
SHALL BE ALLOWED TO SOURCE FROM A BILATERAL ELECTRIC 
POWER SUPPLY CONTRACT OR CONTRACTS MORE THAN THIRTY 
THREE PERCENT (33%) OF ITS TOTAL ELECTRIC POWER SUPPLY 
REQUIREMENTS FROM ANY GENERATION COMPANY OR GROUP 
OF GENERATING COMPANI$S WHOLLY OWNED OR CONTROLLED 
BY THE SAME INTERESTS. ANY DISTRIBUTION UTILITY THAT 
HAS, ON THE EFFECTIVITY OF THIS ACT, SUCH CONTRACT OR 
CONTRACTS WHICH EXCEED THE ALLOWABLE THIRTY THREE 
PERCENT (33%) LIMIT SET FORTH HEREIN SHALL DESIST FROM 
FURTHER AWARDING ADDITIONAL ELECTRIC POWER SUPPLY 
CONTRACT OR CONTRACTS WITH ANY GENERATION COMPANY 
OR GROUP OF GENERATING COMPANIES WHOLLY OWNED OR 
CONTROLLED BY THE SAME INTERESTS, UNTIL ITS PRESENT 
ELECTRIC POWER SUPPLY REQUIREMENTS, WHEN ADDED TO 
THE 
PROPOSED 
ADDITIONAL 
ELECTRIC 
POWER 
SUPPLY 
CONTRACT OR CONTRACTS WITH ANY GENERATION COMPANY 
OR GROUP OF GENERATING COMPANIES WHOLLY OWNED OR 
CONTROLLED BY THE SAME INTERESTS SHALL COMPLY WITH 
THE THIRTY THREE PERCENT (33%) LIMIT SET FORTH HEREIN: 
PROK'DED, THAT ANY EXTENSION OR EXPANSION OF EXISTING 
ELECTRIC POWER SUPPLY CONTRACT OR CONTRACTS SHALL 
BE DEEMED AS NEW CONTRACT OR CONTRACTS FOR PURPOSES 
OF THE LIMITATION SET FORTH HEREIN. 
- 
ANTI-COMPETITIVE BEHAVIOR, NO 
DISTRIBUTION UTILITY 
(c) 
For the first five (5) years from the establishment of the [wholesale 
electricity spot market] WESM, no distribution utility shall source more than 
ninety percent (90%) of its total demand from bilateral ELECTRIC power 
supply contracts. 
For purposes of this Section, the grid basis shall consist of three (3) 
separate grids, namely: THE Luzon GRID, THE Visayas GRID, and THE 
Mindanao GRID. [The ERC shall have the authority] THE COMMISSION IS 
HEREBY AUTHORIZED to modify or amend this definition of a grid when 
two or [more] ALL of the three separate grids become sufficiently interconnected 
to constitute a single grid, or [as] WHEN conditions may otherwise [permit.] 
REQUIRE SUCH MODIFICATION OR AMENDMENT. 


.' 
49 
Exceptions from [these] THE ABOVE limitations shall be allowed for 
isolated grids that are not connected to the high voltage transmission system. 
[Except as otherwise provided for in this Section, any restriction on ownerships 
and/or control between or within sectors of the electricity industry may be 
imposed by ERC only insofar as the enforcement of the provisions of this Section 
is concerned]. 
The [ERC] COMMISSION shall, within one (1) year from the effectivity 
of this Act, promulgate rules and regulations, CONSISTENT WITH THE 
PROVISiONS OF THIS ACT, to ensure and promote competition, encourage 
market development, [and] customer choice, and [discourage/penalize] DETER 
AND OR PENALIZE ANY abuse of market power, cartelization, [and] 0R.any 
anti-competitive or discriminatory behavior, in order to further the intent of {his 
Act and IN ORDER TO protect the [public] interest[.] OF THE GENERAL 
PUBLIC AND THE END-USERS OF ELECTRICITY. Such rules and 
regulations shall COVER AND define the following: 
(a) 
the relevant markets for purposes of establishing THE 
PRESENCE OR ABSENCE OF MONOPOLIZATION, CARTELIZATION, 
ANTI-COMPETITIVE 
AND 
OR 
DISCRIMINATORY 
ACT 
OR 
BEHAVIOR, AND OR abuse or misuse [of monopoly or] OF market [position;] 
POWER 
(b) 
(c) 
areas of isolated grids; and 
the periodic reportorial requirements [oq FROM THE electric 
power industry participants [as] THAT may be necessary to enforce the 
provisions of this Section. 
The [ERC] COMMISSION shall, titofu proprio, monitor and, WHEN 
WARRANTED BY THE ATTENDANT FACTS, penalize any SUCH 
MONOPOLIZATION, CARTELIZATION, ABUSE OF market power 
[abuse] or anti-competitive AND or discriminatory act or behavior by any 
[participant in the] electric power industry[.] PARTICIPANT. Upon finding that 
[a market] AN ELECTRIC POWER INDUSTRY participant has engaged in 
such MONOPOLIZATION, CARTELIZATION, ABUSE OF MARKET 
. 
POWER, OR ANTI-COMPETITIVE: ANI) OR DISCRIMINATORY XI or 
behavior, the [ERC] COMiMlSSlON shall FORTHWII" ISSUE A CEASE 
AND 
1)ESISI' ORDER TO THIC ERRIN<; EI.ICCTRIC 
POWER 
INI)lJSTRY PAIII'ICIPANT, AND THI.:J<KAF'I'ER PEIIMAIUENTLY stop 
and rctlrcss the smlc. Such Iremedies shall, without limitation, includc] 
REDRESS SIIALL INCI,IJDE, .4hIONG OTI1E:K RKMEDIES THAI' MAY 
HE APPROPRIATE {INDEIt THF. CIl\C\lhlSl'ANCES, the imposition of 
price [controls,] CONTROL, TIIK issuance of linjtnnctions, requirement ofl 
INJUNCTIVE RELIEF, AND THE: divcsttncnt or disgorgcmcnt of cxccss 
profits, and 'rI1E imposition of tines and penalties pursuant to THE 
APPLICABLE PROVISfONS Or this Act. 
The [ERC] COM;\IISSION shall, within on6 ( I )  y c : ~  
from thc effectivity 
of this Act, promulgate SIJCII rules land rcgnlations providing for a complaint 
procedurc that, without limitation, providcsl AS MAY BI< NECESSARY, NOT 
ESTABIdISI-I A PROCEDURE WHEKICBY thc accused party, with DUE 
notice [and] TO ALL INTI<RI.:SI'EI) PARTIES ANI) I'IIBLIC HEARING, 
SHALL BE GIVEN RY THE COMMISSION an opportunity to be heard. 
INCONSISTENT WITH TIIE PI~OVISIONS OF THIS A c r ,  THAT WIIJ. 
"SEC. [46]14. F.'ines n ~ d  
fciid/ios. - 'l'hc lincs 2nd 011 penaltics that 
shall be imposctl by the [L'RCI COMMISSION for ;my violation of or non- 


50 
compliance with ANY PROVISIONS OF this Act or [the IRR] ANY RULES 
AND REGULATIONS IMPLEMENTING THIS ACT shall, DEPENDING 
UPON THE GRAVITY OF THE OFFENSE, range from a minimum of Fifty 
thousand pesos (P50,OOO.OO) to a maximum of Fifty million pesos 
(P50,000,000.00). 
Any person who is found guilty of any of the prohibited acts pursuant to 
Section [45] 43 hereof shall suffer the penalty of prision mayor [and] OR a fine 
ranging from Ten thousand pesos (Pl0,OOO.OO) to Ten million pesos 
(P10,000.000.00), or both PENALTY AND FINE, at the discretion of the 
APPROPRIATE TRIAL court. 
The STOCKHOLDERS,' OFFICERS, members of the Board of 
Directors of [the juridical companies participating in or covered in the] A 
generation [companies] COMPANY, [the] distribution [utilities] UTILITY 
COMPANY, the TRANSCO [or its], THE LATTER'S concessionaire 
COMPANY, or A COMPANY THAT ACTS AS A supplier OF 
ELECTRICITY AND THE RELATIVES OF SUCH STOCKHOLDERS, 
OFFICERS, OR MEMBERS OF THE BOARD OF DIRECTORS WITHIN 
THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR AFFINITY, 
who [violate] IS FOUND GUILTY FOR ANY VIOLATION OF ANY OF the 
provisions of this Act may be fined by an amount not exceeding double the 
amount of damages caused by the [offender] OFFENDING COMPANY or by 
imprisonment of one (1) year [or] TO two (2) years or both SUCH FINE AND 
IMPRISONMENT, at the discretion of the APPROPRIATE TRIAL cow. 
[This rule shall apply to the members of the Board who knowingly or by neglkct 
allows the commission or omission under the law.] 
If the offender is a government official or employee, he shall, in addition 
TO THE PENALTY IMPOSED ON HIM OR HER BY THE TRIAL 
COURT, be dismissed from the [government] service [with prejudice to 
reinstatement and] with perpetual [or temporary] disqualification [from holding] 
TO HOLD any elective or appointive GOVERNMENT office. 
If the offender is an alien, he [may] SHALL, in addition to the penalties 
prescribed, be deported SUMMARILY without further proceedings afier THE 
PAYMENT OF HIS OR HER FINE OR THE service of [sentence.] HIS OR 
HER IMPFUSONMENT. 
[Any case] CASES which [involves1 INVOLVE question of fact shall be 
THOSE which involve 
appealable to the Court of Appeals [and those]. 
PURELY question of law shall be directly appealable to the Supreme Court. 
[The] ANY administrative sanction that [may be imposed by the ERC] 
THE COMMISSION MAY HAVE IMPOSED shall [be without prejudice to] 
NOT PREVENT OR IMPEDE the filing of [a] ANY criminal action, if 
warranted. 
To ensure compliance with this Act, the penalty ofprision correccional or 
a fine ranging from Five thousand pesos (P5,OOO.OO) to Five million pesos 
(P5,000,000.00), or both, at the discretion of the court, shall be imposed on any 
person, including but not limited to the president, member of the Board, Chief 
Executive Officer or Chief Operating Officer of the corporation, partnership, or 
any other entity involved, found guilty of violating or refusing to comply with any 
provision of this Act or its IRR, other than those provided herein. 
Any party [to] CHARGED IN an administrative proceeding UNDER 
THE PROVISIONS OF THIS ACT may, at any time, make an offer to the 
[ERC,] COMMISSION, EITHER conditionally or otherwise, for a [consented] 
._ 


