SENATE 
S. B. No. 160 
.______ 
__ 
Inlroduced by SENATOR JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
It is the policy of the State to ensnre transparent, just, and reasonable prices of 
electricity iii the country under a regime of free and fair competition and full 
accountability to the end users of electricity. Such was the reason and promise behind the 
enactment of M 9136, otherwise known as the EPIRA. 
Six (6) years affer its enactment, the promise of the EPIRA is now popularly 
viewed as a broken promise, with the never-ending spiraling cost of power and 
electricity. 
Drastic measures have to be undertaken. In fact, this representation even 
conterriplated the repeal of the entire law. However, after much painstaking deliberations 
in the conmiltee level and plenary sessions ofthe Senate in the Thirteenth Congress, this 
representation is now suppoxtive of a major revision of the EPIRA, with the end in view 
of emuring the quality, reliability, security, and affordability of the supply of electric 
power. 
Hence, the immediate approval of this bill is fervently sought. 
ADA 
Seriator 


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FOURTEENTH CONGRESS 
1 
First Regular Session 
) 
REPUBLIC OF THE PHILIPPINES 
) 
SBN No. 
SENAT? &: 0 
Introduced by Senator JINGGOY EJERCITO ESTRADA 
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 PUJXPOSES” 
Be it enacted by the Senate and House of ReDresentatives of the Philip~ines in ConEress 
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 P o m y  
“SEC. 1. Short Title. - This Act, HEREINAFTER REPERRED TO AS 
THE ACT, shall be known as the “Electric Power Industry Reforin Act of 2001”. 
[It shall hereinafter be referred to as the Act.] 
“SEC. 2. Declaration ofPolicy. - It is hereby declared the policy of the 
State: 
(a) To ensure and accelerate the [total electrification ofl PROVISION OF 
ELECTRIC SERVICE TO EVERY COMMUNITY IN h e  country; 
(b) To ensure the quality, reliabiIity, security, and affordabiIity of the 
supply or electric power; 
(c) To ensure transparent, JUST and reasonable prices of clectuicity in 
THE COUNTRY UNDER a regime of free and fair competition and full Ipuhlicl 
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 [iiifloiv] PLOW 
of private capital TO, and broaden the ownership base of, the power generation, 
transmission, and distribution sectors[;] OF TEE ELECTIUC- POWER 
INDUSTRY; 
(e) To THE EXTENT IT IS LEGALLY ALLOWABLE AND 
JUSTIFIED, TO ensure A fair and non-discriminatory treatment of BOTH TFlE 
public and private [sector] entities ENGAGED IN THE ELECTRIC POWER 
INDUSTRY in CONNECTIOh WITH the process of restnxtLving the [electric 
power] SAID industry; 


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(fl 
To protect the [public] interest OF TRE GENERAL PUBLIC 
AND THE INTEREST OF THE END-USERS OF ELECTIIXCITY, as (it IS] 
THESE INTERESTS ARE affected by the WHEELING CIXARGES, rates, 
and services of THE electiric TRANSMISSION, SUB-TRANSMISSTON, OR 
DISTRIBUTION utilities [aid] OR BY THE PRICES OF THE other 
providers of electric power[;] UNDER THIS ACT; 
(g) 
To assure socially and environmenial'ly coiiipalible eiiergy soimes 
and ELECTRIC POWER infrastructure; 
(h) 
To SEARCH FOR AND proiiiote the utilization of ittdigenous, 
[and] new, and renewable energy SOURCES AND resources in [power] THE 
generation OF ELECTRIC POWER in order to reduce TBE dejmidence OF 
THE COUNTRY 011 imported enerzy[;J SOURCES AND IiESOURCESj 
(i) 
To provide 
for 
[an] TIiE MOST ADVANTAGEOUS, 
BENEFICIAL, orderly, and transparent SALE, DISPO§I?ION, 
AND 
privatizatioii of the GENERATION ASSETS, TRANSMISSION AND SUB- 
TRANSMISSION assets 
[aiid], REAL ESTATE ASSETS, 
OTlHER 
DISPOSABLE ASSETS, IPP CONTRACTS, AND liabilities of the Na[ionnl 
Power Corporation (NPC); 
0) 
To establjsh a TRULY IMPARTIAL, DEPENDABLE, strong, 
and [purely] independent regulatory [body] GOVERNMENT AGENCY and 
system [to ensure consumer protection], WHICH SHALL PROTECT TllE 
THE SAME TIME, RECOGNIZE THE RIGHT OF THE ELECI'RIC 
POWER INDUSTRY PARTICIPANTS TO A JUST AND REASONABLE 
RETURN ON THEIR INVESTMENTS, 
AND 
WEICH SHALX, 
PROMOTE, POSTER, and enhance [the competitive] COMPETI'TXON IN 
THE operation of the electricity market[; and] OF THE COUNTRY; AND 
GENERAL PUBLIC AND THE END-USERS OF ELECTRICITY AN.D, 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 IdJDeniand IsISide [mjManageineiit. 
POWER IN TIiE COUNTRY BY THE END-USERS OF ELECTRICITY, 
"SEC. 3. 
Scope. - This Act shall provide [a] TRJE fmnicworlc for 
the GRADUAL restnlcturing of the electric power industry[, iiicludiiig the]; 
FOR THE BENEFKCIAL SALE, DISPOSITION, AND privatization of the 
[assels of NPC, the] GENERATION ASSETS, TRANSR/IXSSION AND SUB- 
TRANSMISSION 
ASSETS, 
REAL 
ESTATE 
ASSETS, 
OTREK 
DISPOSABLE ASSETS, IPP CONTRACTS, AND LIABILITIES OF N I T ;  
FOR THE ORDERLY transition to the desired competitive h/IARKET 
structure[, and the defiiiition] IN THE ELECTRIC POWER INDUSTRY; 
the respoiisibilities of the vai-ious CONCERNED goveriuiient agencies aiid 
private entities[.] THAT ARE lNVOLVED IN TWE ELECTRIC POWER 
INDUSTRY. 
AND FOR THE CLEAR DEFINITION, DIVISION, AND ASSIGNMENT or 
"SEC. 4. 
(A) 
"AFFILIATE"I"ASS0CIATED 
ENTITY OR PERSON" 
REFERS TO ANY ENTITY OR PERSON WHICR, ALONE OR 
TOGETHER WITH ANY OTBER ENTITY OR PERSON, DIRECTLY OR 
INDIRECTLY, THROUGH ONE OR MORE 
INTERMEDXARTES, 
CONTROLS, IS CONTROLLED BY, OR IS UNDER COklMON 
CONTROL WITH ANOTHER ENTITY OR PERSON. 
Dejijiriition of Ternis. - 


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[(all (B) 
"Aggregator" refers to a person or entity[, engaged] 
WHICH, 
WITHOUT A 
LEGISLATIVE 
FI;IAI\CH'LSE, IS 
DULY 
LICENSED BY THE COMMISSION TO ENGAGE in consolidating electi-ic 
power demand of end-users OF ELECTFUCITY in [the] A contestable markel[,] 
WITHIN A FRANCHISE TERRITORY OF ANOTHER PARTY four the 
purpose of purchasing and reselling electricity TO SUCH END-USERS on a 
group basis; 
[@)I (C) 
"Ancillaiy Services" refer to those services tint are 
necessary to support the transniissioii of capacity and energy f?om SOURCES 
AND resources to loads while maintaining reliable operation of the transmission 
system in accordance with good utility [practice] PRACTICES and the GI-id 
Code WHICH IS REQUIRED to be adopted in accordance with this Act; 
Kc)l (D) 
"Captive Market" refers to [electricity end-users wlio do 
not have the choice of a supplier of electricity, as may be deterniiiicd by the 
Energy Regulatory Co~nmission (ERC) in accordance with this Act;J THAT 
MARKET, WHICH SHALL BE DETERMINED BY THE COMMISSION 
IN ACCORDANCE WITH TEXIS ACT, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING, CONSISTING OF 
END-USERS OF ELECTRICITY IN A FRANCHISE TERRITORY QF A 
DISTFUBUTION UTILITY THAT CANNOT CHOOSE THEIR SUPI'ldER 
OF ELECTRICITY; 
I(d)l (E) 
"Central Dispatch" refers to the [process of issuing] 
ISSUANCE OF direct instructions BY THE GlRlD OPERATOR to electric 
power industry participants [by the grid operator] IN ORDER to achieve ilie 
[economic] MOST ECONOMICAL operation, and TI-LE niaintcixnicd of THE 
NIGHEST DEGREE OF quality, stability, reliability, and security, o f  the 
transmission system; 
(Q 
"CENTRAL 
SCHEDULING" 
REFERS 
TO 
TI-II-IE 
PREPARATION BY THE MARKET OPERATOR OF A DlSPATCH 
SCHEDULE TO D E T E m I N E  THE DISPATCI-L OF GENEk4TING 
UNXTS TO MEET DEMAND AT LEAST COST FOR EACR 'TRADING 
INTERVAL; 
[(e)] (G) 
"Co-Generation Facility" refers to a facility [wliich] TEIAT 
produces electrical aidlor [AND OR] mechanical energy aid OTHER forms of 
useful thermal energy, such as heat or steam, which arc used for 
RESIDENTIAL, industrial, OR commercial heating or cooling purposes tbrough 
the sequential use of energy; 
f(f)l (14 
"Commission" refers to the decision-making body oE the 
[ERC] ENERGY REGULATORY COMMISSION (ERC) composed of a 
Chairman and four (4) members as provided under Section [38 hereofl 37 OF 
THIS 
ACT[;]. 
FOR 
PURPOSES 
OF 
CONSTRUING 
AND 
INTERPRETXNG THE RF,LEVANT PROVISIONS OF THIS ACT, THE 
AND "ERC" SHALL, UNLESS TI-IE CONTEXT CLEARLY INDICATES 
OTHERWISE, SHALL REFER TO THE ONE AND THE SAME ENTXITY; 
TERMS v o M M r s S r o i w ,  "ENERGY REGULATORY COMMISSION", 
I(g)l (1) 
"Concession Contract" refers [to the award by The 
government] TO A CONTRACT FROM THE NATIONAL GOVERNMENT 
OR FROM -4NY OF ITS AUTHORIZED INSTRUMENT.4LJTIES, 
WHICH GRANTS to a qualified private entity [ofl the PRIVILEGE OF AND 
THE responsibility for financing, operating, expanding, maintaining, and 


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managing specific [Govemnent-owned assets;] NATIONAL GOVERNRKEKT 
DISPOSABLE ASSETS; 
l(h)I (J) 
"Contestable Market" refers to [the eleclriciiy mid-~isers 
who have a choice of a supplier of electricity, as may be determined by the ER.C 
in accordance with this Act;] THAT MARKET, WHICH SHALL BE 
ACT, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
WITHIN A FRANCHISE T E W T O R Y  OF A DISTRlBUTlORT UTILITY 
THAT CAN CHOOSE THEIR SUPPLIER OF ELECTRICITY; 
DETERMINED BY TI-IE COMMISSION IN ACCORDANCE WITH THIS 
PUBLIC HEARING, CONSISTING OF END-USERS OF E m c m r C r m  
(K) "CONTROL" REFERS TO THE POWER TO DIRECT OR 
CAUSE TI-IE DIRECTION OF THE MANAGEMENT POLICIES OF AN 
ENTITY OR PERSON BY CONTRACT, AGENCY, OR ommwm. 
[(ill (L) 
"Customer Service Charge" refers to [the] AN AMOLTWT 
WHICH XS A component [in] OF the 1-etail rate AND WBICZI IS intended [for 
the cost recovery of customer-related services including,] TO RECOVER TIIE 
PRUDENT, JUST, AND REASONABLE COST OF ELECTRIC END- 
USER-RELATED SERVICES SUCH AS, but not limited to, meter reading, 
billing administration and collection; 
[till (MI 
"Deniaiid Side Managenlent" 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 
(N) 
"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; 
1N1 (0) 
"Departnient of Finance" or "DOF" 1-efcrs to the 
NATIONAL govemiieiit [agency] XNSTRUMENTALITY created [pursuant to] 
UNDER Executive Order No. 127[;], SERIES OF 1987; 
(P) 
"DISPATCH SCHEDULE" REFERS TO THE TARGET 
GENERATING UNIT OR SCHEDULED LOAD AND FOR EACFI 
RJ3SERVE FACILITY FOR THE END OF THAT TRnDING INTERVAL, 
DETERMINED BY THE MARKET OPERATOR. 
LOADING LEVELS IN 
MEGAWATT FOR EACH scrmwrm 
[(m)] (Q) 
"Distribution Code" refers to a coiiipiialion ',of I-iiles [and 
regulations governing electric utilities in the] INTENDED TO GOVEKV 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 distxibution system with the 
facilities or installations of the parties connected thereto;]. 
IT SHALL 
OBSERVED BY DISTRIBUTION UTILITIES IN RENDERING THEIR 
SERVICES TO THEIR END-USERS OF ELECTRICITY AND IN 
MEASURING THE EFFICIENCY OF THEIR PERPORnlANCE, AND 
THE RULES AND STANDARDS THAT SHALL GOVERN T I E  
RELATlONSBIP OF THEIR DISTRIBUTION SYSTEMS WITH THE 
INCLUDE, AMONG OTX-IERS, THE RULES AND STANDARBS To BE 


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FACILlTlES OR INSTALLATXONS OF OTHER PARTIES CONR'EC'rED 
TO SUCH DISTRIBUTION SYSTEMS; 
I(n)l (R) 
"Distribution of Electricity" refers to the conveyance AND/ 
OR RETAIL SALE of electric power by a distribution utility TO ITS END- 
USERS OF ELECTRICITY through its distribution system pursuant to tbe 
provisions of this Act; 
[(o)] (S) "Distribution System" refers to the system of wixs and 
associated facilities belonging to [a franchised distribution utility, extending] A 
DISTRIBUTION UTILITY IN ITS FRANCHISE TERRITORY, Wl3I.C~l 
EXTENDS between the delivery points [on] OF the traiisiiiission or sub- 
transmission system [or generator connection and] OF THE TRANSCCl OR ClF 
A GENERATION COMPANY, AS THE CASE MAY BE, AND tlre poinl of 
connection OF SUCH WIRES AND ASSOCIATED FACILITIES to the 
preiiiises of the [end-user;] END-USERS OF ELECTRICITY; 
I@)] (T) "Disiribution Wheeling Charge" refers to the [cost or c1mge 
regulated by the ERC] THE AMOUNT AUTHORIZED BY TIIE 
COMMISSION, AFTER DUE NOTICE TO ALL XNTERESTED PARTUS 
AND PUBLIC HEARING, TO BE CHARGED for the use of [a] TEE 
distribution system [and/or the availment of related services;] OF A 
DISTRIBUTION UTILITY AND/OR FOR THE USE OF OTliElZ 
RELATED SERVICES OF A DISTRIBUTION UTILITY; 
f(d1 (U) 
"Distribution Utility" refers to any electric cooperative, TO 
ANY private corporation, TO ANY goveiiment-owned DISTRIBUTlON utility, 
or TO ANY existing local government unit, which has an exclusive franchise to 
operate a disbibution system [in accordance with this Act;] IN A SPECING 
GEOGRAPHICAL AREA UNDER THIS ACT: 
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L(rN (VI 
"Electric Cooperative" refers to a distrihufion uliljty 
organized pursuant to Presidential Decree No. 269, as aniended, or as otherwise 
provided in this Act; 
[(SI] (W) 
"Electric Power Industry Participant" refei-s to any person 
or entity engaged OR WHO SHALL ENGAGE in the generation, ti-ansrnissioi~, 
distribution, or supply of electricity; 
I(91 (X) 
["End-user" refers to any person or entity requiring] 
THAT REQUIRE OR RAVE ACTUAL ACCESS TO the supply and deliwy 
of electricity for [its own use;] THEIR OWN USE. FOR PURPOSES OF 
CONSTRUING AND INTEPU'RETING THE RELEVANT PROVJSXONS 
OF THIS ACT, THE TERM "END-USERS OF ELECTRICITY" SRALL 
BE IDENTICAL IN MEANING TO THE TERM "CONSUMERS OF 
ELECTRICITY", 
AND 
THE PLURAL 
SHALL 
INCLUDE 
THE 
SINGULAR AND VICE VERSA, UNLESS THE CONTEXT C L E A R U  
INDICATES OTHERWISE; 
"END-USERS OF ELECTRICITY" REFER TO PERSONS OR ENTITIES 
Ku)l (Y) 
"Energy Regulatory Board" or "ERB" refers to lhe 
[independent,] NOW DEFUNCT quasi-judicial regulatory body created under 
Executive.Order No. 172, as amended; 
[Wl (Z) 
"Eiiergy Regulatory Commission" or "ERC" refers to the 
regulatory agency created [herein;] UNDER SECTION 37 OF TRIS ACT AND 
ALSO DE~INED IN PARAGRAPH ( a )  OF THIS SECTION; 


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[(w)] (AA) 
"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; 
[(x)J (BB) 
"Generation Company" refei-s to any N.4TUIUL OR 
JURIDICAL person or entity authorized 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)] (CC) 
"Generation of Electricity" refers to tlie production of 
[electricity] ELECTRIC POWER AND ENERGY by a generation company, or 
BY a co-geiieration facility, [pursuant to] IN ACCBMNCE WITH the 
provisions of this Act; 
[(z)] (DD) 
"Grid" refei-s to the high voltase backbone system of 
iiikrcoilnected transinksion lines, substations, and OTHER ;elated facilities; 
[(aa)] (EE) 
"Grid Code" refers to [tlie set] A COMPILATION of rules 
and regulations [governing] WI-1lCH SHALL GOVERN the safe, EFFICXEXVT, 
and reliable operation, MANAGEMENT, maintenance, [and] development, 
AND EXPANSION of the high voltage backbone trmsirrission system mid its 
OTHER related facilities; 
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[(bb)] (FF) 
"Independent Power Producer'' 01: "PP" refers to an 
existing [power generating entity] GENERATION COMPANY, which is not 
owned by NPC[;] AND WITH WHOM NPC OR A DISTRIDUTfON 
UTILITY HAS A VALID AND EXISTING PURCHASED POM'ER 
CONTRACT; 
[(cc)] (GG) 
"Inter-Class Cross Subsidy'' refers to an amount charged by 
distribution utilities to KESIDENTIAL, industrial [and], coiiimercial [end-uscrs 
as well as to], AND otliev subsidizing [customer sectors] END-USERS OF 
ELECTRICITY in order to [reduce electricity rates of other customer- sectors] 
COMPENSATE FOR THE REDUCED ELECTRIC RATES CI3ARGE TO 
CERTAIN 
residential end-users[,] OF ELECTRICITY, hospitals, and 
streetlights; 
OTHER 
CLASS OF END-USERS OF ELECTFSCITY, such as [tlie) 
[(dd)] (Ha) 
"Inter-Regional Grid Cross Subsidy" refers to [an] THE 
amount embedded in the [electricity rates of NPC charged to its custoinersJ 
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)] (11) 
ELECTRICITY RATES THAT NPC COLLECTS FROM END-USERS OF 
"Intra-Regional Grid Cross Subsidy" refers to [an] TBE 
amount embedded in the [electricity rates o f  NPC charged to] ELECTRICITY 
RATES THAT NPC COLLECTS FROM distribution utilities [and non- 
~rtilities] wit11 higlier load factor and/or [AND OR] delivery voltage in order to 
[reduce the electricity rates charged to] COMPEN§ATE FOR 'THE REDUCED 
ELECTRICITY RATES THAT NPC COLLECTS FROM distribution 
utilities with lower load factor andor [AND ORJ delivery voltage located in the 
same regional grid; 
[(ff)J (JJ) 
"PP Administrator" refers io A qualified iildelleiidcnt 
ENTITY OR entities [appointed by] THAT PSALM Coq>oratiori 
shall 
APPOINT TO EFFICIENTLY administer, conserve, and manage the SALE 
OF THE coiitracted ELECTRIC energy output of [NPCJ NPC'S IPP contracts; 


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[(gg)] (lac) "Isolated Distribution System" refers to the bacl;boiie 
system of wires and associated facilities not directly connecied to the national 
transmission system; 
[(l~h)] (LL) 
"Lifeline Rate" refers to [the] A SPECIAL subsidized rate 
given to MARGINALIZED [low-income captive marl<etj end-users OF 
ELECTRICITY IN THE CAPTIVE MARKET OF A PUNCI-USE 
TERRITORY, AND who cannot afford to pay [at full cost;] THE FULL RATE 
AUTHORIZED TO, BE COLLECTED FROM OTBER END-USERS OF 
ELECTRICITY IN THE SAME FRANCHISE TERRITORY; 
(MM) "MARICET OPERATOR" REFERS TO TIIE ENTITY 
RESPONSIBLE FOR THE PREPARATION OF THE DXSPATCH 
SCHEDULE FOR PURPOSES OF OPERATING THE SPOT 1\IARIW,T. 
[(ii)] (NN) 
"National Electrification Administration" 01- "NEA" r-efers 
to the goverimient agency created wder Presidential Decree No. 269, as amended, 
[and] whose additioiial niaidate is [further set foi-th herein;] SET FORTH IN 
THIS ACT; 
[(ii)] (00) 
"National Power Corporation" or "NPC" refers to the 
government corporation created under Republic Act No. 6395, as amended; 
[(l&)] (PP) 
"National Transmission Corporatioii" or V'TMNSCO"] 
"THE 
TRANSCO" 
refers 
to 
the 
GOVERNR~ENT-O\.VNED-AND.. 
CONTROLLED corporation [organized pursuant to this Act to acquire all the 
traismission assets of the NPC;] CREATED UNDER SECTION 8 OF TlIXS 
TRANSMISSION FUNCTIONS OF NPC AND TO ACQUIRE ALL DP 
ACT TO ASSUME THE ELECTRIC 
TRAPt'snussmN AND SUR- 
OTHER RELATED F A c r L r r m  AND ASSETS, INCLUDING NITS 
NPC'S TRANSMISSION AND SUB-TRANSMISSION ASSETS AND 
NATIONWIDE 
FRANCHISE 
FOR THE OPERATION 
OF THE 
TRANSMISSION AND SUB-TRANSMISSION SYSTEMS AND TI113 
GRID: 
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[(ll)] (QQ) 
"Open Access" refers to the [system of allowing] 
PRIVILEGE GRANTED TO any qualified person [the use ofJ TO USE THE 
transmission[, andor] AND' SUB-TRAPITSMISSION FACILITIES AND 
ASSETS AND/OR TIJE distribution system aid associated facilities OF AYY 
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; 
[(mni) ] (RR) "Philippine Energy Plan" or "PEP" refers to the overall 
energy prograiii foniiulated and updated yearly by the DOE and subinitted to 
Congress pursuant to Republic Act No. 7638; 
[(nn)] (SS) 
"Power Developinelit Program" or "PDP" refers to the 
indicative plan [for] TO BE PREPARED AND FORMULATED AND 
GENERATION 
COMPANIES, 
THE 
NATIONAL 
TRANSMISSION 
CORPORATION, AND THE DISTRIBUTION UTILITIES, FOR TI-IE 
PURPOSE OF MEETING AND maiagiiig electricity demand through encrgy- 
efficient programs and for the PURPOSE OF upgading, [expausion, 
rehabilitation, repair, and maintenaiice of power generatioil and ii.arismission 
facilities, foniiulated and updated yearly by the DOE in coordination with the 
generation, traiisiiiissioii and distribution utility companies;] EXPANDING, 
REHABILITATING, 
REPAINNG, 
AND 
MAlNTAfNlNG 
T1X.E 
UPDATED YEAWY BY THE DOE, IN COORDINATION wmr-~ 
m E  


8 
ELECTRIC POWER GENERATION FACILITIES AND ASSETS, ABJI 
THE TRANSMISSION AND 
S U ~ - T ~ A N ~ ~ I S S i ~ ~  
ASSETS AND 
FACILITIES; 
[(oo)] (TT) 
"Power Sector Assets and Liabilities &Ia~iagenm~t 
Corporation" or "PSALM Corp." refei-s to the GOVERNMENT-OW1"\7ED-AND- 
CONTROLLED corporation created [ptusuant to Section 49 hereof;] XN 
SECTION 46 OF THIS ACT; 
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[(pp)] (UU) 
"Privatization" refers to the sale, disposition, [change,] and 
transfer of ownership and control of [assets and IPP contracts, fioiii tbe 
Government or a government corporation to a private person or entity;] TIXE 
GENERATION 
ASSETS 
AND 
RELATED 
FACILITIES, 
TXIE 
TRANSMISSION 
AND 
SUB-TRANSMZSSION 
ASSETS 
AND 
FACILITIES, REAL ESTATE ASSETS, OTHER DISPOSABLE ASSETS, 
IPP CONTRACTS, AND LIABILITIES OF NPC TO A PRIVATE PERSON 
OR PERSONS, OR TO A PRIVATE ENTITY OR ENTITIES; 
(VV) "PUBLIC HEARING" 
REFERS TO A PROCEEDING 
CONDUCTED BY THE COMMISSION AFTER ITS MEltlXERS ARE 
FORMALLY CONVENED TO HEAR, AFTER DUE NOTZCE TO ALL 
INTERESTED PARTIES, THE TESTIMONY OF M.'XTNI<SSKS UNDER 
AND TO FORMALLY RECEIVE DOCUMENTARY EVIDENCE, IN 
ORDER TO DISPOSE ANY ISSUE BROUGHT TO THE ATTENTION OF 
THE 
COMMISSION 
THROUGH 
MOTIONS, 
COMPLAINTS 
OR 
PETITION FILED WITH THE COMMISSION. 
OATH, SUBJECT TO CROSS-EXAMINATION BY ADVERSE PARTIES, 
[(qq)) (WW) "Renewable Energy Resources" [refeers] REFER to energy 
resources, 
[that do not have an upper limit on the] TRAT A
M
 
REPLENXSHABLE, WKTHOUT ANY LIMIT AS TO TX-XEIR 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 
TO ENSURE availability over an indefinite time[. These include, among others,l, 
SUCH AS biomass, solar, wind, hydro, and ocean energy; 
REPLENISHMENT ARE ALMOST CONSTANT AND IiAPlD ENOUGI 
[(rr)] (XX) 
"Restrncturing" 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 be understood 
as covering a range of altematives enhancing exposure of the industry to 
competitive market forces;] AND PROMOTE A HIGHER DEGREE OF 
EFFICIENCY, GREATER AND USEFUL INNOVATIONS, END-USERS' 
CHOICE, AND A WIDER RANGE OF ALTERNATIVES THAT w r u  
ENSURE AND ENIlANCE THE EXPOSUm OF THE INDUSTRY TO 
COMPETITIVE MARICET FORCES; 
[(ss)] (YY) 
"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 MLOWATT-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 electiic serviccl;] TO THE 
END-USERS OF ELECTRICITY; 


9 
[(tt)] (ZZ) 
"Small Power Utilities Group" or SPUG" refei-s to the 
fumtional [unit of NPCJ AND OPERATING UNIT OF NPC TBAT HAS 
BEEN created to pursue AND IMPLEMENT THE missionary electrification 
function[;] AND OPERATION OF NPC; 
[(uu)] (AAA) 
"Stranded contract costs of NPC or OF A distribution 
utility" refer to the excess of the contracted cost of electricity under [cligiblc 
contracts] THE ELIGIBLE INDEPENDENT POWER PRODUCER (WP) 
CONTRACTS OF NPC OR OF A DISTRIBUTIOH UTlLlTV over the actiual 
selling price of [the contracted energy output of such contracts i n  the market. 
Such contracts shall have been approved by the ERJ3 as of December 3 1, 2000;) 
THAT CONTRACTED ELECTRICITY FROM SUCH IPP CONTRACTS 
IN THE MARKET: PROVIDED, THAT IPP CONTRACTS, TO BE 
DEEMED ELIGIBLE, HAD BEEN APPROVED BY TRE ERB ON OR 
BEFORE DECEMBER 31,2000; 
[(vv)] (BBB) "Stranded Debts of NPC" refer to [any] ITS unpaid 
financial obligations [of NPC which have not been liquidated by the pvoceeiis 
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, 
TRANSMISSION 
AND 
SUB-TRANSMISSION 
ASSETS 
AND 
FACILITIES, REAL ESTATE ASSETS, OTHER DISPOSABLE ASSE'FS, 
AND IPP CONTRACTS: 
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59 
I(m)l (CCC) 
"Sub-transmission Assets" refer to [the] A I L  
ASSETS AND facilities related to the power delivery sei-vice below the 
transmission voltages and, based on the fuictiotlal assigimcnt of assets 
[including], SHALL INCLUDE, but SHALL not BE limited to, step-down 
transformers used solely by load customers, associated [s~vitcliya~d/substatiori] 
SWITCHYARD AND/OR SUBSTATION, control and protcctive equipment, 
reactive compensation equipment to improve customer power factor, ovcvliead 
lines, and the laid where such [facilitiesiequipineiit are located. These include 
NPC assets linking the transmission system and the distribution system which axe 
neither classified as generation nor transmission;] FACILITIES AND/OR 
EQUIPMENT ARE LOCATED, AS WELL AS ASSETS OF NPG LINKING 
THE TRANSMISSION SYSTEM AND THE DISTRlBUTXON SYSTEM? 
WHICH ARE CLASSIFIED NEITHER AS GENERATION ASSETS NOR 
AS TRANSMISSION ASSETS; 
[(xx)] (DDD) r'Supplier" refers] '"SUPPLIER OF ELECTKICITI'" 
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 
GENERATION, 
TRANSMISSION, 
SUB-TRANSMISSION, 
AND 
DISTRIBUTION OE' ELECTRICITY; 
[(yy)] (EEE) "Supp1iei"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 ChaJ'&S 
for generation AND THE \VMEELING CHARGES FOR trmsmission aud 
distribution [wheeling]; 
[(zz)] (FFF) 
"Supply of Electricity" [means the sale of eleclricity 13) a 
pal-ty other than a generator or a distributor in the franchise area of a distribution 
utility, using the wires of the distribution utility concerned;] SX-IALL REFER, 
UNLESS THE'CONTEXT SUGGESTS OTHERWISE, TO THE BUSINT%S 
OF 
BUYING 
AND 
SELLING, 
BROW~MNG, m m x r m G  


