Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
Nineteenth Congress
Second Regular Session
HouseBillN..    9793
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Introduced by Representative JOEY SARTE SALCEDA
AN ACT
RENEWING FOR ANOTHER TWENTY-FIVE (25) YEARS THH FRANCHISE
GRANTED T0 THE MANILA ELECTRIC COMPANY, AMENDING FOR THE
PURPOSE REPUBLIC ACT NO. 9209, ENTITLED, ``AN ACT GRANTING THE
MANILA ELECTRIC COMPANY A FRANCHISE T0 CONSTRUCT, OPERATE
AND MAINTAIN A DISTRIBUTION SYSTEM FOR THE CONVEYANCE 0F
ELECTRIC POWER TO THE END-USERS IN THE CITIES/MUNICIPALITIES
0F RETRO MANILA, BULACAN, CAVITE AND RIZAL, AND CERTAIN
clTIEs"uNlclpALITIEsreARANGAys IN BATANGAs, LACUNA, QUEzON,
ANI) PAMPANGA," AND FOR OTHER PURPOSES
EXPLANATORY NOTE
This  Bill  seeks  the  renewal  of the  legislative  franchise  granted  to  Manila  Electric
Company (MERALCO) by virtue of Republic Act No. 9209 issued on June 9, 2003. i
The renewal of this franchise is urged to ensure the continuous and uninterrupted supply
and distribution of quality and reliable electric service to the customers within its franchise area
in consideration of the nature of the vital service it provides. MERALCO serves thirty-eight
(3 8) cities and seventy-three (73) municipalities and is home to the key political and economic
centers of the Philippines, which includes major air and seaports, main offices of government,
and  centers  for  trade  and  commerce.  MERALCO  brings  reliable  and  world-class  electric
service to homes and supports the competitiveness of industrial and commercial customers that
totaled  more  than  7.6  million  in  number  by  the  end  of 2022.  For  the  year  2022  alone,
MERALCO delivered 48,916 Gwh of electricity to these end-users at an average retail rate of
Php9.52 per kilowatt-hour. Electricity consumption in the MERALCO franchise area already
represented   more   than   50%   of  the   country's   total   electricity   consumption   in   20222.
MERALCO's  proven  track  record  over  the  span  of  120  years  has  assisted  greatly  in  the
development of the country's key economic growth areas.
1 REPUBLIC ACT NO. 9209 also known as AN ACT GRANTING THE MANII.A ELECTRIC COMPANY A FRANCHISE TO CONSTRUCT,
OPERATE AND MAINTAIN A DISTRIBUTION SYSTEM FOR THE  CONVEYANCE 0F ELECTRIC POWER TO THE END-USERS IN THE
CITIES/MUNICIPALITIES OF METRO  MANILA, BULACAN, CAVITE AND RIZAL, AND CERTAIN
93ff±NANDPAMPANGA,
2  Department of Energy, 2022 Philippine Power Stat]stlcs =, https:_/_/www.doe.gov.ph/energv-stat]st]cs_/phillppi ne-power-stat]stics
Page  I   1


While many have said that Philippine power rates are among the highest in the region,
a report from the Intemational Energy Consultants (IEC)3 clarified that tariffs in countries like
Indonesia, Malaysia, and Thailand are subsidized fully or substantially by their governments,
while Philippine power prices are reflective of the actual cost of electric service. Furthermore,
even with the recent spikes in intemational fuel prices in 2022, IEC found that "[i]f subsidized
markets  are  excluded,  then  Meralco's  tariff is  13%  lower  than  the  world  average".  The
resilience of MERALCO's tariffs has been attributed by IEC to "Meralco's ability to source
low-cost PSAs4" and a "generation contract portfolio [that] appears to be very well managed".
In  fact,  according  to  IEC,  "[t]he  increase  in  the  generation  charge  [from  2018  to  2022]  -
although  significant  -  is  much  lower  than  it  might  have  been  without  diligent  contract
management by Meralco." In 2022, around 91°/o of supply to captive customers was sourced
from  power  supply  contracts  that  were  procured  under  prevailing  regulations.  IEC  also
detemined that "all of the  components of the regulated Meralco  tariff are judged fair and
reasonable by IEC, based on comparisons with other markets and versus the underlying cost of
electricity supply in Luzon". In particular, with respect to the MERALCO component of the
rate, IEC concluded that "[t]he Distribution Charge (2.56cifewh @  14% of the total) is 33%
less than the average rate for the markets surveyed. On this basis, IEC judges that the charge is
certainly fair and reasonable.5"
Observation of residential customer bills of Philippine distribution utilities (DUs) and
electric cooperatives (ECs) in 2023 shows that the effective electricity prices fluctuated due to
generation cost volatility from sourcing mix, fuel prices, and purchases from the Wholesale
Electricity Spot Market. For distribution charges, MERALCO's approved distribution rate of
Php 1.35kwh was approved by the ERC in 2022. Comparing among the approved distribution
rates of the  18 private DUs show that the MERALCO rate ranks 6th lowest.   MERALCO's
average distribution rate is lower than the Php 2.22ftwh in Tarlac City, Php 1.59/kwh in Cebu
City, and Php 1.42ftwh in Davao City.
Recently, upon MERALCO's  own initiative that was  followed by an ERC  decision
directing the refund of distribution-related charges arising from ERC's final review of 2012-
2015 rates and delays in the regulatory reset process, MERALCO completed a Php48 billion
refund to customers, which brought MERALCO's distribution prices down further.