. 
51 
CONSENT decree, OR voIuntary compliance, or VOLUNTARY desistance 
[and], OR ANY other settlement of the case. The offer [and], INCLUDING any 
or all of the ultimate facts upon which the offer is based, shall be lconsidered] 
DEEMED TO HAVE BEEN MADE for settlement purposes only and shall not 
be used, FOR ANY PURPOSE, as evidence against THE OFFERING PARTY 
OR AGAINST any OTHER party for [any other purpose] THAT MATTER, 
and shall not constitute an admission [by the party making the offer] of any 
violation of the laws, rules, regulations, orders [and], OR resolutions of the [ERC, 
nor] COMMISSION BY THE PARTY MAKING THE OFFER. NEITHER 
SHALL THE ACT OF THE COMMISSION, THE GOVERNMENT, OR 
ANY INTERESTED OR AGGRIEVED PARTY IN ENTERTAINING AND 
DISCUSSING THE OFFER BE DEEMED AS AN ESTOPPEL NOR as a 
waiver ON THE PART OF THE COMMISSION, THE GOVERNMENT, 
OR ANY INTERESTED OR AGGRIEVED PARTY to file any [warranted] 
criminal [actions.] ACTION, IF WARRANTED BY THE FACTS. 
In addition, Congress may, upon recommendation of the DOE [and/or 
ERCJ AND OR THE COMMISSION, revoke such franchise or privilege 
granted to the [party who] ELECTRIC POWER INDUSTRY PARTICIPANT 
THAT violated the provisions of this Act. 
. 
"CHAPTER V 
"PRIVATIZATION OF THE ASSETS OF THE NATIONAL 
POWER CORPORATION 
"SEC. [47]45. NPC Privatization. - Except for the assets of SPUG, the 
generation assets, real estate, and other disposable assets [as well as] OF NPC, 
INCLUDING ITS IPP contracts [of NPC], shall be privatized in accordance with 
THE PROVISIONS OF this Act. 
Within six (6) months [from] 
IMMEDIATELY FOLLOWING the effectivity of this Act, the PSALM Corp. 
shall submit [a plan for the endorsement by] TO the Joint Congressional Power 
Commission FOR ITS ENDORSEMENT TO and [the] approval [oq BY the 
President of the Philippines, A PLAN on the total privatization of the generation 
assets, real estate, AND other disposable assets [as well as existing] OF NPC, 
INCLUDING ITS IPP contracts [of NPC] and, thereafter, THE PSALM CORP. 
SHALL implement the same, in accordance with the following guidelines, except 
as provided for in Paragraph (f) herein: 
(a) 
The privatization value to the National Government of the [NPC] 
generation assets, real estate, AND other disposable assets [as well as] OF NPC, 
INCLUDING ITS IPP contracts, shall be [optimized,] THE MOST 
ADVANTAGEOUS AND BENEFICIAL TO THE NATIONAL INTEREST; 
(b) 
The participation by Filipino citizens and BY corporations 
WHOLLY OWNED OR CONTROLLED BY THEM in the purchase AND 
ACQUISITION of THE NPC GENERATION assets, REAL ESTATE, 
OTHER DISPOSABLE ASSETS, AND ITS IPP CONTRACTS shall be 
encouraged; 
9.; 
In [the] case [of] THE PURCHASE AND ACQUISITION IS DONE 
BY foreign investors, [at least] THEY SHALL COMPLY WITH THE 
NATIONALITY REQUIREMENTS OF THE CONSTITUTION, WHEN 
APPLICABLE, AND NOT LESS THAN seventy-five percent (75%) of the 
funds used to acquire [NPC-generation assets] THE GENERATION ASSETS 
OF NPC and ITS IPP contracts shall be SOURCED OUTSIDE THE 


52 
PHILIPPINES AND inwardly remitted and registered with the Bangko Sentral 
ng Pilipinas. 
(c) 
[The NPC plants and/or] THE GENERATION ASSETS OF 
NPC AND OR its IPP contracts assigned to IPP Administrators, [its] 
INCLUDING THEIR related assets and assigned liabilities, if any, shall be 
grouped in SUCH a manner [which] THAT shall promote NOT ONLY the 
viability of the resulting generation companies [(gencos)] (GENCOS), BUT 
ALSO ensure THEIR economic AND OPERATIONAL efficiency, encourage 
competition, PROMOTE AND foster A JUST AND reasonable PRICE,,OF 
electricity [rates], and create market appeal to [optimize] BRING ABOUT THE 
MOST ADVANTAGEOUS AND BENEFICIAL returns to the government 
from the sale and disposition of [such] THE GENERATION assets, REAL 
ESTATE, AND OTHER DISPOSABLE ASSETS OF NPC, INCLUDING 
ITS IPP CONTRACTS, in a manner consistent with the objectives of this Act. 
In [the] grouping [ofl the generation assets and IPP contracts of NPC, the 
following criteria shall be considered: 
(1) 
A sufficient scale of operations and balance sheet strength to 
promote the financial viability of the restructured Units; 
(2) 
Broad geographical groupings to ensure efficiency of operations 
[but] without the formation of regional companies or consolidation of market 
power; 
(3) 
Portfolio of GENERATION plants and IPP contracts to achieve 
management and operational synergy without dominating any part of the market 
or of the load curve; and 
(4) 
Such other factors as may be deemed ADVANTAGEOUS AND 
beneficial to the [best] NATIONAL interest [of the National Government while] 
AND AT THE SAME TIME ensuring attractiveness to potential investors. 
(d) 
All GENERATION AND OTHER assets of NPC shall be sold in 
[an] A TRANSPARENT AND open [and transparent manner through], 
COMPETITIVE public bidding[, and the]. THE same MANNER AND 
STANDARD OF DISPOSITION shall [apply to] BE EMPLOYED IN the 
disposition of THE IPP contracts[;] OF NPC; 
(e) 
In cases of transfer of possession, control, operation, or 
privatization of multi-purpose hydro facilities, safeguards shall be prescribed to 
ensure THAT THE APPLICABLE CONSTITUTIONAL PROSCRIPTION 
ON THE ALIENATION AND DISPOSITION OF NATURAL RESOURCES 
OWNED BY THE STATE SHALL BE STRICTLY OBSERVED AND that 
the national government may direct water usage in cases of shortage to protect 
potable water, irrigation, and all other requirements imbued with public interest; 
(f) 
The Agus and the Pulangui complexes in Mindanao shall be 
excluded from [among1 the generation [companies] ASSETS OF NPC that will 
be initially privatized. Their ownership shall be transferred to the PSALM Corp. 
[and], BUT both COMPLEXES shall continue to be operated by the NPC. Said 
complexes may be privatized not earlier than ten (10) years from the effectivity of 
this Act, and, except for Agus 111, shall not be subject to THE Build-Operate- 
Transfer (B-0-T), Build-Rehabilitate-Operate-Transfer (B-R-0-T) and SUCH 
other variations thereof [pursuant to] AS SET FORTH IN Republic Act No. 
6957, as amended by Republic Act No. 7718. The privatization of THE Agus and 
THE Pulangui complexes, AFTER THE LAPSE OF THE SAID TEN (10) 
YEARS FROM THE EFFECTIVITY OF THIS ACT, shall be left to the 
discretion of PSALM Corp. in consultation with Congress; 