10 
ELECTRICITY BY A PERSON OR ENTITY, OTHER THAN A 
GENERATION COMPANY OR A DISTRIBUTION UTILITY, TO KNn- 
USERS OF ELECTRICITY, OR OF AGGREGATING DEMANDS FOR 
SUCH 
END-USERS 
OF ELECTRICITY, 
IN 
THE 
FWNCHISE 
TERRITORY OF A DISTRIBUTION UTILITY, USXNC FOR 'rm 
PURPOSE TIlE WIRES AND FACILITIES OF THE DISTRIBUTION 
UTILITY CONCERNED; 
(GGC;)"SYSTEM 
 OPERATOR^^ REFERS TO THE E N n m  
RESPONSIBLE FOR THE IMPLEMENTATION O F  THE DISPATCH 
SCI-IEDULE, TXIE PROVISION OF ANCILLARY SERVICES, AND 
OPERATION AND 
CONTROL TO ENSURE 
SAFETY, POWER 
QUALITY, STABILITY, RELIABILITY AND SECURITY OF TIIE GRID 
WHICH UPON THE PASSAGE OF THIS ACT REFERS TO TRANSCO. 
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((aaa)] (HI-IH) "Transmission Charge" refers to the regulated cost or 
[charges] CHARGE AUTHORIZED BY THE COMMISSION for the use of a 
transmission system which may include tlie [availinent] USE of 
ancillary 
services; 
[(bbb)] (111) "Transmission Developineiit Plan" or "TDP" refers i o  tlie 
PART OP THE POWER DEVELOPMENT program PREPAFlED ANI) 
FORMULATED BY THE DOE JOINTLY WITH TIlE TlUNSCO AND 
TO BE IMPLEMENTED BY THE LATTER IN ACCORDANCE WITH 
THIS ACT, for managing the transmission system [tl~rougli] AND POR THE 
efficient planning [for the] OF ITS expansion, upgrading, reliabilitalion, repair, 
and maintenance[, to be formulated by DOE and implemented hy the TRANSCO 
pursuant to this Act]; 
[(ccc)] (JJj) "Transmission of Electricity" refers to the conveyance of 
electricity through the high voltage backbone system; and 
l(ddd)l (IaW 
"Universal Charge" refers to the charge, if any, 
[imposed for the recovery of tlie stranded cost and other purposes pmsaaiit to 
Section 34 hereof.] TO BE DETERMINED, FIXED, ANI) APPROVED BY 
THE COMMISSION, AFTER DUE NOTICE TO ALL INTERES'lXD 
PARTIES AND PUBLIC HEARING, IN ACCORDANCE WITH AND FOR 
THE PURPOSES MENTIONED IN SECTION 33 OF THIS ACT. 
"CE-IAPTER I1 
"ORGANIZATION AND OPERATION OF THE ELECTRIC 
POWER INDUSTRY 
"SEC. 5. Organization. - The electric power indiistry shall be divided 
into four (4) sectors, namely: [g]Generation[;] SECTOR, [tjTratisiiiissioii[;1 
SECTOR, [d]Distr-ibution SECTOq and [slsupply SECTOR. 
"SEC. 6. 
Generation Sector. - THE [G]geiieration of electric 
power[,] IS a business affected with public interest[,] AND shall be coinpetitive 
and open. 
Upon tlie effectivity of this Act, any new geiieratioii coiipmy OR 
ENTITY shall, before it operates, secure from the [Energy Regulatory 
Coniniissioii (ERC)I COMMISSION a certificate of ADHERENCE TO AND 
compiiance [pursuant to] WITH the standards set forth iii this Act, WlTH THE 
WLIOIJESALE ELECTRICITY SPOT MARKET RULES, as well as \W'LTII 
GRID CODE, WITH THE DISPATCH SYSTEM,. AND WITH TEE 
i 


I1 
health, safety, and enviroiuneiital [clearances from the] STANDARDS A N D  
REQ UIREMIENTS OF appropriate government agencies undcr cxishg Ia\vs. 
Any law to the contrary notwithstanding, IT IS HEREBY DECLAIUW 
THAT UPON THE EFFECTIVITY OF THIS ACT power geiiei-ation siioll not 
be [considered] DEEMED a public utility operation. [For this purpose, any] 
ANY person or entity WHICH IS NOW engaged or which shall engaze in power 
generation and supply of electricity shall not be required to secure a national 
fr'mchise. 
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Upon THE implementation of retail competition and open access, tlic 
prices charged by a generation company fox the supply of electricity shall not be 
subject to ANY KIND OF regulation by the [ERC] COMMISSXON, except as 
otherwise provided iii this Act. 
[[Pursuant to the objective or lowering] IN ORDER TO LOWER 
electricity rates to end-users, sales of [generated powei-J ELECTRICITY by 
generation companies shall be value-added tax zero-rated.] 
The [EKC shall, in deterniining] COMMISSION, IN ORDER TO 
DETERMINE the existence OF ABUSE of market power [abuse] or UTI-IER 
anti-competitive behavior, IS HEREBY AUTI-IORIZED TO require [El-om] 
generation companies fthe submission ofJ TO SUBMIT their Firiaiicial 
statements[.] AT ANYTIME. 
"SEC. 
7. 
Ti.arzsnlissioi2 Sector. - The traiismissioii of elecii-ic 
power shall be a regulated common electricity carrier business, subject to the 
ratemalting [powers of the ERC.] AUTBOMTY OF TEE COMMISSION. 
The [ERC] COMMISSION shall set the standards of the \roliage 
transmission that shall [distinguish] SET APART the transmission ASSETS 
from the sub-transmission assets. Pending the issuance of such [new] standards, 
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 lcilovolts and above in the 
Mindanao Grid: Proviclecl, That for the Visayas and the isolated disbibulion 
[system, should] SYSTEMS, IF the 69 ltilovolt line DOES not foi-ni part of t?ie 
main transinissioii 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 tile National Transinission Cornpany. 
There 
is hereby created a National Transmission Corporation, hereinah referred to as 
THE TMNSCO, which shall assume Ilie electrical transmission functions of the 
National Power Coiyoration (NPC), and WHICH SHALL have the powers and 
OTHER functions hereinafler granted. The TRANSCO sliall ALSO assunie lhc 
authority and responsibility of NPC for the planning, coiistructioii and centralized 
operation and inainteiiance of [its] NPC'S high voltage transnlissioii facilities, 
including grid intercoiuiections and ancillary services. 
Within six (6) months from the effectivity of this Act, the ti-aiisinission 
and sub-transmission ASSETS AND facilities of NPC and all other assets related 
to transmission operations, iiicluding the nationwide franchise of NPC for the 
operation of the transmission system and the grid, sliall be transhred IPSO 
FACTO AND IN TOTO to the TRANSCO. The TRANSCO shall be wholly 
owned by the Power Sector Assets and Liabilities Maiiagemciit Corporation 
(PSALM Coip.)[.] CREATED IN SECTION 46 OF THIS ACT. 


12 
The sub-transmission functions [and], assets, FACILITIES, AND 
LIABILITIES, IP ANY, shall be segregated from the transmission fUtdol,s, 
assets, 
FACILITIES, 
and 
liabilities lor 
tmisparency 
arid 
[dispsalj 
DISPOSITION: Provicltd, That IN THE MEANTIME tlie sub-transmission 
FUNCTIONS, assets, AND FAClLITlES shall be PERFORMED, operaled, 
and maintained by THE TRANSCO until [their disposal] SUCH FUNCTIONS, 
ASSETS, AND FACILITIES ARE SOLD OR OTHERWISE DJSPOSED 
AND TRANSFERRED to qualified distribution utilities which are [in a position] 
CAPABLE to take over the responsibility for PERFORMING, operatjiig, 
maintaining, upgrading, and expaiiding 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, 
transki- such 
functions, assets, FACILITIES, and associated liabilities to the qualiEcd 
distribution utility or utilities connected to such subtransiiiissioii ASSETS AND 
facilities not later than two (2) years from the effectivity ofthis Act or FROM the 
start of open access, whichever comes earlier: Provided, That in (the] case [oil 
THE WINNING BIDDER OR BlDDERS ARE eleclric cooperatives, the 
TMNSCO shall grant TI-IEM concessional financing over a period o f  twenty 
(20) years: 
Provided, however, That the iiistallment payments to TIE 
TRANSCO for the [acquisition ofl sub-tfiuismission ASSETS AND hciicilities 
shall be given [first priority] by the WINNING electric cooperatives [out ofl 
FXRST PREFERENCE TO the net income derived from such ASSETS AND 
facilities. 
The TRANSCO shall [determine the disposal value of' tlie 
subtransmission assets based on the revenue potential of such assets.] I-IIRE AT 
LEAST TWO INDEPENDENT, COMPETENT, AND REPUTABLE 
APPRAISERS TO ESTABLISH AND DETERMINE, FOR THE PURPOSE 
OF DISPOSING SAID SUBTRANSMISSION ASSETS AND FACILZTIES, 
THEIR TRUE AND PAIR MARI(ET VALUE BASED ON TIfErR 
REVENUE POTENTIAL. 
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5s 
59 
[In case of disagreement in) DISPUTES OR DISAGltEEMENTS 1N 
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 
RESOLVED EXPEDITXOUSLY BY THE COMMISSION, AFTER DUF: 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC IIEARING. 
The ACQUISITION AND tale over [by a distribution utility] of' any 
subtransmission FUNCTION, asset [shall not cause], AND FACILITY BY A 
DISTRIBUTION UTILITY OR BY DISTRIBUTION UTILITIES, AS TllE 
CASE MAY BE, MUST NOT RESULT IN a diminution of TEE QUALITY 
AND RELIABILITY OP THE service [and quality] BEING RENDERED to 
the end-users[. Where tliere are] OF ELECTRICITY. IN THE EVENT TIXAT 
two or more [connectedJ distribution utilities[, the] ARE CONNECTED TO 
THE SAME SUBTRANSMISSION ASSET AND FACILITY, A consortium 
or juridical entity shall be formed [by and] TO ACQUIRE AND TAKE OVER 
THE SUBTRANSMISSION FUNCTION, ASSET, AND FACILITY, AND 
THE CONSORTIUM OR JURIDICAL ENTITY SHALL 13E composed of 
[BY] ail of [them and] SUCH DISTFSBUTKON UTILITIES. IN SIJCI-I A 
CASE, 
THE 
SUBSCRIPTION 
RIGHTS 
OP 
EACH 
OF 
THE 
DISTRIBUTION UTILITIES INVOLVED SHALL BE PROl'ORTIONATE 
TO THEIR RESPECTWE LOAD REQUIREMENTS, UNLESS TI-IEY 
AGREE OTHERWISE AMONG THEMSELVES. THE CONSORTIUM OR 
JURIDICAL ENTITY SHALL, thereafter [shall], be granted a ri-atichise 65( 
THE COMMISSION to PERFORM AND operate the subtraiismissjon 
FUNCTION, asset, AND FACILITY [by the ERC]. 


13 
[The subscription rights of each distribution utility involved sliall be 
propoltionate to their load requiremcnts, uiiless otherwise agreed by the parties]. 
[Aside from the] EXCEPT FOR THE PSALM Corp., THE TTIRNSCG, 
and THE connected distribution utilities, no [third] OTHER party shall he 
allowed ANY SHARE IN THE ownership OF ANDior IN THE management 
[participation], in whole or in part, [in such sub-transmission] OF THE 
CONSORTIUM OR JURIDICAL entity[.] THAT SHALL ACQUIRE AND 
FACILITY. 
TAKE OVER THE SUB-TRANSMISSION FUNCTION, ASSET, AND 
The TRANSCO may exercise the power of eminent doniain subjecr to thr 
requirements of the Constitution and existing laws. 
Except as i~l-o~ided 
OTHERWISE [herein] IN THIS ACT, no person, company, 01- entity, other tlian 
the TRANSCO, shall own any transmission ASSETS AND facilities IN TfIC 
COUNTRY. 
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[Prior to] BEFOm the transfer of the trmsiiiission !i~nctjo:is by NPC lo 
TRANSCO[,] and before the pronmlgatioii of the Grid Code, [ERC] TRE 
COMMISSION shall [ensure] SEE TO IT that NPC shall provide to all electric 
power iiidustiy participants open and non-discriminatory access to [its] NPC'S 
transmission 
system. 
Any violation 
[thereof] HEIU3OF [OF THE 
PRECEDING SENTENCE OF THIS PARAERAPI-I] shall [be sul~ject] 
RENDER THE PARTY RESPONSIBLE FOR SUCI-I VIOLATION 
LIABLE to the APPRQPRKATE fines and penalties imposed [herein.] IN 
SECTION 44 OF THIS ACT. 
"SEC. 9. Functions and Responsibilities. - Upon tlie effectivity or this 
Act, the TRANSCO shall have the following functions and responsibilities: 
(a) 
[Act] TO ACT as the [system] GRID operator of tlie naiioiiwide 
electrical transmission and subtransmission system, THAT SITALL be 
transferred to it by NPC; 
(b) 
[Provide open and] TO PROVIDE POWER DELIVERY 
SERVICE THROUGH non-discriminatory OPEN access to its transmission 
system to all [electricity] QUALIFIED AND AUTHOJIIZED 
users[;], 
SUBJRCT TO THE PAYMENT OF TRANSMISSION WHEELING 
CHARGE APPROVED BY THE COMMISSION, AFTER DIJE NOTICE 
TO ALL INTERESTED PARTIES AND PUBLIC HEARING. TRANSCO[,] 
ENGAGE IN RETAILING OF ELECTRICITY, WHICH IS h FUNCTION 
OP DISTRIBUTION UTILITIES; 
SHALL NOTI,] IN ANY WAY BY VIRTUE OF THIS rrxovIsIoN, 
(c) 
[Ensure] TO ENSURE and maintain the reliability, adeclnacy, 
security, stability, and integrity of the nationwide elecfrical TRANSMISSION 
grid in accordance with the perromance standards for the operation and 
mainteiia1ce of the NATIONWIDE ELECTRICAL TMNSMISSXON grid, as 
set forth in a Grid Code to be adopted and promulgated by the [WC] 
COMMISSION within six (6) iiioiitlis from the effectivity of this Act; 
(d) 
[Improve] TO IMPROVE and expand its transmission ASSETS 
A N D  Facilities, consistent with the Grid Code and tlie Transmission Devclopmwi! 
Plan (TDP) to be promulgated pursuant to this Act, IN ORDER to adequately 
serve generdion companies, distribulion utilities, and suppliers [requiring] 7XAT 
REQUIRE transmission service andor [AND OR] ancillary services through the 
transmission system: Provided, That THE TRANSCO shall subillit m y  plan for 
THE expansion or iniprovenient of its ASSETS AND facilities Cor approval by 


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14 
the [ERC;] COMMISSION, AFTER DUE NOTXCE TO ALL INTERESTED 
PARTIES AND PUBLIC I-IEAIIIMG; 
(e) 
Subject to SUCH technical constraints THAT MAY EXIST OR 
BILATERAL CONTRACTS, the [grid] SYSTEM operator of the TRANSCO 
shall provide central dispatch of all ELECTRIC generation PLANT kcillties 
connected, directly or indirectly, to the traiisinissioii system in accordance with 
the dispatch schedule submitted by tlie mai-ket operator[, taking into account 
outstanding bilateral contracts]; PROVIDED HOWEVER, THAT SUCH 
TRANSCO'S SYSTEM OPERATION CHARGES AS TFXE OPERATING 
REQUIRE COMPLETE INDEPENDENCE PROM TEUNSCO AS 'WE 
AIUSE, IF ANY, AND TAKING INTO ACCOUNT ANY OUTSTANDING 
SYSTEM OPERATOR SPTALL BE ALLOWED TO SPIN-OFF USING 
BUDGET WHEN ITS SCHEDULE ,AND DISPATCH FuNcrioxs 
GRID OWNER,and 
(f) 
THE TRANSCO, JOINTLY WITH THE DOE, shall undertake 
Ilie preparation AND FORMULATION of tlie TDP, \YI-IICK SHALL BE 
APPROVED BY THE DOE. 
hi the preparation AND FORMULATION of the TDP, THE TRANSCO 
.4ND THE DOE shall consult the other [participants of tlie] electric power 
industry [such as] PARTICIPANTS, ESPECIALLY tlie geiieratioii companies, 
distributioii utilities, and the [electricity] end-usersI.) OF ELECTRICITY. The 
TDP shall be [submitted to tlie DOE for integration] INTEGRATED with the 
Power Developiiient Program and the Philippine Energy Plan, R O T E  OF 
WHICH ARE provided for in Republic Act No. 7638, otherwise Itnow11 as "the 
Department of Energy Act of 1992". 
[AI SUBJECT TO THE PRIOR AUTHORIZATION 
OF me 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC NEARING, A generation conipany may develop aiid owii or 
operate dedicated AND LIMITED point-to-point (limited] transmission ASSETS 
AND facilities that are consistent with the TDP[: ProvicZecl, That], XP IT IS 
CLEARLY SHOWN THAT such TRANSMISSION ASSETS APID facilities 
are required [only for the purpose of connecting1 AND TO BE USED SOLELY 
BY THE GENERATION COMPANY TO CONNECT XTSELP to the 
transmission system[,and are used solely by the generating facility, stibject to 
prior authorization by tlie ERC: 
Provided, ALrther, That in] OF THE 
TRANSCO. IN the event that such LIMITED TRANSR'XISSION assets AND 
FACILITIES are required for competitive purposes, ownership of tlie same shall 
be transfeerred to the TRANSCO at a fair market price[: Provided, $null)), l'hal 
in]. IN ease or ANY DISPUTE OR disagreement on the fair market price OF 
SUCH 
TRANSMISSION 
ASSETS 
AND 
EACILITIES, 
the 
[ERCJ 
COMMISSION shall detenniiie the fair market [value of the asset.] PRICE OF 
SAID LIMITED TRANSMISSION ASSETS AND FACILITIES, AFTER 
DUE NOTICE TO ALL lNTERESTED PARTIES AND PUUL1C 
HEAJUNG. 
"SEC. 10. 
Co,;oorate Powers of the TMNSCO. -- 
[As a corporate 
entity,] THE TRANSCO sliall have the following corporate powers: 
(?) 
To have continuous succession under its corporate name until 
otheiwise provided by law; 
(b) 
To adopt and use a corporate seal atid to chaiise, alter 01- 
inodiry 
tlie same, if necessary; 
(c)' 
To sue aiid be sued[;] IN ITS NAME; 


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2s 
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30 
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36 
37 
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45 
46 
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48 
49 
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53 
54 
5s 
56 
57 
58 
(d) 
To enter into [a contract] ANY LAWFUL CONTIIACT, and TO 
execute any AND ALL [iiistrunient] INSTRUMENTS necessary or convenient 
for the [puipose] PURPOSES for which it is created; 
(e) 
To borrow funds fioiii any source, whether private or public, 
foreign or domestic, and issue QR FLOAT bonds and other evidence or 
iiidebtedness: 
Provided, That in the case of [the] bond issues OR 
FLOTATIONS, it shall be subject to the approval of the Presidciit of tlie 
Philippines, upon THE recoiniiieiidalioii of the Secretary or Finance: Proiuried 
jiirther, That foreign loans shall be obtained in accordaiice with existing inws, 
AND WITH THE rules and regulations ofthe Bzuigko Seiilral ng Pilipinas; 
(f) 
To maintain a provident fund which [consists 04 SI'IALL 
CONSIST OF THE REGULAR MONTHLY contributioiis [made by both the] 
OF THE TRANSCO and OF its officials and employees, and [their) TEE 
earnings OF SUCH REGULAR MONTHLY CONTRIBUTIONS. 
THE 
PROVIDENT FUND SHALL BE EARMAFUXD for the payment of beiicfits 
to such officials and employees or their heirs, under such teiiiis and conditions as 
[it] THE BOARD OF DIRECTORS OF THE TlWNSCO may prescribe; 
(8) 
To do any [act] AND ALL ACTS necessary or proper to carry out 
the [purpose] PURPOSES for which [it] TKE TRANSCO is created, or which, 
from time to time, may be declared by the BOARD OF DIRECTORS OF TIIE 
TRANSCO [Board as] TO BE necessary, PROPER, tiseful, incideiilal or 
auxiliary to accoiiiplisli [its] THE TRANSCO'S pinposes and objectives; and 
(11) 
Generally, to USE AND exercise ANY, ANI) all OF tiic powers 
AND PREROGATIVES of a coiporation under the corporation law OF THE 
PHILIPPINES, insofar as they a e  not inconsistent with this Act. 
"SEC. 11. 
THE TRANSCO Board of Directors. - [All the] THE 
powers of the TMNSCO shall be vested in and SHALL BE exercised by a 
Board of Directors[. The Board], WHICH shall be composed of a Chairman and 
six (6) menibers. The Secretary of tlic Department of ENERG'r' (DOE) siiall 
[be] SERVE AS the ex of$cio 
Chairman of the Board. THE TRANSCO 
members of the BOARD OF DIRECTORS OP THE TRANSCO /Board shall 
include] ARE the PSALM PRESIDENT, the Secretary of the Department of 
PUBLIC WORKS AND HIGHWAYS, and three (3) [inembers to1 PI:U\/A'TE 
INDIVIDUAL CITIZENS OF THE PHILIPPINES, WHO SHALL be 
appointed by the President[, each representing] AND WHO SHALL EACH, 
RESRECTIVELY, BE DESIGNATED TO FUZPRESENT Luzon, TEE 
Visayas, and Mindanao. 
PRESIDENT SHALL SERVE AS THE VICE-CHAIRMAN. The other 
The SAID TEIREE (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 tenn of six (6) 
years, except that any person appointed to fill-in a vacancy shall serve only FOR 
the REMAINING unexpired term of [iiis/lier] HIS OR HER predecessor in 
office. AI1 THE THREE (3) PRIVATE INDIVIDUAL meiiilxn of the Board 
shall 
be professionals 
of 
GQOD REPUTE 
AND 
WELL-ICNOWN 
INTEGRITY AND recognized coqetence and expertise in the Gclds of 
cngineering, finance, economics, law, oi- business management. No iiicmber of 
the Board or any of his relatives within the fourth civil degree oFconsang~inily or 
affinity sliall have any interest, either as investor, officer or dii-ector, in any 
generation company or distribution utility or other entity engaged iii [kaiisniitting, 


16 
generating aiid supplying electricity specified by ERC.] TRE T&L4NSDiTISSION, 
GENERATION, OR SUPPLY OF ELECTRICITY. 
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57 
5s 
59 
"SEC. 12. 
Powers uzd Duties of the Board. - The f'ollo~iiig [are1 
SHALL BE the powers of the Board: 
(a) 
To provide strategic direction for THE TRANSCO, and TO 
foiniulate niedinin and long-lenn PLANS AND strategies [ptirstuanl to the vision, 
mission, and objectives of TRANSCO;] IN ACCORDANCE WITH THE 
MISSION, OBJECTIVES, PURPOSES, AND VISION FOR WIXHCEI TRE 
TWNSCO WAS CREATED; 
(b) 
To FORMULATE, develop, and adopt policies and measures roar 
the efficient and eRective mana~ement and operation olT1J.E TRANSCO; 
(c) 
To DETERMINE, organize, AND re-organize[, and deteniiiiic] 
the organizational structure and staffing pattern of THE TRANSCO; 7'0 
CREATE, abolish, and/OR [create] RECREATE offices and positioos; TO fix 
the iiiimber of its officers and employees; TO REMOVE FOR CAUSE OR TO 
transfer [and re-align] OR REASSIGN such officers aiid 
[persoiiiiel] 
EMPLOYEES; AND TO fix [their compensation, allowance, aiid beiiefits;j, 
WITHIN JUST AND REASONABLE LIMITS, THE COMPENSATION, 
ALLOWANCE, 
AND 
BENERITS 
OF 
SAID 
OFFICERS 
AND 
EMPLOYEES; 
(d) 
To fix the conipensation, of the President of THE TRANSCO, ?.lid 
to appoint and fix the compensatioii of THE other corporate officers OF TFIE; 
CORPORATION 
(e) 
[For cause, to] TO suspend or remove FOR CAUSE a1iy 
corporate officer appointed by the Board; AND 
(f) 
To adopt [and] SUCH set OF guidelines [fur] AS IVAY RE 
NEEDED TO GOVERN the employment of personnel 011 the basis of mei-it, 
technical competence, and moral [character; and] FUXTITUDE. 
[(g) 
write-off bad debts.] 
Any provisions of the law to the contrary notwithstaiidiiig, to 
"SEC. 13. 
Board Meetings. - The Board shall meet [as often 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 Chainnan of the Board or by a inajority of the [Boavd] 
menibers[.J OF THE BOARD. THE MINUTES OF EVERY MEETING OF 
THE BOARD SHALL INDICATE WHETHER THE MEETING XS A 
REGULAR OR A SPECIAL MEETING AND THE PRINCIPAL 
MATTERS TAKEN DURlNG EVERY SUCH MEETING. 
"SEC. 14. 
Board Per Diems arid Allowcinces. -- The iiieiiibers 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 or the 
Secretixy of the Department of Finance, such other allowances as the Boxd may 
prescribe.]. 
THE AMOUNT OF SUCH PER DIEM SEXALL BE 
COMMENSURATE TO THE STATURE? AND RESPONSIBILITY OF 
THE MEMBERS OF THE BOARD AND SHALL BE DETERMINED AND 
OF TIIk BOARD MAY ALSO RECEIVE SUCH OTHER JUSTIFIED AND 
FIXED BY THE PRESIDENT OF THE P m x w N m .  THE M ~ ~ B E R S  


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59 
17 
REASONABLE 
ALLOWANCES AS 
THE PRESIDENT 
OF THK 
PHILIPPINES MAY AUTHORIZE AND PRESCRIBE. 
“SEC. 15. 
Qzio~umw - The presence of at least four (4) ineiiibers clf 
the Board shall constitute a quorum[, which shall be necessary] for llie transaction 
of any business[. The], AND TIIE affiiiiiative vote of a majority of ALL the 
meinbers [present in a quoruin] OF THE BOARD shall be [aclequ;ite] 
REQUIRED for the approval of any [resolution, decision or ordei-, except wlmi 
the Board shall otherwise agree that a greater vote is requireti.] DECISION, 
ORDER, RESOLUTION, CONTRACT, OR PROCUREMENT. 
“SEC. 16. 
Powers of tlze President of TRANSCO. -- The President 
of THE TRANSCO shall be appointed by the President ofthe Philippiiies. In the 
absence of the EX OFFICIO Cliaimian [OF THE BOARD], the President OF 
THE TRANSCO , AS VICE-CHAIRMAN, shall preside over THE [Boai-d] 
meetings[.) OP THE BOARD. 
The President of THE TRANSCO shall be thc Chief Exectilive Officer of 
[TRANSCO] THE CORPORATION and shall have the following powers and 
duties: 
(a) 
To execute aid adiniiiister the DECISIONS, policies, arid 
measures approved by the Board, and TO ASSUME AND take responsibility for 
the efficient AND HONEST discharge of THE management functions[;] 1N 
THE TTWNSCO: 
(b) 
To oversee the preparation of the budget of TI3E TUNSCO[;] 
AND TO PRESENT IT TO THE BOARD OF DIRECTORS AND OTIXKR 
HIGHER AUTHONTIES AND/OR OFFICES FOR APPROVAL; 
(c) 
To direct and supervise the operation and intemal adminisiration of 
THE TRANSCO aid, for this purpose, HE may delegate some or any of his 
adininistrative responsibilities and duties to other officers of TI-IE 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 officials 
and employees of THE TRANSCO[;], aid HE MAY, lor cause, [to] remove, 
suspend, or otlierwise discipline any SUCH subordinate [employee] OFFICIALS 
AND EMPLOYEES [of THE TRANSCO]; 
(e) 
To submit an annual report to the Board on llie activities, 
PROBLEMS, PLANS, PROGRAMS, and achievements of TIXE TlWNSCO at 
the close of each fiscal year, and upon approval thereof, HE SEALL sirbiml 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 TMNSCO in all ITS dealings and traiisactioix 
with other offices, agencies, and instrunientalities of the Govcriment and with all 
OTHER pesons and [other] entities, private or public, domestic or roorcigi; and 
(9) 
To exercise ALL such other powers and duties as may be vcsted lii 
OR DELEGATED TO hiin by the Board froin time to lime. 
“SEC. 17. 
Exemption ji-om the Snlciry StnFllltrrdlzclrion Lcw. -- [The 
salaries] EXCEPT WHEN DELEGATED BY THE BOARD TO TI-XE 
PRESIDENT OF THE TIUNSCO UNDER PARAGRAP13 (D) OF [‘rIXE 
PRECEDING] SECTION 16 OF THIS ACT, THE CORIIPENSATION, 
ALLOWANCE, and benefits of ALL OTHER OFFICERS AND cmployces [lil 


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2s 
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18 
the TRANSCO] OF THE TMNSCO SHALL BE FIXED BY THE BOARD 
AND shall be [exeiiipt) EXEMPTED from Republic Act No. 6758 [and shall be 
fixed by the TRANSCO Board.]. 
"SEC. 
18. 
Projlits. - 
[The] UNTIL AND UNLESS THE PSALM 
CORP. IS DIVESTED OF THE OWNERSHIP OF THE TKnNSCO 
THROUGH AN ABSOLUTE SALE OF THE TRANSCO TO ANOTHER 
PARTY BY VIRTUE OF SECTION 21 OF TBIS ACT, THE net profit, if 
any, of THE TRANSCO shall be remitted to the PSALM Coi-p. not later than 
ninety (90) days COUNTED FROM THE DAY IMMEDIATELY after THE 
END OF the immediately preceding quarter. 
"SEC. 19. 
Transmission Charges. - The traiisinissioii charges of ihe 
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 Al'l'LICAl3tE 
PROVISIONS OF Paragraph (f) of Section 143 hei-eoi] 42 OF THIS ACT. 
IMPROVEMENTS OR EXPANSION 
PROJECTS 
OF TEE 
TRANSCO THAT WILL RlESULT IN ANY INCREASE IN THE PASS-ON 
CHARGES TO DISTFUBUTION UTILITIES §HALL BE PRESENTED TO 
THE NATIONAL ECONOMIC DEVELOPMENT AUTBORITY (NEDA) 
FOR THOROUGH ECONOMIC FEASIBILITY EVALUATION BEFORE 
SUCH 
IMPROVEMENTS 
OK 
EXPANSION 
PROJECTS 
Am, 
SUBMITTED TO THE COMNIISSION FOR APPROVAL. 
"SEC. 
20. 
[THE] TRANSCO Related Businessse.9. 
TB E 
TRANSCO [may] IS HEREBY AUTHORIZED TO engage, DIRECTLY OR 
INDIRECTLY, in any BUSINESS related TO ITS MAIN business [which 
maximizes] IN ORDER TO MAXIMIZE THE utilization of its assets[:] A4ND 
RESOURCES: 
Provided, That WHERE ASSETS FORMING PAIU OR 
RELATED BUSINESS, a portion o f  the net iiicoine derived from such 
[undeitalting utilizing assets which form part of the rate base] RELATED 
BUSINESS, WHICH PORTION SHALL NOT BE LESS THAIS FIF'TY 
PERCENT (50%) OF SUCH NET INCOME, shall be used to reduce T I E  
traiismissioii RATE OR wheeliug [rates as determined by the ERC. Such portion 
of net income used to reduce the transinission wheeling rates shall not exceed 
fifty percent (50%) of the net income derived from such undertal&g.] CHARGE 
THE RATE BASE OF THE TRANSCO ARE UTILIZED XN SucxI 
PASSED-ON TO THE END-USERS OF ELECTRICITY. 
Separate accounts shall be maintallied for each RELATED business 
[undertaking] to ensure that the transmission business shall neiiher. subsidize in 
any way such RELATED business [ulidertaking] nor encumber [its] THE 
TRANSCO'S 
transmission assets in any way to support such RELATED 
business. 
"SEC. 
21. 
TRANSCO P~ivatizatioiz. - Within six (6) months 11-om 
the effectivity of this Act, the PSALM Corp. shall submit a plan ON THE 
PRIVATIZATION OF THE TRANSCQ for the eiidorsemciit by thc Joint 
CONGRlESSlONAL Power Commission TO, and FOR the approval of, Ihe 
Presideiii o f  the Philippines. [The] THEREAFTER, THE Presideni or Ihe 
Philippines [thereafter] shall direct THE PSALM COI-12. lo [sward, in] 
CONDUCT AN open competitive PUBLIC bidding, AND AWARD 'THE 
OWNERSHIP AND 
CONTROL OF THE TIZANSCO TI-IROUGW A 
CONTRACT OF SALE, OR AWARD THE ADMINISTMTION, 
MANAGEMENT, OPERATION, AND MAINTENANCE, AS WELL AS 
THE PRESERVATION, IMPROVEMENT, AND/OR EXPANSXQN OF rhe 
traiisinission ASSETS AND facilities, including THE grid iiitercoiliiectioiis and 