As  part  of the  societal  obligation  to  marginalized  customers  within  MERALCO's
franchise area, MERALCO implements a lifeline mechanism with a range of 20% to  100%
discount to customers with a monthly consumption of 100 kwh and below, subsidized by other
customers. The maximum discount and range of consumption are the largest among Philippine
DUs.
32022IECstudy,https://meralcomain.s3.ap-southeast-1ramazonaws.com/Images/ckeditor-documents/2022Cwi20IEC%20Study.pdf
4 Power Supply Agreements
5  2022 IEC Study, https: //meralcomain.s3.ap-southeast-1.amazomws.com/images/ckedltor-
documents/2022%20IEC%20Study.pdf
Page  I  2


Through its household electrification advocacy, MERALCO assisted 6,376 low-income
families in its franchise area allowing them access to electric service. In the 40th Electric Power
Industry  Reform Act  (EPIRA)  Implementation  Status  Report  (for the  Report Period April
2022)6 prepared by the Department of Energy,  it reported that MERALCO achieved  100%
household electrification (based on the 2015 Census of population and Housing).
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EC - QTP/NPC-SPuG
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MEfouco
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Other PIOus/LOUCwhedutill®s
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|8} uriserved HHs per Du per Provirice a (Pctenti8t I+Ps ~ Seqyed HHs) pf I Du per Pxpwince
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To support economic development and improve people's quality of life, MERALCO
invested more than Php 220 billion from 2003  to 2022 for new comections, asset renewals,
and load growth projects to serve more customers and their expanding electricity needs, while
continuing to support government projects. These investments also helped improve operational
efficiency  and  enable  a  more  resilient  distribution  network  against  natural  or  man-made
calamities.
MERALCO continues to improve its performance with customers experiencing 8% less
power interruptions (from 2021 's  1.41  times to 2022's  1.30 times) with 7% shorter duration
(128.4 minutes in 2022 vs.138.8 minutes in 2021). New customers in 2022 also experienced a
much shorter processing time with applications taking only an average of 2.20 days to process.
This was more than half a day shorter than the same figure in 2021 (2.96 days).
MERALCO has been consistently improving its System Loss and has returned the full
amount of pilferage recoveries to its customers in the form of lower generation costs. Even
before the enactment of Republic Act No.  7832 which put a limit on the recoverable system
loss charges by DUs from its customers, RERALCO already recognized that the system loss
charge represents a significant portion of the customers'  total bill. Thus, from a system loss
rate of 21.01% in 1986, MERALCO was able to reduce its system loss to just 5.77% in 2022.
This reduction was accomplished over a 36-year period through a comprehensive and intensive
system  loss  reduction program.  Over the period from 2008  to  2022,  hAIRALCO  customer
savings due to lower-than-cap system loss performance has reached Php 56.2 billion.
6 40th Electric Power Industry Reform Act (EPIRA) Implementation Status Report (for the Report Period April 2022),
httos://www.doe.gov.Dh/electric-bower/40th-status-report-epira-implementation
Page  I  3


In addition to  savings,  MERALCO  customers  also benefit from the  full amount of
pilferage recoveries (or differential bills collected by MERALCO, including surcharges) that
is returned to all DU customers in the form of Generation Charge discount. For the period from
2005  up  to  2022,  the  total  amount  of pilferage  recoveries  returned  by  MERALCO  to  its
customers has almost reached Php 10 billion.
MERALCO proactively supports the govemment's goal to accelerate renewable energy
(RE)  development,  especially through programs under the Renewable Energy Act of 2008.
MERALCO  connected  the  country's  first Net  Metering  (NM)  Program  customer  and  has
remained as the DU with the most number of NM participants than all other DUs and ECs
combined.   For 2023, the Energy Regulatory Commission (ERC) said that "majority of these
new [Net Metering] prosumers [were connected by] Meralco"7.  The utility also hosts a variety
of large RE-based generators, providing timely connection and reliable wheeling service to,
among others, the 30 MW Maibarara geothermal powexplant in Batangas, the 50 MW solar
plant of power Source First Bulacan, and the 54MW Altemergy wind project in Rizal province.
In  compliance  with  the  Renewable  Portfolio  Standards  (RPS)  and  after  the  conduct  of a
Competitive Selection Process (CSP), MERALCO recently entered into a contract with Terra
Solar Philippines for the supply of 850MW of renewable energy. The resulting PSA has been
approved by ERC and shall support the construction of the largest solar farm in the world.
MERALCO is not just powering homes and businesses across the country - it is also
illuminating the path for excellence in its field.
In the area of electrification, MERALCO has installed a microgrid pilot facility within
the island of Cagbalete in Quezon province in efforts to learn how advancements in technology
and renewable energy may be used to bring power to end-users in remote and unviable areas.
Under the guidance of the ERC, MERALCO put up a microgrid with a centrally controlled
solar-battery facility backed up by diesel generators in 2018. With a 60 kwp Solar PV array, a
150 kwh Li-Ion Battery Energy Storage System, two (2) units of 30 kw Diesel Generators,
and its distribution system, MERALCO is now providing electric service to 136 households on
the island. MERALCO has shown that it is willing and able to utilize microgrid technology -
the  same  technology  provided under Republic  Act  11646  or the  Microgrid  Act -to  bring
seamless MERALCO electric service to remote and unviable areas. Thus, MERALCO should
be allowed to expand the use of these and other innovative technologies for electrification of
the remaining more than 600 households on Cagbalete Island and other areas.