53 
(g) 
The steamfield assets and generating plants of each geothermal 
complex shall [not be sold separately. They shall be combined and each 
geothermal complex] BE COMBINED AND HELD TOGETHER AS A 
SINGLE UNIT AND shall be sold as one package [through] IN A 
TRANSPARENT 
AND OPEN, COMPETITIVE public bidding. The 
geothermal complexes covered by this [requirement] PARAGRAPH (G) OF 
THIS SECTION SHALL include, but are not limited to, Tiwi-Makban, BAC- 
MAN, Tongonan AND Palinpinon; 
(h) 
The ownership of the Caliraya-Botokan-Kalayaan (CBK) pump 
storage complex shall be transferred FROM NPC to the PSALM Corporation; 
(i) 
Not later than three (3) years from the effectivity of this Act, [and] 
BUT in no case later than the initial implementation'of open access, at least 
[seventy percent (70%)] FIFTY PERCENT (50%) OF THE AGGREGATE 
SUM of BOTH the total capacity of THE generating assets [ofl OWNED 
DIRECTLY BY NPC and [of] the total capacity of the power plants under 
contract with NPC [located] in Luzon and Visayas shall have been privatized: 
Provided, That any unsold capacity FROM SUCH AGGREGATE SUM shall 
be privatized not later than eight (8) years from the effectivity of this Act; and 
0) 
NPC may generate and sell electricity only from the undisp&ed 
[generating] GENERATION assets and FROM THE UNDISPOSED IPP 
contracts of PSALM Corp. and shall not incur any new obligations to purchase 
ELECTRIC power through bilateral CONTRACT OR contracts with OTHER 
generation companies or [other] WITH ELECTRIC POWER suppliers. 
["SEC. 48. 
National Power Board of Directors. - Upon the passage 
of this Act, Section 6 of RA 6395, as amended, and Section 13 of RA 7638, as 
amended, referring to the composition of the National Power Board of Directors, 
are hereby repealed and a new Board shall be immediately organized. The new 
Board shall be composed of the Secretary of Finance as Chairman, with the 
following as members: the Secretary of Energy, the Secretary of Budget and 
Management, the Secretary of Agriculture, the Director-General of the National 
Economic and Development Authority, the Secretary of Environment and Natural 
Resources, the Secretary of the Interior and Local Government, the Secretary of 
the Department of Trade and Industry, and the President of the National Power 
Corporation.] 
"CHAPTER VI 
"POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT 
* 
"SEC. [49]46. Creation 
of 
Power 
Sector Assets 
and Liabilities 
ManagemeMt Corporation. - There is hereby created a government-owned and 
-controlled corporation to be known as the "Power Sector Assets and Liabilities 
Management Corporation", hereinafter referred to as the "PSALM Corp. ", which 
shall take OVER THE ownership AND CONTROL of all existing [NPC] 
generation assets, liabilities, IPP contracts, real estate, and all other disposable 
assets[.], EXCEPT THE SPUG ASSETS AND THE TRANSMISSION AND 
SUBTRANSMISSION ASSETS AND FACILITIES, OF NPC. All outstanding 
obligations of the NPC arising from loans[, issuances] TO IT AND FROM 
FLOTATION BY IT of bonds, securities, and other instruments of indebtedness 
shall be transferred to and assumed by the PSALM Corp. within one hundred 
eighty (180) days from the [approval] EFFECTIVITY of this Act. 
"SEC. [50]47. Purpose and Objective, Domicile and Term of Existence. 
- The principal purpose of the PSALM Corp. is to ADMINISTER AND 
. 


54 
manage the orderly sale, disposition, and privatization of [NPC] THE generation 
assets, real estate, [and] otherdisposable assets, and 1PP contracts OF NPC with 
the [objective] END IN VIEW of liquidating AND SETTLING all OF INpC] 
NPC'S financial obligations and stranded contract costs in [an optimal manner.] 
THE MOST ADVANTAGEOUS AND BENEFICIAL MANNER TO THE 
GOVERNMENT AND TO THE END-USERS OF ELECTRICITY. 
Thc PSALM Corp. shall have its principal office and place of business 
[within] IN Metro Manila. 
The PSALM Cop. shall exist for a period of twenty five (25) years from 
the effectivity of this Act, unless otherwise provided by [law,] THE CONGRESS 
OF THE PHILIPPINES, and all assets [held by it, all], moneys, [and] 
properties, CONTRACTS, AND RECORDS HELD BY AND belonging to it, 
and all its liabilities outstanding upon the expiration of its term of existence shall 
[revert] IPSO FACTO BE TRANSFERRED to and be assumed by the National 
Government. 
"SEC. [51]48. Powers. - The PSALM Corp. shall, in the performance 
of its functions and for the attainment of its objective, have the following powers: 
(a) 
To formulate and implement a program for the DISPOSITION, 
sale, and privatization of the [NPC] GENERATION assets, REAL ESTATE, 
OTHER DISPOSABLE ASSETS, and IPP contracts OF NPC and the 
liquidation of [NPC] ITS debts and stranded contract costs, such liquidation to be 
completed AS SOON AS POSSIBLE within the term of existence of the PSALM 
Corp.; 
(b) 
To take title to and possession of, AND administer and conserve 
WITH THE DILIGENCE OF A GOOD FATHER OF A FAMILY, the assets 
THAT SHALL BE transferred AND ENTRUSTED to it; to sell or dispose [ofl 
the same at such [price] JUST AND REASONABLE PRICES and under such 
terms and conditions as [it] may [deem] BE DEEMED necessary [or], proper, 
AND MOST ADVANTAGEOUS AND BENEFICIAL TO THE NATIOVAL 
USERS OF ELECTRICITY, subject to SUCH applicable laws, rules and 
regulations; 
INTEREST, THE NATIONAL GOVERNMENT, AND TO THE E m -  
(c) 
To take title to and possession of the [NPC] IPP contracts OF NPC 
and to appoint, after A TRANSPARENT AND OPEN COMPETITIVE public 
bidding [in transparent and open manner] FOR THAT PURPOSE, A 
REPUTABLE, TECHNICALLY qualified, AND FINANCIALLY SOUND 
independent ENTITY OR entities [who] THAT shall [act] SERVE as the IPP 
ADMINISTRATOR OR 
Administrators 
in accordance with 
THE 
PROVISIONS OF this Act; 
. 
(d) 
To calculate [the] WITH REASONABLE CERTAINTY AND 
ESTABLISH THE PRUDENT amount of the stranded debts and stranded 
contract costs of NPC, which shall form the basis [for ERC in the determination 
of the universal charge;] OF THE COMMISSION IN DETERMINING THE 
JUST AND REASONABLE AMOUNT OF UNIVERSAL CHARGE FOR 
STRANDED DEBTS AND STRANDED CONTRACT COSTS; 
(e) 
To liquidate the NPC stranded contract costs, [utilizing] USING 
FOR THAT PURPOSE the proceeds from [sales and] THE DISPOSITION, 
SALE, AND PRIVATIZATION OF THE GENERATION ASSETS, REAL 
ESTATE, OTHER DISPOSAL ASSETS, AND IPP CONTRACTS OF NPC, 
AS WELL AS THE VALUE OF SUCH other property THAT MAY HAVE 
BEEN contributed to it[,] (PSALM CORP.), including the proceeds from the 