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5G 
57 
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59 
60 
19 
ancillary services THROUGH A CONCESSION CONTRACT to [a] TI-IE 
qualified [party either through an outright sale or a concession contract.] 
WINNING 
BIDDER. 
The 
[buyer/concessionaire] 
BUYER 
OR 
CONCESSIONAIRE, AS TE-IE CASE MAY BE, shall be responsible for the 
EFFICIENT ADMINISTRATION, MANAGEMENT, OPERATION, AND 
MAINTENANCE, 
AS 
WELL 
AS 
FOR 
T m  PRESERVATION, 
improvement, AND/OR expansion[, operation, and/or maintenai~ce of its] OF 
THE transmission assets aid [the] FACILITIES, INCLUDING TEE GPJD 
INTERCONNECTIONS 
AND ANCILLARY SERVICES AND THE 
ADMINISTRATION, MANAGEMENT, AND FOR THE operntion oi‘ any 
related business[.] OR BUSINESSES. The award [shall result in iiiaxiiiium] TO 
THE QUALiFIED WINNING BIDDER MUST BE BASED ON THE M.OST 
ADVANTAGEOUS, 
BENEFICIAL, AND OPTIMAL present value [of 
proceeds] to the natioiial government. In case a concession contract is awarded, 
the concessionaire shalI [have a] BE GIVEN AN INITIAL CONCESSION 
coiitract period of twenty-five (25) years, subject to review and renewal foi- a 
maxiinurn period of another twenty-five (25) years. 
IF ALL OR A CONTROLLING PORTION OR TI3E S13AIZES OP STOCK 
OF TRANSCO ARE SOLD, THE BUYER OR BUYERS WILL NOT NEED 
CONGRESSIONAL FRANCHISE SEPARATE FROM THAT OF TRANSCO TO 
OPERATE THE BUSINESS OF THX LATTER, PROVIDED HOWEVER, THAT 
THE NATIONALITY REQUIREMENTS OF THE CONSTXTIJTION MUST BE 
COMPLIED WITH. 
rE: THE AWARDEE OF THE CONCESSION CONTRACT IS 
MEPXLY 
HXRED 
UNDER 
A 
COMPENSATION 
SCI.JEhfl3 TO 
ADMINISTER, MANAGE, OPERATE, MAINTAIN, PRESERVE, AND ‘fO 
FINANCE 
AND 
SUPERVISE 
THE 
IMPROVEMENTS 
ANDiOIZ 
EXPANSIONS OF THE ELECTRIC TRANSMISSION ASSETS AXX, 
FACILITIES AND THE GRID INTERCONNECTIONS AND TBE 
THE CONCESSION CONTRACT SHALL NOT BE FU3QUIRED TO 
OBTAIN A NATIONAL FRANCHISE, NVD NEITflER SHALL EE OK IT 
BE 
REQUIRED 
TO 
QUALIFY 
UNDER 
THE 
NATXONALITY 
REQUIREMENTS OF THE CONSTITUTION FOR PUBLIC 5:TILITX’ 
OPERATORS. 
ANCILLARY SERVKES FOR THE mmsco, THE AWARDEE OF 
HOWEVER, IF THE WINNING BIDDER OR AWARDEE OF THE 
OF THE ELECTRIC TRANSMISSION ASSETS AND PACItlTXES AND 71IF 
GRID INTERCONNECTIONS AND ANCILLARY SERVICES, AS [A] BUYER 
OR 
LESSEE TILERBOP, AND ADMINISTERS, MANAGES, MAINTAINS. 
OPERATES, IMPROVES, AND EXPANDS THEM AS RIS OR ITS OWfl 
BUSINESS, THEN IN THAT CASE THE AWARDEE OF THE CONCESSION 
CONTRACT MUST OBTAIN A NATIONAL FRANCHISE TREREFOR, AND 
IIE OR IT MUST QUALIFY UNDER THE NATIONALITY REQUIIU3MEXTS 
OF THE CONSTITUTION FOR PUBLIC UTXLITY OPEnllTORS. 
CONCESSION CONTRACT TAKES OVER THE POSSESSION AND COvrRoL 
[In any case, the awardee shall] THE AWARDEE., WBETH3l:K 
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 
coiitl’act, AS THE CASE MAY BE, shall [include, but not limited to, the 
provision for] PROVIDE, AMONG OTHERS, SUCH perforniaiice ar?d 
financial guarantees or [any] other covenants [which] THAT the natioiial 
govemiiie~it may require. [Failure to coiiiply with such obligations shall result in 
the imposition of appropriate sanctions or penalties by the .ERC.] 
TEE 
FAILURE OF THE AWARDEE TO COMPLY WITH A.NY OF SUCH 
GUAFWNTEES OR COVENANTS SiMALL CONSTITUTE A DEFAYJI,T 


20 
ON THE PART OF THE AWARDEE AND SHALL CAUSE TFIE 
IMMEDIATE 
RESCISSION 
AND 
CANCELLATION 
01; 
THE 
CONTRACT O F  SALE OR OF THE CONCESSION CONTRACT AND, IN 
ADDITION, TI-IE IMPOSITION OF APPnOPRlATE SANCTIONS, 
FINES, OR PENALTIES BY THE COMMISSION XN ACCOI-DANCE 
WITH SECTION 44 OF THIS ACT. 
The awardee [shall] MUST be financially a i d  tecluiically 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 be] IS a regulated coiniiion carrier business. [requiring] I'T 
REQUIRES a national fi.aichise[.] AND [A] COMPLIANCE W T H  TI-IE 
NATIONALITY 
REQUIREMENTS 
OF 
THE 
CONSTITUTION. 
[Distribution] SUBJECT TO THE REGULATION OF TEE COMMISSXCIN, 
DISTRIBUTION of electric power to [all] end-users OF ELECTRICITY may 
be undertaken by QUALXFZED private distribution utilities, BY ELECTRIC 
cooperatives, BY local govemnient units presently underlalcing this iiinction 
[andJ, OR BY other duly authorized AND QUALIFIED entities[, subject lo 
regnlation by tlie ERC.]. 
"SEC. 23. 
Functions of 
Distribution Utilifies. - [A] 
EVERY 
distribution utility [shall have] BAS the obligation AND RESPONSIBILX'TU 
UNDER THIS ACT to provide, WITHIN ITS FRANCHISE TEM.ITORY, 
ELECTNC distribution services and connections to its system, IN 
ACCORDANCE WITH TI-IE PROVISIONS OF THE I)ISTlZIBUTION 
CODE, for [any] EVERY end-user OF ELECTRICITY [within its fi-anchise 
area consistent with the distribution code. Any entity engaged therein] TRAT 
PROVISIONS OF THE DISTRIBUTION CODE SHALL. BE CONSISTENT 
WITH 
THE 
PROVISIONS 
OF THIS 
ACT. 
EVERY 
SUCH 
DISTRIBUTION UTILITY shall provide open and noli-discriminatory access io 
its distribution system to all QUALIFIED users[.] WITHIN XTS FRAR'CI-lISE 
TERRITORY. 
APPLIES FOR SUCH SERVICES AND CONNECTIONS. 
'rm 
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57 
5s 
[Any] A distribution utility shall be entitled to impose arid collect JUST 
AND REASONABLE distribution wheeling charges and coiuiection fees from 
such [end-users as approved by Uie ERC.] QUALIFIED USERS, AS MAX' RE 
APPROVED BY THE COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND P u m x  HEARING. 
A distribution utility [shall have the] BAS 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 
RISASONABLE retail rate, duly approved [by the ERC.] BY TIS 
COMILIISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC NEARING. 
To achieve economies of scale in utility operations, distril?ulion utilities 
may, after due notice TO ALL INTERESTED PARTXES and public hea-ing, 
pursue structural and operalioiial reforins such as, but not limited to, join1 actions 
between or among tlie distribution utilities, subject to [the] SUCH guidelilies AS 
MAY BE'. issued by tlie [ERC. Such] COMMISSION, PROVIDED SUCH 
joint actions shall result in iinproved efficiencies, reliability o f  scrvice, reduciion 
of costs, and compliance [to] WITH the perforniancc standards TI-IAT SHALL 


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21 
BE prescribed iii the [IRF,] IMPLEMENTING RULES AND REGULATIONS 
(IRR) of this Act. 
Distribution utilities shall submit to the [ERC] COMiMISSXON 
a 
statement of their compliance with the technical specifications prcscribed in tlie 
Distribution Code and 1N tlie perfoiinance standards prcscribed in the [IRRJ 
IMPLEMENTING RULES AND REGULATIONS of this Act. Distribution 
utilities which [do not] FAIL TO comply with any of tlie prescribcd tec.linical 
specifications [and] IN THE DISTRIBUTION CODE AND IN THE 
perlbniiance standards shall submit to the [ERC] COMMISSION a plan [to 
comply,] OF COMPLIANCE, within three (3) years, with TRE said prcscribed 
Leclmical specifications [and] IN THE DlSTRlBUTIOiV CODE AND 1.N THE 
perfommaice standards. The [ERC] CQM1\IISSION shall, within sixty (60) days 
upon receipt of such plan, evaluate tlie same and notify the distribution utility 
concerned of [its] THE COMMISSION'S action. FaiIure ON THE PART O F  
ANY DISTRIBUTION UTILITY to submit a feasible and credible pia11 [and/or] 
OF COMPLIANCE AND/OR hiltire to implement tlie same shall serve as 
grounds for the imposition of appropi-iate sanctions, fines, or penalties. 
Distribution utilities shall prepare and submit to the DOE tbcir aninial 
distribution development plans. [In the case 04 FOR electric cooperatives, such 
plans shall be submitted though the National Electrification Adininistration. 
[Distribution utilities] A PRIVATE OR GOVERI\'n3EN'T-O'rl~~~,D 
DISTRIBUTION UTXLITY shall provide, WXTHIN A REASONABLE TIME 
FROM THE REQUIREMENT THEREOF, universal service [witliiii tlicir 
franchise, over a reasonable time from tlie requirement thereof, including unviablc 
areas, as part of their social obligations,] IN THE VIABLE AREAS OF ITS 
AS PART OF ITS SOCIAL OBLIGATIONS, in a nianner that shall sustain 
[the] ITS economic viability [of the utility], subject to tlie approval by Ilie [ERC 
in the case of private or goveiiment-owned utilities. To this end, distrib tition 
utilities) COMMISSION AFTER DUE NOTICE TO ALL INTERESTED 
PARTIES AND PUBLIC HEARING. EVERY DISTIUBUTION UTILITY 
shall submit to the DOE [their plans] ITS PLAN for seiviiig such areas as part of' 
[their] ITS distribution development [pians] PLAN. Areas [wliicli a franchisedl 
IN THE FRANCHISE TERRXTORY OF A distribution utility WHICH I T  
cannot SERVICE or does not find viable ENOUGH TO SERVICE may be 
transfeerued to another distribution utility, if any is available, [who will] TRAT 
CAN provide the service, subject to [THE] approval by [ERC.] TEE 
COMMISSION AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC BEARING. In [cases where] THE EVENT ?'KAT A Crsncliise 
[holders fail andlor refi~use] HOLDER FAILS AND/OR REFUSES to service 
[any] AN area within [their] 
ITS franchise territory and [allowed] anotlier 
DISTRIBUTION utility IS AUTHORIZED AND ALLOWED BY TFIE 
COMMISSION to service the same, [then] THE FRANCHISE EIOLDER 
OVER THE SAID AREA CANNOT THEREAPTER CLAIM IT DACK 
AND THEREBY DISTURB the status quo [shall be respected.] IN PAVOR OF 
THE DISTRIBUTION UTILITY THAT BAS BEEN AUTHORIZED AND 
ALLOWED BY THE COMMlSSKON TO SERVICE THE SAID AREA. 
FRANCHISE TERRITORY, AS WELL AS IN THE NON-VIABLE AREAS 
Distribution utilities [may exercise] ARE HEmBY G1UNTED tlie 
power of eminent domain, subject to [the] SUCI-1 reyuircments [ofl AND 
LIRlITATIQNS(, IF ANY,] lMPQSED BY the Coiistitutioii and AKY existing 
[laws] LAW. 
"SEC. 
24. 
Distribution JVheelirrg Charge. - The distribution 
wheeling charges of distribution utilities sliall be filed with and approved \by the 
ERC pursuant toj BY THE COMMISSION, AFTER DUE NOTICE TO ALL 


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INTERESTED PARTIES AND PUBLIC HEARING, IN ACCORDANCE 
WlTA THE APPLICULE PROVISIONS OF Paragraph (f) of Section (43 
hereof] 42 OF THIS ACT. 
"SEC. 25. 
Retail Rate. - The retail rates [charged by] TIIAT 
distribution utilities SHALL CHARGE for [the supply of electricity] 
PROVIDING DISTRIBUTION SERVICES AND CONNECTIONS TO 
END-USERS OF ELECTMCXTY in [their] THE captive inavket OF THFXI? 
RESPECTIVE FRANCHISE TERRITORIES shall be [subject to regulation] 
FILED WITH AND APPROVED by the [ERC] COMMlSS'LON, AFTER 
DUE NOTICE TO ALL LNTERESTED PARTIES AND I'UI3LIC 
HEARING. THE RETAIL RATES SHALL BE based on the priiiciple of ruli 
recoveiy of prudent, JUST, and reasonable ecoriomic costs ILESPECFJVELY 
incurred[, or such other piinciples that will promote efficiency as may he 
detenniiied by the ERC.] BY THE DISTRIBUTION UTILITIES. 
IN 
MAIUNG OR SETTING THE RETAIL RATES THAT DISTNBUTXON 
UTILITIES 
MAY 
CHARGE FOR 
PROVIDING 
DISTiUBUTX ON 
THEIR RESPECTIVE FRANCHISE TERRITORIES, TEE COPIMISSXON 
MUST 
OBSERVE 
AND 
COMPLY 
WITH 
THE 
RPPLICABLE 
PROVISIONS OF PARAGRAPH (17) OF SECTION 42 Ox7 TIXIS ACT. 
SERVICES AND CONNECTIONS TO END-USERS OF ELECTRICITY IN 
Every disbibution utility shall identify and segregate in its bilk to ITS 
end-users OF ELECTRICITY the componeiits of [the] ITS retail rate, as 
[defined] REQUIRED in this Act. 
"SEC. 26. 
Distribution Related Businesses. - [Disti-ibution titiiities] 
SUBJECT TO TBE APPROVAL OF THE COMMISSION, AFTER DTJE 
NOTICE TO ALL INTERESTED PARTIES Ah'D PUBLIC HEARING, A 
DISTRIBUTION UTILITY may, directly or indirectly, engage in m y  
BUSINESS related TO ITS MAIN business [uidertaltiiig which maxiiiiizes] IN 
ORDER TO MAXIMIZE the utilization of [their] ITS assets[:] AND 
RESOURCES: Provided, That WHERE ASSETS FORMING PART OF 
THE RATE BASE ARK UTILIZED IN SUCH RELATED BUSINESS, a 
portion of the net incoine derived from such [undertaking utilizing assets which 
form par1 of the rate base] FUXATED BUSINESS, WHICH POnTXON 
SHALL NOT BE LESS THAN FIFTY PERCENT (50%) OF SUCH NET 
INCOME, shall be used to reduce its distribution wheeling [charges] <XARGE 
AND RETAIL RATE [as detenniiied] APPROVED by the [ERC: Proi~irled, 
fiwther, That such poition of net income used to reduce their disli-ibution 
wheeling charges shall not exceed fifty percent (50%) of the net iiicoiiie del-ived 
from such uiidertalcing: Provided, finnlly, That separate accounts are maintained 
ior each business undertaking to ensure that the distribution business slid1 neither 
subsidize in any way such business undertalcing 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 D!STRIBUTIOh' 
BUSINESS SHALL NEITHER SUBSIDIZE, IN ANI' WAY, SUCH 
RELATED BUSINESS NOR ENCUMBER, IN ANY 
W'AY, 
ITS 
DISTRIBUTION ASSETS TO SUPPORT SUCH RELATED UUSINESS. 
"SEC. 27. 
Franchising Power in the Electric Power Secior. ~- 
rlliej 
UPON THE EFFECTIVITY OF THIS ACT, THE power lo gi-ant rrmcliiscs to 
persons engaged in the transmission and distribution or electricily shall be vested 
exclusively in the Congress of the Philippines. [and all] ALL laws inconsisteilt 
with [this Act] THE PRECEDING SENTENCE OF THLS SECTION 
particularly, but not limited to, Section 43 of PD 269, otherwise lino\?;n as the 
"National Eleclrificatioii Decree," are hereby [deemed] repealcd or iiiodified 


23 
accordingly: Provided, That all existing franchises shall be allowed to RUN ilicir 
iiill term: Presided, fiuliieu, That in the case of electric cooperatives, rcne\~vals 
and mncellations shall remain with the National Electrification Coniinissrori 
under the National Electrification Administration for five (5) more years [afi.er] 
FROM the enactment of this Act. 
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["SEC. 28. 
De-Monopolizutiori uiid Sliureho1diii.g Dispersal. -- 
In 
conipliance with the constiiutioiial maidate for dispersal oE owiiership and de- 
moiiopolization of public utilities, the holdings of persons, naturd or juridicd, 
including directors, officers, stockholders and related interests, in il distribution 
utility and their respective holding companies shall not exceed twenty-liue (25%) 
percent of the voting shares of stock unless the utiliiy or the company holding tile 
s1iare.s or its controlling stockhoIders are already listed in the Philippiiie Slock 
Exchange (PSE): Provided, That controlling stockholders of small distrihuiioii 
utilities are hereby required to list in the PSE within five (5) years rmni lhe 
enactment of this Act if they already own the stocks. New conlrolliiig 
stocldioldcrs shall undertake such listing within five (5) years lrom the tiiiie they 
acquire ownership and control. A small distribution company is one whose peal: 
deni;ind is equal to or less than Ten megawatts (10MW).] 
[The ERC shall, within sixty (60) days from the effectivity of this Act, 
promulgate the rules and regulations to implenient and effect this provision.] 
[This Section shall not apply to electric cooperatives.] 
"SEC. [29] 28.S~pply Sector. - The supply sector is a btisiness affected 
with public interest. Except for distribution utilities and electric cooperativcs with 
respect to their RESPECTIVE existing fianchise [areas] TERRZTOKIES, all 
suppliers of electricity to the contestable market [shall require] MUST [11.4VE] 
SECURE a license from the [ERC.] CQMMISSION. 
For this purpose, the [ERC] COMMISSION shall promulgate TAE 
NECESSARY rules and regulations [prescribing], NOT XNCONSISTENT 
WITH THE PROVISIONS OF THIS ACT, THAT SHALL PIWSCNRXBE the 
qualifications of [electricity] suppliers [which] OF ELECTRICITY. SUCff 
QUALIFICATIONS shall include, among other requirements, a denioiistration 
of their technical [capability,] AND financial [capability,] CAPARILtTXES and 
creditworthiness: Provided, That the [WC] COMMISSION shall havc TEE 
authority to require [electricity] suppliers OF ELECTFUCITY to furnish [a] 
SURETY bond OR BONDS, or ANY other [evidence of the ability ofa supplier/ 
ANALOGOUS GUARANTEE INSTRUMENTS SATISFACTORY TO TIJE 
CO:\XMISSION, TO DEMONSTRATE AND ENSURE TIXEIR ABlLlTY 
AND CAPACITY, AS SUPPLIERS OF ELECTRICITY, to witlist and inarliet 
disturbances [or other] AND OTHER RISKS AND events that may increase [the 
cost of providing service.] THEIR COSTS IN FULLFXLLING TI-XEXR 
COMMITMENTS, AS SUPPLIERS OF ELECTRICITY, TO PROVIDE 
THE QUALITY AND LEVEL OF SERVICES THEY OFFER TO T1IE:LR 
CUSTOMERS. 
Any law to the contrary iiotwilbstaiidiiig, suppIy of electricity to the 
contestable niarltei 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 TO engage in tlic [supply of 
electricity] BUSINESS AS SUPPLIER OF ELECTIUCITY to the contestable 
market shall hot be required TO HAVE OR to secure a iiational fiLuiChiSe. 


24 
The prices [to be charged by suppliers] THAT SUPPL1ERS OF 
ELECTRICITY SHALL CHARGE for the  upp ply o r  electricity to the 
coiitestable iiiarket shall not be subject to regulation by the JERC.) 
COMMISSION. 
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[Electricity suppliers] SUPPLIERS OF ELECTMCTY shall be subject 
to [the1 ides and regulations {CURCWR~II~~ 
THAT MAY BE PROMLUXATED 
BY 
THE 
COMMISSION 
GOVERNING 
abuse 
of 
iiiai-liet power, 
CONSPIRACIES IN RESTRAINT OF TRADE, cartelization, aiid Ollie:- anti- 
competitive or discriminatory behavior (to be promulgated by the EKC.] 
TRAT 
ARE INIMICAL TO THE INTEREST OF THE GENElt.tL PUBLIC A N D  
THE END-USERS OF ELECTRICITY. 
[In its hilliiigs to end-users, evevy supplier] EVERY SUPPLIER OF 
ELECTIUCITY shall identify and segregate IN HIS OR ITS BILLINGS TO 
HIS OR ITS END-USEltS OF ELECTRICITY the components of'BIS OR its 
[supplier's] charge, as defined [herein] IN THIS ACT. 
"SEC. [30]29. wholesale Electricily Spot Madiet. 
Wilhiii oiie (1) year 
from the effectivity of this Act, the DOE shall establish a [w]Wholesalc 
[elElectricity [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 inechanisin for identifying and setting !he 
price of actual variations li-om the quantities transacted under contracts between 
THE sellers aid THE purchasers of electricity[.] IN THE WESM. 
Jointly with ALL the electric power industry pailicipruits, the DOE sliall 
formulate the detailed rules for the [wholesale electricity spoi. inarsket.] WESM. 
Said rules shall provide the [niechaiisni for] SYSTEM AND MANNER OF 
detennining tlie price of electricity not covered by bilateral contracts between 
THE sellers ald THE puchasers of electricity users. [The price deteimiiiation 
methodology contained in said rules] THE METHOD CONTAINED IN THE 
THE WESM shall be subject to the approval of [ERC.] THE CORLMISSXON, 
REARING. Said rules shall also EMBODY AND reflect accepted ecoiioinic 
priiiciples [aiid] THAT SHALL provide a level playing field to all electric power 
industry participants. The rules shall FURTHERMORE pi-ovide, amon!: oihers, 
procedures for: 
SAID RULES FOR DETERMINING THE PRICE OF ~mcmrcrn~ 
ris 
AFTER DUE NOTICE TO ,4LL INTERESTED PARTXES AND PUBLIC 
(a) 
Establishing the merit order dispatch iiistructioiis for each time 
period; 
PROVIDED HOWEVER, 
THAT IN EVERY CASE, AS A 
DISPATCHED AHEAD OF THE HIGEIER PRICED ELECTRZCITY. 
GENERAL RULE, THE CHEAPER ELECTRICITY s r u u  BE 
(b) 
(c) 
Determining the market-clearing price for each time period; 
Administering the market, including criteria for admission to [and 
tennination] OR DISMISSAL fiom tlie iiiarlcet [which includes], AS WELL A S  
ANY REQUIRED security or performance [bond requireiiieiits) BOND, voting 
rights of the participants, surveillance, (and] assurance dcoinpliance [of] BY ll1e 
participants with the iiiles, and tlie forniation of the [wholesale electricity spot 
market goveiniiig body] GOVERNING BODY OF THE WESM; 
(d) 
Prescribing Luidelines for the iiiarlcet operation in system 
emergencies; and 
(e) 
Amending the SAID rules. 


25 
The [wholesale electricity spot market] WESM sliall be iniplementi-d by a 
market operator in accordance with the [wholesale electricity spot mai-l~s] 
WESM rules. The market operator shall be ail autonomous group[,) to bc 
constituted by DOE[,] with equilable representation !?om clectr-jc power industry 
participants[,] AND initially under tlie administrative supervision of tlie 
TRANSCO. The marltet operator shall undertake the preparatory work and TI-XI? 
initial operatioil of the [wholesale electricity spot niarltetj M'ESM. Not latei- than 
one (1) year after the implementation of the [cvholesale electi-icity spor niarltetj 
WESM, ai independent entity shall be foiined and the ftnictioiis, assets and 
liabilities of the inarltet operator shall be transferred to such INDEPENDENT 
entity with the joint eiidorsenient of tlie DOE and the electric power indushy 
participants. Thereafter, the administrative supervision of the TMNSCO over- 
[such entity shall cease.] THE WESM AND THE INDEPENDEKT R?AXU<ET 
OPERATOR SHALL CEASE AND TERMINATE. 
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Subject to the compliance with the iwnibership ci-iteria, all [generatingj 
GENERATiON companies, distribution utilities, suppliers OF ELECTIUCXTV, 
bulk [consumers/eiid-users] [CONSUMERS AND/OR] END-USERS OF 
ELECTRICITY and other similar eiitities authorized by tlie [ERC shall be] 
COMMlMISSION ARE eligible to become meiiibers o f  the [wholesale 
electricity spot iiiarlcet] WESM. 
The [ERC] COMMISSION may authorize other similar eiitities to 
become eligible as members, either directly or indirectly, of (lie [wholesale 
electricity spot inarltet] WESM. All [generating] GENERATION conipanies, 
distribution utilities, suppliers OF ELECTRICITY, bulk [consu~iiers/e~id-uscrsl 
END-USERS OF ELECTRJCXTY aid other similar entities authorized by the 
[ERC) COMMISSION, whether direct or indirect members of the [wholesale 
electricily spot marlcet] WESM, shall be bound by the [wholesale electricity spot 
niarltet] WESM rules with respect to transactions in [that iiiai-ltet] TEE \VESM. 
NEA may, in exchange for adequate security and a guarantee fee, acl as a 
guarantor for THE purchases of electricity in the [wholesale electricity spot 
marJtetJ WESM by any electric cooperative or small distiibulioii utility to sipport 
[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] WITX outstauding uiicollecled 
billings to any local goveninient unit shall report such billings to NEA [which] 
AND NEA shall, in turn, reporl the same to the Department of Budget md 
Management (DBM) for collection pursuant to Executive Order 190, issircd on 
Decernber21, 1999. 
The cost of administering and operating the [wliolesale electrjcity spot 
marltet] WESM shall be recovered by the market operator through a charge 
iniposed to all market members: Provided, That such charge shall be filed with 
and approved by the [ERC.J COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING. 
In cases of national and international security emergencies or natural 
calamities, the [ERC] CQMMlSSION is hereby empowered to suspeud the 
operation 'of the [wholesale electricity spot iiiaritet] WVESR'I 
01- declare a 
temporary [wholesale electricity spot market] WESM failure. 
TO ENCOURAGE AND PROMOTE TEE DEVELOPMENT O F  
THE WESM, DISTRIBUTION UTILITIES WITH DEMAND LEVELS OF 
NOT LESS THAN 100 MEGAWATTS ARE REQUlRED, FOR THE FXRST 
TI-Il?,EE 
(3) 
YEARS 
IMMEDIATELY 
ROLLO'IVfNC 
I'kflI 
t 


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ESTABLISHMENT OF THE WESM, TO SOURCE FROM THE WESM 
AT 
LEAST 
TEN 
PERCENT 
(loo/) OF TMElR 
SUPPLY 
OF 
ELECTRICITY FOR RETAIL, TO END-USERS. TRE COMMlSSION 
MAY, FROM TIME TO TIME, REVIEW THE APPROPXATE LEVEL 
OF DEMAND TO BE SOURCED FROM THE WESM AND, IN 
MERITORXOUS INSTANCES, WAIVE IMPLEMENTATXON OF S U C X  
REQUIREMENT, SUBJECT TO A PUBLIC HEARING. 
[THEREAFTER, THE SAlD TEN PERCENT (1 0Yo) SHALL 
GRADUALLY BE INCIUCASED AT THE RATE OF TWO PERCENT (2%) 
EVERY YEAR ur TO THE EIGHTH (sTII) YEAR PROM TRE 
ESTABLISHMENT OF THE WESM IN ORDER TO MACCJ A LEVEL 
OF TWENTY PERCENT (20%) ON THE SAID EIGKI’H 
YEAR 
BY CONGRESS. 
WHERE IT SHALL REMAIN UNTIL ADJUSTED FURTHER UPWARD 
“SEC. 131130. Reiail Competition slid Open Access. - Any law to tlic 
contrary notwitlistanding, retail conipetition and open access on dish-ibutiori wires 
OF DISTRIBUTION UTILITIES shall be implemented not later than thi-ee (3) 
years [upon the] PROM THE DATE QF THE effectivity ofll~is .4ct, subject lo 
the foIlowiiig conditions: 
(a) 
[Establislmieiit] THE ESTABLISHMENT or the [w]\;i’liolesale 
[ejElectricity [s]Spot [m]Market (WESM); 
(b) [Approval] THE APPROVAL of THE unbundled transmission and 
distribution wheeling charges[;] BY THE COMMISSION; 
(c) [Initial] THE 
INITIAL implementatioii of the cross subsidy 
removal scheme: 
(d) [Privatization] THE 
PRIVATIZATION of at least [scveniy 
(70%) percent] FIFTY PERCENT (50%) of the total capacity of [generating] 
THE GENERATION assets ofNPC in Luzon and THE Visayas; [and] 
(e) [Transfer] THE TRANSFER of the managenient 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 TEWTOEPIES OF ELECTRIC 
COOPERATIVES, THE TRANSFER OF THE SUl3-TRANSh‘lISSION 
APPLICABLE PROVISIONS OF THIS ACT TO TI<% CONNECTED 
ELECTRIC COOPERATIVES. I 
ASSETS 
AND 
FACILITIES 
IN 
ACCORDANCE 
WITH :rm 
Upon 
the initial 
implementation 
of open 
access, 
the [ERC] 
COMMISSION shall [allow) CONSTITUTE l N  A PORhlAL ORDER TO 
BE ISSUED AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING all [electricity] end-users OF E1,ECTlIrCITY wi(h 
a nioiithly average peak deinaiid of [at least] NOT LESS THAN one ineg:awtt 
(1MW) for the IMMEDIATELY preceding twelve (I 2) BILLING moulhs tc be 
the contestable marlset. 
[Two] AFTER TWO (2) years [thereafter,] 
IMMEDIATELY FOLLOWING THE INITIAL IMPLEMENTATION OF 
OPEN ACCESS, the threshold level lor the contestable iiialriiet s h l l  be reduced 
to seven hundred fifty kilowatts (750kW). At [this] THAT level, aggegators 
shall be allowed to supply electricity to n~rl-llsers whose aggregate demarid within 