With big data and information technology-driven industries reaching Philippine shores,
MERALCO is strengthening its network to support very large, and power quality-conscious
customers  called  global  hyperscalers.  These  customers  require  reliable  and  scalable  power
supply,  a stable electricity grid, high-capacity infrastructure, redundancy for backup power,
ability to accommodate increasing power demands as the hyperscaler expands, and renewable
energy  sources  and  solutions  such as  energy efficiency  and power quality.  Digital  Edge,  a
global company engaged in building enterprise and hyperscale data centers,  announced last
March 2023 that "Narra 1"8, its first data center in the Philippines, is ready for service. Housed
in Binan, Laguna, it will provide colocation and interconnection services to the region. Digital
Halo,  another  hyperscaler,  is  developing  a  70MW  data  center  campus  on  a  3.75-hectare
7 https://web.facebook.com/ERcgovpH
8 "Digital Edge 10MW data center ready for service in the Philippines",1 March 2023,
httDs.//www.Dhilstar.com/business/2023/12/31/2322392/meralco-asked-take-over-service-nasugbu
Page  I  4


location in Cainta, Rizal9.  In addition to these, PLDT's 54MW Vitro Data Center in Sta. Rosa,
Laguna[°  is expected to be completed this year.  The market research group  Statista Market
Insights predicts that for the Philippines, "Revenue in the Data Center market is projected to
reach US$513.60m in 2024."[t MERALCO should thus be directed to continue to strengthen
and build up its network so that hyperscalers will continue to choose to locate in the Philippines.
MERALCO  is  also  home  to  the  largest number of customers  participating  in retail
customer choice programs prescribed by the EPIRA and the Renewable Energy Act. According
to the records of the Philippine Electricity Market Corporation (PEMC), as of end September
2023, there are  1,345  contestable customers,  or 71% of the registered participants in Retail
Competition and Open Access (RCOA) and the Green Energy Option Program (GEOP), in the
MERALCO franchise area[2. To empower these customers in their exercise of retail choice,
MERALCO replaced their traditional meters that measure cumulative consumption and are
read once a month with more advanced meters capable of measuring and storing electricity
consuinption at market trading intervals then transmitting them to the DU in near real-time. As
retail choice and other customer-empowement programs advance and expand to create more
value for electricity end-users, MERALCO should be allowed to roll out the needed advanced
metering technology and supporting infrastructure.
In addition to empowering customers with retail choice, MERALCO has enabled more
than  6,700  customers  to  install  renewable  energy  systems  in  their  homes  under  the  NM
program. These MERALCO customers comprise more than half of the nation's  11,707 NM
participants (as of December 2023). Further, soon after the release of the Net Metering Rules
by ERC in July 2013 , MERALCO connected the first NM customer in the country in December
of the same year. MERALCO also worked with the National Renewable Energy Board and the
DOE to come up with the  lst Net Metering Reference Guide in 2015 with the assistance of
Deutsche Gesellschaft fur Intemationale Zusammenarbeit (GIZ). Sharing leamings from actual
experience,  MERALCO  again  worked  with  stakeholders  and  an  updated  version  of the
guidebook was released in 2022. MERALCO and the NM program have empowered customers
to contribute to the renewable energy initiative while at the same time increasing the available
supply  that  can be  utilized  by  others.  MERALCO  should  therefore  be  directed  to  further
broaden the participation of customers in the NM program.
MERALCO  also  looks  for  ways  to  empower  even  the  most  regular  of customers.
MERALCO has put in place numerous platforms to avail of electric service. These include a
cellular phone app and a website where a customer can apply for electric service, inquire about
an on-going application, report an incident or brownout, or find the nearest business center.
MERALCO has also  set up multiple avenues  so that customers can easily pay their regular
monthly bills at their most convenient time. In addition to the business centers, MERALCO
customers can pay over the counter at banks, shopping malls, through phone apps, credit cards,
and electronic wallets.
For those  who  prefer to  prepay their  electricity,  MERALCO has  also  rolled-out its
Prepaid Electricity Service called "K-Load". After the pilot in 2013, MERALCO has steadily
9 ``Arch Capital launches new firm Digital Halo, planning 70MW facility in Manila'',11 January 2023,
https:/./wwwdatacenterdynamics.com/en/news/arch-capital-launches-new-firm-digital-halo-planning-70mw-facility-in-manila/
10 -Lel.gest PLDT data center gets boost., 2 July 2023, https: //www.philstar.com_thusiness /2023/07/02/2277973 /largest-pldt-
data-center-gets-boost
11 Market Iuslghts: Data Center Philippines, https://www.stat]sta.com/outlook_/tmo /data{enter/philippines
12 Quarterly Retail Market Assessment Report for 3rd Quarter of 2023, PEMC,
file: ///C:/Users/ME152520/Downloads/0_RMAR  2023-Q3.pdf
Page  I  5


expanded the program that is now enjoyed by more than 97,300 customers. Prepaid electricity
has   empowered   customers   to   better   manage   their   electricity   consumption   and   costs.
MERALCO should be directed to expand this so that more Filipinos can take the reins of their
electricity consumption.