55 
r. 
universal 
charge[;] 
IMPOSED TO RECOVER 
THE 
STRANDED 
~ 
CONTRACT COSTS OF NPC; 
(Q 
To adopt rules and regulations, NOT INCONSISTENT WITH 
THE PROVISIONS OF THIS ACT, as may be necessary or proper for the 
orderly conduct of its business or operations; 
(g) 
(h) 
To sue and be sued in its OWN name; 
'( . 
To appoint or hire, transfer, remove, and fix the compensation of 
its personnel: Provided, however, That the Corporation shall hire its own 
personnel only if absolutely necessary[, and as]. AS far as practicable AND TO 
SAVE ON COST, PSALM COW. shall avail itself of the services of personnel 
detailed TO IT from other government agencies; 
(i) 
To own, hold, acquire, or lease real and personal properties as may 
be necessary or required in the discharge of its functions; 
6) 
To borrow money and TO incur such liabilities[, including] 
THROUGH the [issuance] FLOTATION of bonds, securities, or other 
evidences o f  indebtedness, utilizing FOR THAT PURPOSE its assets as 
collateral [and/or through the guarantees] AND OR THE GUARANTEE of the 
National Government: Provided, however, That all such debts or borrowings OF 
PSALM CORP. shall [have been] BE LIQUIDATED AND paid off before the 
end of its corporate life; 
(k) 
(1) 
To restructure THE existing loans of the NPC; 
To collect, administer, and apply PROPERLY NPC's [portion] 
SHARE of the universal charge; and 
(m) 
To structure the DISPOSITION, sale, AND privatization [or 
disposition of NPC] OF THE GENERATION assets and IPP contracts [and/or] 
OF NPC AND OR their ELEClkfC energy output, based on such terms and 
conditions which shall [optimize the value] PRODUCE THE MOST 
ADVANTAGEOUS AND BENEFICIAL RESULTS, VALUES, and [sale] 
prices [of] FOR said GENERATION assets[.] AND IPP CONTRACTS AND 
THEIR ELECTRIC ENERGY OUTPUT FOR THE NATIONAL 
INTEREST, FOR THE NATIONAL GOVERNMENT, AND FOR THE 
END-USERS OF ELECTRICITY. 
. 
"SEC. [52]49. Power 
Sector 
Assets 
and 
Liabilities 
Management 
Corporation, Meetings, Quorum and Voting. - The Corporation shall be 
administered[,] and its powers and functions SHALL BE exercised[,] by a Board 
of Directors which shall be composed of the Secretary of Finance as the 
Chairman, the Secretary of Budget and Management, the Secretary of ..the 
Department of Energy, the Director-General of the National Economic and 
Development Authority, the Secretary of the Department of Justice, the Secretary 
of the Department of Trade and Industry, and the President of the PSALM Corp., 
ALL OF WHOM SHALL SERVE as ex of$cio members thereof. 
The Board of Directors OF THE PSALM CORP. shall [meet regularly 
and] HOLD A REGULAR MEETING ONCE EVERY MONTH WITHOUT 
NEED OF CALL ON A DAY TO BE DESIGNATED BY THE MEMBERS 
OF THE BOARD OF DIRECTORS IN A FORMAL RESOLUTION FOR 
THAT PURPOSE, THE BOARD OF DIRECTORS OF THE PSALM 
COW. MAY ALSO HOLD SPECIAL MEETINGS, WHEN DEMANDED 
BY THE NEEDS OF THE CORPORATION AND as frequently as may be 
necessary [to enable it] to discharge [its] THE functions and responsibilities[.] 


56 
* 
I’ 
OF THE MEMBERS OF THE BOARD, UPON WRITTEN NOTICE FROM 
THE CHAIRMAN, WHICH SHALL STATE, IN EVERY CASE, THE 
PURPOSE OF THE SPECIAL MEETING BEING CALLED. The presence 
[at a meeting] of AT LEAST four (4) members OF THE BOARD IN ANY 
MEETING shall constitute a quorum[,] TO DO BUSINESS, and the decision of 
[the majority of three (3)] AT LEAST FOUR (4) members present at [a] THE 
meeting [where there is a quorunl] shall [be the] CONSTITUTE A decision of 
the Board of Directors. 
“SEC. 153150. Powers of the President of PSALM Corp. - The 
President of the PSALM Corp. shall be appointed by the President of the 
Philippines. In the absence of the Chairman, the President OF THE PSALM 
COW. shall preside over THE [Board] meetings[.] OF THE BOARD. 
The President of the PSALM Corp. shall be the Chief Executive Officer of 
the PSALM Corp., and HE shall have the following powers and duties: 
(a) 
[To] HE SHALL execute and administer the policies and 
measures approved by the Board, and HE SHALL [take responsibility] BE 
RESPONSIBLE for the efficient discharge of ALL management functions; ,. 
(b) 
[To] HE SHALL DIRECTLY oversee the preparation of the 
budget of the PSALM Corp.; 
(c) 
[To] HE SHALL direct and supervise the operation and internal 
administration of the PSALM Corp. and, for this purpose, HE may delegate 
[some or] any OR SOME of his administrative responsibilities and duties to other 
officers of the PSALM Corp.; 
(d) 
Subject to the guidelines and policies set [up] by the Board, [to] 
HE SHALL appoint and fix the number and compensation of subordinate 
officials and employees of the PSALM Corp.; and, for cause, [to] HE SHALL 
remove, suspend, or otherwise discipline any subordinate employee of the 
PSALM Corp.; 
(e) 
[To] HE SHALL submit an annual report to the Board on the 
activities, [and] achievements, AND ACTUAL CONDITION of the PSALM 
Corp. at the close of each fiscal year and, upon approval thereoq,] BY THE 
BOARD, HE SHALL submit a copy OF THE ANNUAL REPORT to the 
President of the Philippines, TO THE CONGRESS OF THE PHILIPPINES, 
and to such other agencies as may be required by law; 
(f) 
[To] HE SHALL represent the PSALM Corp. in all dealings and 
transactions with other offices, agencies, and instrumentalities of the Government 
and with a11 persons and other entities, private or public, domestic or foreign; and 
(9) 
[To] HE SHALL exercise such other powers and PERFORM 
SUCH OTHER duties as may be vested in him by the Board from time to time. 
“SEC. 154151. Exemption from the Salary Standardization Law. - The 
salaries and benefits of employees [in] OF the PSALM Corp. shall be [exempt] 
FIXED BY ITS BOARD OF DIRECTORS AND SHALL BE EXEMPTED 
from THE PROVISIONS OF Republic Act No. 6758 [and shall be fixed by the 
PSALM Cop. Board]. 
“SEC. 155152. Property of the PSALM Corp. - The following funds, 
assets, contributions, and other property shall constitute the CAPITAL, ASSETS, 
AND property of the PSALM Corp.: 
. 
. 
. 


51 
(a) 
The generation assets, real estate, [IPP contracts,] other disposable 
assets [of NPC], AND IPP CONTRACTS TRANSFERRED TO IT FROM 
NPC BY VIRTUE OF THE PROVISIONS OF THIS ACT AND THE 
proceeds from the sale or disposition of [such] ANY OR ALL OF SAID assets 
[and the], REAL ESTATE, AND CONTRACTS AS WELL AS ANY residual 
assets HELD BY IT from B-0-T, R-0-T, and other variations thereof; 
(b) 
[Transfers] ANY AND ALL TRANSFERS from the National 
Government; 
(c) 
[Proceeds] THE PROCEEDS from loans incurred to restructure 
AND or refinance [NPC's transferred] THE liabilities[:] OF NPC THAT WERE 
TRANSFERRED TO IT BY VIRTUE OF THE PROVISIONS OF THIS 
ACT: Provided, however, That ANY AND all SUCH LOANS OR borrowings 
shall be fully paid [for by] AND LIQUIDATED NOT LATER THAN the end 
of the life of the PSALM Cop.; 
(d) 
[Proceeds] THE PROCEEDS from the universal charge allocated 
for THE LIQUIDATION OF THE stranded contract costs and the stranded 
debts of NPC; 
(e) 
(f) 
(g) 
[Net] THE ANNUAL profit of NPC; 
met] THE ANNUAL profit of THE TRANSCO; 
[Official] ANY AND ALL KINDS OF OFFICIAL assistance, 
grants, and OR donations from external sources; and 
(h) 
[Other sources of funds as may be determined] ANY AND ALL 
FUNDS DERIVED by THE PSALM Corp. [necessary for the above-mentioned 
purposes.] FROM OTHER SOURCES. 
'.. 
"SEC. [56]53. Claims Against the PSALM Corp. - The following shall 
constitute the claims against the PSALM Corp.: 
(a) 
[NPC] VALID liabilities OF NPC THAT WERE transferred to 
the PSALM Gorp.[;] IN ACCORDANCE WITH THE PROVISIONS OF 
THIS ACT; 
(b) 
(c) 
New Loans[;] INCURRED BY THE PSALM CORP. IN 
Transfers from the National Government; 
ACCORDANCE WITH THE PROVISIONS OF THIS ACT; and 
(d) 
[NPC] NPC'S stranded contract costs[.] ARISING FROM ITS 
VALIDLY CONCLUDED IPP CONTRACTS. 
. 
<
"CHAPTER VI1 
"PROMOTION OF RURAL ELECTRIFICATION 
"SEC. 157154. [Conversion of Electric Cooperatives. - Electric 
cooperatives are hereby given the option to convert into either stock 
cooperative under the Cooperatives Development Act or stock corporation 
under the Corporation Code. Nothing contained in this Act shall deprive 
electric cooperatives of any privilege or right granted to them under 
Presidential Decree No. 269, as' amended, and other existing laws.] 
CONVERSION OF EXISTING ELECTRIC COOPERATIVES INTO 