27 
a contiguous area is at least seven hundred fifty kilowatts (7501tW). [.Subsequently 
and every] EVERY year Iliereafter, the [ERC] COMMlSSiON shall REWEW 
AND evaluate tlie perfoi-maim ofthe CONTESTABLE iiiarltet[. 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 tlie 110 useliold 
[demand level.] END-USERS OF ELECTRICITY. In the ca.se of elcc~ric 
cooperatives, retail competition aiid open access shall be implemented not earlier 
than five (5) years [upon] FROM the effectivity orthis Act. 
"SEC. [32]31. [NPC Stranded Debt arid Contract Cost Recoveqi./ hPCS 
STRANDED DE3XS AND STMNDED CONTXACT COSTS RECOVER 1'. 
- [Stranded debt] TEIE STRANDED DEBTS of NPC [shall] refer to [any] ITS 
unpaid financial obligations [of NPC.], WZIlCljI ARE NOT LIQUIDATED OR 
OFFSET BY THE PROCEEDS FROM THE SALE, DlSPOS17'1OP4, 
AND/OR 
PRIVATIZATION 
OF NPC'S 
GENERATION 
ASSETS, 
TRANSMISSION AND SUBTRANSMISSION ASSETS AND FACILITIES, 
REAL ESTATE ASSETS, OTHER DISPOSABLE ASSETS, AND IPP 
CONTRACTS. 
&mnded] THE STRANDED contract costs of NPC jshall) refer io tlie 
excess of the contracted cost of electricity under TI-lE eligible [IPP] 
INDEPENDENT POWER PRODUCER (IPP) contracts of NPC WXTEI I T S  
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 RE DEEMED ELIGIBLE CONTR.4CT.S 
TO APPLY FOR STRANDED CONTRACT COST§ RECOVERY ONLY 
IF SUCH CONTRACTS have been approved by the EPLi [as oil ON Uli 
BEFORE December 31,2000. 
The national government shall directly assume a porlioii of the fiiiaiicial 
obligations of NPC in ai amount not [to exceed] LESS THAN Two huiicired 
billion pesos (P200, 000,000,000.00). 
The [ERC] COMMISSION shall verify the reasonable [aiiiowits and 
determine the maiiiier and duration for the full recovery of stranded debt and 
stranded contract costs as defined herein:], ACTUAL, AND AGGREGATE 
REASONABLE, ACTUAL, AND AGGREGATE AMOUNTS OF TXIE 
STRANDED 
CONTRACT 
COSTS 
OF NPC 
THAT 
MUST 
BE 
RECOVERED, IF ANY, AND SHALL APPROVE AND DETERMINE TEE 
MANNER AND DURATION FOR THE PULL RJZCOVERU OF BOTI-I, 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PTJBLIC 
HEARING: Pmvided, That the duration for such FULL recovery shall not be 
LshorterJ LESS than fifteen (15) years nor [longer] M O m  than twenl-y-five (25) 
years. The [ERC] COMMISSION shall, at the end of the first year [ofl FROM 
the implementation of [stranded cost recovery] THE STRANDED DEaTS AND 
STRANDED CONTRACT COSTS RECOVERY, aiid every year therealter, 
conduct a review OF ALL RELEVANT FACTS lo detei-mine whelher there [isJ 
HAS BEEN AN under-recovery or over-recovery [and adjust (true-up) tlie level 
of stranded cost recovery charge accordingly.] FROM THE STRANDED 
DEBTS AND THE STRANDED CONTRACT COSTS WCOVEX1Y 
RECOVERY, THE COMMISSION SHALL, AFTER DUE NOTICE TO 
RATE OF THE SAID STRANDED DEBTS AND STRANDED CONTRACT 
included for stranded cost recovery] REPRESENTING TI-IF, STRANDED 
AMOUNTS OF THE STRANDED DEBTS AS WELL AS TI-IE JUST AND 
CHARGE. 
IN THE EVENT OF UNDER-lLECOVERY OR OVEN- 
ALL INTERESTED PARTIES AND PUBLIC HEARING, ADJUST TIXE 
COSTS ' RECOVERY CI-IARGE ACCORDINGLY. A I I ~  amount [to be 
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DEBTS AND STRANDED CONTRACT COSTS RECOVERY CHARGE 
shall be reflected as a separate item in the [consumer billing statei!ient.! 
ELECTRIC END-USER'S MONTHLY BILLING STATEMENTS. 
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IN CASE O F  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 
NATXOXAL 
RATE, COMPUTED ON THE BASIS OF THE AMOUNT OF EACX 
MONTHLY BILLING STATEMENT UNTIL THE TOTAL OVEK- 
RECOVERED AMOUNT IS FULLY REFUNDED. THE CO?dMISSION IS 
HEREBY AUTHORIZED TO ADOPT SUCH FAIR AND REASON.iBL,E 
FORMULA AND PROCEDURE TO EFFECT THE SAKI3 JXEFUNU. 
GOVERNMENT'S 
NINETY-DAY TREASURY BILL BORROWING 
"SEC. 133132. DistYi'iliution (Utilities/ UTILITY'S Strtliidcrl Con Wmi 
Costs Recoveiy. - [Stranded] THE STRANDED contract costs or A 
distribution [utilities shall] UTILITY refer to the excess of the contracted cost of 
electricity under THE eligible INDEPENDENT POWER PRODUCER (PI)) 
contracts of [such utilities] THE DISTRIBUTION UTlLXTU WITH ITS XPPs 
over the actual selling price of [such contracts] THAT CONTMC'fED 
ELECTRlCITY FROM SUCH IPP CONTRACTS in the market. [Sx!i 
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 appvovcd by the EliB 
[as ofj ON OR BEFORE December 31,2000. 
A distribution utility [shall] WITH ELIGIBLE XPP CONTRACTS 
MAY BE ALLOWED TO recover ITS stranded contract costs[: 
i'mi~idcd, 
Izowever,That] ONLY IF such STRANDED CONTRACT costs [of the PI'S or 
distribution utilities are subject to] ARE POUND, AFTER A THOROUGH 
review by [ERC in order to deteniiiiie 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] XPP CONTRACTS entered into by NPC, at the time 
[they were contracted. The ERC] OR AS NEAR A TIME AS THE SAID IPP 
CONTMCTS OF THE DISTRIBUTION UTILITY WERE CONCLUDED. 
IN REVIEWING AND COMPARING THE SAID AVERAGE PRICE OF 
ELIGIBLE IPP CONTRACTS OF THE DISTRIBUTION UTILITY, TI-IE 
COMMISSION shall take into consideration all RELEVANT factors that affect 
tlie total cost of [NPC] NPC'S IPP generation projects, including direct or indirect 
subsidies or incentives provided by tlie Govemnient. 
Within one (1) year Liom the start of open access, any distribution litility 
that [seeks] INTENDS TO SEEK THE recovery ofstrand.ed 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 SUB&flTl'lNG L4T 
THE SAME TIME such [other] suppotting EVIDENCE A.NDiOR 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 
EVIDENTIAL mQUIREMENTS, within the [date] specified PERIOD OF 
TIME shall not be [eligible for such recovery.] ENTITLED TO RECOT"? 
ANY STRANDED CONTRACT COSTS. 
NOTICE OF INTENT, WITH THE NECESSARY 
s u p r o m x w  


29 
Any distribution utility [wliicli seeks] THAT INTENDS to recover 
stranded [cost] CONTRACT COSTS shall have 
it duty to mitigate 
BEFOREHAND its potential stranded contract costs by making jrcasonahle best] 
REAL efforts [lo]: 
(a) 
TO reduce the costs of its existing contracts with [PPs] I’TS 
INDEPENDENT POWER PRODUCERS (IPPS) to [a leve! not exceeding] 
[THE] AN EXTENT [OF] AT LEAST EQUAL TO the avei-age buyiiip price 
loo FROM other COMPARABLE land-based electric power [genci-ators; J 
GENERATION COMPANIES; and 
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(b) 
TO subinit to an annual [earnings] FINAN‘CJAL 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 RE USED to 
reduce the book value of [contracts until the end of tlie stranded cost recovery 
period.] ITS IPP CONTRACTS. 
BILATERAL CONTRACTS CONCLUDED BY A DISTRIBUTI ON 
UTILITY WITHOUT 
OPEN 
COMPETITXVE PUBLIC RIDDING, 
SPECIALLY 
WITH 
SISTER 
OR 
AFFILIATED 
GENERATION 
COMPANY OR COMPANIES, MUST BE SUBJECTED TO STRINGENT 
MITIGATION EXAMINATION TO ELIMINATE ABOVE MhRKXT 
PRICES, 
INDICES, 
COST 
FACTORS, 
OTHER 
l’lUf;E.RRED 
PROVISIONS 
AND 
ARRANGEMENTS 
THAT 
[SI-LALL] WILL 
ELECTRICITY. 
INCREASE THE PASS-ON 
COSTS 
TO THE END-USERS 
OF 
THE STRANDED CONTRACT COSTS TtECOVERXES ALLOWED 
SHALL BE COLLECTED ONLY FROM CUSTOMERS 
OF THE 
DISTRIBUTION UTILITY CONCERNED XN ITS OWN FRANCf-IISE 
TERRITORY, AFTER THE ELIMINATION OF THE INTER-GR1R 
SUBSIDIES. 
AFTER THE ABOVE-MENTIONED MITIGATION EXAMINATXON 
[Other] IN CONDUCTING THE REVIEW OF TEE STRANDED 
CONTRACT 
COSTS 
OF 
A 
DISTRIBUTION 
IJTILITY, 
THE 
COMMISSION MAY UTILXZE FOR THAT PURPOSE OTHER mitigating 
measures which are reasonably luiown and generally accepted within the electric 
power industry [shall be utilized]. Tlie [ERC] COMMISSION shall not require 
the distribution utility to tale 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 
WITW 
THE AI’PLTCABLE 
PROVISIONS OF THIS ACT. 
Tlie [relevant) distribution utility CONCERNED shall subinit to the 
[ERC] COMMISSION quarterly reports showing the amount of THE slraxled 
CONTRACT costs ALREADY recovered and the RENIA41N1NG balance 
[remaining], IF ANY, YET to be recovered. 
Within tlxee (3) months [from] IMMEDIATELY FOLLOWING the 
subniissioii of the application for THE stranded [cost] CONTRACT COSTS 
recoveiy by the [relevant] disti-ibution [utilities,] UTILIITY CONCERNED, the 
[ERC] COMMISSION shall verify the JUST AND reasonable [amo~i~ts] 
AMOUNT TO BE RECOVERED, IF ANY, and SHALL AI’E’RROVF: V I E  
SAME AND detennine the tnanne~ and duration for the full recovel-y of TflE 
stranded contract costs [as defined herein:], AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING: 
Provided, That the 
duration for sucli recovery dial1 not be [shorter] LESS tlian fifteen (15) years nor 


30 
(longer] MORE than twenty-five (25) years. Any amount [to be included for 
stranded cost recovery) REPRXSENTING THE STRANDED CONTRACT 
COSTS RECOVERY CHARGE shall be reflected as a separate itern in the 
[consumer billing 
statement.] ELECTRIC END-USER'S MONTXILY 
BILLING STATEMENTS. 
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The [ERC] COMMISSION shall, at the end o f  the first year [ofl F7RC)hI 
the inipleinentation of THE stranded [cost] CONTRACT COSTS recovery, 2nd 
every year thereafter, conduct [a) AN 
ANALYSIS AND revlcw OF ALI, 
RELEVANT FACTS to determine whetlier there [is] HAS BEEN AN under- 
recovety or over-recovery PROM THE STRANDED CONTRACT COSTS 
RECOVERY CHARGE and adjust [(ti-ue-up) the level ofj THE RATE OF 
THE SAID stranded [cost] CONTRACT COSTS recovery charge accordingly. 
In case of ui 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 creatcd Tor 
these aniouiits, which shall be held in trust for any future claims of distribution 
utilities for sb-aiided [cost] CONTRACT COSTS recovery. At tlie end of' the 
stranded [cost] CONTRACT COSTS recovery period, any rcinaining aiiiount in 
[this] THE SAID TRUST account shall be used to reduce the elcctricity rates 
CHARGED to the end-users[.] OF ELECTRICITY. 
"SEC. [34]33. Univevsul Clmrge. - Wilhin one (I) yea from the 
effectivity of this Act, a universal charge to be deteniiined, fixed, and approvcd 
by 
the 
[ERC,] COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING, shall be imposed 011 :ill 
[electricity] end-users OF ELECTRICITY, ON THE BASIS OF. THE 
NUMBER OF KILOWATT HOURS OF ELECTRICITY I<ESPECI'IVELU 
CONSUMED BY THEM, for the following purposes: 
(a) 
[Payment for] FOR the PAYMENT OF THE AMOUXT OF 
stranded debts OF NPC in excess of the amount TO BE assuined by the National 
Government [and] AS PROVIDED UNDER SECTION 31 OF TISXS ACT, 
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 i'SE 
FROM 
THEIR RESPECTIVE ELIGIBLE IPP CONTRACTS BECAlJSE OF the 
restructuring of the ELECTRIC POWER industry; 
FOR THE PAYMENT OF JIJST AND REASONABLE A m m r r  OF 
(b) 
[Missionary eIectrificatioiiJ FOR THE PAIWENT OF 
PRUDENT, JUST AND REASONABLE COSTS OF MISSIONARY 
ELECTRIFICATXON PROJECTS; 
(c) 
[Thej FOR THE PAYMENT OF THE AMOUNT FOR THE 
equalization of the taxes and royalties applied to indigenous or reimvable sources 
of energy vis-&vis imported energy fiiels; 
(d) 
[An) FOR THE PAYMENT OF THE AMOUNT OF AN 
environniental charge equivalent to one-lourtli of one centavo per kilowatt-hour 
(P0.0025/ltWli), which shall accrue to an eiivironmeiital fund [to], AND WEIICR 
SHALL be used solely for [watershed] THE rehabilitation and nianagenientj. 
Said fund shall be managed by NPC under existing ai~angeiiients;] OF THE 
WATERSHED AREAS. THE SAD ENVIRONMENTAL FUND SX-IALL 
BE 
UNDER 
THE 
RESPONSIBILITY, 
ADMlNISTRA'~ION, AND 
MANAGEMENT OF THE NPC; aid 


31 
(e) 
[A charge to account for all fonns ofl FOR TliZ I’AYMENT OF 
AGGREGATE AMOUNT OF ALL cross-subsidies AUTRORIZED UNDER 
period not [exceeding] TO EXCEED thee (3) years[.] FROM TIIE DATE OF 
SECTION. 
THE 
CHARGE 
REPRESENTING 
THE 
RECOVERY 
OP Tm 
THIS ACT, WHICH CROSS-SUBSIDIES SHALI, EXIST ONL’I’ for a 
THE IMPOSITKON OF TEE UNrvERsAL CHARGE r.mwrmD IN Tms 
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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 TRISIR 
RESPECTIVE end-users OF ELECTRXCITY 011 [a monthly] THE basis [by 
the distribution utilities.] OF THE NUMBER OF I(ILOWATT HOURS OF 
ELECTRICITY ACTUALLY CONSUMED BY EACH OF SUCH END- 
USERS OF ELECTRICITY PER BILLING MONTH. Collectioiis by the 
distribution utilities and the TRANSCO in any given BlLLlNG month shall be 
reiiiitted to the PSALM Corp. on or before the fifteenth (15th) DAY o i  rhc 
succeeding month, net a€ any aniouiit 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.] 
THE SELF-GENERATED ELECTRICITY OF AN END-USER \WlO 
OR WBICI-I ,IS NOT DIRECTLY CONNECTED TO TllE DlSTRlBliTION 
SYSTEM OF A DISTRUBUTION UTILITY OR TO THE TRANSMISSION 
GRID AND ITS SUBTRANSMISSION FACILITIES SHALL NOT BE 
SUBJECT TO OR LIABLE FOR THE UNIVERSAL CI-IARGE IMPOSED 
IN THIS SECTION, 
EXCEPT FOR THE PAYRIENT OF THE 
OBLIGATIONS SPECIFIED IN (b) AND (d) IF THE SELF GENERA‘TED 
ELECTRICITY OF THE END USER COMES FROM THE UTILIZATTON 
AND EXPLOITATION OF THE NATURAL RESOURCES OF TUE 
COUNTRY. 
HOWEVER, EVEN IF THE END USER wr-Io OR IVHICI~ 
GENERATES ELECTRICITY FOR ITS OWN USE PROM ITS OWN 
GENERATION FACILITY IS CONNECTED TO THE DISTRII?UTION 
SYSTEM OF A DISTRIBUTION UTILITY OR TO THE TRANSMISSION 
THE 
UNIVERSAL 
CHARGE 
IF 
THE 
SELF 
GENERATED 
ELECTRICITY DOES NOT PASS THROUGH THE DISTRTBUTXON 
SYSTEM OF A DISTRIBUTION UTILITY OR OF TFlE TRANSMISSION 
SYSTEM OF TRANSCO, 
EXCEPT FOR THE PAYMENT 0 1 7  THE 
OBLIGATIONS SPECIFIED IN (b) AND (d) IF THE SELF GENERATED 
ELECTRICITY OF THE END USER COMES FROM THE UTILIZATION 
COUNTRY. 
SYSTEM OF TRANSCO, THE SAME SHALL NOT BE SUBJECT ’ro 
AND EXPLOITATION OF Trm NATURAL RESOURCES OF n u 3  
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 WSICII 
SHALL BE disbursed only SUCH AMOUNTS AS MAY BE NEEDED 
STRICTLY, for the purposes specified [herein] IN THIS SECTION in ai open 
and transparent manner. PSALM SHALL APPOINT A CONSUjMEK jOR A] 
REPRESENTATIVE [FROM A CONSUMER GROUP] ACTIVE IN THE 
ELECTRICITY 
INDUSTRY 
WHO 
SHALL 
ICIONI’FO’II 
THE 
DISBURSEMENT OF FUNDS. All amounts collected for the universal chai-ge 
shall be ALLOCATED AND distribuled EXPEDITIOIJSLU FOR TIIE 
PAYMENT OF THE OBLIGATIONS SPECIFIED IN (A), (E), (C), (D), 
AND (E) ABOVE AND to [the] THEIR respective beneficiaries, within [a] 


32 
SUCI-I reasonable period [to be provided by the ERC.] OF ‘I‘IME AS SFTALL 
BE DETERMINED BY THE COMMISSION. 
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“SEC. 135134. Royulfies, Returns und Tux Rates for Iriiligei7.0~~ 
Eiiierg~, 
Resources. - The provisions of Section 79 of Corninonwealth Act No. I37 
(C.A. No. 137) and any law to the contrary notwithstanding, the President of tlic 
Philippines shall [IS HEREBY DIRECTED TO] reduce the SHARE, roya!fies, 
retunis, and taxes lcollected] OF THE NATIONAL GOVERNMF,N’I for the 
exploitation of all indigenous sources of energy, including but not liniited to, 
nalural gas and geothermal steam, so as to effect parity of [izu;] treatment /with 
the existing rates for] FOR TAX PURPOSES BETWEEN imported cod, crude 
oil, bunker fuel, [and] other imported fuels[.] AND INDIGENOUS SOURCES 
OF ENERGY, ESPECIALLY NATURAL GAS AND GEOTRERRfAI, 
STEAM. 
To ensure [lower rates] CHEAPER ELECTRICITY for end-users, the 
[ERC shall] COMMISSION, AFTER DUE NOTICE TO ALL I;NTEW<STED 
PARTIES AND PUBLIC HEARING, [IS HEREBY DIRECTED TO] 
SHALL FIND WAYS AND MEANS AND [TO] EXERr EVERY EFFORT 
TO forthwith reduce the PRICES AND/OR rates of ELECTRIC power €ram 
all indigenous sources of energy AND 
IMPROVE TfTE 
GRID’S 
GENERATION MIX OR PORTFOLIO OF PLANTS. 
“SEC. 136135. Unbundling of Rutex and Puncfiorzs. - 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 TH‘E 
APPROVAL OF ITS REVISED RATES BY THE CORZMISSION, AFTER 
DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING. The EXISTING rates of NPC shall be unbundled betlvcen 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 ci-oss subsidies [for 
both the transmission and the generation rates] IN THE EXISTING XPC 
RATES, IF ANY, BOTH IN THE TRANSMISSION SECTOR AND IN 
THE GENERATION SECTOR, shall be renioved in accordance \villi TIXI? 
APPLICABLE PROVISIONS OF this Act. 
Within THE six (6) months ifroin] IMMEDIATELY FOLLOWING the 
effectivity of this Act, each distribution utility shall [file its revised rates for the 
approval by the ERC.] [ALSO] LIKEWISE FILE A PETITION FOR TlXE 
APPROVAL OP ITS REVISED RATES BY THE COMIVIISSXON, AFTER 
DUE NOTICE TO ALL INTERESTED PARTIES AX14 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 TRI3 
RETAIL RATE OF A DISTRIBUTION UTILITY shall reflect the respective 
costs of providing each AND EVERY KIND OF sei~icel, For both llic 
distribution retail wheeling and supplier’s charges,] BEING RENDERED, AND 
BOTFI SHALL BE REFLECTED SEPARATELY IN TEE DlSTlZlBUTXON 
OF ELECTRICITY. 
THE inter-class subsidies shall. be removed [in 
accordance with this Act.] BOTH FROM THE DISTRIBUTIO~ UTILITY’S 
UTIL1TX”S MONTHLY BILLING STATEMENTS TO ITS END-UStCRS 
w r m m N G  CI-EARGE TO SUPPLIERS OF ELECTRLCITY ‘ h n  PROM 
THE DISTRIBUTION 
UTILITY’S RETAIL RATE TO rrs END-USERS 
OF ELECTRICITY, IN ACCORDANCE WITH THE APPLICABLE 
PROVISIONS OF THIS ACT. 


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59 
Witliiii THE six (6) months [ko~ii] 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 
DISTRIBUTION UTILITY, AS THE CASE MAY BE, OF ITS PFXI'I'ION 
FOR THE APPROVAL OF ITS REVISED RATES, THE COMMISSION 
[THE 
CO.MMISSJON 
SHALL] 
ACCORDINGLY 
NOTIFY 
THE 
INTERESTED PARTIES OF ITS DECISION THEmON. 
SHALL FORTHWITH ACT ON THE PETITION, AND THEIU3AFTER 
Any electric power industry participant shall functionally and structurally 
unbundle its business activities aid/OR ITS rates in accordance with the [scctors 
as identified in] SECTOR TO WHICH IT BELONGS ACCOIXDXNG TO 
Section 5 [liereof.] OR THIS ACT. The [ERC) CONI\/IISSION sliall cnsi~re 
AND ENFORCE fdl compliance with this provision. 
"CIIAPTER 111 
"ROLE OF THE DEPARTMENT OF ENERGY 
"SEC. [37]36. Powers and Functions of the DOE. - In addition to its 
existing powers and functions, tlie DOE is hereby [iiiandated] [ASSIGNED] 
DESIGNATED AND DIRECTED to supervise the 1-estl-ucturing of the 
[electricity] ELECTRIC POWER industry. In pursuance thereof, Section 5 of 
RA 7638 otherwise lcnown as "The Department of Energy Act of 1992" is hereby 
amended to read as follows: 
"(a) 
Fomiulate policies for the planning and implementation of a 
comprehensive proyam for the efficient supply and economical use of energy 
WHICH [WILL] SHALL BE consistent with the approved national econoniic 
plan, [and] with the policies on enviroiniiental protection, [and] conserclation, aiid 
maintenance of ecological balance, and WHICH SHALL provide a meclianism 
for the integration, rationalization, aiid coordination of the vai-ious energy 
prograins of the Government; 
(b) 
Develop aiid update annually the existing Philippine Energy Plan; 
hereinafter referred lo as 'The [Plan] PEP', which shall provide for au intepted 
and conipreliensive exploration, development, utilization, distribution, and 
conservation of energy resources, with Iprererential bias for] PREFERENCE iN 
FAVOR OF environnierit-friendly, indigenous, and low-cost sources of energy. 
The plan shall include [a policy direction towards tlie privatization or goveriuuent 
agencies related to energy, deregulation of tlie power and energy industry, and] 
WAYS AND MEANS TOWARD THE reduction of dependeiicy OF TRE 
COUNTRY oii oil-fired plants. Said Plan shall be submitted to Congress no: later 
than the fifteenth day of September and every year thereafter; 
(c) 
Prepare and update annually a Power Developinent Prograiii (PDP) 
and integrate the same into the [Philippine Energy Plan.] PEP. TIie PDP shall 
consider and integrate the individual or joint development plans FOR the 
transmission, generation, and distribution sectors of tlie electric power industry, 
which are submitted to the Department: Prouidecl, huivevey2 That the [EXC] 
COMMISSION shall have exclusive authority [covering1 TO ISSUE A.ND 
IMPLEMENT the Grid Code, THE DISTRIBUTION CODE, and [the] SUCM 
OTHER pertinent rules snd regulatior~s [it] THAT THE COMMISSION nX!y 
issue; 
(d) 
Ensure the ~
V
~
4
~
~
~
~
~
r
~
~
~
ADEQUACY, reliability, qualit)/, 
and security of THE supply of electric power; 


34 
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5 8  
59 
(e) 
Following the restructuring o f  the [electricity sector] ELECTRIC 
POWER INDUSTRY, the DOE shall, aniong others: 
(i) 
Encourage INVESTMENTS PROM THE private sector 
[investments] in 
the 
[electricity sector] 
ELECTRIC 
POWER 
INDUSTRY and promote THE developnient of ii;digeiious 
and 
renewable SOURCES OF energy [sources]; 
(ii) 
Facilitate and encourage reforms in the structure and 
operations of dislribution utilities [for] IN ORDER TO ATTAIN greater 
efficiency and lower costs[;] OF ELECTRICITY; 
(iii) 
In consultation with other government agencies, promote a 
system or incentives to encourage [industry participants, including new 
generating companies and end-users to provide adequate and reliable 
electric supply;\ [AND ENLARGE] NEW PARTLCTPANTS IN TliE 
ELECTRIC 
POWER 
INDUSTRY, 
[ESPECIALLY 
TO 
ENCOURAGE] 
THE 
ENTRY 
OF 
NEW 
GENERATION 
COMPANIES AND TO [ENLARGE] BROADEN T I E  NUMBER 
OF END-USERS OF ELECTRICITY, WHICH WILL IN TURK 
PROVIDE THE COUNTRY WITH AN ADEQUATE, ]RELIABLE, 
AND CHEAPER SUPPLY OF ELECTRICITY; and 
(iv) 
Undertake, 
in 
coordination 
with 
Ihe 
[ERC] 
COMMISSION, NPC, PSALM, NEA and the Philippine Information 
Agency (PIA), [SUCH] information campaigns [THAT MAY BE 
NEEDED] lo educate the public on the reskucturing of the [electricity 
sector] ELECTRIC POWER INDUSTRY and ON THE privatization of 
TEIE NPC assets; 
(4 
Jointly with tlie electric power industry participaiits, establish the 
[wholesale electricity spot market] WESM and fomiulate thc detailed rules 
[governing the operations tliereoc] TO GOVERN ITS OPERATIONS; 
(g) 
Establish 
and 
administer 
programs 
for 
the 
exploration, 
transpoifation, niarlteting, distribution, utilization, conservation, stockpiling, and 
storage of energy resources of all fonns, whether coilventional or non- 
conventional; 
(h) 
Exercise supervision and control over all government activities 
[relative to] [THAT HAVE TO DO WITH] INVOLVING energy projects in 
order to attain A WELL COORDINATED EFFORT TO ACCOR%PLlSli 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, aniong others, reserve requireincntsj;] OF 
THE COUNTRY; 
(j) 
Monitor THE ACTlVITIES OF THE private sectoi- [activities 
relative to energy projects in order to atlain the goals of the restructiii-ing, 
privatization, and modernization of the electric power sector as pro\;idcd €01- under 
exisling laws:] REGAKDING ENERGY PROJECTS IN ORDER TO 
ACCOMPLISH 
THE 
GOALS 
AND 
OBJECTIVES 
OF 
THE 
RESTRUCTURING, 
PRIVATIZING, AND 
MODERNlZIh'G 
THE 
ELECTRPC POWER INDUSTRY IN ACCORDANCE WITI'I TfK 


35 
MANDATE OF EXISTING LAWS; Provided, That the Departniciit shall 
eiidcavor to provide [for] an eiiviroiunent THAT IS coiiducive to A fl-ee and 
active private sector INVOLVEMENT, participation, and investment in all 
energy activities[;] OF THE COUNTRY; 
(k) 
Assess the requirements of, deteimiiie prioi-ities for, provide 
direction to, and disseniiiiak infomalion resulting from energy research and 
development programs for the optima! development of various ~oiins of energy 
produc,tion and utilizatioii technologies; 
(I) 
Formulate and implement [programs, including] A PROGlMM 
OF PENALTIES FOR THE INJUDICIOUS OR INE.FFfCIENT USE OF 
ENERGY 
IN ALL ENERGU-CONSUMING 
SECTORS OF THE 
ECONOMY, AS WELL AS a system of [providing] incentives [and penalties,] 
for the judicious and efficient use of energy, SUCIl AS CO-GENElWTXON 
SYSTEMS, 
DlSTRlBUTED 
GENERATION, 
DEXIAl\lD-SIUE 
MANAGEMENT SYSTEM, AND RENEWABLE ENERGY [in all energy- 
cousuiiiing sectors of the economy]; 
(m) 
Foniiulate and implenient a program for the accelerated 
developinelit of non-conventional energy [systems] SOURCES and the 
promotion aid coininercializatioii of its applications; 
(n) 
Devise ways and means of [giving] EXTENDING direcl benefit 
to the INHABXTANTS OF A REGION, province, city, [or] AND municipality[, 
especially the community, and people affected, and equitable prefcrential benefit 
to the region] that hosts the energy resource [and/or the energy-geuemting] 
AND/OR' THE ENERGY-GENERATION facility[:] OR FACTLITIES: 
Provided, however, That the XNHABITANTS OF THE other REGIOXS, 
provinces, cities, AND municipalities[, or regions] shall not be depi-ived of their 
energy requirements; 
(0) 
Encourage private enterprises engaged in energy projccts, 
including coiporations, cooperatives, and similar collective organizations, to 
broaden tlie base of their ownership and thereby encourage the widest public 
ownership of energy-oriented Icorporations;] ENTERPRISES; 
(p) 
Foimulate such rules and regulations [as], NOT INCONSISTENT 
WXTH THE PROVISIONS OF THIS ACT, WHICH inay be necessary to 
implenient tlie objectives of this Act; and 
(q) 
Exercise such other powers as may be necessary or incidental to 
attain the objectives of this Act." 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
I6 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
45 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
1- 
2 3 
"CI-IAPTER N 
"REGULATION OF THE ELECTRIC POWER INDUSTRY 
"SEC. [38]37. Creiitioi2 of" the Energy Regiilntovy Coiiimi~rsioiz. - 
[There 
is hereby created an IMPARTIAL, [TRULY] independent, AND quasi-judicial 
regulatory body to be [named the Energy Regulatory Comiiiission (ERC). For 
this purpose,] KNOWN AS "THE COMMISSION". EXECUTIVE ORDER 
NO. 172, SERIES OF 1987, AS AMENDED, IS HEREBY REPEALED LV 
TOTO, AND the [existing] Energy Regulatoiy R o a d  (ERB) created [ui~dcr 
Executive Order No. 172, as amended,] THEREUNDER i s  hereby abolished[.] 
AND 
ALL 
ITS 
POWER§ 
ARE 
FORMALLY 
AND 
TOTALLY 
ABOLISilE? 
AND TERMINATED.] THE ENERGY EGULATORY 