MERALCO has always been at the forefront of sustainability and is one of the largest
supporters of the DOE's DC2021 -07-0023 entitled: "Providing for a Policy Framework on the
Guidelines for the Development, Establishment, and Operation of Electric Vehicle Charging
Stations (EVCS) in the Philippines".  By the end of 2022, MERALCO had already installed
forty-nine (49) electric vehicle charging stations across Metro Manila and the provinces within
its franchise area. These stations utilize multiple charging protocols and support MERALCO's
fleet as it transitions to utilizing more and more electric vehicles. As the country moves towards
more  sustainable  transportation  solutions,  it  would  be  advantageous  that  MERALCO  be
directed to build up both its electric vehicle fleet and the needed supporting infrastructures such
as charging stations.
One of the technologies at the comerstone of sustainability are Energy Storage Systems
(ESS) and MERALCO is leading the way, utilizing this technology to improve power quality,
minimize  power  interruptions,  and  manage  electricity  consumption  at  peak  periods.   In
partnership with Hitachi, MERALCO installed two (2) units of one (1) MW Battery Energy
Storage Systems (BESS) in the MERALCO distribution network that have been in operation
since March 2019. Located along circuits that serve both end-users and a 3 .82 MW Solar Farm,
MERALCO uses the BESS to improve power quality and provide voltage support; properly
integrate  a renewable  energy  source  with  variable  output;  and,  reduce  costs  to  consumers
through peak shaving. The use of the BESS  allows RERALCO to defer the construction of
more expensive system upgrades. With these benefits that can accrue to consumers, DUs like
MERALCO should be explicitly allowed to own and operate ESS.
With the  MERALCO  distribution network  serving  as  the host  to  many renewable
energy generators, such as wind farms and solar arrays like Power Source First Bulacan and
Altemergy, MERALCO can utilize the technology of distributed energy resources - or power
sources connected directly to the distribution network - in building network resilience. With
the  generators  much  closer  to  end-users,  customers  enjoy  better  power  quality,  shorter
restoration  times,   and  potentially  less   interruptions.   As   a  forerunner  in  this  customer-
benefitting technology, it would only be reasonable that MERALCO be allowed to continue to
strengthen its network with additional and more extensive distributed energy resources.
Throughout  its  long  and  storied  history,  MERALCO  has  gamered  a  multitude  of
recognitions,  solidifying  its position as  a model  distribution utility.  In an award given  last
December 6, 2023, the DOE has recognized MERALCO for three (3) key policy directives of
the Department:  first, ensuring adequate and reliable electric power supply in the country as
prescribed under DOE Department Circular (DC) No. 2010-03-0003; second, full compliance
to reportorial requirements and pertinent data in the fomulation of the power development plan
specified in DOE DC No. 2015-04-0002; and third, ensuring effective and successful transition
towards  the  implementation of Retail  Competition and Open Access  (RCOA)  as  contained
DOE DC No. 2013-05-0006.
For its part, the ERC, on August 4, 2023, issued a certification that MERALCO is in
full  compliance  with  the  reportorial  requirements  of  the  Commission,  including  system
Page  I  6


performance.  These  reports  cover  the  regular  monthly  submission  on  rates;  revenue  and
remittances; and, electric service standards and utility perfomance, among others.
As  a  testament  to  the  quality  and  reliability  of service  that  MERALCO  provides,
electricity end-users in areas outside of MERALCO have taken steps to request for MERALCO
service when what they receive from the current provider has proven inadequate. As early as
2008, Evercrest Golf club Resort, Gulod Resort, Chateau Royale Sports & Country Club, and
the Metropolitan Medical Center relayed to their DU that they experience nearly daily power
interruptions affecting their ability to  serve their customers and patients.  Failing to obtain a
response  or  solution,  they  sought  the  court's  assistance  to  direct  MERALCO,  the  service
provider closest to them in Tagaytay City, to take over their electric service.
In  a decision rendered  on August  30,  2018,  the Regional  Trial  Court Branch  14  in
Nasugbu,    Batangas    issued    a    decision   on   the   matter    stating,    among    others,    that
"MERALCO. . .has  the capability to provide adequate and reliable  electric power supply to
plaintiff s  establishments.  Its  area of operation includes the province  of Cavite or until the
boundary ofNasugbu, Batangas. Plaintiff' s establishments are located just several meters away
from  the  said  boundary.  Batelec  I  has  failed  to  provide  bulk  energy  needs  of plaintiff's
establishments but may well be provided by hAIRALCO with great reliability and efficiency".
In a similar move, the Sangguniang Bayan ofNasugbu, Batangas issued Resolution 368
last  December  4,  2023   endorsing  the  transfer  of  electric  service  in  the  municipality  to
MERALCO. This resolution was in response to a petition signed by more than 22,500 Nasugbu
residents and business owners seeking better electric service because they could no longer bear
the  "exorbitant  electricity bills,  frequent power intelTuptions,  and poor  service  quality that
cause disruption to day-to-day lives"13 from their provider.