. 
58 
* 
,I 
, 
7. 
GENUINE CONSUMER-OWED COOPERATWES. - WITHIN A 
PERIOD OF SIX (6) MONTHS, ALL ELECTRIC COOPERATIVES 
SHALL 
REGISTER 
WITH 
THE 
COOPERATIVE 
DEVELOPMENT AUTHORITY (CDA) WHICH SHALL ENSURE 
THAT IT WILL BE MANAGED BASED ON INTERNATIONALLY 
ACCEPTED COOPERATIVE PRINCIPLES. NEA’S POWER OF 
CONTROL AND 
MARTIAL POWERS 
OVER ELECTRIC 
COOPERATIVES GRANTED UNDER PRESIDENTIAL DECREE 
269, AS AMENDED BY PRESIDENTIAL DECREE 1645, CEASES 
UPON REGISTRATION WITH THE CDA. 
’(. 
THE ELECTRIC COOPERATIVE MANAGEMENT SHALL 
WITHIN 
A 
PERIOD 
OF 
SIX 
(6) 
MONTHS 
AFTER 
REGISTRATION WITH THE CDA RECOGNIZE IN ITS BOOK 
CONSUMERS IN ITS ASSETS DETERMINED ON THE BASIS OF 
THEIR PATRONAGE SUBJECT TO GUIDELINES TO BE ISSUED 
BY THE CDA. THREE (3) MONTHS AFTER THE COMPLETION 
OF THE RECORDING OF PATRONAGE CAPITAL, THE 
MANAGEMENT SHALL CALL A GENERAL ASSEMBLY FOR 
THE CONDUCT OF AN ELECTION FOR A NEW SET OF 
OFFICERS AND BOARI) OF DIRECTORS TO BE SUPERVISED 
BY THE CDA. NOTHING CONTAINED IN THIS ACT SHALL 
DEPRIVE ELECTRIC COOPERATIVES OF ANY PRIVILEGE OR 
RIGHT GRANTED THEM UNDER PRESIDENTIAL DECREE 269, 
AS AMENDED, AND OTHER EXISTING LAWS. 
OF ACCOUNTS THE INDIVIDUAL EQUITY OF ITS MEMBER- 
NOTWITHSTANDING THE REGISTRATION WITH CDA, 
NEA 
SHALL 
CONTINUE 
TO 
ENSURE 
EFFICIENT 
COLLECTION OF ELECTRIC COOPERATIVES DEBT TO NEA. 
“SEC. [58]55. Additional Mandate 
of the National Electrzjkation 
Administration (NEA). - 
NEA shall develop and implement programs: 
(a) 
To prepare electric cooperatives in operating and competing under 
the deregulated electricity market IN AN OPEN ACCESS AND RETAIL 
WHEELING ENVIRONMENT, AND COMPLETE THAT PREPARATION 
within five (5) years from the effectivity of this Act[, specifically in an 
environment of open access and retail wheeling]; 
(b) 
To strengthen the technical capability and financial viability of 
rural electric cooperatives; and 
(c) 
To review and upgrade THE APPLICABLE regulatory policies 
with a view to enhancing the viability of THE rural electric cooperatives as 
electric DISTRIBUTION utilities. 
NEA shall continue to be under the supervision of the DOE and shall 
exercise its functions under Presidential Decree No. 269, as amended by 
Presidential Decree No. 1645, insofar as they are consistent with this Act. 
“SEC. [59]56. Alternative Electric Service for Isolated Villages. - The 
provision AND RENDITION of electric service in ANY remote, SPARSELY 
POPULATED, and unviable [villages that the franchised] AREA WHICH IS 
COVERED BY THE FRANCHISE OF A DISTRIBUTION utility WHICH 
is unable to PROVIDE AND RENDER service TO THE SAID AREA for any 
reason shall be opened to ANY other qualified third parties, PREFERABLY TO 


59 
I* 
ANY INTERESTED ADJACENT DISTRIBUTION UTILITY IN THE 
SAME AREA. 
"SEC. [60]57. Debts ofElpctric Cooperatives. - Upon the effectivity of 
this Act, all outstanding financial obligations of electric cooperatives to NEA and 
other government agencies, incurred for the purpose of financing the rural 
electrification program, shall be assumed by the PSALM Corporation in 
accordance with [the] A program TO BE approved by the President of the 
Philippines within one (1) year from the effectivity of this Act, which SAID 
PROGRAM shall be implemented and completed within three (3) years from the 
effectivity of this Act. The [ERC] COMMISSION shall ensure a reduction in the 
rates of electric cooperatives commensurate with [the] THEIR resulting savings 
[due to] ARISING FROM the removal of the amortization payments [oq ON 
their loans[. Within] ASSUMED BY THE PSALM CORP. 
IF WITHIN 
THE FIRST five (5) years from the condonation of [debt,] THE AFORESAID 
FINANCIAL OBLIGATIONS any electric cooperative [which shall] SHOULD 
transfer AND DIVEST ITSELF COMPLETELY AND ABSOLUTELY.OF 
THE ownership [or] AND control of its assets, franchise [or], AND operations, 
'SUCH ELECTRIC COOPERATIVE shall [repay] PAY BACK TO THE 
PSALM Corp. AN AMOUNT EQUAL TO THE SHAM OF THE SAID 
ELECTRIC COOPERATIVE OF the total CONDONED debts, including 
accrued interests thereon. 
"CHAPTER VI11 
"GENERAL PROVISIONS 
"SEC. [61]58. Reportorial Requirements. - The DOE [shall] MUST 
take [the] ANY AND ALL necessary measures to ensure that the provisions of 
this Act are properly implemented, and shall PERIODICALLY submit to the 
JOINT CONGRESSIONAL Power Commission, BEING CREATED IN 
SECTION 59 OF THIS ACT, a semi-annual report on the PROPER AND 
ACTUAL implementation of this Act on or before the last week of April and 
October of each year. 
"SEC. 162159. Joint Congressional Power Commission. - Upon the 
effectivity of this Act, a JOINT congressional POWER commission, hereinafter 
referred to as the "Power Commission", is hereby constituted. The Power 
Commission shall be composed of fourteen (14) members with the chairmen of 
the Committee on Energy of the Senate and the House of Representatives and six 
(6) additional members from eadh House, to be designated by the Senate 
President and the Speaker of the' House of Representatives, respectively. The 
minority IN EACH HOUSE OF CONGRESS shall be entitled to A pro rata 
representation [but shall have at] IN THE POWER COMMISSION, OR AT 
THE VERY least one (1) representative [in the Power Commission.] THEREIN. 
. 
The Commission shall, in aid of legislation, perform the following 
functions, among others: 
(a) 
Set the guidelines and overall framework to OVERSEE, monitor, 
and ensure the proper, FAITHFUL, AND STRICT implementation of this Act; 
(b) 
Endorse TO AND FOR THE APPROVAL OF THE 
PRESIDENT OF THE PHILIPPINES the initial privatization plan OF THE 
NPC within one (1) month from THE submission of such plan to [the Power 
Commission by PSALM Corp. for approval by the President of the Philippines;] 
IT BY THE PSALM CORP. AS REQUIRED UNDER SECTION 45 OF 
THIS ACT; 


60 
(c) 
To 
ensure 
transparency, 
FAITHFUL, 
AND 
STRICT 
ADHERENCE TO THE PROVISIONS OF THIS ACT REGARDING THE 
PRIVATIZATION OF NPC, require the submission of SUCH PERTINENT 
DOCUMENTS OR reports from government agencies concerned on the conduct 
of public bidding procedures [regarding] IN CONNECTION WITH THE 
privatization of [NPC] THE generation [and] ASSETS, transmission assets[;], 
REAL ESTATE, OTHER DISPOSABLE ASSETS, AND IPP CONTRACTS 
OF NPC: 
(d) 
Review and evaluate the perfoirriance of the industry participants 
in relation to the objectives [and], timelines, AND TIME-SEQUENCES set forth 
in this Act; 
(e) 
Approve the budget for the programs of the Power Commission 
and all disbursements therefrom, ipcluding compensation of all personnel; 
(f) 
Congress; 
Submit periodic reports to the President of the Philippines and TO 
(g) 
Determine inherent weaknesses in the law and recommend 
necessary remedial legislation or executive measures; and 
(h) 
Perform such other duties and functions as may be necessary to 
attain its objectives. 
In furtherance OF THE DUTIES AND FUNCTIONS OF THE 
POWER COMMISSION AS SET FORTH hereof, the Power Commission is 
hereby empowered to require the DOE, [ERC] THE COMMISSION, NEA, 
TRANSCO, generation companies, distribution utilities, suppliers, and other 
electric power industry participants to submit reports and all pertinent data and 
information relating to 
THEIR RESPECTIVE ACTIVITIES AND 
BUSINESSES AS WELL AS RELATING TO the performance of their 
respective functions in the industry. Any person who willfully and deliberately 
refuses without ANY just cause to extend the support and assistance required by 
the Power Commission IN ORDER to effectively attain its objectives shall, upon 
conviction, be punished by imprisonment of not less than one (1) year but not 
more than six (6) years or a fine of not lest than Fifty thousand pesos 
(P50,OOO.OO) but not more than Five hundred thousand pesos (P500,OOO.OO) or 
both at the discretion of the court. 
The Power Commission shall adopt its OWN internal rules of 
procedures[;] AND SHALL conduct SUCH hearings, and receive SUCH 
testimonies, reports, and technical advice[;] AS ARE NEEDED BY IT IN THE 
PERFORMANCE OF ITS FUNCTIONS. THE POWER COMMISSION IS 
HEREBY AUTHORIZED TO invite or summon bv submenu ad testificundun? 
. 
_I 
any public official, private citizen, or any other person to testify before it, or 
require any person by subpoena duces tecum to produce before it such records, 
reports, documents, or other materials as it may require[; and]. AND generally 
[require], THE POWER COMMISSION IS HEREBY GRANTED all the 
powers necessary to attain the purposes for which it is created. The Power 
Commission shall be assisted by a secretariat to be composed of personnel who 
may be seconded from the Senate and the House of Representatives [and]. THE 
POWER COMMISSION, WHEN IT BECOMES NECESSARY IN 
PERFORMING ITS FUNCTIOi'k, may retain consultants. The secretariat shall 
be headed by an executive director who has sufficient KNOWLEDGE, 
EXPERIENCE, background, and competence on THE ELECTRIC POWER 
INDUSTRY AND ON the policies and issues relating to electricity industry 
reforms as provided in this Act. To carry out its powers and functions, the initial 