36 
BOARD (Em) CREATED UNDER EXECUTIVE ORDER NO. 1’72, AS 
AMENDED, IS HEREBY ABOLISHED. IN LIEU THEREOF, THEKE IS 
HEREBY CREATED AN IMPARTIAL, INDEPENDENT, AND QUASI- 
JUDICIAL REGULATORY BODY TO BE NAMED THE: ENERGY 
REGULATORY COMMISSION (ERC), WHICH FOR PURPOSES O F  
THIS ACT IS REFERRED TO AS THE “COMMISSION”.‘ ALL 7‘BE 
POWERS FORMERLY VESTED IN THE ENERGY ILEGULATORP 
BOARD UNDER EXECUTIVE ORDER NO. 172, AS AMENDED, TIIAT 
ARE CONSISTENT WITH THE PROVISIONS OF TKlS ACT nL4l’ BE 
EXERCISED BY THE COMMISSION. 
THE COMMISSION SHALL ENJOY FISCAL AUTONOMY 
PROVKDED THAT A SUPPLEMENTAL BUDGET THROUGH TEE 
DEPARTMENT OF .BUDGET AND MANAGEMENT 
SHALL riE 
SUBMITTED TO CONGRESS, 
WITHOUT 
PRJUIJDICE 
m TEE 
POWERS OF THE COlMMlSSION ON AUDIT OVER THE FINANCIAL 
ACTIVITIES OF THE COMMISSION. 
1 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
31 
3s 
39 
40 
4.1 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
“SEC. 38. 
QUALIFICATIONS OF THE MEMBERS 01.‘ T I E  
CUMMISSION. - The Coinmission shall be composed of a Chairmaii aid four 
(4) ASSOCIATE inenibcrs to be appointed by the President of the Philippines. 
The Chairman and the ASSOCIATE members of the Comiiiissiori shall be 
natural-born citizens OF THE PHXLKPPINES and PERMANENT residents [of 
the 
Philippines,] 
THEREOF 
FOR 
THE 
LAST 
FIVE 
YEARS 
BE REPUTABLE INDIVIDUALS [persons] of good moral character, at least 
thirty-five (35) yeas of age, and [ofl POSSESSING KNOWN AND recognized 
PROFESSIONAL competence in any of the following fields: JOP EITHER] 
energy, law, economics, finance, commerce, [OR] ACCOUNTANCY, or 
engineering[, with]. EXCEPT FOR THE MEMBERS FROM THE I A W  
AND 
ACCOUNTANCY 
PROFESSIONS, 
T I E  
TIIREE 
OTXIER 
MEMBERS MUST IXAVE at least [three (3)J PKVE (5) years OF actual, 
ACTIVE, and distinguished PROFESSIONAL experience in their respective 
fields [of experlise: PTovided, That out ofl. OF the [four (4)1 FIVE (5) iiiembers 
of the Commission, at least one (1) OF THEM shall be a REPUTABLE AND 
RESPECTED member of the Philippine Bar with at least ten (10) yeai-s OF 
DISTINGUlSI3ED experience in the active practice of THE law. and 
ANOTHER one (1) shall be a REPUTABLE AND RESP.ECTED certified 
public accountant, ALSO with at least ten (10) years OF DISTINGUISHED 
experience in THE active practice[.] OF THE PROFESSION 
OF 
ACCOUNTANCY. 
IMMEDIATELY PRECEDING THEIR APPOINTMENTS. TI-IEY s rum 
Within three (3) months from the creation of the [ERC] 
COMKISSXON, 
the Chairman shalI ,submit [for the approval by] TO lhe Presidelit of the 
Philippines FOR HIS APPROVAL [the] A new organizational siructiu-e and A 
LIST ORpIantiZlu OF positions necessary to can7 out the powers and functions 
of the IERC.] COMMISSION. 
The Chaiiiiian of the Commission, who shall he a RESPECTED, 
REPUTABLE, AND DISTINGUISHED member of the Philippiue Bar, shall 
act as the Chief Executive Officer of the Commission. 
All members of the Commission shall have a FIXED, R’ON- 
RENEWABLE, AND NBN-EXTENDIBLE temi of seven (7) years[: Pmsded, 
That for]. FOR the first appointees, the Chaiiinai shall hold oKicc for seven (7) 
years[,]; two (2) ASSOCIATE members shall hold office for five (5) years; and 
the [otlier] LAST two (2) ASSOCIATE members shall hold office foJ- tl~ree (3) 
years: Prdvideil[, firiher], That appointment to any future vacaiicy shall only be 
for the unexpired tem of the predecessor[: PvovideLl, jhcdly, That tiiei.e,shall be 


S I  
no reappointment and in no case shall any member serve for more thaii scvcn (7) 
years in the Commission]. 
The Chaii-inm and THE ASSOCIATE members of the Commission shall 
assume office at ihe beginning of their RESPECTIVE tenns: Provided, Tha!, if 
upon the effectivity of this Act, the Comniissioii has not beeii constiliited, and the 
new staffing patteiii [and] OR pluntillu OF positions [have] HAS not been 
approved and/OR filled-up, tbe [current Board and existing personnel of ERB] 
MEMBERS 
AND 
PERSONNEL 
OF THE 
DEFUNCT 
ENERGY 
REGULATORY BOARD shall continue io hold office[.] UNTIL TIBY ARE 
CORRESPONDINGLY REPLACED. 
[The existing] ANY OF THE personnel of the DEFUNCT ERR, iT HE 
OR SHE IS qualified AND UAS NOT BEEN THE SUBJECT OF ANY 
OR OF MALFEASANCE OR MISFEASANCE IN OFFICE, shall be given 
preference in [the] tilling [up ofl THE NEW STAFFING PATTERN OK 
pluntilln OF positions created in [the ERC,] AND FOR TEE COMMISSXON, 
subject to SUCH REQUIREMENTS OF existing civil servicc rules and 
regulations. 
ADMINISTRATIVE OR CRIMINAL CASE OF DERELICTION OF m m  
[Members] ALL THE MEMBERS of the Coniiiiission shall enjoy 
security of tenure, and THEY shall not be suspended or I-emoved fiom orfice 
[except] ON ANY GROUND OTHER TIlAN for A just cause as PROVIDED 
AND specified by law. 
“SEC. 39. PROHIBITIONS - The Chainnan and the ASSOCIATE 
members of the Commission [or any ofl AND their relatives within the foui-ih 
civil degree of consanguiiiity or affinity, WHETHER SUCH PEIISONhL 
KELATIONS ARE kgitknate, [or] coninioii law, [sliall be] OR OTHER53iE12, 
ARE prohibited kom holding any interest whatsoever, either as investor, 
stoclcholder, officer, or director, in any company or entity engaged in the husiness 
of transmitting, generating, supplying, AGGREGATING, or distributing [any 
fonii of energy and must, therefore, divest tlu-ough sale or legal disposition or any 
and all interests in the energy sector upon assumption or office.] 
ELECTRICITY. 
1 
2 
3 
4 
5 
6 
7 
S 
9 
10 
11 
12 
13 
14 
15 
16 
17 
1s 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
UPON THE ASSUMPTION BY THE CHAIIUI!lAN AND THE 
ASSOCIATE 
MEMBERS 
OF THE 
COMMISSION 
OF TI-KEIR 
RESPECTIVE POSITIONS, THE CHAIRMAN AND THE ASSOCIATE 
MEMBERS OF THE COMMISSION AND THEIR IUBPECTTVE 
RELATIVES WITHIN THE PRQSCFUBED DEGREE Of.: PERSONAL 
RELATIONS 
MUST 
DIVEST 
THEMSELVES 
OF ALL 
TEIEIR 
PROHIBITED 
INTEREST, 
THROUGIl 
REAL 
ARMS 
LENGTH 
CORRESPONDING PAYMENT OF ALL TAXES DUE, IF ANY, ON 
WITHOUT ANY 
PROVISION GRANTING A RIGHT TO TI37 
TRANSFEROR OF SUCX PROHIBITED INTEREST TO REPURCX-XASE 
SUCH TRANSFERRED OR DISPOSED PROHIBITED INTEREST, -4ND 
[OR) MUST RESIGN FROM ALL TBEXR PROSCRIBED POSPTIQNS IN 
TRANSACTIONS OR OTXER VALID FORMS OF DISPOSITION, vmx 
SUCH TRANSACTION OR OTHER FQRMS OF DisPomroiv AND 
THE ELECTRIC POWER INDUSTRY. 
“SEC. 40. QUQRUfW- The presence or at least three (3) !rieinbe~-s of the 
Commission shall constitute a quorum [and the majority] IN EVERY 
OFFICIAL .AND FORMAL MEETING AND/OR L-IEAIUNG OF T I E  
COMMISSION. THE vote of‘ [two (2) members in a meeting where ,a quorum 
is present] A MAJORITY OF THE QUORUM shall be necessay for the 
adoption of [any] A VALID iule, ruling, order, resolution, decision or other 


38 
OFFICIAL AND FORhIAL'act of the Cominissioii in tlie exercise of its quasi- 
judicial functions: 
Pvovided, That in fixing THE TRANSRUSSXQN, 
SUBTRANSMISSION, AND DISTRIBUTION WI-IEELXNG CFIA1iGE.S 
AND THE TRANSMISSION, SUBTRANSMISSION, ARTD DISTRIBU'UON 
rates and tariffs[,] AS WELL AS IN RENDERING ANY O m E R  OR 
DECISION ON ANY ISSUE OR MATTER THAT SHALL RESULT IN A N  
INCREASE IN THE FINANCIAL BURDEN TO THE END-USERS OF 
ELECTRICITY, an affirmative vote of AT LEAST three (3) members OF 
THE COMMISSION shall be required. 
"SEC.[ 39141. Compensation and Other Emoluments f07- [ERCJ THE 
COMMZSSZON Persoiznel. 
-The 
compensation aiid [other emolumcuis~ 
ALLOWANCES for tlie Chairman and THE ASSOCIATE membeas of tlie 
Commission [and the ERC persoiuiel] AS WELL AS THE SALARIES AND 
ALLOWANCES OF THE COMMISSION PERSONNEL shall be exempted 
from [tlie coverage ofi Republic Act No. 6758, otherwise luiown as the "Salary 
Staiidardization Act". For this purpose, the schedule of [compensatioii of tlie ER.C 
personnel,] SALARIES AND ALLOWANCES OF TfiE COR1htISSION 
PERSONNEL, except for the initial [salaries aid] coiiipeiisatioii AX.) 
ALLOWANCES of the Chairman and THE ASSOCIATE meiiibeas oE 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 froin 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: Pi-oviclecl, That in 
no case shall the rate OF SUCH COMPEN§ATION OR SAL,A.RlES AND 
ALLOWANCES be upgraded more than once a year. 
The Chairman and THE ASSOCIATE members of the Coiniiijssion shall 
initially be entitled to the same [salaries] COMPENSATION, allowanccs, aid 
benefits as those of the Presiding Justice and Associate Justices of the Suprexe 
Court, respectively. The Chairman aiid the ASSOCIATE members of' the 
Commission shall, upon completion of their term OF OFPlCE or upon becoming 
eligible for retirement under existing laws, be entitled to tlie same rctireineat 
benefits and privileges provided for tlic Presiding Justice and Associate Justices 
of the Supreme Court, respectively 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
I t  
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
4 
I 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
"SEC. [40]42. Enhancement of Teclinical Competence. - The [ERC] 
COMMISSION shall establish rigorous training programs for its staff [for tlic 
purpose of enhancing the] AND PERSONNEL TO ENIXANCE THEIR 
tecluiical competence AND 
THAT of the [ERC in the following are,as: 
evaluation of technical perfomiance and monitoring ofJ COMMISSION 1N 
ORDER TO STRENGTHEN ITS KNOWLEDGE AND CAPACITY TO 
MONITOR AND EVALUATE THE TECHNICAL CAPABILITIES AND 
OVERALL PEmORMANCE OF THE ELECTRIC POWER INDIJSTIiY 
PARTICIPANTS, INCLUDING THEIR compliance with THE service [and], 
perfoniiance, [standards, performaice-based rate-setting refom7, environiiieiml 
standards, and such other areas as wiIl1 AND ENVIRONRlENTAL 
STANDARDS, AS WELL AS WITI-I THE REFORMS PROVIDED IN THIS 
ACT, AND ABOVE ALL TO enable the (ERC] COMMISSION lo adequately 
perform its duties and EFFICIENTLY ACCOMPLISH ITS ftinclions. 
"SEC. 
141143. PROTECTION AND Promotion of Coimrnigr RIGFITS 
AND Interests. - THE COMMISSION SHALL ENSURE TIIE 
ADEQUATE PROTECTION AND PROMOTION OF THE INTERESTS 
OF THE ELECTRICITY CONSUMERS AND UPNOLD TI~IEIR BASIC 
RIGHTS AS FOLLOWS: 


39 
TO HAVE QUALITY, RELIABLE, AFFORDABLE, SAFE, 
ANI? REGULAR SUPPLY OF ELECTRIC POWER; 
TO BE ACCORDED COURTEOUS, PROMPT, AND NON- 
DISCIUMINATORY 
SERVICE 
BY 
THE 
IXECTRTC 
SERVICE PROVIDER, 
TO 
BE 
GIVEN 
A 
TMNSPARENT, 
NON- 
DISCRIMINATORY AND 
REASONABLE 
PRICE 
OF 
ELECTRICITY CONSISTENT WITH TElE PROVXSLONS 
OF THIS ACT. 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
1% 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
4.1 
42 
43 
44 
45 
46 
47 
4.8 
49 
50 
51 
52 
5 3 
54 
55 
56 
57 
5% 
59 
TO BE AN INFORMED ELECTRIC CONSUMER ANI) 
GIVEN ADEQUATE ACCESS TO INFORiVIATION ON 
MATTERS AFFECTING THE ELECTRIC SERVICE OF 
THE CONSUMER CONCERNED: 
TO 
BE 
ACCORDED 
PROMPT 
AND 
SPFEDY 
RESOLUTION 
OF COMPLAINTS 
BY 
BOTH 
'YXE 
DISTRIBUTION UTILITY AND/OR THE COMMISSION; 
TO I m O W  AND CHOOSE THE ELECTRIC SERVICE 
RF,TAILER UPON THE IMPLEMENTATION OF RETA1L 
COMPETITION; AND 
TO ORGANIZE THEMSELVES AS 
A 
CONSIJMFR 
ORGANIZATION IN THE FFUNCHISE: AREA WTIEXE 
THEY BELONG AND WHERE THEY AI= 
SERVED BY 
THE DISTRIBUTION UTILITY OR AS A NETWORK OF 
ORGANIZATION. 
The [ERC] COMMISSION shall [handle] ATTEND AND RESPOND 
EXPEDITIOUSLY TO THE [consumer] complaints OF END-USElIS OF 
ELECTRICITY, and IT SHALL ensure AND SAFEGUARD the adeciiiate, 
EFFECTIVE, AND SUSTAINED proinotion [of consunicr interests.] AND 
ELECTEUCXTY. 
PROTECTION 
OF 
THE 
INTERESTS 
OF 
END-(JSERS 
OF 
THE COMMISSION SHALL. ENSURE THAT DISTRlBlJTXON 
UTILITIES SHALL SUPPLY THE LEAST COST ELECTRICITY FO Li 
THEIR CAPTIVE END-USERS; 
"SEC. [42]44. Budget of the [ERC.] COMMISSION. - The amoiuit of 
One Hundred fifty million pesos (Pl50,000,000.00) 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 Oflice of the 
President or the Philippines. Thereafter, lhe annual budget of the [ERC] 
COMMISSION shall be included in the [regular] GENERAL or special 
appropriations[.] OF THE NATIONAL GOVERNMENT. 
"SEC. 143145. Functions of the (ERC.] COMMISSION. - The [ERCi 
COMMISSION shall, AMONG OTI-IERS, [(I)] pr0mot.e coinpelition[,]; 
[(2)] encourage market developnientf,,]; [(3)] PROTECT END-USERS OF 
ELECTRICITY 
FROM 
DISCRIMINATORY, 
UNFAIR: 
 OR^ 
CONFISCATORY 
RATES; 
[(4)] ensure 
[customer], 
UPON 
X'HE 
ESTABLISHMENT OF THE, CONTESTABLE MARKET, END-IJSER'S 
choice; and '[(5)] CONTROL, PREVENT, AND penalize abuse oi'mar-ltet power 
in the restructured [electricity] ELECTRIC POWER industry. 


40 
1 
2 
3 
4 
5 
6 
1 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
21 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
3s 
39 
40 
41 
42 
43 
44 
45 
46 
47 
4s 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
[In appropriate cases, the ERCJ THE COMMISSION is authorized to 
issue A cease aiid desist order, WHENEVER IT IS NEEDED TO SERVE 'TEE 
INTEREST OF THE PUBLIC OR THE INTEREST OF JUSTICE, after due 
notice TO ALL INTERESTED PARTIES and PUBLIC hearing. 
THE COMMISSION, ACTING AS A QUASI-JUDICIAL BODY, 
SHALL CONDUCT PUBLlC HEAMNGS ON ALL APPLlCATlONS FOR 
WHICH, 
WILL 
AFFECT 
PMVATE 
MGRTS 
OR 
XMI'OSE 
OBLIGATIONS OR WILL RESULT IN ANY INCREASE IN TIIE PRICE 
OF ELECTRICITY TO THE CONSUMERS. 
NENCEFOKTB, NO 
MAY BE ISSUED. 
RATE INCREASE AND ON ANY ISSUE, THE rummnmx OF 
PROVISIONAL AUTKORKTY FOR ELECTRICITY wm INCREASE 
[Towards this end, it shall] IN ADDITION, THE COMRIXSSLON 
SI-IALL PERFORM AND EXERCISE AND be responsible for the ~ollowiiig 
[ltey] POWERS AND fiiiictions [in the restructured industry]: 
(a) 
Enforce the iinplemeiiting rules and regulatioiis of this Act[;], 
WHICH ARE NOT INCONSISTENT WITH ANY OF ITS PROVISIONS; 
(b) 
Within six (6) months [from] IMRlEDIATELV FOLLOWING 
the effectivity of this Act, promulgate and enforce, in accordaim with {law,] 
THE APPLICABLE PROVISIONS OF THIS ACT, a Natioilal Grid Code aiid 
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 eslablis!;meiit of 
the SAID perfoimaiice standards, the nature and function of the cntities 
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 foiniulatioii of the SAID 
financial capability standards, the nature and fuiictioii of the [entity] 
ENTITIES slid1 CAREFULLY be considered: Provided, funher, 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 pihlic hearings 
the universal cha-ge, to be imposed on all electricity end-users pursuaa'i to 
Section 34 hereof]; AND 
(111) 
DETERMINE, PIX, AND APPROVE, AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PlJBLlC 
HEARING, THE XTEMIZED AMOUNTS OF THE UNIVERShL 
ELECTRICITY PURSUANT TO SECTION 33 OF TBIS ACT. 
CI-IARGE TO BE IMPOSED ON ALL 
END-USERS OF 
(e) 
Enforce the rules and regulations governing the operations of the 
[electricity spot niairliet] WESM and the activities of the spot inarkel opcrator aiid 
other participaiits in the spot market, for the purpose of ensuring a Sreater AND 
RELIABLE supply and rational pricing of electricity; 
(d) 
Deteimiiie the [level] AMOUNT AND EXFENT or cross 
subsidies in the existing retail rate uiitil the same is FINALLY reiiioved p~ii-s~Etiit 
to Secljon 174 hereof;] 71 OF THIS ACT; 


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(e) 
Amend, REVISE, or revoke, after due notice TO ALL 
INTERESTED PARTIES and PUBLIC hearing, llie authority lo opcrate [oil 
GRANTED TO any person or entity which fails to comply with tlie 
PERTINENT provisions [hereof, the LRR, or any] OF THIS ACT, OR VI’ITH 
ANY OF THE IMPLEMENTING RULES AND REGULATIONS OF THIS 
ACT, OR WITH ANY DECISION, order, or resolution of the [EKC.] 
COMMISSION. hi the event a divestment, CESSATION, OR DESISTANCE 
is required, the [ERC] COMMISSION shall, THROUGH A FORIiIAL 
ORDER FOR THAT’ PURPOSE, allow the affected parly [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 110 case SHALL THE 
SAID REASONABLE TIlVlE exceed twelve (12) months h-om tlie issuancc ol’ 
the SAID FORMAL order[;) OF THE COMMISSION; 
(f) 
[In the public interest eslablish] ESTABLXSX-I; and enforce [a 
methodology for setting] IN THE INTEREST OF THE GENERAL PLJBLIC 
AFTER 
TAKING 
INTO 
ACCOUNT 
ALL 
RELEVANT 
CONSIDERATIONS, 
INCLUDING 
THE 
EFFICIENCY 
OR 
INEFFICIENCY OF THE KEGULATED ENTITIES, AND AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC BEAIUNG, 
JUST 
AND 
REASONABLE 
transmission 
and 
distribution 
WON- 
DISCRIMINATORY wheeling [rates and] CHARGES, AS WELL, AS JUST 
AND REASONABLE NON-DISCRIMINATORY retail rates for the captive 
market of [a] disti-ibution [utility, taking into account all relevant considerations, 
iiicluding the efficiency or inefficiency of tlie regulated entities. The rates iiiust be 
such as to] UTILITIES, WI-IICH SHALL allow the recovery of ALL just aod 
reasonable costs[,] and [a] GIVE A JUST AND reasonable retum on TI-l’fi rate 
base (ROlC3) OF THE REGULATED ENTITIES to enable [the entity] TX-IEM 
to operate viably[. The ERC may adopt alternative fortiis o f  iiitemationally- 
accepted rate-setting nielhodology as it may deem appropriate. The rate-sclting 
inethodology 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 oE 
system losses prescribed in Section 10 of Republic Act No. 7832, is hereby 
amended and shall be replaced by caps which shall be deteiiiiined by the ERC 
based ,on load density, sales mix, cost of service, delivery voltage and other 
technical considerations it may promulgate. The ERC shall detemine such foim 
of rate-setting methodology, which sliall promote efficiency. hi case the rate 
setting methodology used is RORB, it shall be subject to the follo\ving 
guidelines:], AND WHICEI SHALL ENSURE A JUST AND REASONABLE 
PRICE OF ELECTRICITY. 
AND IN TEIE INTEREST OF rm END-USERS 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 FQLI,OWINC 
GUIDELINES: 
(I) THE RATE BASE SHALL CONSIST OF THE AVERAGE 
VALUE OF ALL ASSETS, FACILITIES, PKQPERTY, AND 
DISTRIBUTION UTILITY, AT THE BEGINN1NF AND AT TIJE 
END OF ITS FISCAL YEAR, AS SHOWN IN TEE PROPERTY 
ACCOUNTS OF THE TRANSCO OR OF TNII: DISTR113CrTION 
UTILITY, AS THE CASE MAY BE, WHICH ARE DIRECTLY 
USED AND USEFUL IN PROVIDING THE SERVICE TO THE: 
END-USERS 
OF 
ELECTRICITY, 
LESS 
TBE ACCRUED 
ALLOWANCE FOR DEPRECIATION TAKEN FOR THE YEAR 
PERMANENT IMPROVEMENTS OF THE TRRNSCO OR OF mi: 


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2s 
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5s 
42 
ON THE REGULATED ENTITY'S DEPRECIABLE ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT 
IMPROVENLENTS, 
PLUS 
TWO 
MONTBS 
PRUDENT 
OPERATING CAPITAL. 
(11) THE VALUE OF THE FRANCHISE OF THE TRRNSCO 
OR OF THE DISTRIBUTION UTILITY 
SHALL NOT 1112 
INCLUDED 
IN 
THE RATE 
BASE FOR PURPOSES 
OF 
RATEMAKING. 
(111) 
THE 
VALUE 
OF ANY 
ASSET, 
FACXLITY, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS 
NOT 
ACTUALLY USED AND USEFUL FOR THE PURPOSE OF 
RENDERING THE SERVICE OF THE TMNSCO OR 0 1 7  ' T I E  
RATE BASE, HOWEVER USEFUL THE ASSET, FACXLI'TY, 
PROPERTY, AND PERMANENT IMPROVEMENTS MAY HAVE 
BEEN IN THE PAST OR MAY YET BE IN THE FUTURE. 
DISTRIBUTION UTILITY SHALL NOT BE INCLUDED IH n m  
(IV) THE VALUE OF REAL OR PERSOXAL PROPERTY 
PURCHASED AND HELD BY THE TRANSCO OR BY TFlE 
DISTRIBUTION UTILITY FOR THE NEEDS OF POSSIBLE 
FUTURE GROWTI-X SHALL NOT [LIICEWISE) BE INCLUDI.<D TN 
THE RATE RASE. 
(V) 
THE 
COST 
OF 
OVER-ADEQUATE 
ASSETS: 
FACILITIES, PROPERTY, AND PERMANENT IMPROVEMENTS 
SHALL NOT [SIMILARLY] BE ALLOWED TO BE INCLUDED IN 
DISTRIBUTION UTILITY. 
THE 
RATE 
BASE 
OR 
THE 
TRANSCO 
OR 
OF THE 
cyr) THE TOTAL AMOUNT 
OF ALL 
DEPOS~TS 
REQUIRED BY A DISTRIBUTION UTILITY Fmn'r END-USERS 
OF ELECTRICITY AS A CONDITION OF mrmnoN AND 
AMOUNT OF ACCUMULATED INTERESTS THEREON, sr-rAn 
CONTINUATION OF SERVICE, INCLUDING ?'BE TOTAL 
NOT 
BE 
INCLUDED 
IN THE 
RATE 
RASE 
OF TI-IE 
DISTMBUTION UTILITY. 
(VXI) THE VALUE OF NEWLY CONSTRUCTED OR 
INSTALLED 
ASSETS, 
FACILITIES, 
PROPERTY, 
ANT) 
PERMANENT 
IMPROVEMENTS 
WHICJl 
ARE 
TO 
RE 
INCLUDED IN THE RATE BASE SHALL BE THE PRUDENT 
ORIGINAL COSTS OF SUCH NEWLY CONSTRUCTED OR 
INSTALLED 
ASSETS, 
FACILITIES, 
PROPERTY, 
.\ND 
PERMANENT IMPROVEMENTS. 
(VIII) FOR ASSETS, FACILITIES, PROPERTY, AND 
PERMANENT IMPROVEMENTS WHICH A m  NOT NEWLY 
CONSTRUCTED 
OR 
INSTALLED, 
THEIR 
VALUE, 
FOR 
THEIR 
CURRENT 
TOTAL 
REVALUATION 
VALUE, 
IN 
ACCORDANCE WITH THE REVALUATXON AUTWORT7,ED 
UNDER THIS ACT, AS SHOWN IN THE PROPERTY ACCOLINTS 
OF THE TRANSCO OR OF THE DISTRIBUTION UTILITY, IXSS 
THE 
TOTAL 
ACCUMULATED 
ALLOWANCES 
FOR 
DEPRECIATION TAKEN BY THE REGULATED ENTITIES 
EVERY FISCAL YEAR ON THEIR DEPRF,CIARLE ASSETS, 
PUWOSES OF DETERMINING THE KATE BASE, SIXALL DE 


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FACILITIES, 
PROPERTY, 
AND 
PERMAMEET 
IMPROVEMENTS. 
(IX) 
A, 
REASONABLE 
ALLOWANCE 
FOR 
DEPRECIATION BASED ON A RATE CONSISTENTLY APPLIED 
IN 
ACCORDANCE 
WITH 
WIDELY 
ACCEPTED 
AND 
RECOGNlZED ACCOUNTING RULES SI-IALL BE TAlOCN 
EVERY FISCAL YEAR ON EACH OF THE DEPl??ClhRLE 
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERiiIANENT 
IMPROVEMENTS OF THE TRANSCO OR UP A DISTRIBUTION 
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 Book OF TH.E TIUR'SCO 
OR O F  THE DISTRIBUTION UTILITY, IN ACCORDANCE WITH: 
ACCOUNTS AS THE COMMISSION MAY PRESCRIBE FOR THE 
PROTECTION OF THE STOCKf-IOLDERS, BQNDBOLUERS, 
CREDITORS, AND THE GENERAL PUBLIC, ESPECIALLY THE 
END-USERS OF ELECTRICITY. 
UTILITY. SUCH YEARLY ALLOWANCE FOR Drmt~txx.mioiv 
SUCH RULES, REGULATIONS, AND m sucu FORMS OF 'rm 
(X) THE TRANSCO OR THE DISTRIBUTION LITILXTY 
SHALL CONSISTENTLY CONFORM TO ITS DEPRECIATION 
RATE OR RATES SO DETERMlNED AND FIXED, AND SIlALL 
SET ASIDE THE MONEYS SO ALLOTTED POX SUClX 
DEPRECIATION ALLOWANCES OUT OF ITS EARNIXCS IN A 
DEPRECIATION FUND, AND IT SHALL CARRY THE SAME IN 
A DEPRECIATION FUND ACCOUNT. THE INCOME PROM 
INVESTMENTS OF THE MONEYS IN SUCH DEPRECIATION 
FUND ACCOUNT SHALL BE INCLUDED AND RZCORDED 1N 
SUCH DEPRECXATlON FUND ACCOUNT AND SI'LALL, x'OR1vL A 
PART OF THE DEPRECIATION FUND. 
(XI) THE DEPRECIATION 
FUND 
SHALL NOT 
BE 
EXPENDED 
OTHER[WISE] 
THAN 
FOR 
NEW 
CONSTRUCTIONS, 
OR 
FOR 
THE 
IMPROVEMENTS, 
REPLACEMENTS, EXTENSIONS, OR ENHANCEMENT OF T I E  
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS 
OF 
THE 
TRANSCO 
OR 
OF 
T I E  
DISTRIBUTION UTILITY THAT SHALL RAISE AND IMPROVE 
THE DEGREE OF EFFICIENCY AND QUALITY OF TI312 
SERVICE TO BE RENDERED BY THE TRANSCO OR BY TI-TE 
DISTRXBUTION UTILITY. 
(XI) 
ANY 
AMOUNT 
DRAWN 
FROM 
TRE 
DEPRECIATION F'IJND AND USED FOR THE IMPROVER~lENT, 
,REPLACEMENT, EXTENSION, OR ENHANCEMENT OF THE 
ASSETS, FACILITIES, 
PROPERTY, AND PEIWIANENT 
IMPROVEMENTS 
OF 
THE 
TRANSCO 
OR 
OF 
THE 
DISTRIBUTION UTILITY, OR FOR THE CONSTRUCTION OF 
ANY NEW ASSET, FACILITY, PROPERTY, AND PERiMANICNT 
IMPROVEMENT 
OF 
THE 
TRANSCO 
OR 
OF 
TI~IE 
'DISTRIBUTION UTILITY, SHALL BECOME PART OF TRE 
RATE BASE. 
[(i)] (XlIl) 
[For purposes of determining the rate base, thc] 
.,'THE TRANSCO or [my] A distribution utility [may be allowedj IS 