On multiple occasions, hflRALCO has taken the opportunity to share its expertise and
resources  with  other  distribution  utilities  and  end-users  in  areas  outside  MERALCO  by
providing assistance and support following natural disasters, such as typhoons and floods. After
Typhoon  "Pablo"  slammed  into  Southern  Mindanao  on  December  4,  2012,  MERALCO
travelled to Mindanao to assist the hard-hit Davao Oriental Electric Cooperative (DORECO)
and assist in bringing back the electric service. In 2013 , in the aftermath of typhoon "Yolanda",
MERALCO crews, bringing with them forty (40) generators, helped power-restoration efforts
in  Tacloban,  Leyte  and  other  areas  across  the  country.  MERALCO  also  provided  power
restoration  assistance  in  Batanes  after  the  destruction  brought  by  typhoon  "Ferdie"  in
September 2016. The Meralco contingent had to perform restoration activities manually due to
the unavailability of mechanized equipment and vehicles. In November of 2020, in the wake
of typhoon "Rolly",  MERALCO joined the Power Restoration Rapid Deployment (PRRD)
Task  Force  Kapatid  to  help  in  the  power  restoration  in Albay,  Catanduanes,  and  parts  of
Camarines Sur. Right before Christmas in 2021, hffiRALCO crews travelled to the province
of Cebu in support of the restoration efforts of the Visayan Electric Company (VECO) and
Mactan Electric Co. (MECO) that were devastated by typhoon "Odette". Just last July 2023,
MERALCO  crews  travelled to  Ilocos Norte to  assist the Ilocos Norte Electric  Cooperative
(INEC)  in restoring  power  after the  passage  of typhoon  "Egay".  These  are  in  addition  to
restoration assistance provided in Albay after typhoon "Glenda" (2014); Sorsogon and Oriental
Mindoro after typhoon "Nona" (2015); Cagayan and Isabela after typhoon "Lawin" (2016);
and, the Bicol Region, Oriental Mindoro, and Quezon Province after typhoon "Nina" (2016).
13 "Meralco asked to take over service in Nasugbu", Philippine Star, December 31, 2023,
httDs://wwwDhilstarcom/business/2023/12/31/2322392/meralco-asked-take-over-service-nasugbu
Page  I  7


MERALCO assisted in various ways including sending personnel, equipment, tools, and repair
materials;   providing   relief  goods   and  donations   in  partnership   with  the   One   Meralco
Foundation (OMF); and, providing lighting facilities such as generators, solar "liter of light"
streetlights, and household solar lamps.
In 2020, as the world wrestled with the COVID pandemic, MERALCO worked with
the COVID-19 Inter-Agency Task Force (IATF) to provide support to the Department of public
Works and Highways (DPWH) in the establishment and operation of quarantine facilities and
support groups.  These facilities  included the Ninoy Aquino  Stadium COVID-19  Treatment
Facility, the East Avenue Medical Center Mortuary Freezer, and the Ciudad Victoria Philippine
Arena Mega Quarantine Facility.
Since  2014,  under  the  direction  of the  DOE  and  ERC,  MERALCO  and  volunteer
customers  have  been  implementing  the  Interruptible  Load  Program  (ILP)  to  ration limited
power supply in the grid when power intermptions are imminent. As of end-September 2023,
there are 110 MERALCO customers with a total committed de-loading capacity of 539.26 MW
that have signed up with MERALCO and with Retail Electricity Suppliers as ILP Participants.
Since Meralco started implementation in 2014, ILP was activated 27 times in MERALCO's
area, and because of the support of ILP participants, the program has successfully spared as
many as 1.8 million households from power intemiptions.
MERALCO is also a dependable partner of the government in the roll-out of the Build-
Better-More  program,  multiple  Public-Private-Partnership  initiatives,  and  other projects  in
coordination with the Department of public Works and Highways (DPWH) and the Department
of Transportation (DOTR). These include the Connector Road between the North Luzon and
South Luzon Express Ways; the Skyway Stage 3; the Metro Rail Transit Line 7 (MRT-7); and,
Cavite-Laguna Expressway. From the period 2019 to 2023, MERALCO has relocated a total
of 14,479 electric poles in line with the completion of these and other projects.
It is our obligation as representatives of the people to  ensure that all electricity end-
users within the franchise of MERALCO continue to enjoy safe, reliable and efficient service
at fair and reasonable prices.  It is therefore imperative that the  State give its  support to the
renewal of MERALCO's franchise so that it may continue to deliver the benefits of accessible
and  reliable  power   at   a   fair  and  reasonable  price  to   residents,   businesses,   industries,
government agencies, and all electricity end-users in its franchise area.
