Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS.
First Regular Session

House Bill Number 469

Introduced by:
REP. PRESLEY C. DE JESUS (PHILRECA PARTYLIST), REP. SERGIO C.
DAGOOC (APEC PARTY-LIST ), REP. GODOFREDO N. GUYA (RECOBODA
PARTYLIST), AND REP. ADRIANO A. EBCAS (AKO PADAYON PARTY-LIST)

AN ACT AMENDING REPUBLICT ACT NO. 9136,
OTHERWISE KNOWN AS THE “ELECTRIC POWER INDUSTRY REFORM ACT
OF 2001 OR EPIRA”, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

This proposed bill intends to revisit the 12 year old Electric Power Industry
Reform Act or commonly known as the EPIRA, passed in 2001.

In the 10" year commemoration of the said law, various member-consumer-
owners have strongly manifested the need to review the said law expressing
discontent on its supposed function which is to at least provide a mechanism that
would rationalize the cost of per kilowatt hour of power consumed. While the
explanation of the authors of the said law was deemed acceptable for the consuming
public; “that it was not the intention of EPIRA to reduce the price of power’, it is
generally found out that EPIRA has even functioned the opposite and instead
unjustifiably gave way to rising costs of electricity.

In Mindanao, for the past years of persistent undersupply of electricity, the
stakeholders found out that the certain provisions of the current law will certainly
perpetuate the same situation. Hence, the stronger resolve for the Mindanaoans to


oppose the privatization of the Pulangui and Agus Hydro Electric Power Plants,
having identified this same as one of the provisions.

In Luzon, it is found out that the transition to market operations is not paved
well; that rising costs are not avoided for, which, the liberalization of the industry
promoted by EPIRA pre-supposing competition to lower the costs, was not realized.
This immediate experience is what this measure is trying to avoid experimenting for
in areas like Mindanao.

We agree on the apprehensions of those who wish to protect and rather
strengthen those parts of EPIRA which have taken off and did their functions well in
the industry, from being tinkered. It is for the preceding reason why we only choose
for this proposal, those few provisions that require necessary examination. Now, ten
years are more than enough for giving EPIRA unconditional support and we,
consumers, are starting to feel the consequences. We cannot further this adverse
effect especially with the poor consumers not only in Mindanao, but in the entire
nation. We must examine again EPIRA and introduce amendments to improve its
function to the entire power industry.

PHILRECA Party-List

Rep. SERGIO C. DAGOOC

APEC Party/.ist

Rep. ADRIANO A. EBCAS
AKO PADAYON Party-List


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

House Bill Number 469

Introduced by:
REP. PRESLEY C. DE JESUS (PHILRECA PARTYLIST),
REP. SERGIO C. DAGOOC (APEC PARTY-LIST ), REP. GODOFREDO N. GUYA
(RECOBODA PARTYLIST), AND REP. ADRIANO A. EBCAS (AKO PADAYON
PARTY-LIST)

AN ACT AMENDING REPUBLIC ACT NO. 9136,
OTHERWISE KNOWN AS THE “ELECTRIC POWER INDUSTRY REFORM ACT
OF 2001 OR EPIRA”, AND FOR OTHER PURPOSES

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

CHAPTER | - POLICY AND DEFINITIONS

SECTION 1. Title. - This act shall be known as the “Revised Electric Power
Industry Reform Act or REPIRA". It shall hereinafter be referred to as the Act.

Section 2. Declaration of Policy. — It is hereby declared the policy of the
State to ensure that the right policy direction is provided in the power industry in
order to provide the right support for sectors that deliver direct benefits to consumers
such as the rural electrification program. Towards this end, the State shall
strengthen the support mechanism to enable electric cooperatives do their mandate
in delivering electricity to the countryside even in the economically marginalized
areas.

CHAPTER II - AMENDATORY PROVISIONS

Section 3. Section 8 of EPIRA shall be amended to read as follows: “SEC. 8.
Creation of the National Transmission [company] CORPORATION.-XXX...