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AUTHORIZED to revalue its [eligible] assets [not more than], 
FACILITIES, PROPERTY, AND PERMANENT 6MPRBVEMENTS 
CONSTITUTING ITS RATE BASE once every three (3) years [by an] 
THROUGH THE SERVICES OF AN EXPEIUEIENCED, WELL- 
ESTABLISHED, 
REPIJTABLE, 
AND 
indepeiident 
appr;iisal 
company[:], 
IN 
ACCORDANCE 
WITH 
SOUND 
AND 
CONSISTENTLY MAINTAINED METHOD OF VALUATION: 
Provided, Izowevev, 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 PERlOD THAT SUCH EXTRAORDINARY 
INFLATION OR DEVALUATION LASTS: Proi~ilkeil, jiwfher, That 
the (ERC] COMMISSION, IN THAT EVENT, shall exert [erforts 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. 
(XIV) A JUST AND REASONABLE RATK OF N T U R N  Oh‘ 
THE RATE BASE OF THE TlUNSCO OR OF A DISTXifBUTXON 
PER ANNUM OF SUCH RATE BASE. 
UTILITY SHALL NOT EXCEED TWELVE PERCENTUM (12%) 
(XV) THE CAP ON THE RECOVERABLE U T E  OF A 
JUST AND REASONABLE SYSTEMS LOSS PRESCRIBED IN 
SECTION 10 OF REPUBLIC ACT NO. 7332 SEIALI, BE 
MAINTAINED IN THE DENSELY POPULATED CITIES, U W A N  
CENTERS, AND 
MUNICIPALITIES OF THE 
COUNTRY: 
PROVIDED, THAT IT SNALL BE ACCORDINGLY AMENDED 
AND REPLACED IN AREAS OTHER THAN THE DENSELY 
MUNICIPALITIES OF THE COUNTRY BY CAPS WX-TXCK SHALL 
BE DETERMINED AND FIXED BY THE COMIEIISSXON, AFTER 
DUE NOTICE TO ALL INTERESTED PARTES AND PUBLIC 
POPULATED 
CITIES, 
URBAN 
CENTERS, 
AND 
HEARING, BASED ON LOAD DENSITY, SALES MIX, 
cosr OF 
SERVICE, DELIVERY VOLTAGE, AND OTHER TECr~mctiXJ 
CONSIDERATIONS 
THAT 
THE 
COMFhISSION 
MiiY 
PROMULGATE: PROVIDED FURTHER, THAT AIVY NEW CAI’ 
FOR RECOVERABLE SYSTEMS LOSS IN AREAS OTHER THAN 
THE DENSELY POPULATED CITIES, URBAN CENTERS, AND 
MUNICIPALITIES OF THE COUNTRY SFIALL ALSO TAKE 
INTO CONSIDERATION AND PROVIDE FOR A JUST AND 
REASONABLE SYSTEMS LOSS FOR THE INEFFICCfENCIES Of? 
THE 
SYSTEMS 
OF 
ELECTRIC 
COOPERATIVES 
IN 
PERF’ORMlNG 
THEIR 
MISSIONARY 
ELECTRIFICATION 
FUNCTIONS. 
(XVI) CORPORATE INCOME TAX LEVIED ON THE NET 
TAXABLE 
INCOME 
OF 
THE 
TRANSCO 
012 , O F  A 
INDIRECTLY, BE PASSED ON TO THE 
END-USERS OF 
ELECTRlClTY. 
DISTRIBUTION 
UTILITY 
SHALL NOT, 
m m C n , Y  
OR 
[(ii)] (XVlI) Interest expenses [are not ailowable] 
OF ‘THE 
TRANSkO OK OF A DISTRIBUTKON UTILITY SHALL NO?’ BE 
.ALLOWED AS deductions [from permissible] FOR PUlhPOSES OF 
DETERMINING A JUST AND REASONABLE return on rate base[;]. 


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2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
1s 
1‘) 
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21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
3 1 
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33 
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3s 
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(XVIII) 
NEGLIGENT 
OR 
WASTEFUL 
LOSSES, 
INCLUDING LOSSES DUE TO UNNECESSARY EMlORS IN 
CONSTRUCTION OR IN EQUIPMENT PROCUREMENT, A S  
WELL AS LOSSES DUE TO LACK OF ORDINARY ECONOMY, 
PRUDENCE, 
FORESIGIIT, 
AND 
EFFICIENCY 
IN 
MANAGEMENT, INCURRED BY THE TRANSCO OR RY A 
DISTRIBUTION UTILITY SHALL NOT BE PERMITTED -4s 
OPERATING CHARGES AND, THEREFORE, SHALL NOT RIS 
ALLOWED 
AS 
DEDUCTIONS 
FOR 
PURTQSES 
OF 
RATEMAIQNG. 
(xix) THE AMOUNT OF PENALTIES AND/Ort cosm OF 
REMEDIES AMSING FROM ANY vxoLATrON OF CONTRACT 
BY THE TRANSCO OR BY A DISTRLBUTION UTILITY SlIAT,L 
NOT BE PASSED ON TQ THE END-USERS OF ELECTRTCI’I’Y. 
[(iii)] (XX) 
[In] FOR PURPOSES OF deterniiiiiiig {eligiblc] 
THE JUST AND REASONABLE cost of seivices that will be passed 011 
to 
the 
end-users[,] 
OF 
ELECTRICITY, 
the 
[l?RC] 
TKE 
COMMISSION shall establish minimum efficiency perfoi-niaiice 
standards for the TRANSCO and THE distribution utilities, iricludiiig 
systems losses, interruption frequency rates, and coliection e Cficiencyl;] 
OF THE REGULATED ENTITIES. 
[(iv)] (%XI) [Further, in] IN deteiinining THE rate base[,] OF 
THE TRANSCO OR OF ANY DISTRIBUTION UTILITY, TKE 
COMMISSION SHALL NOT ALLOW the TRANSCO or any 
distribution utility [shall not be allowed] to include TEE COSTS OF 
management inefficiencies [like cost], SUCH AS, BUT NOT LIMITED 
TO, TEIE COSTS of project delays not [excused] %XCLTS,4RL,E by 
force majeure[,] OR THE penalties and related interest CHARGES 
ARXSING during construction [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 [utiliticsj 
UTILITY, which shall become part of the rate base, shall be subject to 
[verification by the ERC] TEE APPROVAL OF THE COMMLSSION, 
AFTER DUE NOTICE TO ALL INTERJXSTED PARTIES AND 
PUBLIC HEARING, IN ORDER to ensure that the [contracting andj 
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 
PROCURI?MENT SHALL BE DONE IN ACCORDANCE WfTR 
OPEN COMPETITXVE PUBLIC BIDDING AND IN COMPLIANCE 
WITH THE REQUIREMENTS OF EXISTING APPLICABLE 
PROCUREMENT LAWS, A§ WELL AS IN ACCORDANCE W1TX-I 
transparent and accepted industry procureinent and purchasing practices 
[to protect the public interest.], SO THAT THE INTEREST OF THE 
GENERAL PUBLIC AND THAT OF THE 
END-USERS OF 
ELECTRICITY SHALL BE PROTECTED. 
(XXIII) 
IN 
ASCERTAINING, 
FOR 
IWTI?AlhI(lNG 
PURPOSES, THE COST OF OR INVESTMENT 1N 
ASSETS, 
FACILITIES, PROPERTY, AND PERMANENT IAMPROVEMEYTS 
WHr‘CH SHALL BE USED AND USEFUL IN PROVIDING TXIE 
COST OR INVESTMENT SHALL NOT INCLUDE OUTLAYS OR 
ALLOWANCES 
FOR 
RECKLESS, 
EXTRAVAGANT, 
ELECTRIC SERVICE TO END-USERS OF ELECTMCITY, SUCLl 


46 
UNNECESSARY, 
OR XNOPPORTUNE EXPENDITURES OR 
COSTS OF CONSTRUCTION. 
THE COMMISSION, TO PROMOTE EIW‘TCIENCY AND 
FAIRNESS IN THE ELECTRIC POWER INDUSTRY AND WHEN 
JUSTIFIED AND DEMANDED BY THE NATIONAL INTEW,S?. 
MAY ADOPT, AITER DUE NOTICE TO ALL XNTERl?STEI> 
PARTIES AND PUBLIC HEARING, ANY OTHER ALTERNATII’E 
FORM OF INTERNATlONALLY-ACCEPTED 
RZETHOD 
OF 
RATEMAKING THAT SHALL BEST SERVE THE I\.IUTUrtt 
INTERJZST OF TfIE GENERAL PUBLIC, THE END-USERS OF 
ELECTIUCITY, 
AND 
THE 
ELECTRrC 
INDUSTRY 
PARTICIPANTS. 
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2 
3 
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48 
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50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
IN EVERY CASE, THE RATEMAKING immor) so 
ADOPTED 
AND 
APPLIED 
MUST 
BE 
NElTIXER 
EXTORTIONARY TO THE END-USERS OF ELECTRICITY NOR 
CONFlSCATORY 
TO 
THE 
TRANSCO 
OR 
TO 
THE 
DISTRIBUTION 
UTILITIES, AND 
MUST 
FIJRT13EIIIMOR.E 
ENSURE THAT THE PlUCE OF ELECTRICITY IS JUST AND 
REASONABLE. 
THE RATEMAIUNG POWER HEREIN GR4N1’ED TO 
THE COMMISSION MUST BE EXERCISED IN SUCE A 
MANNER THAT EVERY DOUBT MUST BE RESOLVED IN 
FAVOR OF THE PROTECTION OF THE RIGI-ITS OF THE 
GENERAL PUBLIC. 
THE COMMISSION IS HEREBY AUTX-XORIZED TO 
DIVIDE 
THE 
FMNCHISE 
AREA 
OR 
AREAS 
OF 
A 
SUCH DIVISION OR DIVISIONS WXLL PROMOTE GREATER 
EFFICIENCY, LOWER PRICE OF ELECTRICITY TO END- 
USERS, 
TRANSPARENCY, 
AND 
MORE 
EFFECTIVE 
ELECTRIC POWER INDUSTRY. 
DISTRIBUTION UTILITY INTO SUB-AREA OR SUB-AREAS, TF 
REGULATION OF THE REGULATED ENTITLES IN TIXE 
IN ALL CASES OF RATE-MAICING, THE SOLlClTOK 
GENERAL MUST BE NOTIFIED OF AND WALL APPEAR IN 
THE 
PROCEEDINGS 
BEFORE 
THE 
COMMISSION 
TO 
REPRESENT THE GOVERNMENT THEREIN SO THAT TkW. 
INTEREST OF THE GENERAL PUBLIC AND THE INTEREST 
OF THE END-USERS OF ELECTRICITY wrLL BE PROTECTED. 
SIMILARLY, TBE COMMISSION ON AUDIT (COA) IS 
HEREBY RJZQUIRED TO ASSIST TEE COMMISSION, WHEN 
NEEDED BY THE LATTER, TO VERIFY AND VALIDATE THE 
FACT§ AND FIGURES INVOLVED IN ANY RATEhfAIUNC, 
PROCEEDINGS BEFORE THE COMMISSION. 
(9) 
Three (3) years after the imposition ofthe universal charge, ensure 
that the charges of the TPXANSCO or OF any distribution urility shall [bear] 
INCLUDE no cross subsidies between THE grids, within [grids,] A GRID, or 
between, classes of [customers] END-USERS OF ELECTRICXTV, except as 
provided [herein;] IN THIS ACT; 
(11) 
Review and approve any chariges [on] IN the teriiis and coiiditiniis 
I 
of service of the TRANSCO or OF my distribution utility; 


47 
(i) 
Allow the TMNSCO to charge user fees for aicillaiy services to 
all eiectIic power industry participants or self-generating entities coiuiected to the 
grid. Such fees shall be fixed by the [ERC] 
COMMISSION after due notice TO 
ALL INTERESTED PARTIES and public hearing; 
fi) 
Set 
a 
lifeline 
rate 
€or 
[the 
niarginaliz,ed 
end-users;] 
[DESERVING] LOW-INCOME END-USERS OF ELECTRICITY; 
(IC) 
Monitor and 
take SUCH APPROPRIATE measures 
in 
accordance with this Act to penaliz,e ANY abuse of market power, ANY 
cartelization, aiid/OR ANY anti-competitive or discriminatory behavior by any 
electric power industry pailicipant; 
(1) 
Inipose fines AND/or penalties for any non-compliance with or 
breach of ANY PROVISION OF this Act, [the IRR] OR O F  ANY 
PROVISION OF THE IMPLEMENTING RULES AND REGULATIONS or 
this Act, [and the] OR OF ANY DECISION, ORDERS, ItESOLU'TIONS, 
rules, aid regulations which lit] TIIE COMMISSION proniulgates or 
administers; 
(m) 
Take any other action THAT BAS BEEN delegated to it [p~u-sum1 
to] UNDER this Act; 
(11) 
[Before the end ofl ON OR BEFORE THE TEIIRTIETW (30'") 
OF April [THIRTY (30)] of each year, submit to the Office of the President of 
the Philippines and TO TSE Congress[,] OF THE PHILIPPINES, 7VITXI A 
copy fk-nislled TO the DOE, 
an annual report containing ALL such inatters or 
cases which have been filed before or referred lo it during Ibe preceding yeax-> the 
actions and proceedings undertaken BY IT IN CONNECTION THEP.EWTR, 
and its decision or resolution in each AND EVERY case. The [EKCJ 
COMMISSION shall nialce SUFFICIENT copies of such repoi-ts AND MAKT 
THEM available lo any interested party upon payment of a REASONABLE 
charge which [reflects] SHALL BE SUFFKCIENT TO COVER, AT LEAST, 
the prjnling costs. The IERC] COMMISSION shall publish all its decisions 
involving rates and THOSE INVOLVING anti-competitive cases in at least one 
(1) newspaper of general circulation, and/or [AND OR] post THE SAME 
electronically, and circulate to all interested electric power industry pai<icipants 
copies or its DECISIONS OR resolutioiis to MAICE ICNOWN AND ensure A 
fair and impartial treatment[;] OF EVERYONE AFFECTED; 
(0) 
Monitor ALL the activities in the genemtion and supply SIDE of 
the electric power industry [with the end iii view of promoting] IN ORDER TO 
PROMOTE free niarltet competition THEREIN and [ensuring] IN ORDER TO 
ENSURE that the allocation or pass througli of hulk purchase cost by 
[distributors] DISTRXBUTXON UTILITIES is transparent[,] AND non- 
discriminatory and that any existing subsidies, IF SUCH WERE THE CASE, 
shall be divided pro-rata miong all retail suppliers; 
(p) 
Act on applications for or modifications of cei-tificates of public 
convenie~ice [and/or] [AND OR] necessity, licenses, or pel-iiiits or fraiichised 
[electric] DISTRIBUTION utilities iii accordance with law; and revoke, review, 
and modify such certificates, licenses or permits in appropriate cases, such as 
FOR KNSTANCE in cases of violations of the GI-id Code, TKE D!,stributioii 
Code, and [otliei-1 THE rules and regulations issued by the [ERG] 
COMMISSION in accordiuice with [law;] THE PROVlSlONS OF THIS 
ACT; 
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(q) 
Act on THE applications for [cost recovery andj JUST AND 
REASONABLE 
COSTS 
RECOVERlES 
AND 
FOR 
JUST 
AND 
REASONABLE retiirii on THE deiiiand side management projects; 
(r) 
In the exercise of its investigative and quasi-judicia[ powers, act 
against any ELECTRIC POWER INDUSTRY participant or player [in the 
energy sector] for violations of any law, rule, and regulation governing tlie 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 seclor] or by any person, as may 
be provided by law, and require any pcrsoii or entity to submil any repori 01- data 
[relative] THAT MAY BE RELEVANT to any investigation or heariiig BEING 
conducted BY THE CQMMXSSION pursuant to this Act; 
(s) 
[Inspect,] IN Tk-lE EXERCISE OF I T S  QUASI-JUDICJAL 
POWER, INSPECT AT ANY TIME, 011 its own DIRECTLY or through [drily 
authorized1 representatives[,] DULY AUTIIOMZED BY IT, the premises, 
books of accounts, and records of any person or entity [at any time, in ihe exercise 
of its quasi-judicial power] for purposes of deteiiiiining tlie existence of any auti- 
competitive behavior and/or [AND OR] market power abuse [andj OX any 
violation of n k s  and regulations issued by the [ERC;] COMMISSLON; 
(t) 
Perform such other regulatory functions as [are) MAY BE 
appropriate and necessary [in order] to ensure thc successful resti-ucturing and 
modernization of the electi-ic power industty, (such as,] li\\’CLUDING, but not 
limited to, the ADOPTION AND ENFORCEMENT OF rilles and guidelines, 
NOT INCONSISTENT WITH TBE PROVISIONS OF TEXIS ACT, uiidei- 
which generation companies, THE TRANSCO, AND THE distribution utilities 
[which], WHOSE SHARES OF STOCK arc not YET publicly listed TN THE 
PHILIPPINE STOCK EXCHANGE (PSE), shall offer and sei1 to the 
GENERAL public [a portion], WITH PRIORITY AN13 PREFERENCE 
GIVEN TO END-USERS OF ELECTRICITY, not less h
i
 
filrteeii per 
(1 5%) of their RESPECTIVE coinmon shares of stoclts: Provided, hoi,iww~ 
That geiieration companies[,] AND distribution utilities [or their respective 
holding companies] that are already listed in the PSE TO THE EXTEXT 01: 
AT 
LEAST FIFTEEN PERCENT OF THEIR RESPECTIVE COMMON 
SHARES OF STOCK are deemed [in compliance. For existing companies, 
such] 
TO 
HAVE 
COMPLIED 
WITE-I 
THIS 
REQUIREMENT. 
GENERATION COMPANIES, THE TRANSCO, AND DTSTRTBUlXON 
UTILITIES WHICH ARE NOT YET LISTED IN TEE PSF, OR 
GENERATION COMPANXES AND DISTRIBUTION UTILITIES WHICR, 
THOUGH ALREADY LISTED IN THE rsE, HAVE NOT YET REACHED 
THE MINIMUM FIFTEEN PERCENT (is%) LISTING raQumawwr, 
SHALL COMPLY OR COMPLETE WITH THE REQUIRED LISTING 
AND public offering [shall be implemented] not later than five (5) years fiom the 
effectivity of this Act. New GENERATION companies AND DISTRIBUTION 
UTILITIES shall iniplenient tlieir respective LISTING AND public offerings 
not later than five (5) years Erom the issuance of their cerlificate of coniplii~iice[;] 
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 
tlie ERC in] ARISING FROM OR IMPOSED UNDER THE PROVISIONS 
OF THIS ACT, AS WELI, 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 EI,E,C?‘XIC POWER 
XNDUSTRY participants or players [in tlie energy sector]. 
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All notices of hearings to be conducted by tlie [ERC] COMMISSION for 
the p q o s e  of fixing rates or fees shall be pnblished at Icast twice for two 
successive weeks in two (2) newspapers of nationwide circulatioii. 
"[SEC. 44. 
Trarisfer of Powers and Fui~tioizs. - The powers and 
functions of the Energy Regulatory Board not inconsistent with the provisions of 
this Act are hereby transferred to the [ERC] COMMISSION. The foregoing 
transfer or powers and €tinctions shall include all applicable fiinds aild 
appropriations, records, equipment, property and personnel as may be necessruy.] 
"SEC. 46. 
Cimss Owzwship, Murket Power Abiise 
a11.d hiti-. 
Coilupetihe Behavior. - No 'participant in the [ekclrjcily] ELE.CTRXC 
POWER industry [or any other person may] SHALL engage in any KIND OF 
anti-competitive behavior, including, but iiot limited to, cross-subsidizalioii, pi-icc 
or marlet manipulation, or ANY other unfair trade practices THAT ARE 
detriineiital to the DEVELOPMENT, encouragement, and proteclioii of THE 
contestable markets. 
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No 
generation 
company, 
distribution 
utility, 
A 
COXZPANV 
SUPPLYING ELECTRICITY, or ANY OF its [respective subsidiary or 
affiliate or stockholder or official o f  a generation coinpaiiy or distribution utility, 
or other entity engaged in generating and supplying electricity specifieii by EliC] 
SUBSIDIARIES, AFFILIATES, STOCKHOLDERS, OFFICIALS, OR 
DIRECTORS, OR THE OFFICIALS, DIRECTORS, OK O'THI3R 
STOCICHOLDERS OF SUCH SUBSIDIARIES OR AFFILIATES, OR ANY 
RELATIVES 
OF 
SUCH 
STOCI(FIOLDERS, 
OFFICIALS, 
OR 
DIRECTORS within the fourth civil degree of consanguinity or affinity, shall he 
allowed to HAVE AND hold, DIRECTLY OR INDIRECTLY, any interest[, 
directly or indirectly,] in THE TRANSCO or [its] IN THE TRANSCQ'S 
concessionaire. Likewise, the TRANSCO, or its concessionaire, or my of [its) 
THE stocIdioldcrs, [or] officials, OR DIRECTORS OF TEE TRANSCO OR 
ITS 
CONCESSIONAIRE, 
or 
any 
[of their] 
relatives 
OF SUCR 
STOCIGIOLDERS, OFFICIALS OR DIRECTORS OF THE TRANSCO 
OR ITS CONCESSIONAIRE within the fourth civil degree of consaiiguiiiity or 
affinity, shall iiot 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 oficio government-appoin ted repi-cseiitatives, no 
[person who is an] officer or director, OR STOCKHOLDER of [he TR4NSCO 
or {its] OFFICER, DIRECTOR, OR STOCIGXOLDER OF 'EIR 
TRANSCO'S concessionaire shall be an officer OF director of any genu a t' ion 
company, distribution utility, or [supplier.] A COMPANY SUPPLYIN 6- 
ELECTRXCITY. 
A 
DISTRIBUTION UTILITY, WHICH IS EXISTING AT 'TfXE 
TIME OF THE EFFECTIVITY OF THIS ACT AND M'XIICK HOLDS 
SHARES OF STOCIC IN A GENERATION COMPANY AND/OR 
ANOTHER 
DISTRIBUTION 
UTILITY 
ON 
OR 
BEFORE 
'TEE 
EFFECTIVITY OF THIS ACT, MAY CONTINUE TO BOLD SUCH 
INCREASE THE NUMBER OF SUCEX SHARES OF STOCK EXCEYI' 
WHEN SUCH INCREASE IS THE RESULT OF A DECLARATION OF 
CORPORATE STOCK DIVIDENDS. 
SHARES OF STOCK BUT SHALL NOT BE AIJTBOR~ZXD 'ro 
AFTER THE EFFECTIVITY 
OF THIS 
ACT, 
NO 
NE&' 
DISTRIBUTION 
UTILITY 
OR ANY 
OF ITS 
SUBSIDIARIES, 
AFFILIATES, STOCKHOLDERS, OFFICIALS, OR DIMXXORS, OR 
THE OFFICIALS, DIRECTORS, OR OTBER STOCICUOLDERS OF' 
SUCH SUBSIDIARIES OR AFFlLIATES, INCLUDING THE RELATIVES 


50 
OF SUCH STOCKHOLDERS, OFFICIALS, OR DIRECTORS w m - I r N  
THE FOURTH CIVIL DEGREE OF CQNSANGUINlTU OR AFFINITY 
SHALL BE ALLOWED TO HAVE AND WOLD, DIRECTLY OR 
INDIRECTLY, ANY INTEREST IN ANY 
NEW OR EXISTING 
GENERATION COMPANY. 
NEITHER MAY A [ANY] NEW GENERATION COhIPANY OR 
ANY 
OF ITS 
SUBSIDIARIES, AFFILIATES, 
STOCKHOLDERS, 
OFFICIALS, OR DIRECTORS, OR THE OFFICIALS, DIRECTORS, OR 
OTHER STOCI(H0LDERS OF SUCH SUBSIDIARIES OR AFFILIATES, 
INCLUDING 
THE 
RELATIVES 
OF 
SUCH 
STOCICIXOLDERS: 
OFFICIALS, OR DIRECTORS WITHIN THE FOURTR ClVIL DEGREE 
OF CONSANGUINITY OR AFFINITY BE ALLOWED TO HAVE AND 
HOLD, DIRECTLY OR INDIRECTLY, ANY INTEREST IN ANOTHER 
GENERATION COMPANY, [ANY] OR IN A NEW OR EXXSTXNG 
DISTRIBUTION UTILITY. 
[PROVZDED, THAT ANY DXSTIUBUTION 
UTILITY OR GENERATION COMPANY, AS THE CASE MAY ,BE, 
HOLDING ANY SUCH. PROSCRIBeD INTEREST IN h GENERATION 
COMPANY OR DISTRIBUTION UTILITY, AT THE TIME OF THE 
ENACTMENT OF THIS ACT, SHALL DXVEST ITS I'ROSCRIIlED 
INTEREST IN SUCH GENERATION COMPANY OR DISTRIBUTION 
UTILITY NOT LATER THAN THE END OF THE YEAR TWO 
TI-IOUSAND EIGHT (ZOOS).] 
AFTER THE EFFECTIVITY OF THIS ACT AND EXCEPT AS 
OTfIERWISE AUTHORIZED AND PROVIDED EIEREIN, NO BOLDING 
COMPANY OR OTHER ENTITY, WHETHER IN THE FORM OF A 
CORPORATION OR NOT, SHALL BE ALLOWED TO FIAVE AND 
HOLD VOTING SHARES QP STOCK SIMULTANEOUSLY. IN A 
GENERATION COMPANY AND IN A DISTRIBUTION UTILITY XN 
SUCH NUMBERS AS TO ENABLE THE HOLDING COMPANY OR 
OTHER ENTITY TO ELECT A DIRECTOR IN BOTH TIIE 
GENERATION COMPANY AND THE DISTRIBUTION urmm. 
To promote true market competition aid prevent harmful inonopoly and 
market power abuse, the [ERC] COMMISSION shall enforce tlie €ollowjng 
safeguards: 
(a) 
No company or related group [can] SHALL BE ALLOWED TO 
own, operate or control more than thirty percent (30%) of the installed geiieratiiig 
capacity of a grid and/or [AND OR] twenty-five (25%) of tlie [national] installed 
NATIONAL generating capacity. "Related group" includes a person's business 
interests, including its subsidiaries, affiliates, directors or officers or any of tlieiu 
relatives by consanguinity or affinity, legitimate or corninon law, within :he 
fourth civil degree; 
(b) 
Distribution utilities may enter into bilateral power supply 
CONTRACT OR contracts subject to review AND APPROVAL by the [ERC:] 
COMMISSION, AFTER DUE NOTICE TO ALL INTEKESTED PAR'X'IES 
AND PUBLIC HEARING: Provided, That [such review shall only be requirsd 
for disk-ibution utilities whose mai-lozts have not reached houschold denianlc: Icvel. 
For the purpose of preventing market power abuse between associated fii-nis 
engaged in generation and disti-ibutioii, no distribution utility shall be allowed 10 
source fiom bilateral power supply contracts more than firty percent (50%) of its 
total demand ii-om an associated fiiin engaged in generation but such liii:itatioii, 
however, shall not prejudice contracts entered into prior to !he effectivity of this 
Act. An associated firm with respect to another entity reki-s to any pel-son which, 
alone or together with any other penon, directly or jiidireclly, tlxougl~ one 01- 
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more intemediaries, controls, is controlled by, or is under coininoii control with, 
such entity; andl FOR THE PROTECTION OF CAPTIVE MARKETS ANI) 
IN ORDER TO ENSURF, HEALTHY COMPETITION 
IN TEE 
GENERATION SECTOR OF THE ELECTRIC POWER INDUSTRY, 
BILATERAL POWER SUPPLY CONTRACT OR CONTRACTS OF 
SIXTY MEGAWATTS (60 MW) OR MORE SHALL BE 5UBJECT TO 
OPEN COMPETITIVE PUBLIC BIDDING CONDUCTED BY A B1.D 
COMMITTEE UNDER THE SUPERVXSION OF THE COMMISSION 
AND 
COMPOSED OF REPRESENTATIVE 
EACH FROM 'IXE 
NATIONAL ECONOMIC DEVELOPMENT AUTHORITY (NEDA), THE 
DEPARTMENT OF ENERGY (DOE), THE DISTRlBtJTION UTII-ITY 
CONCERNED, 
AND 
AN 
EXPERIENCED 
AND 
WPUTARLE 
SELECTED BY THE COMMISSION. 
REPRESENTATIVE 
OF THE ELECTKIC END-USERS GROUPS 
IN ORDER TO PREVENT ABUSE OF MAIUCET POWER AN0 
ANTI-COMPETITIVE BEUAVIOR, NO 
DXSTRIBUTION UTILITY 
POWER SUPPLY CONTRACT OR CONTRACTS M O W  TSAN T13.JRTY 
REQUIREMENTS FROM ANY GENERATION COMPANY OR GROUP 
OF GENERATING COMPANIES WHOLLY OWNED OR CONTROLIXD 
HAS, ON THE EFFECTIVITY OF THIS ACT, SUCH CONTRACT OR 
CONTRACTS WHICH EXCEED THE ALLOWABLE TZIR'IW TI-KREII: 
PERCENT (33%) LIMlT SET FORTH HEMIN SHALL DESIST FROM 
FURTHER AWARDING ADDITIONAL ELECTRIC P0VI'E.R SUPPLY 
OR GROUP OF GENERATING COMPANIES WHOLLY OWNED OR 
CONTROLLED BY THE SAME INTERESTS, UNTIL ITS PRESENT 
THE 
PROPOSED 
ADDITIONAL 
ELECTRIC 
POWER 
SUPP1,Y 
CONTRACT OR CONTRACTS WITH ANY GENERATION COME'WY 
OR GROUP OF GENERATING COMPANIES WHOLLY OWNED OR 
CONTROLLED BY THE SAME INTERESTS SHALL COMPLY WITH 
PROVIDED, TEAT ANY EXTENSION OR EXPANSION OF EXISTING 
ELECTRIC POWER SUPPLY CONTRACT OR CONTRACTS SHALL 
BE DEEMED AS NEW CONTRACT OR CONTRACTS FOX PURPOSES 
SHALL BE ALLOWED TO SOURCE FROM A BILATERAL m x n u c  
THREE PERCENT (33%) OF ITS TOTAL ELECTRIC POWER suwr,Y 
BY THE SAME INTERESTS. ANY DISTRIBUTION UTILITY TIIAT 
CONTRACT OR CONTRACTS WIT51 ANY GENERATION COWIPANY 
ELECTRIC POWER SUPPLY REQUIREMENTS, WIXEN ADDED 'ro 
Trm THIRTY THREE PERCENT (33%) LIMIT SET FORTH HEREIN: 
OF THE LIMITATION SET FORTH I-IEmm. 
(c) 
For the first five (5) years from the establislment orthe [wholesale 
elechicity spot market] WXSM, no distribution utility shall source inore than 
ninety percent (90%) of its total demand from bilateral ELECTRIC power 
supply contracts. TCIE COMMISSION MAY, FROM TIME TO TIME, 
FROM THE WESM AND, IN MERITORIOUS INSTANCES, WAIVE 
IMPLEMENTATION OF SUCH REQUIREMENT, SUJJSECT TO A 
PUBLIC HEARING. 
mvmw THE APPROPRIATE LEVEL OF DEMAND TO BE SOURCED 
For purposes of this Section, the grid basis shall consist of tlirec (3) 
separate grids, namely: THE Luzoii GRID, THE Visayas GRIR, and THE 
Mindaiiao GRID. [The ERC shall have the authority] TIIF, CQMh/IlSSION IS 
I-IErZEBY AUTHORlZED to modify or amend this definition of a grid \dieu 
two or [more] ALL of the three separate grids become sufficiently intercoiiiiected 
to constitute a single grid, or [as] WHEN conditioiis may otherwise [peimii.] 
REQUIRE SUCH MODIFICATION OR AMENDMENT. 