Page  I  8


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
Nineteenth Congress
Second Regular Session
HouseBillNo.   9793
Introduced by Representative JOHY SARTE SALCEDA
AN ACT
RENEWING FOR ANOTHER TWENTY-FIVE (25) YEARS THE FRANCHISE
GRANTED T0 THE MANILA ELECTRIC COMPANY, AMENDING FOR THE
PURPOSE REPUBLIC ACT NO. 9209, ENTITLED, ``AN ACT GRANTING THE
MANILA ELECTRIC COMPANY A FRANCHISE T0 CONSTRUCT, OPERATE
AND MAINTAIN A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF
ELECTRIC POWER T0 THE END-USERS IN THE CITIES/MUNICIPALITIES
0F METRO MANILA, BULACAN, CAVITE AND RIZAL, AND CERTAIN
clTIEs"uNlclpALITIEsreARANGA¥s IN BATANGAS, LACUNA, QUEZoN,
AND PAMPANGA," AND FOR OTHER PURPOSES
Be  it  enacted by  the  Senate  and  the  House  Of Representatives  Of the  Philippines  in
Congress assembled:
SECTION   1.  jvcz/%re  cz#c7  Scare  o/ FrcI7tcfo!.5e.  -Subject  to  the  provisions  of the
Constitution and applicable laws, rules and regulations, the franchise granted to Manila Electric
Company (MERALCO), hereunder referred to as the grantee, its successors or assigns, under
RepublicActNo.9209,toconstruct,operateandmaintaininthepublicinterestandcommercial
purposes, a distribution system for the conveyance of electric power to the end-users, in the
cities  and municipalities  of Caloocan,  Las  Pifias,  Makati,  Malabon,  Mandaluyong,  Manila,
Marikina,  Muntinlupa,  Navotas,  Parafiaque,  Pasay,  Pasig,  Pateros,  Quezon City,  Sam Juan,
Taguig and Valenzuela of Metro Manila; cities and municipalities of Angat, Balagtas, Baliuag,
Bocaue, Bulacan, Bustos, Calumpit, Dofia R. Trinidad, Guiguinto, Hagonoy, Malolos, Marilao,
Meycauayan, Norzagaray,  Obando,  Pandi,  Paombong,  Plaridel,  Pulilan,  San Ildefonso,  San
Jose  del  Monte,  San  Miguel,  San  Rafael  and  Sta.  Maria,  Province  of Bulacan;  cities  and
municipalities  of Alfonso,  Amadeo,  Bacoor,  Carmona,  Cavite,  Dasmarinas,  Gen.  Alvarez,
Gen.  E.  Aguinaldo,  Gen.  Trias,  Imus,  Indang,  Kawit,  Magallanes,  Maragondon,  Mendez
Nufiez,  Naic,  Noveleta,  Rosario,   Silang,  Tagaytay,  Tanza,  Temate  and  Trece  Martires,
Province of cavite; cities and municipalities of Angono, Antipolo, Baras, Binangonan, Cainta,
Cardona,  Jala-Jala,  Montalban,  Morong,  Pililla,   San  Mateo,  Tanay,  Taytay  and  Teresa,
Province of Rizal; cities and municipalities of Batangas, San Pascual and Sto. Tomas, Province
of Batangas; cities and municipalities of Alaminos, Bay, Bifian, Cabuyao, Calanba, Calauan,
Liliw,  Los  Bafios,  Luisiana,  Magdalena,  Majayjay,  Nagcarlan,  Pila,  Rizal,  San  Pablo,  San
Pedro,  Sta.  Cruz,  Sta.  Rosa  and Victoria,  Province  of Laguna;  cities  and municipalities  of
Candelaria,  Dolores,  Lucban,  Lucena,  Mauban,  Pagbilao,  Sampaloc,  San Antonio,  Sariaya,
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Tayabas  and  Tiaong,  Province  of Quezon;  barangays  of Balucuc  and  Calantipe  in  Apalit,
Pampanga;  Barangay Concepcion in San  Simon,  Pampanga;  and barangays of Bahay Pare,
Barangca, Dulong Ilog, Mangumbali, Mandili, Mapaniqui, Paligui, Pangclara, Pulong Gubat,
Pulong  Palazan,  Salapungan,  Vizal  San  Pablo,  Vizal  Santo  Cristo  and  Vizal  Sto.  Nifio  in
Candaba, Pampanga is hereby renewed.
The grantee shall also be authorized to extend service to any adjacent or nearby city,
municipality,  barangay  or province,  whenever  such service  is  requested by  its residents  or
inhabitants, through their Local Government Units, pursuant to a referendum called for that
purpose in accordance with law or as otherwise directed by a court of competent jurisdiction.
As used in this Act, distribution system refers to the system of wires and associated facilities
including  sub-transmission  lines  belonging  to  a  franchised  distribution  utility  extending
between the delivery point on the national transmission system or generating facility and the
metering point/facility of the end-user.
SEC.  2. A4lcz777!er a/Operczfz.o#s a/Fczcz./I.fz.es. -All electric distribution facilities,  lines
and systems for electric services owned, maintained, operated or managed by the grantee, its
successors  or assigns, whether overhead or underground as required under applicable laws,
rules,  regulations  or ordinances,  shall be operated and maintained at all times in a superior
marmer, and it shall be the duty of the grantee, its successors or assigns, whenever required to
do  so  by the Energy Regulatory  Commission,  hereafter referred to  as  the ERC  or its  legal
successor, to modify, improve and change such facilities or systems in such manner and to such
extent as the progress in science and improvements in the electric power services may render
reasonable and proper.  It shall be the duty of the grantee to implement the modemization of
the electric distribution network through the adoption of advanced automated network facilities
and systems, such as but not limited to, advanced metering infrastructure, advanced distribution
management system,  and energy  storage  systems,  for higher efficiency,  greater innovation,
improved electrification and customer choice. The grantee shall also adopt other systems which
shall allow consumers to better manage their energy consumption to reduce their electricity
bills and encourage the use of renewable energy sources through distributed energy resources.
In order to promote energy security and sustainable and efficient energy in accordance with the
Republic  Act No.11697  or the  Electric  Vehicle  Industry  Development  Act  (EVIDA),  the
grantee  shall  also  operate  electric  vehicles  and  related  charging  facilities  subject  to  cost
recovery mechanisms that the energy regulatory commission may approve.
Whenever  practicable  and  for purposes  of maintaining  order,  safety  and  aesthetics
along the highways, roads, streets, alleys or right-of-way, the grantee may for its own pulposes,
allow the use, of free spaces in its poles, facilities or right-of-way by interested parties upon
reasonable  compensation  to   the  grantee.   The   ERC   shall   decide  in  case  of  dispute  or
disagreement between the parties.