‘The sub transmission functions, assets, FACILITIES, AND LIABILITIES, IF
ANY, shall be segregated from the transmission functions, asset, FACILITIES, and
liabilities for transparency and DISPOSAL: Provided, That IN THE MEANTIME the
sub-transmission FUNCTIONS, assets, AND FACILITIES shall be PERFORMED
Operated, and maintained by THE TRANSCO, OR ITS CONCESSIONAIRE, until
SUCH FUNCTIONS, ASSETS, AND FACILITIES ARE SOLD OR OTHERWISE
DISPOSED AND TRANSFERRED to qualified distribution utilities which are
CAPABLE to take over the responsibilities of operating, maintaining, upgrading, and
expanding said assets. All transmission and sub-transmission related liabilities of
NPC shall be transferred to and SHALL BE assumed by the PSALM Corp.

‘THE TRANSCO OR ITS CONCESSIONAIRE, shall negotiate with and
thereafter, transfer such functions, assets, FACILITIES, and associated liabilities to
the qualified distribution utility or utilities connected to such sub transmission
ASSETS AND facilities not later than two (2) years from the effectivity of this Act or
FROM the start of open access, whichever comes earlier Provided, That in case
THE WINNING BIDDER OR BIDDERS ARE electric cooperatives, the TRANSCO,
AND/OR WHICHEVER AGENCY ASSUMES RESPONSIBILITY IN THE
DISPOSITION OF SUB-TRANSMISSION FACILITIES, shall grant THE ELECTRIC.
COOPERATIVES concessional financing over a period of twenty (20) years:
Provided, However, That the instalment payments to THE TRANSCO for the sub-
transmission ASSETS AND facilities shall be given by the WINNING electric
cooperatives FIRST PREFERENCE TO the net income derived from such ASSETS
AND facilities. The TRANSCO shall HIRE AT LEAST TWO INDEPENDENT,
COMPLEMENT, AND REPUTABLE APPRAISERS TO ESTABLISH AND
DETERMINE, FOR THE PURPOSE OF DISPOSING SAID SUBTRANSMISSION
ASSETS AND FACILITIES, THEIR TRUE AND FAIR MARKET VALUE BASED ON
THEIR REVENUE POTENTIAL.

‘DISPUTES OR DISAGREEMENTS IN THE valuation, procedures, ownership
participation, and other issues RELATED TO THE DISPOSITION OF THE
SUBTRANSMISSION ASSETS AND FACILITIES SHALL BE RESOLVED
EXPEDITIOUSLY BY THE ERC, AFTER DUE NOTICE TO ALL INTERESTED
PARTIES AND PUBLIC HEARING.

‘The ACQUISTION AND take-over of any sub transmission FUNCTION,
asset, AND FACILITY BY A DISTIBUTION UTILITY OR BY DISTRIBUTION
UTILITIES, AS THE CASE MAY BE, MUST NOT RESULT IN a diminution of THE
QUALITY AND RELIABILITY OF THE service BEING RENDERED to the end-users
OF ELECTRICITY. IN THE EVENT THAT two or more ELECTRIC
COOPERATIVES ARE CONNECTED TO THE SAME SUBTRANSMISSION
ASSET AND FACILITY, A consortium or juridical entity shall be formed TO
ACQUIRE AND TAKE OVER SUBTRANSMISSION FUNCTION, ASSET, AND
FACILITY, AND THE CONSORTIUM OR JURIDICAL ENTITY SHALL BE
composed of all of SUCH ELECTRIC COOPERATIVES. IN SUCH A CASE, THE
SUBSCRIPTION RIGHTS OF EACH OF THE DISTRIBUTION UTILITIES
INVOLVED SHALL BE PROPORTIONATE TO THEIR RESPECTIVE LOAD
REQUIREMENTS, UNLESS THEY AGREE OTHERWISE AMONG THEMSELVES.
THE CONSORTIUM OR JUDIRICAL ENTITY SHALL, thereafter, be granted a

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franchise BY THE NATIONAL ELECTRIFICATION ADMINISTRATION to
PERFORM AND operate the sub-transmission FUNCTION, asset, AND FACILITY.
PROVIDED FURTHER, THAT ANY SUB-TRANSMISSION FACILITIES WHICH
WILL NOT BE ASSUMED BY THE ELECTRIC COOPERATIVES AND BY ANY
DISTRIBUTION UTILITIES WILL BE CONSIDERED TRANSMISSION FACILITIES.