52 
Exceptions f?om [these] THE ABOVE limitations shall be allowed Tor 
isolated grids that are not coiinected to the high voltage t~aiisniis.sion sysleni. 
[Except as otherwise provided for in this Section, any restrictioii on ownerships 
and/or control between or within sectors of the electricity industry rimy he 
imposed by ERC only insofar as the enforcement of the provisions of this Section 
is conceined]. 
The [ERC] COMMISSION shall, within one (1) yeai- fiom the ei-fcctivity 
of this Act, promulgate inies aid regulations, CONSKSTENT WlTI-l TRE 
PROVISIONS OF THIS ACT, to ensure and promote coinpctitioii, encourage 
mal-let development, [a~id] custonier choice, and [discoura~e~pcnalize] 
DETER 
AND/OR PENALIZE ANY abuse of market power, cartelization, [aid] OR any 
anti-competitive or discrimiiiatory behavior, in order to further the intent o f  this 
Act and IN ORDER TO protect the [public] interest[.] OF THE GENERAL 
PUBLIC AND TIiE END-USERS OF ELECTRICITY. Such rules aiid 
regulations shall COVER AND defiiie the following: 
(a) 
the relevant markets for purposes of establjshing TCIIE 
PRESENCE OR ABSENCE OF MONOPOLIZATION, CARTELIZATION, 
BEHAVIOR, AND/OR abuse or misuse [of monopoly or] OF market [positiou;] 
ANTI-COMPETITIVE 
AND/OR 
DISCRIMINATORY 
ACT 
OR 
POWER; 
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58 
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,3 3 
(b) 
(c) 
areas of isolated grids; and 
the periodic reportorial requirements [ofl FROPI THE electric 
power industry participants [as] THAT niay be necessary to enforce the 
provisions of this Section. 
The [ERCJ COMMISSION shall, motu proprio, monitor and, VV’REN 
WARRANTED BY THE ATTENDANT FACTS, penalize m y  SLiCA 
MONOPOLIZATION, CARTELIZATION, ABUSE OF market powcr 
[abuse] or anti-competitive AND/or discriminatory act 01- behavior by any 
[participant i.n the] electric power industry[.] PARTICIPANT. Upon firiditig that 
[a marlcet] AN ELECTRIC POWER INDUSTRY participaiit has engaged in 
such MONOPOLIZATION, CARTELIZATION, ABUSE OF MARKET 
behavior, the [ERC] COMMISSION shall FORTHWIT13 ISSUE A CEASE 
AND DESIST ORDER TO THE ERRING ELECTRIC PO\VE,R 
INDUSTRY PARTICIPANT, AND THEREAFTER PEkRIIAi”TLY slop 
and redress the same. Such [remedies shall, without limitation, include] 
REDRESS SHALL INCLUDE, AMONG OTHER REiCIEDLES THAT MAY 
BE APPROPRIATE UNDER THE CIRCUMSTANCES, the iiripositioii of 
price [controls,] CONTROL, THE issuance of [injunctions, req~~ircment 
ofl 
INJUNCTKVE RELIEF, AND THE divestment or disgorgemiit of excess 
profits, and THE imposition of fines and penalties pursuant to ’ THE 
APPLICABLE PROVISIONS OF this Act. 
POWER, OR ANTI-COMPETITIVE AND/OR DISCRlMXNATORY act 01- 
The [ERC] 
COMMISSION shall, within one (1) year from the effectivity 
of this Act, promulgate SUCH rules [aid regulations providing for a compfai.nt 
procedure that, without limitation, provides] AS MAY BE NECESSARY, NOT 
INCONSISTENT WXTH THE PROVISIONS OF THIS ACT, THAT WILL 
ESTABLISH A PROCEDURE WHEREBY the accused party, with DUE 
notice [and] TO ALL INTERESTED PARTIES AND PUBLIC f-fEAI<lNG, 
SI-IALL BE GIVEN BY THE COMMISSION an opportunity io be heard. 
“SEC. [46]47. Fines und Periulties. - The fines aiid/OR penalties Lhat 
shall be iniposed by the (ERC] COR4MISSION for aily ~:jolation or or 11011- 
compliance with ANY PROVISIONS OF this Act or [the LRRJ ANY RIJLES 


53 
AND REGULATIONS KMPLEMENTING THIS ACT shall, DEPENDING 
UPON THE GRAVITY OF TBE OFFENSE, range from a ~iiinimtnii of Fiiiy 
thousand pesos (P50,000.00) to a maximum of Fifty million 
pesos 
(P50,000,000.00). 
Any person who is found guilty of any of the prohibiled acts pursuant to 
Section [4S] 43 hereof shall suffer the penalty ofprisim niayor [and] OR a fine 
ranging from Ten thousand pesos (Pl0,000.00) to Ten million pesos 
(PlO,000.000.00), 
or both [PENALTY AND FINE], at the discretion of the 
APPROPRIATE TRIAL court. 
The STOCKHOLDERS, OFFICERS, inenibers of the Boud of 
Directors of [the juridical companies participating in or covered in the] A 
generation [companies] COMPANY, [tlie] distribution [utilities] UTILITY 
COMPANY, the TRANSCO [or itsJ, THE LATTER'S concessionaire 
COMPANY, or A COMPANY THAT ACTS AS 
A supplier 
017 
ELECTRICITY AND THE RELATIVES OF SUCH STOCIKI-IOLDERS, 
OFFICERS, OR MEMBERS OF THE BOARD,OF DIRECTORS WITFIXN 
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 ai amount not exceeding double the 
amount of damages caused by the [offendel-] OFFENDING COMPANII or by 
iniprisonnient of one (I) year [or] TO two (2) years or both SUCIX FIXE AND 
IMPRISONMENT, al the discretion of the APPROPRIATE TRIAL court. 
[This rule shall apply to the members of the Board who lcuowingly or by neglect 
allows the commission or omission under the law.] 
If tlie 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 a
h
 TI-IE 
PA-VMENT OF 131s OR RER FINE OR THE service of HIS OR EER 
sentence. [HIS OR HER IMPR1SONMENT.J 
[Any case] CASES which [involves] INVOLVE question of Pact shall be 
THOSE which involve 
appealable to the Court of Appeals [and those]. 
PURELY questions of law shall be directly appealable to the Supreme Court. 
[The] ANY administrative sanction that [may be imposed by the ERCJ 
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 ofpisisioii cumeccionoi or 
a fine ranging from Five thousand pesos (P5,000.00) to Five million pcsos 
(P5,000,000.00), 
or both, at the discretion of the court, sl~all he imposed on any 
person, including but not limited to the president, meinbcr of the Board, Chief 
Executive Officer or Chief' Operating Officer of the corporation, parfnership, 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 [toJ CHARGED IN an administrative proceeding UNDER 
THE PROVISIONS OF TEE3 ACT may, at any time, make an ofkf 10 the 
[EKC,] COMMISSION, EITHER conditionally or otherwise, Cor a jconsenled] 
CONSENT decree, OR voluntary compliance, or VOLUNTARY desistance 
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5s 


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[and], OR AM17 other settlement of the case. The offer [and], INCLUDING aiiy 
or all of the ultimate facts upon which tlie orfer is based, shall be [considel-ecl] 
DEEMED TO HAVE BEEN MADE foi- settlement purposes only and shall iiyt 
be used, FOR ANY PURPOSE, as evidence against THE OFFERING PARTY 
OR AGAINST aiiy OTHER party for [any other purpose] TNAT I\IJATTER, 
and shall not constitute an admission [by the pai-ty inalting the ofrerj of my 
violation of the laws, rules, regulations, orders [and], OR resolutions of the [ERC, 
nor] COMMlSSiON BY TI-IE PARTY MAICING THE OFFER. NEITHER 
SHALT, THE ACT OF THE COMMXSSION, THE GOVERNMENT, OR 
ANY INTERESTED OR AGGRTEVED PARTY IN ENTERTAINING AND 
DISCUSSING THE OFFER BE DEEMED AS AN ESTOPPEL NOR as a 
waiver ON TI-IE PART OF THE COMMISSION, THE GOVERNMXET, 
OR ANY INTERESTED OR AGCFUEVED PARTY to file any [warranfed] 
criminal [actions.] ACTION, IF WAFUUNTED BY THE FACTS. 
In addition, Congress may, upon recommendation of the DOE Imdior 
ERC,] AND/OR THE COMMXSSION, revoke such franchise or privilege 
granted to the [party who] ELECTRIC POWER INDUSTRY PARTICIPANT 
THAT violated the provisions of this Act. 
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"CHAPTER V 
"PRIVATIZATION OF THE ASSETS OF THE NATJONAL 
POWER CORPORATION 
"SEC. [47]48. NPC Pvivntizntiorz. - Except for the assets of SPUG, 
lhe 
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 FOLLOWXNG tlie effectivity of this Act, th.e PSALM Ccip. 
shall submit [a plan for the endorsement by] TO the Joint Congressional Power 
Commission FOR ITS ENDQRSEMENT TO and [tlie] approval [ofj BY the 
President of the Philippines, A PLAN on the total privatization of Ilie 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 Goveiiimcnt of the [NPC] 
generation assets, real eslate, AND other disposable assets [as well as] OF NEC, 
INCLUDING ITS IPP contracts, shall be (optimized;] THE MOST 
ADVANTAGEOUS AND BENEFICIAL TO THE NATIONAL INTEREST; 
(b) 
The pailicipalion 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 sliall be 
encouraged; 
In [the] case [of] THE PURCHASE AND ACQUiSITrOX 1s DONE 
BY foreign investors, [at least] THEY SHALL COMPLY WITH THE 
NATIONALITY EQUIREMENTS OF THE CONSTXTUTION, \?'BEN 
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 he SOURCED OUTSIDE TRE 
PHILIPPINES AND inwardly remitted and registered with the Bangko SenIra1 
ng Pilipinas. 


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(c) 
[The NPC plants and/or] THE GENERATION ASSETS 01‘ 
NPC AND/OR its PP contracts assigned to PP Admiiiistmtors, jitsj 
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 [(geiicos)] (GENCOS), BUT 
ALSO ensure THEIR economic AND OPERATIONAL erficiency, 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 goverruneni 
fiom the sale and disposition of [such] THE GENERATION assets, .REAX, 
ESTATE, AND OTHER DISPOSABLE ASSETS OF NPC, INCLUDING 
ITS IPP CONTRACTS, in a manner consistent with tlie objectives or this Act. 
In [tlie] grouping [olj the generation assets and IPP coni.racts of NPC, tlie 
following criteria shall be considered: 
(1) 
A sufficient scale of operations and balaiice shect strength to 
promote the financial viability of the restructured units; 
(2) 
Broad geographical groupings to ensure eficiency of operations 
[but] without the foimation of regional companies or coiisolidaiion of market 
power; 
(3) 
Portfolio of GENERATION plants and IIT coniracts to achie:c 
management and operational synergy without dominating any part of tlie 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 Goveiiimeut while1 
AND AT THE SAME TIME ensuring attractiveness to poleiitial investors. 
(d) 
All GENERATION AND OTHER assets of NPC shall be sold in 
[an] A TRANSPARENT AND open [and transparent mamier throushI; 
COMPETITIVE public bidding[, and the]. THE same IIfANNER 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 he 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 lhat 
the iiational goveilimeiit may direct water usage in cases of shortage tn protect 
potable water, irrigation, and all other requirements imbued with public intercst; 
(f) 
The Agus and the Pulaiigui complexes in hfii1daiiZ~o shall bc 
excluded from [among] the generation [conipaiiies] ASSETS OF NPC that will 
be initially privatized. Their ownership shall be transferred to tlie PSALM Coi-p. 
[and], BUT both COMPLEXES shall continue to be operated by the NPC. Said 
coiiiplexes may be privatized not earlier than ten (10) years fiom the efrectivil): or 
this Act, and, except for Agus 111, shall not be subject to ‘ITME 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 orTEI-IE Agus and 
THE Pulangui complexes, AFTER THE LAPSE OF THE SMD TEN (10) 
YEARS FROM THE EFFECTIVITY OF THIS ACT, shall be left to the 
discretion of PSALM Corp. in consultation with Congress; 


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(g) 
The steamfield assets aid generating plants of each geothermal 
complex [shall not be sold separately. They shall] MAY be conihined and [each 
geothermal complex] [BE COMBINED AND HELD TOGETHER AS A 
SINGLE UNIT AND shall be] sold as one package [t?zrough] IN A 
TRANSPARENT 
AND OPEN, COMPETITIVE public bidding. TIE: 
GENERATING' PLANTS SHALL BE CAKlUED WITH TX3E SALE AND 
SHALL CONTINUE TO BE IN EFFECT, WITH THE RIGHTS AND 
OBLIGATIONS 
UNDER 
SUCH 
STEAM 
SALES 
AGREEMEPJT 
TUNSFERRED FROM NPC TO THE BUYER OF TRE GENEUTXNG 
PLANTS. PSALM MAY ALSO APPLY ALTERNATIVE SCHEMES FOR 
THE 
SALE, 
PRIVATIZATION 
OR 
DISPOSITION 
OF 
NI'C 
GENERATING PLANTS IN THE GEOTHERMAL COMPLEXES, 
PROVIDED SUCH ALTERNATIVE SCHEMES SHALL OPTIMIZE THE 
VALUE AND SALE PFUCES OF SAID GENERATING ASSETS. THE 
SECRETARY OF THE DEPARTMENT OF FINANCE (DOF), IN 
DETERMINE THE OPTIMUM VALUE OF SUCH ASSETS. The 
geothennal coinplexes covered by this (requirenient] PARAGRAPE (G) OF 
THIS SECTION SHALL include, but are not limited to, Tiwi-Makban, BAG 
MAN, Tongonan AND Palinpinon; 
CORRESPONDING 
STEAM SALES AGREEMENTS OF 'THIZSE. 
CONSULTATION WITH THE PRIVATIZATION 
c o m c r L ,  SEALL, 
(h) 
The ownership of the Caliraya-Botolcan-Kalayaan (CBK) piinip 
storage complex shall be transferred FROM NPC to the PSALM Coi-poration; 
(i) 
Not later than tlme (3) years from tlie 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 tlie total capacity of THE generating assets [ofj OWNED 
DIRECTLY BY Nl'C 
and [ofl the total capacity of the power plants under 
contract with NPC [located] in Luzoii aid Visayas shall have been privatized: 
Provided, That any unsold capacity FROM SUCH AGGREGATE SUM slmll 
be privatized not later than eight (8) years from the effectivity of this Act; out1 
6) 
NPC may generate and sell electricity only from the undisposed 
[generating] GENERATION assets and FROM THE UNrDIISPOSED IPP 
contracts of PSALM Cop. 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 ofDirectors. -- 
Upon the passage 
of this Act, Section 6 of RA 6395, as amended, and Section 13 of K4 7633, as 
amended, referring to the coniposition of the Natianal Power Board of Directors, 
are hereby repealed and a new Board shall be imiiiediately organized. The new 
Board shall be composed of the Secretary of Finance as Cliairnian, with the 
following as menibers: the Secretary of Energy, the Secretary of Budgct and 
Management, the Secretary of Agriculture, the Director-General of tlie National 
Economic and Development Authority, the Secretary of Enviroiuiient and Natural 
Resources, the Secretary of the Interior aid Local Goveriuiie:nt, the Secretar;! of 
the Department of Trade and Industry, and the President of tlie National Power 
Corporation. J 


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"CHAPTER VI 
"POWER SECTOR ASSETS AND LLABILITES MANAGEMENT 
"SEX. 49. 
Crecition of Power 
Sector Assets 
and Liabilities 
Mcinagenzent Corporation. 
~ 
There is hereby created a govei-iimeiit-owned and 
-controlled coiporation to be luiowii as the "Power Sector Assets and Liabilities 
Manageiiieiit Corporation", hereinafter referred to as the "PSALA4 Coi-p.", which 
shall tale OVER THE ownership AND CONTROL of all existing [NIT] 
geiieration assets, liabilities, P P  contracts, real estate, and all other disposable 
assets[.], EXCEPT THE SPUG ASSETS AND THE TRANSMISSION AND 
SUBTRANSMISSION ASSETS AND FACILITIES, OF NPC. All outstanding 
obligatiolis of the NPC arising from loans[, issuances] TO IT AND FROM 
FLOTATION BY IT of bonds, securities, and other irist~zrrr~ents 
af indebtcdne.ss 
sliall be transferred to and assumed by tlie PSALM Gorp within one hiindrccl 
eighty (180) days from the [approval] EFFECTIVITY ofthis Act. 
"SEC. 
50. 
Purpose and Objective, Domicile uiid Term of Exisleiice. 
- The priiicipal purpose of the PSALM COT. is to ADMINXSTER AND 
manage the orderly sale, disposition, and privatizatioii of [NPC] THE generation 
assets, real estate, [and] other disposable assets, and LPP coiitracts OF NPC wit!i 
tlie [objective] END IN VIEW of liquidating AND SETTLING all OP [NPPC] 
NPC'S financial obligations and stranded contract costs in [an optimal manlier.] 
GOVERNMENT AND TO THE END-USERS OF ELECTRICITY. 
THE MOST ADVANTAGEOUS AND BENEFICIAL MANNER 'ro m E  
The PSALM Corp. shall have its principal office and place of business 
[within] IN Metro Manila. 
The PSALM Corp. shall exist for a period of twenty five (25) years froiii 
the effectivity of this Act, unless olhenvise provided by [law,] THE CONGRJZSS 
OF THE PHILIPPINES, and all assets [held by it, ail], moneys, [aiidj 
properties, CONTRACTS, AND RECORDS HELD BY AND belonSing 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 
Govenment. 
"SEC. 51. 
P0weJ-s. - The PSALM Corp. shall, in the pel-oimance 
o f  its functions and for the attainment of its objective, have the following powers: 
(a) 
To formulate and implement a program for tlie DISPOSITION, 
sale, and privatization of the [NPC] GENERATION assets, REAL ESTATE, 
OTHER DISPOSABLE ASSETS, and IPP Contracts OF' NPC and the 
liquidation of INpC] ITS debts and stranded contract costs, such liquidation to be 
completed AS SOON AS POSSIBLE within the tenii of existence o f  the PSALM 
Corp.; 
(b) 
To take title to and possession of, AND administer and coilserve 
WITH THE DILIGENCE OF A GOOD FATHER OF A FAMILY, the assets 
THAT SHALL BE tiansferred AND ENTRUSTED to it; lo sell or dispose [oi'] 
the same at such [price] JUST AND REASONABLE PlUCES aid under such 
ternis and conditions as [it] may [deem] BE DEEMED necessary [or], proper, 
AND MOST ADVANTAGEOUS AND BENEFICIAL TO THE NATIONAL 
USERS OF ELECTRICITY, subject to SUCH applicable laws, 1-tiles and 
regulations; 
INTEREST, THE NATIONAL GOVERNMENT, AND TO mri END 


58 
(c) 
To take title to and possession of the (NPCJ IPP conkacts 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 FXNANCIALLTII SOLMI 
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 Ah13 
ESTABLISH THE PRUDENT amount of the stranded debts and sti-anded 
coiltract costs of NPC, which shall form the basis [for ERC in the deteiniinatioii 
of the universal charge;] OF THE COMMlSSlON IN DETERMINING 7 ° F :  
STRANDED DEBTS AND STRANDED CONTRACT COSTS; 
JUST AND REASONABLE AMOUNT OF UNXVERSAL CI-IARGl? FOR 
(e) 
To liquidate the NPC sti-anded contract costs, [utilizing] ti'SING 
FOR THAT PURPOSE the proceeds from [sales and] THE DISPOSITION, 
SALE, AND PRIVATIZATION OF THE GENERATION ASSETS, RF,AI, 
AS WELL AS THE VALUE OF SUCH other propelt)! TI-IA'T MAY I-LAVE 
BEEN contributed to it[,] (PSALM COFW.), iiicludiiig the proceeds ffom the 
universal 
charge[;] 
IMPOSED 
TO RECOVER 
THE 
STRANDED 
CONTRACT COSTS OF NPC; 
ESTATE, OTEIER D r s P o S a  ASSETS, AND IPP CONTRACTS OF NPC, 
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(Q 
To adopt rules and regulations, NOT INCONSISTENT WITH 
THE PROVISIONS OF TWS ACT, as niay be necessary or proper foor the 
orderly conduct of its business or operations; 
(g) 
(11) 
To sue and be sued in its OWN name; 
To appoint or hire, transfer, remove, and fix tlie coinpe~isatioii of 
its personnel: Provided, however, That the Corporatioil shall hire its own 
persomiel only if absolutely necessary[, and as], AS far as practicable AND TO 
SAVE ON COST, PSALM C O W .  shall avail itself of tlie services or personnel 
detailed TO IT from other goveinmiit agencies; 
(i) 
To own, bold, acquire, or lease real and personal properties as may 
be necessary or required in the discharge oEits functions; 
(j) 
To borrow money and TO incur such liabilities[, iiicluding] 
THROUGH the [issuance] FLOTATION of bonds, securities, or other 
evidences of indebtedness, utilizing FOR THAT PURPOSE ils assets as 
collateral [andor througli the guarantees] AND/OR THE GUARANTEE of the 
National Government: Provirkd, however, That all such debts 01' borrowings OP 
PSALM COW. shall [have been] BE LIQUIDATED AND paid off before the 
end of its corporate life; 
(1) 
(I) 
To restructure THE existing loans of the NPC; 
To collect, administer, and apply PROPEltLV NPC's [portion] 
SHARE of the universal charge; and 
(m) 
To structure the DISPOSITION, sale, AND privatization [or 
disposition of NPC] OF THE GENERATXON assets and lPP contracts [and!or] 
OF NPC AND/OR their ELECTRIC energy outpul, based on such tenns and 
conditions which shall [optimize the value] PRODUCE THE MOST 
ADVANTAGEOUS AND BENEFICIAL RESULTS, VALUES, and [sale] 
prices [of] FOR said CENEliATlON assets[.] AND IPP CONTRACTS AND 
THEIR 
ELECTRIC ENERGY 
OUTPUT FOR THE NATIONAL 


59 
INTEREST, FOR THE NATIONAL GOVERNMENT, AND FOR THE 
END-USERS OF ELECTRICITY. 
"SEC. 52. 
Power Sector 
Assets 
nnd 
Linbi1itie.s Muriagemeiif 
Corporajion, Meetings, Quorum und Voting. - The Colyoration shall be 
administered[,] and its powers and functions SHALL BE exercised[,] by a Board 
of Directors which shall be composed of the Secretary o f  Finance as the 
Chajinia~i, the Secretary of Budget and Management, the Secretary of the 
Deplu-tment of Energy, the Director-Geiieral o f  the National Economic and 
Development Authority, the Secretary of the Departniciit of Justice, the Secrctai-y 
o f  the Departiiient o f  Trade and Industry, aid the President of thc PSALM Cot-p., 
ALL OF WHOM SHALL SERVE as ex oflcio menibers tl~ereof. 
The Board of Directors OF THE PSALM CORP. shall [meet regularly 
and] HOLD A REGULAR MEETING ONCE EVERY MONTH M'ITXPOIJT 
NEED OF CALL ON A DAY TO BE DESIGNATED BY THE MEMBERS 
OF THE BOARD OF DIRECTORS IN A FORMAL RESOLUTlON FUR 
THAT PURPOSE. THE BOARD OF DIRECTORS OF THE PSAI,M 
CORP. MAY ALSO HOLD SPECIAL MEETINGS, IWKEN DEMANDED 
BY THE NEEDS OF THE CORPORATION AND as fi-equeiitly as may be 
necessary [to enable it] to discharge [its] THE functions and responsibilities[ .] 
OF THE MEMBERS OF THE BOARD, UPON WRITTEN NOTICE FROM 
THE CHAIRMAN, WHICH SHALL STATE, IN EVERY CASE, TIRE 
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 quoruin[,] TO DO BUSINESS, aiid the decision of 
[the majority of three (3)] AT LEAST FOUR (4) menibers present at [a] TlZE 
ineetiiig [where there is a quoruni] shall [be the] CONSTITUTE A decision or 
the Board of Directors. 
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"SEC. 53. 
Powers of the President of PSALA4 Cot?. 
~- 
The 
President of the PSALM Corp. shall be appointed by the President of the 
Philippines. hi the absence of the Chairman, the President OF THE PSALR'I 
CORP, shall preside over THE [Board] meetings[.] OF THE BOARD. 
The President of the PSALM Cop. 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 polikies and 
measures approved by the Board, and HE SHALL [take responsibility] HE 
WSPONSXBLE for the efficient discharge of ALL inaiiagenieiit functions; 
(b) 
[To] HE SHALL DIRECTLY oversee the prepaimtion of the 
budget of the PSALM Corp.; 
(c) 
(To] HE SHALL direct and supervise the operation and intcma! 
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 C o p ;  
(d) 
Subject to the guidelines and policies set [up] by the Board, [to] 
HE, SHALL appoint and fix the number and conipensatioii of subordinate 
officials aiid employees of the PSALM Coiyr.; aiid, for cause, [to] HE SlIALL 
remove, suspend, or otherwise discipline any subordinate eixpioyee 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 
Cop. at the close of each fiscal year and, upon approval lliereoi~,) 
THE 


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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; 
(Q 
[To] HE SI-IALL represent the PSALM COIF. in all dealings and 
transactions with other offices, agencies, and instrumentalities of tlie Goveriimcnt 
and with all persons and other entities, private or public, domestic 01- 
foreign; and 
(g) 
(Toj RE SHALL exercise such other powers and PISRFORM 
SUCH OTHER duties as may be vested in him by tlie Board kom time to time. 
"SEC.54. 
Exemptioti from the Sulmy Stamlurdizntion Luw. -- 
The 
salaries and benefits of employees [in] OF tlie PSALM Coq. shall be'[exenipt] 
FIXED BY ITS BOARD OR DIRECTORS AND SHALL BE EXEMPTED 
from THE PROVISIONS OF Republic Act No. 6758 [and shall be fixed by the 
PSALM Cop. Board]. 
"SEC. 55. 
Properly of the PSALM Corp. - The following funds, 
assets, contributions, and other property shall constilute the CAPITAL, ASSETS, 
AND property of the PSAUvI Corp.: 
(a) 
The generation assets, real estate, [PP contracts,j other disposalhie 
assets [of NPC], AND IPP CONTRACTS TRANSFERRED TO 17' FROM 
NPC BY VIRTUE QP THE PROVISIONS OF THIS ACT ANE THE 
proceeds from the sale or disposition of [such] ANY OR ALL OF SA119 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) 
[Traiisfersj ANY AND ALL TRANSFERS 6.om the National 
Govemnient; 
(e) 
[Proceeds] THE PROCEEDS from loans incurred to restructure 
ANDior refinaice [NPC's transferred] THE liabilities[:] OF NPC TRAT WERE 
TRANSFERRED TO IT BY VIRTUE OF THE PROVEIONS OP THIS 
ACT: Provided, however, That ANY AND all SUCH LOANS OR boil-owings 
shall be fully paid [for by] AND LIQUIDATED NOT LATER TEIAN the end 
of tlie life of the PSALM COIF.; 
(d) 
[Proceeds] THE PROCEEDS from the universal charge alloca[ed 
for THE LIQUIDATION OF THE stranded contract costs and the strawled 
debts of NJ?C; 
(e) 
(0 
(g) 
[Net] THE ANNUAL profit of NPC; 
[Net] THE ANNUAL profit of THE TRANSCO; 
[Official] ANY AND ALL KINDS OF OFFICIAL assistance, 
grants, and/OR donatiolis from external sources; and 
(11) 
[Other sources of funds as may be deterniined] ANY ANR ALL 
FUNDS DERIVED by THE PSALM Corp. [necessary for the above-mentioned 
purposes.] FROM OTHER SOURCES. 
' "SEC. 56. 
Claim Agciinst the PSALM Corp. - The Lollowing shall 
constitute the claims against the PSALM Coip: 
(a) 
[NPC] VALID liabilities OF NPC THAT WERE iran:.Lemd to 
tlie PSALM Gorp:[;] IN ACCORDANCE WITH THE PROVISIONS OF 
THIS ACT; 