SEC.  3. J77gress cz7tcJ Egress. -For the purpose of erecting and maintaining poles and
other supports for said facilities, wires or other conductors or for the purpose of laying and
maintaining said poles, facilities, wires, cables, or other conductors, it shall be lawful for the
grantee, its successors and assigns, with the prior approval of the Department of public Works
and  Highways  (DPWH)  or  the  local  government  units  (LGUs)  concerned,  as  may  be
appropriate, to make excavations or lay conduits in any of the public places, highways, streets,
lanes,  alleys,  avenues,  sidewalks  or bridges  of said provinces,  cities,  and/or municipalities
without need of compensation: Provided however, That any public place, highway, street,lane,
alley,  avenue,  sidewalk or bridge disturbed,  altered or changed by reason of the erection of
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poles  or  other  supports,  or  the  laying  of  wires,  other  conductors  or  conduits,  shall  be
immediately repaired and properly restored at the expense of the grantee, its successors and
assigns, in accordance with the standards set by the DPWH and concerned LGUs.
In the event that the DPWH or LGU requires the relocation of electric sub-transmission
and  distribution  lines  along,  upon,  under  and  across  publicly  owned  lands  and  public
thoroughfares, including, without limitation, all roads, highways, streets, alleys, bridges and
causeways,   for  the  primary  purpose  of  the  government,  the  grantee  shall  be  properly
compensated for such relocation.
SEC. 4. Respo7!sz.bz./I.fy /a ffoe Pctb/I.c. -The grantee shall supply electricity to its captive
market in the least cost manner. The grantee may supply electricity to the contestable market
subject to conditions that may be prescribed in applicable laws, rules and regulations. The price
to be charged by the grantee to the contestable market should not be subject to regulation by
the ERC. In the interest of the public good and as far as feasible and whenever required by the
ERC,  the  grantee  shall  modify,  improve  or  change  its  facilities,  poles,  lines,  systems  and
equipment for the purpose of providing efficient and reliable service and reduced electricity
costs. The grantee shall charge reasonable, just and competitive power rates for its services to
all types of consumers within its franchised area in order that business and industries shall be
able to compete.  In support of providing universal service in off-grid and other areas where
generation companies cannot supply power, the grantee shall also construct, develop, acquire,
own, operate and maintain generating facilities and microgrids within its franchise area.
The grantee shall have the obligation to provide open and nondiscriminatory access to
its distribution system and services for any end-user within its franchise area consistent with
RepublicActNo.9136,otherwiseknownasthe"ElectricPowerlndustryReformActof2001."
The grantee shall not engage in any activity that will constitute an abuse of market power such
as but not limited to, unfair trade practices, monopolistic schemes and any other activities that
will hinder competitiveness or businesses and industries.
SEC. 5. JIcz/es/or Servz.ces. -The retail rates to its captive market and charges for the
distribution of electric power by the grantee to its end-user shall be regulated by and subject to
the approval of the ERC.
The grantee shall identify and segregate in its bill to the end-users the components of
the  retail  rate  pursuant  to  Republic  Act  No.  9136,  unless  otherwise  amended.  Such  rates
charged by the grantee to the end-users shall be made public and transparent. The grantee shall
implement lifeline rate to marginalized end-users as mandated under Republic Act No. 9136.
The grantee shall offer electric service using a prepaid metering system to its customers
who may elect to prepay for their electricity subject to the rules and regulations that the ERC
may prescribe.
SEC.  6.  Promofz.o#  o/ Co#s#"er  J73/Crests.  -  The  herein  grantee  shall  establish  a
platformforconsumerconcemstohandleconsumercomplaintsandensureadequatepromotion
of consumer interests. The grantee shall act with dispatch on all complaints brought before it.
The grantee shall ensure that such platform can be remotely accessed through electronic or
digital means.
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SEC. 7. Zzz.gfe/ o//%e Govcr#me77/. ~ A special right is hereby reserved to the President
of the  Philippines  in times  of war,  rebellion,  public peril,  calamity,  emergency,  disaster or
disturbance of peace and order to temporarily take over and operate the distribution system of
the grantee or to authorize the temporary use and operation thereof by any agency/department
of the government upon due compensation to the grantee, its successors or assignees, for the
use of the said distribution system during the period when they shall be operated.
SEC.   8.   J2z.gfe/  a/ E77".77e73/  Domczz.#.   -   Subject   to   the   limitations   and  procedures
prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as
it  may  be  reasonably  necessary  for  the  efficient  establishment,  improvement,  upgrading,
rehabilitation, maintenance and operation of services. The grantee is authorized to install and
maintain its poles, wires and other facilities over and across public property, including streets,
highways, forest reserves and other similar property of the government of the Philippines, its
branches or any of its instrumentalities. The grantee may acquire such private property as is
actually  necessary  for  the  realization  of the  purposes  for  which  this  franchise  is  granted,
including,  but  not  limited  to  poles,  wires,  cables,  transformers,  switching  equipment  and
stations, buildings, infrastructure, machineries and equipment previously, currently or actually
used,  or  intended  to  be  used,  or have  been  abandoned,  unused  or underutilized,  or which
obstructs its facilities, for the operation of a distribution system for the conveyance of electric
power to end users in its franchise area: Provided, That proper condemnation proceedings shall
have been instituted and just compensation paid.
