Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS

Second Regular Session

House Bill No, 1052

Tntroduced by
Philreca Party-List Representative Presley C. De Jesus,
APEC Party-List Representative Sergio C. Dagooc.

Ako Padayon Pilipino Party-List Representative Adriano A. Ebcas,
RECOBODA Party-List Representative Godofredo N. Guya

EXPLANATORY NOTE

In light of the Coronavirus pandemic, many electric cooperatives are experiencing
low collection rates on power bills of consumers of electricity. The deferral of the
bill payments is due to the increased rate of unemployment brought about by this
pandemic, Hence, in the worst-case scenario, some electrie cooperatives may fall
under the category of “ailing cooperatives”.

Generally, when a cooperative is classified as ailing, the National Electrification
Administration shall exercise its step-in rights, to take over the operations and
management, in order to address an ailing EC's arrearages in power supply
purchases, high systems loss, low collection efficiency, operating loss, among
others.

This bill proposes that the step-in rights shall also be afforded to the aggrupation
of electric cooperatives who are capable, technically and financially, to manage the
ailing EC. This will not only avoid the possible added cost of acquisition by private
entities to the electricity rate, but will also smoothen the transition of the


management from the ailing EC to the aggrupation of ECs, both being non-stock
and non-profit entities.

In view of the foregoing, the immediate passage of this Bill is earnestly sought.

LEY C. DE JESUS
"HILRECA Party-List Representative

SERGIO J DAGOOC
APEC Party-List Representative

Agere —

Ako Padayon Pilipino Party-List Representative

‘OBODA Party-List Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
EIGHTEENTH CONGRESS

Second Regular Session

House Bill No.__7051

Introduced by
Philreca Party-List Representative Presley C. De Jesus,
APEC Party-List Representative Sergio C. Dagooc.
Ako Padayon Pilipino Party-List Representative Adriano A. Ebcas,
RECOBODA Party-List Representative Godofredo N. Guya

AN ACT
GRANTING THE AGGRUPATION OF ELECTRIC COOPERATIVES
A PREFERENTIAL RIGHT TO TAKE OVER UNDERPERFORMING
ELECTRIC COOPERATIVES, AMENDING FOR THIS PURPOSE
REPUBLIC ACT NO. 10531

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

Section 1. Title. — This Act shall be referred to as the "Electric Cooperatives Aggrupation
Act of 2020.”

Section 2. Declaration of Policy. — It is hereby declared the policy of the State to:

a) Promote the sustainable development in the rural areas through rural
electrification;

b) Empower and strengthen the National Electrification Administration (NEA) to
pursue the electrification program and bring electricity, through the electric


cooperatives as its implementing arm, to the countryside even in missionary or
economically unviable areas;

c) Empower and enable the electric cooperatives to cope with the changes brought
about by the restructuring of the electric power industry pursuant to Republic Act
No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 by:

i) anchoring them firmly in the communities they serve and ensure they are
closely regulated by their consumers who are as well Member-Owners;

ii) _ trusting the management and expertise of technically and financially viable
electric cooperatives and the aggrupation thereof;

infuse capitalization to any underperforming electric cooperative for the
said purposes;

iv) maintaining a lower electricity rate in the area where an aggrupation of ECs
takes over operation by virtue of their nature as non-stock and non-profit;

Section 3. Preferential Right for Distribution Utilities — Section 4-B on Step-In Rights
in Cases of Ailing Cooperatives under Presidential Decree No 269, as amended by
Republic Act No. 10531, is hereby further amended to read as follows:

“SEC. 4-B. Step-in Rights in Cases of Ailing Cooperatives. - The NEA shall
immediately step-in and take over from its Board the operations of any
ailing electric cooperative. Within a reasonable period after take-over, the
NEA may convert the ailing cooperative to either a stock cooperative
registered with the CDA or a stock corporation registered with the Securities
and Exchange Commission (SEC).

The NEA shall in determining the propriety of the conversion, be guided by
the ability of the member-consumers of said electric cooperative to pay for
their shares in the stock cooperative or stock corporation.

The NEA may appoint or assign third persons to the Board of the electric
cooperative until the NEA decides that the election of a new board of
directors to manage the electric cooperative is necessary. The NEA may
create a management team for the purpose.

The NEA shall, in the exercise of its step-in rights under this Act, strictly
observe due process of law. The step-in rights may only be exercised by the
NEA in case of failure of-the electric cooperative to meet operational and


financial standards set by the NEA or in other analogous instances set forth
in the IRR of this Act.

‘The NEA, in the exercise of its step-in rights, may designate any
electric cooperative or the aggrupation of qualified electric
cooperatives to take over the operation of ailing electric
cooperatives for a certain period of time. Provided, that this is
done in accordance with the with guidelines of accreditation of
qualified individual electric cooperatives and aggrupation of
electric cooperatives.

The NEA shall also grant to any electric cooperative or the
aggrupation of ECs a preferential right to take over the
distribution of electricity in the franchise area of a failed electric
cooperative, before offering and soliciting the same to private
distribution utilities and/or private investors. Provided, that
said individual electric cooperative is technically and financially
capable to take over the same.”

Section 4. Congressional Oversight. — The Joint Congressional Energy Commission
shall exercise oversight powers over implementation of this Act. The NEA, DOE, and ERC
shall submit annually to the Joint Congressional Energy Commission a thorough report
on the implementation of this Act not later than 15 March of every year: Provided, That
the report shall include identification of legislative gaps, if any, and recommended ways
forward.

Section 5. Implementing Rules and Regulations. - The NEA, in consultation with the
appropriate government agencies mentioned herein and electric power industry
stakeholders, shall issue the implementing rules and regulations of this Act, including the
issuance of the guidelines for accreditation provided under Section 3 hereof, within sixty
(60) days upon its effectivity.

Section 6. Amendatory Clause. - This Act amends Section 43 of the Electric Power
Industry Reform Act of 2001 insofar as the rights, obligations, and powers of the ERC are
concerned. This Act also amends Section 21 of the IRR of R.A. 10531. Any other provision
of law, presidential decree, executive order, or rules and regulations inconsistent with the
provisions of this Act or with the rules and regulations issued pursuant thereto are hereby
repealed or modified accordingly.

Section 7. Separability Clause. — If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provisions not affected thereby shall
remain in force and effect.



Section 8. Repealing Clause. — Any law, presidential decree or issuance, executive
order, letter of instruction, rule or regulation inconsistent with the provisions of this Act
is hereby repealed or modified accordingly.

Section 9. Effectivity Clause. - This Act shall take effect fifteen (15) days following its
complete publication in the Official Gazette or a newspaper of general

circulation.

Approved.