61 
.I 
I <, 
sum 
of 
Twenty-five million 
pesos 
(P25,000,000.00) IS 
HEREBY 
APPROPRIATED FOR THE POWER COMMISSION AND shall be charged 
against the current appropriations of the Senate. Thereafter, [such] ANY amount 
necessary for [its] THE continued operation OF THE POWER COMMISSION 
shall be included in the annual General Appropriations Act. 
The Power Commission shall exist for period of ten (IO) years from the 
effectivity of this Act, and ITS EXISTENCE may be extended by a joint 
concurrent resolution[.] OF BOTH HOUSES OF CONGRESS. 
"SEC. (63160. Separation Ben& 
of Oflcials and Employees of Affected 
Agencies. - National Government employees displaced or separated from the 
service as a result of the restructuring of the electricity industry and privatization 
of NPC assets pursuant to this Act, shall be entitled [to] either TO a separation 
pay and other benefits in accordance with existing laws, rules or regulations or [be 
entitled] to avail of the privileges provided under a separation plan which shall 
[be] GRANT TO THE AVAILING EMPLOYEE one and one-half month 
salary for every year of service in the government: Provided, however, That those 
who [avail] HAVE AVAILED of [such] THE privileges OF THE SAID 
SEPARATION PLAN shall start their government service anew if THEY ARE 
absorbed THEREAFTER by any government-owned successor company[ .] OR 
BY THE NATIONAL GOVERNMENT ITLSEF. In no case shall there be any 
diminution of benefits under the separation plan until the full implementation of 
the restructuring and privatization[.] OF NPC. 
Displaced or separated personnel OF NPC as a result of [the] ITS 
privatization[, if qualified,] shall, IF QUALIFIED, be given preference in the 
hiring of the manpower requir,ements of the privatized companies[.] OR 
EMERGING CORPORATE ENTITIES OF THE PRIVATIZED ASSETS. 
The salaries of employees of NPC shall continue to be [exempt] 
EXEMPTED from [the coverage ofj Republic Act No. 6758, otherwise known as 
"The Salary Standardization Act". 
With respect to employees who are not retained by NPC, the Government, 
through the Department of Labor and Employment, shall endeavor to implement 
re-training, job counseling, and job placement programs[.] FOR THEM. 
"SEC. [64]61. Fiscal Prudence. - To promote the prudent management 
of government resources, the creation of new positions and the levels of or 
increases in salaries and all other emoluments and benefits of THE TRANSCO 
and THE PSALM Corp. personnel shall be subject to the approval of the 
President of the Philippines. The compensation and all other emoluments and 
THE TRANSCO and OF THE OFFICIALS AND THE MEMBERS OF THE 
BOARD OF DIRECTORS OF THE PSALM C o p  shall be subject to the 
approval of the President of the Philippines. 
benefits of the officials and THE members of the Board of DIRECTORS OF 
"SEC. [65]62. Environmental Protection. 
- Participants in the 
generation, distribution, and transmission [sub-sectors] SECTORS of the 
ELECTRIC POWER industry shall comply with all environmental laws, rules, 
regulations, and standards promulgated by the Department of Environment and 
Natural Resources including, in appropriate cases, the establishment of an 
environmental guarantee fund. 
"SEC. [66]63. Benefits to Host Communities. - The obligations of 
generation companies and energy SOURCE AND OR resource developers to 
THE communities [hosting] THAT HOST energy generating facilities [and/or] 
AND OR energy SOURCE AND OR resource developers, as defined under 


62 
,I . I 
Chapter 11, Sections 289 to 294 of.the Local Government Code and Section 5(i) of 
Republic Act No. 7638 and their implementing rules and regulations and 
applicable orders and circulars WHICH MUST BE consistent with this Act, shall 
continue: Provided, That the obligations [mandated] IMPOSED under Chapter 
11, Section 291 of Republic Act NO. 7160, shall apply to privately-owed 
corporations or entities utilizing the national wealth of the locality. 
To ensure the effective implementation of the reduction in THE cost of 
electricity in the cornunities where the source of energy is located, the 
mechanics and procedures prescribed in the Department of the Interior and Local 
Government (D1LG)-DOE Circulars No. 95-01 and 98-01, dated October 31, 
1995 and September 30, 1998, respectively, and THE other issuances related 
thereto shall be pursued. 
Towards this end, the fund generated from the eighty percent (80%) of the 
national wealth tax shall, in no case, be used by any local government unit for any 
purpose other than those for which it was intended. 
In case of any violation or noncompliance by any local government 
official of any provision thereof, the DILG shall, upon prior notice and hearing, 
order the project operator, through the DOE, to withhold the remittance of the 
royalty payment to the host community concerned pending completion of the 
investigation. The unremitted funds shall be deposited in a government bank 
under a trust fund[.] ACCOUNT IN THE NAME OF THE BENEFICIARY 
LOCAL HOST COMMUNITY. 
"SEC. [67]64. NPC Offer of Transition Supply Contracts. - Within six 
(6) months from the effectivity of this Act, NPC shall file with the [ERC] 
COMMISSION for [its] THE LATTER'S approval [a], AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC HEARING, 
THE transition supply contract OR CONTRACTS duly negotiated with (the) 
distribution utilities containing the terms and conditions of THE supply OF 
ELECTRICITY TO SUCH DISTRIBUTION UTILITIES and [a] THE 
corresponding schedule of rates, consistent with the provisions [hereof,] OF 
THIS ACT, including adjustments [and/or] AND OR indexation formulas [which 
shall apply to] APPLICABLE DURING the term of such CONTRACT OR 
contracts. The term of the transition supply CONTRACT OR contracts shall not 
extend beyond one (1) year fkom the introduction of open access. Such 
CONTRACT OR contracts shall be based on the projected demand of such 
DISTRIBUTION utilities less any of their currently committed quantities under 
eligible IPP contracts [as defined] DESCRIBED in Section [33 hereof:] 32 OF 
THIS ACT: 
Provided, That the total generation capacity of such signed 
transition supply CONTRACT OR contracts shall not exceed the level of [NPC] 
NPC'S owned, controlled, or committed capacity as of the effectivity of this Act. 
Such transition supply CONTRACT OR contracts shall be assignable to AND 
RE MADE BINDING ON [the NPC] NPC'S successor [generating] 
GENERATION companies. 
/ 
Within six (6) months from the date of THE submission of the transition 
supply contract OR CONTRACTS by NPC FOR THE APPROVAL OF THE 
COMMISSION, the [ERC] COMMISSION shall notify NPC of [their] ITS 
approval of the SCHEDULE OF rates contained [therein.] IN SAID SUPPLY 
CONTRACT OR CONTRACTS. 
. 
The [ERC] COMMISSION shall maintain a record of the [contract] terms 
and CONDITIONS OF THE CONTRACT OR CONTRACTS AND THE 
SCHEDULE OF THE rates offered by NPC. 
Likewise, the [ERC] 
COMMISSION shall update monthly[,] the SAID rates, WHEN THERE IS A 
NECESSITY TO DO SO, using [the] SUCH appropriate, JUST AND 