Provz.c7ed, /#rffeer, that upon the filing of the petition for expropriation, or at any time
thereafter, and after due notice to the owner of the property to be expropriated and the deposit
in a bank located in the franchise area of the full amount of the assessed value of the property
or properties, the grantee shall be entitled to immediate possession, operation, control, use and
disposition of the properties sought to be expropriated, including the power of demolition, if
necessary, notwithstanding the pendency of other issues before the court, including the final
determination  of the  amount  of just  compensation  to  be  paid.  The  court  may  appoint  a
representative from the ERC, or its legal successor, as a trial commissioner in detemining the
amount of just compensation.  The  court may consider the tax  declarations,  current audited
financial statements, and rate-setting applications of the owner or owners of the property or
properties being expropriated in order to determine their assessed value.
SEC. 9.  rer7" o/Frcz#cAz.se. -This franchise shall be in effect for a period of twenty-
five  (25)  years  from  the  effectivity  of this  Act,  unless  sooner revoked  or  cancelled.  This
franchise  shall  be  deemed  ipso  facto  revoked  in  the  event  the  grantee  fails  to  operate
continuously for two (2) years. This franchise shall be in effect for a tern of twenty-five (25)
years from the expiration date of the term granted in the current franchise under Republic Act
No. 9209, unless sooner revoked or cancelled by Congress for any violation of the terms and/or
provisions of the franchise herein granted.
SEC.10. 4ccepfcz#ce ¢7cd CoJ„p/z.cz#ce. -Acceptance of this franchise shall be given in
writing within sixty (60) days after the effectivity of this Act.
SEC.  11.  Wczr;'¢#fy z.# Fczvor o/IVc!/I.o7ccz/ cz#d I,occz/ Gover#"e#ts. -The grantee shall
hold the national, provincial and municipal governments of the Philippines harmless from all
claims, accounts, demands or actions arising out of accidents or injuries, whether to property
or  persons,   caused  by  the  construction,  installation,  operation  and  maintenance  of  the
distribution system of the grantee.
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SEC. 12. £z.¢bz./z.fy/or Dczmczges. -The grantee shall be liable for any injury and damage
arising  from  or  caused  by  accident  to  persons  and  property  by  reason  of any  defective
construction under this franchise or of any neglect or omission to keep its poles and wires in a
safe condition.
SEC.  13. Scz/c, £eczse,  rrcz#s/'/er,  I/s#/"cf,  c/c. -The grantee shall not lease, transfer,
grant the usufruct of or sell this franchise or the rights and privileges acquired thereunder to
any person, firm, company, corporation or other commercial or legal entity, nor merge with
any other corporation or entity, nor shall the controlling interest of the grantee be transferred
whether in whole or in part, and whether simultaneously or contemporaneously, to any such
person, fim, company, corporation or entity without the prior approval of the Congress of the
Philippines, except to  a wholly-owned subsidiary of the grantee or where the grantee is the
surviving corporation:  Provided, That any such transfer, sale or assignment is in accordance
with  the  constitutional  limitations.  Any  person  or  entity  to  which  this  franchise  is  sold,
transferred  or  assigned  shall  be  subject  to  the  same  conditions,  terms,  restrictions  and
limitations of this Act.
SEC.  14.  jzeporforz.cz/ jzegwz.reme73Z.  -  The  grantee  shall  submit  an  annual  report  of
finances and operations to the Congress of the Philippines.
SEC.15. Eqwcz/i.fy C/czwse. -In the event that any electric power industry participant
required to secure a legislative franchise, competing individual, partnership or corporation shall
receive a sinilar permit or franchise with terms and/or provisions more favorable than those
herein granted or which tend to place the herein grantee at any disadvantage, such terms and/or
provisions shall be deemed part hereof and shall operate equally in favor of the herein grantee:
Provided, That any terms and/or provisions herein granted which are not contained in other
franchise  that  may  hereafter  be  granted  shall  likewise  be  enjoyed  by  the  future  grantees:
Provided,  however,  That  the  foregoing  shall  neither  apply  to  nor  affect  the  provisions
concerning territory covered by the franchise and the life-span of the franchise.
SEC.  16. 4pp/I.cczbz./I.fy C/czwse. -The grantee shall comply with and be subject to the
provisions  of Commonwealth  Act  No.  146,  as  amended,  otherwise  known  as  the  "Public
Services Act", as amended, and Republic Act No. 9136.
SEC.  17. Repecz/czbz./I.ty cz#c7 IVo77-exc/#Sz.v!.ty C/czwse. -This franchise shall be subject to
amendment, alteration or repeal by the Congress of the Philippines when the public interest so
requires and shall not be interpreted as an exclusive grant of the privileges herein provided for.
SEC.  18. Scporczbz./I.ty C/¢wse. -If for any reason, any of the sections or provisions of
this Act is declared unconstitutional or invalid, the other parts or provisions hereof which are
not affected thereby shall continue to be in full force and effect.
SEC.19. jzepe¢/I.7!g C/czwse. -Acts 484 and 3648, as amended, Republic Act No. 3444,
Republic Act No. 9209, and all other laws, decrees, orders, resolutions, instructions and rules
and regulations or parts thereof, which are inconsistent herewith, are hereby deemed repealed
or modified accordingly.
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I
SEC. 20. Ejj7recfz.vz.fy. -This Act shall take effect fifteen (15) days from the date of its
publication,  upon  the  initiative  of the  grantee,  in  at  least  two  (2)  newspapers  of general
circulation in the Philippines.
Approved,
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