‘EXCEPT FOR THE PSALM Corp., THE TRANSCO, and THE connected
distribution utilities, no OTHER party shall be allowed ANY SHARE IN THE
ownership OF AND /or IN THE management, in whole or in part, OF THE
CONSORTIUM OR JUDICIAL entity THAT SHALL ACQUIRE AND TAKE OVER
THE SUB-TRANSMISSION FUNCTION, ASSET, AND FACILITY.

‘The TRANSCO may exercise the power of eminent domain subject to the
requirements of the Constitution and existing laws. Except as provided OTHERWISE
IN THIS ACT, no person, company, or entity, other than the TRANSCO, shall own
any transmission ASSETS AND facilities IN THE COUNTRY.

‘BEFORE the transfer of the transmission functions by NPC to TRANSCO
and before the promulgation of the Grid Code, THE ERC shall DIRECT AND ensure
that NPC shall provide to all electric power industry participants open and non-
discriminatory access to NPC’S transmission system. Any violation HEREOF shall
RENDER THE PARTY RESPONSIBLE FOR SUCH VIOLATION LIABLE to the
APPROPRIATE fines and penalties imposed IN SECTION 44 OF THIS ACT.

Section 4. Section 31 of the EPIRA, shall be amended to read as follows:
“SEC. 31, Retail competition and Open Access. - Any law to the contrary
notwithstanding, retail competition and open access on distribution wires OF
DISTRIBUTION UTILITIES shall be implemented ONLY UPON THE REALIZATION
OF EXCESS OF POWER SUPPLY EQUIVALENT TO 30% OF THE BASELOAD
REQUIREMENT IN EACH OF THE LUZON, VISAYAS, AND MINDANAO GRID,
FROM THE DATE OF THE effectivity of this Act, subject to the following conditions:

(a) Establishment of the wholesale electricity spot market;

(b) Approval of unbundled transmission and distribution wheeling charges; and

(c) Initial implementation of the cross subsidy removal scheme;

(d) Privatization of at least seventy (70%) percent of the total capacity of
generating assets of NPC in Luzon and Visayas; and

(e) Transfer of the management and control of at least seventy percent (70%) of
the total energy output of power plants under contract with NPC to the IPP
Administrators.

‘THE initial implementation of open access AND RETAIL COMPETITION
SHALL BE DECLARED BY the ERC IN A RESOLUTION AND, IN THE SAME
ORDER TO BE ISSUED AFTER DUE NOTICE TO ALL INTERESTED PARTIES
AND PUBLIC HEARING, SHALL ALSO DECLARE THAT all end-users OF
ELECTRICITY with a monthly average peak demand of NOT LESS THAN ONE
POINT FIVE MEGAWATT (1.5MW) for the IMMEDIATELY preceding twelve (12)
BILLING months to be the contestable market. AFTER TWO (2) years
IMMEDIATELY FOLLOWING THE INITIAL IMPLEMENTATION OF OPEN

3


ACCESS, the threshold level for the contestable market shall be reduced to ONE
MEGAWATT (1MW). At THAT level, aggregators shall be allowed to supply
electricity to end-users whose aggregate demand within a contiguous area is at least
ONE MEGAWATT (1MW). LOAD LEVEL BELOW ONE MEGAWATT (1MW) WILL
REMAIN AS CAPTIVE MARKET IN THE FRANCHISE AREAS OF ELECTRIC
COOPERATIVES TO MAINTAIN THE MISSIONARY SERVICE IN THE UNVIABLE
AREAS. EVERY year thereafter, the ERC shall REVIEW AND evaluate the
performance of the CONTESTABLE market AND, ON the basis of such YEARLY
REVIEW AND evaluation, THE ERC shall gradually reduce the threshold level IN
AREAS UNDER THE FRANCHISE OF THE PRIVATE DISTRIBUTION UTILITIES
until THE CONTESTABLE MARKET SHALL FINALLY COVER the household
END-USERS OF ELECTRICITY. In the case of electric cooperatives, THESE
AFOREMENTIONED LEVELS SHALL NOT BE APPLICABLE.