63 
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REASONABLE adjustment [and/or] AND OR indexation formula[.] THAT 
WILL PROMOTE AND PROTECT THE INTEREST OF THE GENERAL 
PUBLIC AND THE INTEREST OF THE END-USERS OF ELECTRICITY. 
Notwithstanding the provisions of Section 25 [hereofl OF THIS ACT, the 
rates charged by a distribution utility for the generation component of the supply 
of electricity in their retail rate shall, for the term of the transition supply 
CONTRACT OR contracts, not exceed the SCHEDULE OF RATES 
CONTAINED IN THE SAID transition supply contract [rates,] OR 
CONTRACTS, AS APPROVED BY THE COMMISSION AND as updated 
monthly. The recovery of costs incurred by a distribution utility for any 
generation component in excess of the SAID transition supply contract OR 
CONTRACTS rates shall be disallowed by the [ERC] COMMISSION, except 
for eligible contracts as defined' [under] AND DESCRIBED IN Section [33 
hereofl 32 OF THIS ACT: Provided, That such limitation on the recovery of 
generation component costs by a distribution utility shall apply only to the 
equivalent quality and quantity of electricity still available to the distribution 
utility from NPCI.1, TAKING INTO ACCOUNT THE TOTAL COST OF 
DELIVERING THE ELECTRIC POWER TO THE DISTRIBUTION 
UTILITY'S FRANCHISE TERRITORY. 
"SEC. [68]65. Review of IPP Contracts. - An [i]Inter-agency 
[cICommittee WHICH SHALL BE chaired by the Secretary of Finance, with the 
Secretary of the Department of Justice and the Director General of the National 
Economic and Development Authority as members thereof, is hereby created IN, 
AND upon the effectivity of, this Act. The INTER-AGENCY Committee shall 
immediately undertake a thorough review of all IPP contracts[.] AND SHALL 
TAKE 
EVERY 
NECESSARY 
EFFORT 
AND 
ACTION 
TO 
RENEGOTIATE SUCH IPP CONTRACTS AND ERADICATE AND OR 
MINIMIZE EVERY ONEROUS PROVISIONS CONTAINED IN THEM. 
In cases where such contracts are found to have provisions which are grossly 
disadvantageous, or onerous to the Government, the INTER-AGENCY 
Committee shall [cause] REQUIRE the appropriate government agency [to file 
an action], IF IT BECOMES NECESSARY, EITHER TO AVAIL, 
under the arbitration clauses provided in THE said contracts or TO initiate 
PROMPTLY 
any SUCH appropriate LEGAL action BEFORE A 
COMPETENT 
COURT under 
[Philippine] THE laws[.] OF THE 
PHILIPPINES. The PSALM Corporation shall diligently seek to reduce stranded 
CONTRACT costs, if any. 
WITHOUT ANY UNNECESSARY DELAY, OF, THE LEGAL REMEDIES 
. 
ANY REDUCTION IN THE COSTS OF THE SAID IPP 
CONTRACTS ARISING FROM THEIR RENEGOTIATION, OR FROM 
ANY REMEDIES TAKEN UNDER THE RELEVANT ARBITRATION 
BEFORE A COMPETENT COURT UNDER THE LAWS OF THE 
PHILIPPINES SHALL BE USED TO REDUCE THE UNIVERSAL 
CHARGE IMPOSED UNDER SECTION 33 OF THIS ACT. 
CLAUSES IN SUCH CONTRACTS, OR FROM ANY LEGAL ACTION 
/ 
ANY UNJUSTIFIED FAILURE TO PERFORM THE OFFICIAL 
DUTY IMPOSED UNDER THIS SECTION 65 AND THE SUCCEEDING 
SECTION 66 OF THIS ACT SHALL BE A GROUND FOR THE FILING 
OF ANY APPROPRIATE LEGAL ACTION AGAINST, AND THE 
PUNISHMENT OF, THE RESPONSIBLE PARTY OR PARTIES UNDER 
THE APPROPRIATE PROVISION OF REPUBLIC ACT NO. 3019, 
PRACTICES ACT OF THE PHILIPPINES. 
OTHERWISE KNOWN AS THE ANTI-GRAFT AND CORRUPT 
.. 


64 
’. . 
“SEC. [69]66. Renegotiation of Power Purchase and Energy Conversion 
Agreements between Governmenis Entities. - Within three (3) months from the 
effectivity of this Act, all power purchase and energy conversion agreements 
between the PNOC-Energy Development Corporation (PNOC-EDC) and NPC, 
including but not limited to the BAC-MAN, Palinpinon, Tongonan, LEYTE A 
AND B and Mt. Apo Geothermal complexes, shall be reviewed by the [ERC] 
COMMISSION, and the ONEROUS terms AND CONDITIONS thereof, IF 
ANY, MUST BE REVISED AND amended to.,remove any hidden costs or 
extraordinary mark-ups in the cost of power or steam above [their true] JUST 
AND REASONABLE costs. All Amended contracts shall be submitted to the 
Joint 
Congressional 
Power 
Commission for 
approval. 
The 
[ERC] 
COMMISSION shall ensure that all savings realized from the reduction of [said] 
ANY SUCH HIDDEN COSTS OR EXTRAORDINARY mark-ups shall be 
passed on to all end-users OF ELECTRICITY. 
“SEC. [70]67. Missionary 
Elecirzjication. 
-Notwithstanding 
the 
NATIONAL POWER CORPORATION’S divestment [and/or] AND OR 
privatization of [NPC assets,] ITS GENERATION ASSETS, TRANSMISSION 
contracts [and spun-off corporations, NPC], THE NPC shall [remain as a 
National Government] CONTINUE TO EXIST AS A GOVERNMENT-owned 
and-controlled corporation to perform [the] A missionary electrification function 
through the Small Power Utilities Group (SPUG) [and] AS DEFINED IN THIS 
ACT. 
FOR 
THAT 
PURPOSE, 
THE 
NATIONAL 
POWER 
CORPORATION IS HEREBY .AUTHORIZED TO EXERCISE ALL ITS 
UNDER ITS EXISTING LEGISLATIVE CHARTER, EXCEPT TO THE 
EXTENT THAT SUCH POWERS AND 
PREROGATIVES ARE 
MODIFIED BY AND ARE INCONSISTENT WITH ANY OF THE 
PROVISIONS 
OF 
THIS 
ACT. 
THE 
NATIONAL 
POWER 
CORPORATION shall be responsible for providing power generation [and its] 
OR GENERATIONS, INCLUDING ALL NECESSARY AND associated 
power delivery systems, in areas that are not connected to the NATIONAL 
transmission system. The missionary electrification function OF THE 
NATIONAL POWER CORPORATION shall be funded: 
(A) from the 
revenues from sales in missionary areas; and (B) from the universal charge [to] 
THAT SHALL be collected from all [electricity] end-users [as] OF 
ELECTRICITY, WHICH UNIVERSAL CHARGE SHALL BE determined 
by the [ERC.] COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING. 
AND SUB-TRANSMISSION 
ASSETS AND FACILITIES, AND IPP 
. 
CORPORATE POWERS AND ENJOY ALL ITS PREROGATIVES 
“SEC. [71]68. Electric Power Crisis Provision. - [Upon the 
determination by] IN CASE OF ANY IMMINENT SHORTAGE OF SUPPLY 
OP ELECTRICITY, AS DETERMINED AND PROCLAIMED BY the 
President of the Philippines [of an imminent shortage of the supply of electricity], 
Congress may authorize, through a joint resolution, the establishment of 
additional [generating capacity] GENERATION -CAPACITIES TO SOLVE 
SUCH SHORTAGE ADEQUATELY, under such terms and conditions as [it] 
CONGRESS may approve. 
“SEC. [72]69. [Mandated] MANDATORY Rate Reduction. - Upon the 
effectivity of this Act, residential end-users OF ELECTRICITY shall be granted 
a [rate] MANDATORY reduction from NPC rates IN AN AMOUNT of NOT 
LESS THAN thirty centavos per kilowatt-hour (P0.30lcWh). Such reduction shall 
be reflected as a separate item in the [consumer] MONTHLY billing statement 
OF RESIDENTIAL END-USERS OF ELECTRICITY, 
V 
“SEC. [73]70. Lifeline Rate. - A socialized pricing mechanism, called a 
lifeline rate, 
for 
[the] marginalized 
RESIDENTIAL 
end-users OF 