61 
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(b) 
(c) 
New Loaiisl;] INCURRED BY THE PSALiM CORP. IN 
Transfers fioiii the National Government; 
ACCORDANCE WITH TBE 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. 57. 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 
Presideiitial Decree No. 269, as amended, and other existing laws. 
"SEC. 58. 
Additional Mandate of tlie National Electri/kitioii 
Administratioiz (NEA). - NEA shall develop and implement programs: 
(a) 
To prepare electric cooperatives in operating axd competing under 
the deregulated electricity market IN AN OPEN ACCESS AND RETAXI, 
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 aid upgrade THE APPLICABI,E regulatory policies 
with a view to enhancing the viability of THE rural electric cooperativcs as 
electric DISTRIBUTION utilities. 
NEA shall continue to be under the supervision of the DOE and shall 
exercise its fuiictions under Presideiitial Decree No. 269, as amended by 
Presidential Decree No. 1645, insofar as they are consistent wilh this Act. 
"SEC. 59. 
Alternative Electric Senice for Isolated Villages. -- 
'She 
provision AND RENDITION of electric service in ANY remote: SPARSELY 
POPULATED, and uiviable [villages that the franchised] A.REA WHICH IS 
COVERED BY THE FRANCHISE OF A DISTRIBUTION utility WHXCXX 
is unable to PROVIDE AND RENDER service TO THE SAID AREA for any 
reason shall be opened to ANY other qualified third paties, PWPERABLY TO 
ANY INTERESTED ADJACENT DISTRIBUTION UTILITY IN TEE 
SAME AREA. 
"SEC. 60. 
Debts of Electric Cooperatives. - Upon the effectivity of 
this Act, all outstanding financial obligations of electric cooperatives to "EA and 
other govemment agencies, incurred for the purpose of financing the rural 
electrification prograin, shall be assuined by the PSALM Corporation in 
accordaiicc with [the] A program TO BE approved by the Pxesident of tl~c 
Philippines within one (1) year from the effectivity of this Act, which SAID 
PROGRAM shall be implemented and completed withiil three (3) years from tlie 
effectivity of this Act. The [ERC] 
COMMISSION shall eiisure a 1-eduction in the 


62 
rates of electric cooperatives commensurate with [the] THEIR resulling savings 
[due to] ARISING FROM tlie removal of the amortization paynenls [oq ON 
their loans[. Within] ASSUMED BY TI-IE PSALM CORP. 
IF WXTX-TlN 
THE FIRST five (5) years from the condonation of [debf,] THE AFORESAID 
FINANCIAL OBLIGATIONS any electric cooperative [which shall] SHOULD 
transfer AND DIVEST ITSELF COMPLETELY AND ABSOLUTELY OF 
THE ownership [or] AND control o f  its assets, franchise [or], AND operations, 
SUCH ELECTRIC COOPERATIVE shall [repay] PAY BACK TO THE 
PSALM CO~I. AN AMOUNT EQUAL TO THE SHARE OF TI-IE S.41D 
ELECTRIC COOPERATIVE OF the total CONDONED debts, including 
accrued interests thereon. 
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45 
"CI-IAPTER VI11 
"GENERAL PROVISIONS 
"SEC. 61, 
Reportorid Requirements, - The DOE [shall] MUST 
take [the] ANY AND ALL necessary measures to ensure tlial the p~ovisioiis of 
this Act are properly implemented, and shall PERIODICALLY suhniit !a 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 011 or before the last week of April and 
October of each year. 
"SEC. 62. 
Joint Congressional Power Commission. - Upon the 
effectivity of this Act, a JOINT congressional POWER commission, [herein:iifler 
referred to as] the "Power Commission", is hereby constituted. The Power 
Comiuission shall be composed of fourteen (14.) members with the ciiaii-~~en 
of 
the Coininittee on Energy o f  the Senate and the Bouse of Representatives and six 
(6) additional members from each House, to be designated by the Senate 
President and the Speaker of the House of Representatives, respectively. 1:'he 
minority IN EACH HOUSE OF CONGlWSS shall be entitled to A pro rata 
representation [but shall have at] IN THE POWER COI\IIMISSION, OR AT 
THE VERY least one (1) representative [in the Power Commission.] THEREIN. 
The POWER Commission shall, in aid of legislation, perfoiiii the 
following functions, among others: 
(a) 
Set the guidelines and overall framework to OVEIlSEE, monitor, 
and eiisure the proper, FAITHFUL, AND STRICT iniplenientalioii of this Act; 
(b) 
Endorse TO AND FOR THE APPROVAL OF THE 
PRGSIDENT OF THE PHILIPPINES tlie initial privatizatioi? plan OF TEE 
NPC within one (1) month from TIXE submission of such plan to [the Power 
Commission by PSALM Corp. for approval by the President of tlie Philippuies;] 
IT BY THE PSALM CORP. AS REQUIRED UNDER SECTXON 45 OF 
THIS ACT; 
(c) 
To 
ensure 
transparency, 
FAITHFUL, 
AND 
STRICT 
ADHERENCE TO THE PROVISIONS OF THIS ACT REGARDING THE 
PRIVATIZATION OF NPC, require the submission of SUCXX PERTINENT 
DOCUMENTS OR reports lrom government agencies concerned on the condilct 
of public bidding procedures [regarding] IN CONNECTION WITH TI-%E 
privatization of [NPCJ THE genera-ation [andj ASSETS, transmission assets!;], 
REAL ESTATE, OTHER DISPOSABLE ASSETS, AND XPP CQNTWCTS 
OF NPC: 


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(a) 
Review aiid evaluate the performance o f  the industry participailts 
in reiation to the objectives [mid], timelines, AND TIME-SEQUENCES set forth 
in this Act; 
(e) 
Approve the budget for the programs of the Power Commission 
and all disbursements therefrom, including compensation of all personiiel; 
(f) 
Congress; 
Submit periodic reports to the President ofthe Philippines aid TO 
(g) 
Deterniine inherent weaknesses in the law and 1-ecoiiiiiiciid 
necessary remedial legislation or executive measures; and 
(11) 
Perfonn such other duties and functions as may be necessary to 
attain its objectives. 
hi furtherance OF THE DUTIES AND FUNCTIONS OF T I E  
POWER COMMISSIOIV AS SET FORTH hereof, the Power Coinmission is 
liereby empowered to require the DOE, [ERC] THE COMMISSION, NEA, 
TRANSCO, generation companies, distribution utilities, suppliers, and other 
electric power industry paiticipants to submit reports and all peitiiient data aiid 
information 
relating 
to 
TIJEKR 
RESPECTIVE 
ACTXVlTIES 
AND 
BUSINESSES AS WELL AS RELATING TO the performanec of their 
respective fuiictions in the industry. Any person who willfully and deliberately 
refuses without ANY just cause to extend the support and assistance required by 
tlie Power Coininission IN ORDER to effectively attain its objectives shall, qion 
conviction, be punished by imprisonment of not less than one (1) year but not 
more than six (6) years or a fine of not less tlian Fifty thotisand pesos 
(P50,OOO.OO) but not more than Five hundred thousand pesos (P500,000.00) or 
both at the discretion of tlie court. 
The Power Commission shall adopt its OWN iiilemal rilles o f  
procedures[;] AND SHALL conduct SUCH hearings, and receive SUCX-2 
testimonies, reports, and technical advice[;] AS ARE NEEDED BY IT IX THE 
PERFORMANCE OF IT§ FUNCTIONS. THE POWER CQfilMISSION IS 
HEREBY AUTHORIZED TO invite or sunnioii by subpoem ad resti$ca7idwr~i 
any public official, private citizen, or any other person to testif)) before it, or 
require any person by subpoena duces tecum to produce before it such records, 
reports, documents, or ollier materials as it may require[; and]. AND generally 
[require], THE POWER COMMISSION IS HEREBY GRANTED ali the 
powers necessary to attain the purposes for which it is created. The Power 
Commission shall be assisted by a secretariat to be composed of personnel who 
may be seconded from the Senate and the House ofRep~esentalivcss Iai~dJ, T I E  
POWER COMMISSION, WHEN IT BECOhfES NECESSARY IN 
PERFORMING ITS FUNCTIONS, may retain consultants. The secretariat shall 
be headed by an executive director who has sufficient IQ$O\VK,EDGE, 
EXPERIENCE, background, and competence on TBE ELECTRIC POWE'R 
INDUSTRY AND ON the policies and issues relating to eleclricity industry 
reforms as provided in this Act. To carry out its powers and hctions, the initial 
sum 
of 
Twenty-five 
million 
pesos 
(P25,000,000.00) IS 
HEREBY 
APPROPRIATED FOR THE POWER COMMISSION A N D  shall be clrarged 
against the current appropriations of the Senate. Thereafter, [such] ANY amount 
necessary Cor [ik] THE coiitinued operation OF THE POWER COMh?ISSXON 
shall be included in the annual General Appropriations Act. 
The Power Commission shall exist for period of ten (! 0) years h n i  the 
effectivity or this Act, and ITS EXISTENCE may be extended by a joint 
concur-rent resoluiiou[.] OF BOTH HOUSES OF CONGRESS. 


64 
"SEC. 63. 
Separation Benefits of Ojjiials und Enipioyces oJidJccrcd 
Ageficies. - National Govcriuiieiit employees displaced or septal-akd from che 
service as a result of the restwcturing or the electricity industry aiid privatization 
of NPC assets pursuant to this Act, shall be entitled [toj eithei- TO a separation 
pay aiid other benefits in accordance with existing laws, rules or regulations 01- [be 
entitled] to avail of tlie privileges provided under a separation plan which sliall 
[bel GRANT TO THE AVAILING EMPLOYEE one and one-half inoiitli 
salary for every year of service in the xovemment: Provided, horvever, That those 
wlio [avail] HAVE AVAILED of [such] THE privileges OF THE SAID 
SEPARATION PLAN shall stait their goveminent service anew if THEY ARE 
absorbed THEREAFTER by any government-owned successor company[.] OR 
BY THE NATIONAL GOVERNMENT ITLSEF. In no casc shall there be my 
diminution of benefits under the separation plan until the full impleiiientntioii of 
the restructuring aiid privatization[.] OF NPC. 
Displaced or separated persolme1 OF NPC as a result of [the! ITS 
privatization[, if qualified,] shall, IF QUALIFIED, be given prekrence in l!ie 
hiring of the manpower requirements of the privatized companies[.] OR 
EMERGING CORPOMTE ENTITIES OF THE PRIVATIZED ASSETS. 
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The salaries of employees of NPC shall contiiiue to he [cseiiipt] 
EXEMPTED fioni the coverage of Republic Act No. 6758, o!henvise kno\vii as 
"The Salary Standardization Act". 
With respect to employees wlio are not retained by NPC, the Goveriinieiit, 
through the Department of Labor aid Einployment, shall endeavor to iniplement 
re-training, job counseling, aid job placement programs[.] FOR THEM. 
"SEC. 64. 
Fiscal Prudence. - To promote tlie prudent iiianageiiiciit 
of government resources, the creation of new positions and the levels of or 
increases in salaries and all other emoluments and benefits of THE TR4NSCO 
and THE PSALM Corp. persomiel shall be subject to the approval of the 
President of the Philippiiies. The compeiisatioii and all other emoluments aiid 
benefits of the officials and THE members of the Board of DIKECTOXS OF 
THE TRANSCO aiid OF THE OFFICIALS AND THE MEMBERS OF THE 
BOARD OF DIRECTORS OF THE PSALM Corp. shall he subject to the 
approval of the President of the Philippines. 
"SEC. 65. 
Environmeiztal Protection. - Participants in thc 
generation, distribution, and transmission [sub-sectors] SECTORS of the 
ELECTRIC POWER industry shall comply with all enviroi?mental laws, rules, 
regulations, and standards promulgated by the Department o f  Enviromnent and 
Natural Resources including, in appropriate cases, tlie establishment of an 
environmental guarantee fund. 
"SEC. 66. 
Benej%ts to Host Communities. - The obligations of 
generation companies and energy SOURCE AND/OR resource developers to 
THE communities [hosting] THAT HOST energy generating facilities aiid!oi- 
[AND OR] energy SOURCE AND/OR resource developers, as defined under 
Chapter 11, Sections 289 to 294 oftlie Local Goveniiiient Code and Section 5(i) of 
Republic Act No. 7638 and their implementing rules aid regulalioiis and 
applicable orders and circulars WHICH MUST BE coiisisteii! wi!h !his Act, sllal! 
continue: Provided, That the obligations [iiiandated] Ih'lPOSED uiider Chapter 
11, Sectioii 291 of Republic Act No, 7160, shall apply lo privatcly-o\wed 
corporations or entities utilizing tile national wealth of the locality. 
To ensure the effective illipleiiieiitation of the reduction in THE Cost O f  
electricity in the communities where the source of energy is located, the 
mechanics and procedures prescribed in Uie Department of the Interior and Local 


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Goveriment (DILG)-DOE Circulars No. 95-01 and 98-01, dated October 31, 
1995 and September 30, 1998, respectively, aiid THE otlier issuances relaied 
thereto shall be pursued. 
Towards this end, the fund generated from the eighty percent (80%) of the 
iiational wealth tax shall, in no case, be used by any local govemiiient u i j t  lor any 
purpose other than those for which it was intended. 
Ln case of any violation or ilonconipliance by any local govermicn[ 
official of any provision thereof, the DILG shall, upon prior notice aiid hearing, 
order the project' operator, through tlie DOE, to withhold the remittance of the 
royalty payment to the host commuiiity concerned pending coinpletio~i or the 
iiivestigation. The unremitted funds shall be deposited in a government lmik 
under a trust fund[.] ACCOUNT IN THE NAME OF THE BENEFICIARY 
LOCAL HOST COMMUNITY. 
"SEC. 67. 
NPC 0ff.r uf Trcrnsition Supply Cuiztmcts. - Within six 
(6) months fiom the effectivity of this Act, NPC shall file with the IERC] 
COMMISSION for [its] THE LATTER'S approval [a], AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLlC HE.I\Pd.NG, 
THE trailsition supply contract OR CONTRACTS duly negotiated with [tlie] 
distribution utilities coiitaiiiiiig the term and coiiditions of THE supply OF 
ELECTRICITY TO SUCEI DISTRIBUTION UTILITIES and [a] TXE 
corresponding schedule o f  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 sucl: CONTRACT OR 
contracts. The term of the transition supply CONTRACT OX coiitrac.ts shall ~ i o t  
extend beyond one (1) year fiom the introduction of open access. Such 
CONTRACT OR contracts shall be based on the projected demand of sLic1i 
DISTRIBUTION utilities less any of their currently committed quantities uiider 
eligible PP contracts [as defined] DESCRIBED in Section 133 liereat] 32 OF 
THIS ACT: 
Provided, That the total generation capacity of such sigied 
transition supply CONTRACT OR contracts shall not exceed tlie level or [Nl'C] 
NPC'S owned, controlled, or coinmitted capacity as of the effectivity of this Act. 
Such transition supply CONTRACT OR contracts shall be assignable to AND 
BE MADE BINDING ON [the NPC] NPC'S siiccessor fgeneratiii;n,] 
GENERATION companies. 
Within six (6) months from the date of THE submissioii of tlie transition 
supply contract OR CONTRACTS by NPC FOR THE APPROVAL OF 'I'I-TE 
COMMISSION, the [ERC] COMMISSION shall iiotily NPC of [their] ITS 
approval of the SCHEDULE OF rates contained [therein.] IN SAID SIIPPL'J( 
CONTRACT OR CONTRACTS. 
The [ERC] COMMISSION shall maintain a record of the [conti-act] term 
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, WXEN TI-IEIIE 1s A 
NECESSITY TO DO SO, using [the] SUCH appropiate, JUST AND 
REASONABLE adjustment and/or [AND OR] indexation foi-iimla[.] TTXAT 
WILL PROMOTE AND PROTECT THE INTEREST OF TEE GENERAL 
PUBLIC AND THE INTEREST OF THE END-USERS OF ELECTRICITY. 
Notwithstanding the provisions or Section 25 [hereoi] OF THIS ACT, the 
rates charged by a distribution utility for the generation component of thc supply 
of electricity in their retail rate shall, for the tenn of the transition supply 
CONTRACT OR contracts, not exceed the SCHEDULE OF RATES 
CONTAXNED IN THE SAID transition supply contract [rates,] OR 
CONTRACTS, AS APPROVED BY THE COMMISSION AND as tipdated 


65 
monthly. The recovery of costs incurred by a disti-ibution utility lor ally 
generation coniponcnt in excess of the SAID transition supply contract OR 
CONTRACTS rates shall be disallowed by the [ERCJ COMMISSION, except 
for eligible contracts as defined [uiider] AND DESCRIBED IN Section 133 
hereof] 32 OF THIS ACT: Provided, That such limitation on the recovery of 
generation component costs by a distribution utility shall apply only !o the 
equivalent qualily and quantity of electiicity still available to the distribution 
utility from NPC[.], TAKING INTO ACCOUNT THE TOTAL COST OF 
DELIVERING THE ELECTRIC POWER TO THE DISTRXBUTION 
UTILITY’S FRANCHISE TERRITORY. 
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“SEC.68. 
Review of IPP Coriti-acts. - An [ilhter-agency 
[cjCominittee WllICH SHALL BE chaired by the Secretary of Finance, with the 
Secretary of the Department of Justice and the Director General of the Natioiial 
Economic and Development Authority as members thereof, i s  hereby created IN, 
AND upon the elfectivity of, this Act. The INTER-AGENCY Conindice sl~all 
immediately undertake a thorough review of all IPP contracts[.] AND SHALL 
TAKE 
EVERY 
NECESSARY 
EFFORT 
AND 
ACTION 
TO 
RENEGOTIATE SUCK IPP CONTRACTS [AND] TO ERADICATE 
AND/OR [MINIMIZE EVERY ONEROUS PROVISIONS CONTAINED IN 
THEM] MITIGATE THEIR ONEROUS EFFECTS. In cases where such 
contracts are found to have provjsions wliicli are grossly disadvantageous, or 
onerous to the Government, the INTER-AGENCY Committee shall lcause] 
JXEQUIRE the appropriate yovenmient agency [to file an action], IF IT 
UNNECESSARY DELAY, OF THE LEGAL REMEDIES riiider 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. 
BECOMES NECESSARY, EITHER TO AVAIL, \llll‘EIOUT 
ANY 
ANY REDUCTION IN THE COSTS OF ‘TEE SAID IPP 
CONTRACTS ARISING PROM THEIR RENEGOTIATION, OR FROM 
ANY REMEDXES TAKEN UNDER THE RELEVANT ARBITRATION 
CLAUSES IN SUCH CONTRACTS, OR FROM ANY LEGAL AeTlON 
BEFORE A COMPETENT COURT UNDER THE LkWS OF TITE 
PHILIPPINES SHALL BE USED TO REDUCE THE UNIVERSAL 
CHARGE IMPOSED UNDER SECTION 33 OF THIS ACT. 
ANY UNJUSTIFIED FAILURE TO PEWORR/I THE OFlircrnL 
DUTY IMPOSED UNDER THIS SECTION 65 AND THE SUCCEEDING 
SECTION 66 OF THIS ACT SHALL BE A GROUND FOR THE FILING 
OF [ANY] THE APPROPRIATE LEGAL ACTION AGAINST, AND THE 
PUNISHMENT OF, THE WSPONSIBLE PARTY OR PARTIES UNDER 
THE APPROPRIATE PROVISION OF REPUBLIC ACT NO. 3019, 
PRACTICES ACT OF THE PE-IILIPPXNES. 
OTHERWISE KNOWN AS THE ANTI-GRAFT AND CORRUPT 
“SEC. 69. 
Renegotiutiori of Power Purchnse a i d  Eiieygy Coriversioiv 
Agreements between Governrizetits Entities. - Witllin thee (3) iiiontlis froin the 
effectivity of this Act, ail power purchase aud energy conversion agi-eemenfs 
between the PNOC-Energy Development Coiporation (PNOC-EDC) and NPC, 
including but not limited to the BAC-MAN, Palinpinon, Tongonan, LEYTE A 
AND B and Ml. Apo Geotliennal cojnplexes, sliall be reviewed by tlie [13lCC] 
COMMISSION, and tlie ONEROUS tei-nx AND CONDlTIQNS thereof, IF 
ANY, MUST BE REVISED AND amended to remove any hidden costs 01- 
extraordinary mark-ups in the cost of power or steam above their [irue] JUST 
AND REASONABLE costs. A11 Amended contracts dial! be sub~iiitled to !lie 
Joint 
Congressional 
Power 
Commission 
for 
approval. 
Tiic 
[EliCI 
P 


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COMMISSION shall ensure that all savings realized from the reduction of [said] 
ANY SUCH HIDDEN COSTS OR EXTRAORDINARY mark-ups sliall be 
passed on to all end-users OF ELECTRICITY. 
“SEC. 70 
Mis.sio/znry 
Electrzjication. 
-Notwithstanding 
the 
NATIONAL POWER CORPORATION’S divestment a d o r  [AND OR] 
privatization of [NPC assets,] ITS GENERATION ASSETS, TRANSMISSION 
contracts [and spun-off corporations, NPC], THE NPC shall [remain as a 
National Governiiieutl CONTINUE TO EXlST AS A GOVERNMENT-b\vned 
and-controlled corporation to perfoiin [the] A missionary electrification iiinction 
through the Sinall Power Utilities Group (SPUG) [and] AS DEFINED IN TIXIS 
ACT. 
FOR 
THAT 
PURPOSE, 
THE 
NATIONAL 
POWER 
CORPORATION IS HEREBY AUTHORIZED TO EXERCISE ALL ITS 
CORPORATE POWERS AND ENJOY ALL ITS PREROGATIVES 
UNDER ITS EXISTING LEGISLATIVE CHARTER, EXCEPT TO TEE 
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 NATXONAI, 
transmission system. The niissionary electrification functiou OF THE 
NATIONAL. POWER CORPORATION shall be funded: 
(A) fiom the 
revenues from sales in missionary areas; and (E) 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 
“SEC. 71. 
Electric Power Cvisis Provision. 
- IUpon the 
determination by] IN CASE OF ANY IMMINENT SHORTAGE OF SUPPLY 
OF ELECTRICITY, AS DETERMINED AND PROCLAIMED BY thc 
President of the Philippines [of an imminent shortage of the supply of electricity], 
Congress may authorize, through a joint resolution, the establkhnient o~f 
additional [generating capacity] GENERATION CAPACITIES TO SOLVE 
SUCH SHORTAGE ADEQUATELY, under such temis and conditions as [it] 
CONGRESS may approve. 
“SEC. 12. 
[Mandated] MANDATORY Rate Redzictioii. -- 
Upon the 
effectivity of this Act, residential end-users OF ELECTRICITY shall be granted 
a [rate] MANDATORY reduction fiom NPC rates IN AN AMOTJNT of NOT 
LESS THAN thirty centavos per Icilowatt-hour (P0.30kbVh). Such reduction shall 
be reflected as a separate item in the [consumer] MONTHLY billing statement 
OF RESIDENTIAL END-USERS OF ELECTNCXTY. 
”SEC. 73. 
Lifeline Rate. - A socialized pricing mechanism, called a 
lifeline 
rate, 
for 
[the] inargiiialized 
RESIDENTIAL 
end-users 
OF 
ELECTRICITY shall be set by the [ERC, which] COMI\IISSXON. 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 ANI) 
AFTER THE DATE OF ITS ESTABLISHMENT, unless extended by [law.] 
BY CONGRESS. The [level oil consumption LEVEL OF THOSE M’EICII 
USERS OF ELECTRICITY and the LEVEL OF WHAT SHALL UF 
DEEMED TO BE A JUST A4ND REASONABLE LIFELINE irate shali be 
deterniined by the [ERCl COMMISSION, after due notice TO ALL 
INTERESTED PARTIES and PUBLIC hearing. 
SHALL BE CONSIDERED MARGINALIZED m , S m E N n a  END- 
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68 
"SEC. 
74. 
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] WXTI-IIN a period not tsccedjng three 
(3) years from the establishnient by the IERC] COMMlSSlON of [a] TXlE 
universal [charge] CHARGE AUTHORIZED UNDER SECTION 33 OF 
THIS ACT, which shall be collected from all [electricity] end-users[. Such level 
ofl OF ELECTRICITY, EXCEPT AS OTHERWISE PROVZDEB IN 7'HI.S 
ACT. THE AMOUNT PER KILOWATT HOUR FOR EACH KIND OF 
SAID cross subsidies shall be made transparent [and] TO THE PUBLIC AKD 
SHALL BE identified separately in the billing statements [provided to end-users 
by the suppliers.] THAT A DISTRIBUTION UTILITY OR SUPPLIER OF 
ELECTRICITY [SENDS] ISSUES MONTHLY TO [EACH OF ITS] END- 
USERS OF ELECTRICITY. 
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The [ERC] 
COMMISSION may extend, AFTER DUE NOTlCE TO 
ALL INTERESTED PARTIES AND PUBLIC BEARING, the period for Ibe 
reinoval of SAID cross subsidies for a maximum period of one (1) year [upon 
finding], IF IT FINDS that THE cessation of [such inechanisni] SAfD CROSS 
SUBSIDIES would have a material adverse effect [upon the public] ON THE 
interest[,] OF THE GENERAL PUBLIC, particularly the INTEREST OF ?'HE 
residential end-user[;] OF ELECTRICITY; or would have an immediate, 
irreparable, and adverse financial effect on distribution [utility.] UTTLITIES OR 
ON SUPPLIERS OF ELECTRICITY. 
"CHAPTER IX 
"FINAL PROVISIONS 
"SEC. 
75. 
Stutmto7y Constructio/z[s/. - This Act shall, unless the 
context indicates otherwise, be construed in favor of the establishnient, 
promotion, AND preservation o f  competition [and people] AS WELL AS IN 
FAVOR OF THE empowerment [so that the widest pariicipatioii 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 TX-IE 
ELECTRIC POWER INDUSTRY SO THAT THE PEOPLE CAN ENSUR.E 
THE PROTECTION OF THEIR RIGHTS AND INTERESTS. With respect 
to NPC's debts and IPP [and related] contracts, nothing CONTP,INICD in lliis 
Act, UNLESS THE CONTEXT CLEARLY SAYS O'I'I-IERWISE, shall be 
construed as: (I) an EXPRESSED OR implied waiver of any right, action, or 
claim[,] OF NPC OR OF THE PHILIPPINE GOVERNMENT, ARIS1NC: 
FROM OR RELATING TO ANY SUCH CONTRACTS, against any person 
or entity[, of NPC or the Philippine Government arising froin 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 01- 
BY the Philippine Government under existing contracts[.] OR AGR.EEMENTS. 
"SEC. 
76. 
Ecluciltion and Protection of End Users. - [End rrsei-s] 
THE END-USERS OF ELECTNCITY shall be [educated about the) 
INFOXILIED ABOUT AND MADE FAMILXAR WITH TEE CONCEPT 
AND ililpleinentation of retail OPEN access and its impact on end-users OF 
ELECTRICITY, and [on] WITH the proper [use], COST-EFFECTWE, AND 
ECONONlCAL UTlLILIZATlON of electric power. Such feducat~on] 
INFORMATION AND FAMILIARIZATION shall include, but not limited to, 
the existence or competitive GENERATION COMPANIES, COMPETITIVE 
electricity suppliers, choice or competitive electricity services, regulated 


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69 
transmission and distribution services, RATE BASE, RETURN ON RA'I'F 
BASE (RORB), systems PERFORMANCE STANDARDS AND reliability, 
aggregation, [market] WHOLESALE ELECTRICITY SPOT MARKET 
(WESM), CAPTIVE AND CONTESTABLE MARKETS, ileiiiized 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-iiiconie bill [payment] PAYMENTS, AND energy 
conservation and safety measures. 
The DOE, in coordination with the NPC, NEA, [ERC] TEE 
COMMISSION, and the Office of the Press SecretarS.-Piiilippine Lnforniatioii 
Agency (OPS-PIA), shall BE RESPONSIBLE FOR AND underlake ai 
infomiation campaigii to [educate) INFORM AND FTANIILIAlUZE the public 
on ALL FACETS OF the restructuring of the electric power industry and TliE 
privatization of NPC. 
"SEC.77. 
Implenzerzting Rules and Regzdations. - The DOE [shall], 
in consultation with relevant goveinment agencies, the electric power iiidiistry 
participants, CONCERNED non-government organizatioiis, and WXTIX eiid- 
users[,J OF ELECTMCTY GROUPS, SHALL promulgate, IVITI-flN SIX (6) 
MONTHS FROM THE EFFECTIVITY OF THIS ACT, the NECESSARY 
Inipleiiieiiting Rules and Regulations (IRR) [of this Act, within six (6) months 
from the effectivity of this Act, subject to the approval of tlie Power 
Commission.], 
WI-IICII 
MUST 
BE 
CONSISTENT 
WITH 
TXE 
PROVISIONS 
OF 
THIS 
ACT 
AND 
APPROVED 
BY 
JOINT 
CONGRESSIONAL POWER COMMISSION. 
"SEC. 78. 
hvunction 
and 
Restraining 
Orclw. 
- 
The 
implementation of the provisions of this Act, WITH RESPECT TO THE 
RESTRUCTURING OF TRE ELECTRIC POWER INDUSTRY AND TEE 
PRIVATIZATION OF THE NPC, shall not be restrained or enjoined except by 
an order issued by the Supreme Court of the Philippines. 
"SEC. 
79. 
Separability Clause. - Iffor any reason, my provision o f  
this Act is declared uncoiistitutional or invalid, the other parts or provisions 
[hereofj which are not affected thereby shall continue to be iii full force and 
effect. 
"SEC. 80. 
AppZicabiliQ and Repenling Clause. - The [applica'uilityl 
APPLICABLE provisions of Coinmoiiwealth Act No. 146, as amended, 
othenvise known as the "Public Services Act"; Republic Act 6395, as amended, 
revising the charter of NIT; Presidential Decree 269, as amended, referred to as 
the Natioiial Electrification Decree; Republic Act 7638, otherwise known as the 
["]Department of Energy Act of 1992["]; [Executive Order 172, as amended, 
creating the ERB;] Republic Act 7832 otherwise known as tlie ["]hnti-Electi-icity 
and Electric Transmission LinesiMaterials Pilferage Act oi' 1994["], shall 
continue to have full force and effect, except insofar as [they] SUCH ACTS AND 
DECREE, AND ONLY TO THAT EXTENT, are incoiisisteni with h?Y 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 INTZNT 
OF 
CONGRESS 
THAT 
HENCEFORTH 
THE 
GENERATION, 
TRANSMISSION, 
SUBTRANSMISSION, 
DISTRIBUTION, 
AND/OR 
BY THE PROVISIONS OF THIS ACT, AND THAT NO AGENCY OF THE 
NATIONAL GOVEWMENT, OTHER THAN THE COMMISSI Oh', 
supmy OF RLECTRIC POWER SHALL BE GOVERNED ENTJRELY 


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SHALL BE ALLOWED TO REGULATE TRE TRANSMISSION, 
SUBTRANSMISSION, AND DISTRIBUTION, OR AUTROXIPZE TUE 
ESTABLISHMENT OF GENERATION COMPANIES OR SUPPLIERS 
OF ELECTRICITY. 
Presidential Decree No. 40 and all laws, decrees, rules and regnlations, OK 
portions thereof, inconsistent with this Act are hereby repealed or modified 
accordingly. 
EXECUTIVE ORDER NO. 172, SERIES OF 1987, AS AMENDED, 
CREATING THE ENERGY REGULATORY BOARD, IS HEREBY 
REPEALED EXCEPT AS OTRERWISE PROVIDED IN TfllS ACT. 
"SEC. 81. 
Efectivity Clause. - This Act shall talce effect on the 
fifteenth day following its publication in at least two (2) national [papers] 
NEWSPAPERS of general circulation. 
Approved,