Section 5. Section 34 of the EPIRA shall be amended to read as follows: *
SEC. 34. Universal Charge. — Within one (1) year from the effectivity of this Act, a
universal charge to be determined, fixed and approved by the ERC, shall be
imposed on all electricity end-users for the following purposes:

(a) xxx

(b) xxx

(c) xxx

() An environmental charge equivalent to one-fourth of one centavo per
kilowatt-hour (P0.0025/kWh), which shall accrue to an environmental fund to
be used solely for watershed rehabilitation and management. Said fund shall
be managed by NPC under existing arrangements;

(e)A charge to account for all forms of cross-subsidies for a period not
exceeding three (3) years. The universal charge shall be non-by passable
charge which shall be passed on and collected from all end-users on a
monthly basis by the distribution utilities. Collections by the distribution
utilities and the TRANSCO in any given month shall be remitted to the
PSALM Corp. on or before the fifteenth (15th) of the succeeding month, net
of any amount due to the distribution utility. Any end-user or self-generating
entity not connected to a distribution utility shall remit its corresponding
universal charge directly to the TRANSCO. The PSALM Corp., as
administrator of the fund, shall create a Special Trust Fund which shall be
disbursed only for the purposes specified herein in an open and transparent
manner. All amounts collected for the universal charge shall be distributed to
the respective beneficiaries within a reasonable period to be provided by the
ERC; AND

(f) TO FUND THE REHABILITATION OF LINES PREVIOUSLY
CONSTRUCTED USING NEA-SUBSIDY FUNDS AND/OR PRIORITY
DEVELOPMENT ASSISTANCE FUND (PDAF) TO ELECTRIFY FAR-
FLUNG UNVIABLE AREAS.

Section 6, Section 35 of the EPIRA, is hereby amended to read as follows:.”
SEC.35. Royalties, Retums and Tax Rate- The provision of Section 79 of
Commonwealth Act No. 137 (C.A. No. 137) and any law to the contrary


notwithstanding, the President of the Philippines shall reduce the royalties, returns
and taxes collected for the FOLLOWING:

1. INDIGENOUS ENERGY RESOURCES. For the exploitation of all indigenous
sources of energy, including but not limited, natural gas and geothermal
steam, so as to effect parity of tax treatment with the existing rates for
imported coal, crude oil, bunker fuel and other imported fuels.

2. TAX FOR ELECTRIC COOPERATIVES.

To ensure lower rates for end-users, the ERC shall forthwith reduce rates of power
from alll indigenous sources of energy.

Section 7. Section 43 of EPIRA is further amended to read as follows: “SEC.
43. Functions of the ERC. -XXX...

‘(a) Enforce the implementing rules and regulations of this Act RELATIVE TO
INDUSTRY COMPETITION AND MARKET ABUSE TOGETHER WITH OTHER
AGENCIES AUTHORIZED TO MONITOR THE STANDARDS IN ACCORDANCE
WITH THE EXISTING RULES AND REGULATIONS SET.

‘(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in
accordance with law, a National Grid Code and a Distribution Code which shall
include, but not limited to, the following:

‘()) Performance standards for TRANSCO O & M Concessionaire, and suppliers:
Provided, That in the establishment of the performance standards, the nature and
function of the entities shall be considered: and

‘i Financial capability standards for the generating companies, the TRANSCO,
distribution utilities and suppliers: Provided, further, That such standards are set to
ensure that the electric power industry participants meet the minimum financial &
TECHNICAL standards to protect the public interest. PROVIDED FURTHERMORE
THAT MONITORING, SUPERVISION & ENFORCEMENT OF FINANCIAL &
TECHNICAL STANDARDS OF THE ELECTRIC COOPERATIVES WILL BE
IMPLEMENTED BY THE NATIONAL ELECTRIFICATION ADMINISTRATION,
INCLUDING EXISTING GUIDELINES PROMULGATED BY THE ENERGY
REGULTORY COMMISSION, PRIOR TO THIS AMENDMENT.

(iii) Determine, fix, and approve, after due notice and public hearings the universal
charge, to be imposed on all electricity end-users pursuant to Section 34 hereof. .