2 . 
65 
L 
I' 
* 
.$ 
ELECTRICITY shall be set by the [ERC, which] COMMISSION. THIS 
LIFELINE RATE shall be exempted from the cross subsidy phase-out under this 
Act AND SHALL REMAIN for a period of ten (10) years[,] FROM AND 
AFTER THE DATE OF ITS ESTABLISHMENT, unless extended by [law.] 
BY CONGRESS. The [level oq consumption LEVEL OF THOSE WHICH 
SHALL BE CONSIDERED MARGINALIZED RESIDENTIAL END- 
USERS OF ELECTRICITY and the LEVEL OF WHAT SHALL BE 
DEEMED TO BE A JUST AND REASONABLE LIFELINE rate shall be 
determined by the [ERC] COMMISSION, after due notice TO ALL 
INTERESTED PARTIES and PUBLIC hearing. 
" . 
"SEC. 174171. Cross Subsidies. - Cross subsidies within a grid, between 
grids [and/or], AND OR BETWEEN classes of [customers] END-USERS OF 
ELECTRICITY shall be phased out [in] WITHIN a period not exceeding three 
(3) years from the establishment by the [ERC] COMMISSION of [a] THE 
universal [charge] CHARGE AUTHORIZED UNDER SECTION 33 OF 
THIS ACT, which shall be collected from all [electricity] end-users[. Such level 
oq OF ELECTRICITY, EXCEPT AS OTHERWISE PROVIDED IN THIS 
ACT. THE AMOUNT PER KILOWATT HOUR FOR EACH KIND OF 
SAID cross subsidies shall be made transparent [apd] TO THE PUBLIC AND 
SHALL BE identified separately in the billing statements [provided to end-users 
by the suppliers.] THAT A DISTRIBUTION UTILITY OR SUPPLIER OF 
ELECTRICITY. 
ELECTRICITY SENDS MONTHLY TO EACH OF ITS END-USER OF 
The [ERC] COMMISSION may extend, AFTER DUE NOTICE TO 
ALL INTERESTED PARTIES AND PUBLIC HEARING, the period for the 
removal of SAID cross subsidies for a maximum period of one (1) year [upon 
finding], IF IT FINDS that THE cessation of [such mechanism] SAID CROSS 
SUBSIDIES would have a material adverse effect [upon the public] ON THE 
interest[,] OF THE GENERAL PUBLIC, particularly the INTEREST OF THE 
residential end-user[;] OF ELECTRICITY; or would have an immediate, 
irreparable, and adverse financial effect on distribution [utility.] UTILITIES OR 
ON SUPPLIERS OF ELECTRICITY. 
"GI-IAPTER IX 
"FINAL PROVISIONS 
"SEC. 175172. Statutory Constructions. - This Act shall, unless the 
context indicates otherwise, be construed in favor of the establishment, 
promotion, AND preservation of competition [and people] AS WELL AS IN 
FAVOR OF THE empowerment [so that the widest participation of the people] 
OF THE PEOPLE TO PARTICIPATE, AS WIDELY AS IS LEGALLY 
ALLOWED, whether directly or indirectly, [is ensured.] ON ANY MATERIAL 
AND SUBSTANTIAL MATTER OR DECISION AFFECTING THE 
ELECTRIC POWER INDUSTRY SO THAT THE PEOPLE CAN ENSURE 
THE PROTECTION OF THEIR RIGHTS AND INTERESTS. With respect 
to NPC's debts and IPP [and related] contracts, nothing CONTAINED in%his 
Act, UNLESS THE CONTEXT CLEARLY SAYS OTHERWISE, shall be 
construed as: (1) an EXPRESSED OR implied waiver of any right, action, or 
claim[,] OF NPC OR OF THE PHILIPPINE GOVERNMENT, ARISING 
FROM OR RELATING TO ANY SUCH CONTRACTS, against any person 
or entity[, of NPC or the Philippine Government arising from or relating to any 
such contracts]; or (2) a [conferment] GRANT of new OR ADDITIONAL or 
better OR SUPERIOR rights to creditors and IPP contractors [in addition to] 
DISTINCT FROM THE ALREADY subsisting rights granted by the NPC or 
BY the Philippine Government under existing contracts[.] OR AGREEMENTS. 


<' , 
66 
* . .* 
t' 
"SEC. [76]73. Education and Protection of End Users. - [End users] 
THE END-USERS OF ELECTRICITY shall be [educated about the] 
INFORMED ABOUT AND MADE FAMILIAR WITH THE CONCEPT 
AND implementation of retail OPEN access and its impact on end-users OF 
ELECTRICITY, and [on] WITH the proper [use], COST-EFFECTIVE, AND 
ECONOMICAL UTILILIZATION of electric power. Such [education] 
INFORMATION AND FAMILIARIZATION shall include, but not limited to, 
the existence of competitive GENERATION COMPANIES, COMPETITIVE 
electricity suppliers, choice of, competitive electricity services, regulated 
transmission and distribution services, RATE BASE, RETURN ON RATE 
BASE (RORB), systems PERFORMANCE STANDARDS AND reliability, 
aggregation, [market] WHOLESALE ELECTRICITY SPOT MARKET 
(WESM), CAPTIVE AND CONTESTABLE MARKETS, itemized billing 
STATEMENT, stranded [cost] DEBT OF NPC, STRANDED CONTRACT 
COSTS OF NPC AND OF DISTRIBUTION UTILITIES, uniform disclosure 
requirements 
FROM 
ALL 
ELECTRIC 
POWER 
INDUSTRY 
PARTICIPANTS, low-income bill [payment] PAYMENTS, AND energy 
conservation and safety measures. 
The DOE, in coordination with the NPC, NEA, [ERC] THE 
COMMISSION, and the Office of the Press Secretary-Philippine Information 
Agency (OPS-PIA), shall BE RESPONSIBLE FOR AND undertake,. an 
information campaign to [educate] INFORM AND FAMILIARIZE the public 
on ALL FACETS OF the restructuring of the electric power industry and THE 
privatization of NPC. 
"SEC. [77]74. Implementing Rules and Regulations. - The DOE [shall], 
in consultation with relevant government agencies, the electric power industry 
participants, CONCERNED non-government organizations, and WITH end- 
users[,] OF ELECTRICTY GROUPS, SHALL promulgate, WITHIN SIX (6) 
MONTHS FROM THE EFFECTIVITY OF THIS ACT, the NECESSARY 
Implementing Rules and Regulations (IRR) [of this Act, within six (6) months 
from the effectivity of this Act, subject to the approval of the Power 
Commission.], 
WHICH 
MUST 
BE 
CONSISTENT 
WITH 
THE 
PROVISIONS 
OF 
THIS 
ACT 
AND 
APPROVED 
BY 
JOINT 
CONGRESSIONAL POWER COMMISSION. 
. 
"SEC. 178175. Injunction 
and 
Restraining 
Order. 
- 
The 
implementation of the provisions of this Act, WITH RESPECT TO THE 
RESTRUCTURING OF THE ELECTRIC POWER INDUSTRY AND THE 
PRIVATIZATION OF THE NPC, shall not be restrained or enjoined except by 
an order issued by the Supreme Court of the Philippines. 
"SEC. [79]76. SeparabiliF 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. 
"SEC. [80]77. ApplicabiliG and Repealing Clause. - The [applicability) 
APPLICABLE provisions of Commonwealth Act No. 146, as amended, 
otherwise known as the "Public Services 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["]; [Executive Order 172, as amended, 
creating the Em;] Republic Act 7832 otherwise known as the ["]Anti-Electricity 
and Electric Transmission LinesMaterials Pilferage Act of 1994["], shall 
continue to have full force and effect, except insofar as [they] SUCH ACTS AND 
. 


I 
67 
n
,
 *” 
DECREE, AND ONLY TO THAT EXTENT, are inconsistent with ANY OF 
THE PROVISIONS OF this Act. 
The provisions with respect to electric power of Section [ll(c)] 12(C) of 
Republic Act 7916, as amended, and Section 5(f) of Republic Act 7227, are 
hereby repealed or modified accordingly[.], IT BEING THE CLEAR INTENT 
OF 
CONGRESS 
THAT 
HENCEFORTH 
THE 
GENERATION, 
TRANSMISSION, SUBTRANSMISSION, DISTRIBUTION, AND OR 
SUPPLY OF ELECTRIC POWER SHALL BE GOVERNED ENTIRELY 
BY THE PROVISIONS OF THIS ACT, AND THAT NO AGENCY OF THE 
NATIONAL GOVERNMENT, OTHER THAN THE COMMISSION, 
SHALL BE ALLOWED TO REGULATE THE TRANSMISSION, 
SUBTRANSMISSION, AND DISTRIBUTION, OR AUTHORIZE THE 
ESTABLISHMENT OF GENERATION COMPANIES OR SUPPLIERS 
OF ELECTRICITY. 
Presidential Decree No. 40 and all laws, decrees, rules and regulations, or 
portions thereof, inconsistent with this Act are hereby repealed or modified 
accordingly. 
- 
“SEC. [81]78. Eflectivity Clause - This Act shall take effect on the 
fifteenth day following its publication in at least two (2) national [papers] 
NEWSPAPERS of general circulation. 
/ 
Approved