Section 8. Section 47 of the EPIRA is hereby amended as follows: “SEC. 47.
NPC Privatization. — Except for THE AGUS & PULANGUI HYDRO ELECTRIC
PLANTS COMPLEXES, the generation assets, real estate, and other disposable
assets as well as IPP contracts of NPC shall be privatized in accordance with this
Act AND the following guidelines, except as provided for in Paragraph (f) herein:

(a) Xxx..
(b) Xxx..


(c) Xx...
(d) Xxx...
(e) Xxx.

‘(f) The Agus and the Pulangui complexes in Mindanao shall be excluded from
among the generation companies that will be privatized. Their ownership shall be
transferred to the PSALM Corp. and both shall continue to be operated by the NPC.
Said complexes SHALL BE RETAINED TO GENERATE POWER WHICH WILL
SERVE AS BUFFER SUPPLY TO AVERT POWER CRISES. ELECTRIC
COOPERATIVES SHALL BE PRIORITIZED IN CONTRACTING THESE
COMPLEXES’ CAPACITY TO SERVE THE NEED OF THE RESIDENTIAL
CONSUMERS.

(g)XXX
(h)XXx
(XXX

@) NPC SHALL generate and sell electricity AND SHALL CONSTRUCT AND
MAINTAIN ADDITIONAL CAPACITY EQUIVALENT TO THE CAPACITY OF THE
BIGGEST POWER PLANT IN EVERY GRID, FOR ANCILLARY PURPOSES AND
TO STABILIZE THE GRID IN ANY GIVEN TIME THAT A BASE PLANT
EXPERIENCE OUTAGE.

Section 9. Section 58 of the EPIRA is hereby amended, to read as follows:
“SEC. 58. Additional Mandate of the National Electrification Administration (NEA). —
NEA shall develop and implement programs:

‘(a) To prepare electric cooperatives in operating and competing under the
deregulated electricity market AND IN AN OPEN ACCESS AND RETAIL
COMPETITION ENVIRONMENT, INCLUDING SETTING UP MANAGEMENT
SYSTEM, PROMOTING JOINT ACTIONS IN POWER PURCHASE POOLING,
OPERATION OF SUB-TRANSMISSION LINES, SHARING OF COMMON
SERVICE FACILITIES AND REGULATION-RELATED TRAINING AND
TECHNICAL INTERVENTIONS, within five (5) years from the effectivity of this
Act;

‘(b) To CONTINUE STRENGTHENING the technical capability and financial
viability of rural electric cooperative AND FOR THAT PURPOSE, WITHIN ONE
(1) YEAR FROM THE EFFECTIVITY OF THIS ACT, DEVELOP, SUBMIT AND
IMPLEMENT PROGRAMS TO ENABLE THE ELECTRIC COOPERATIVES TO
BE FINANCIALLY VIABLE AND INDEPENDENT

‘(c) To CREATE AN APPROPRIATE TECHNICAL STAFF TO ASSIST
ELECTRIC COOPERATIVES IN CONDUCTING PERIODIC REVIEW OF
RATES AND OTHER RELATED ACTIVITIES AND


“(d) TO ACT AS PLANNING AND IMPLEMENTING AGENCY INVOLVING
MISSIONARY ELECTRIFICATION AND INTEGRATING GRID AND OFF-GRID
EXPANSION PROGRAMS AND TO SUBMIT THE SAME TO DOE FOR
REVIEW, APPROVAL AND PROPER IMPLEMENTATION.

Section 10. Section 66 of the EPIRA is hereby amended to read as follows:
“SEC. 66. Benefits to Host Communities,.-The obligations of generation companies.
and energy resource developers to communities hosting energy generating facilities
and/or energy resource developers as defined under Chapter Il, Sections 289 to 294
of the Local Government Code and Section 5(i) of Republic Act No. 7638 and their
implementing rules and regulations and applicable orders and circulars
INCONSISTENT WITH THIS ACT ARE HEREBY AMENDED TO SIMPLIFY THE
DISTRIBUTION OF THE SHARES IN NATIONAL WEALTH TAX.

‘THE COMMUNITIES HOSTING ANY SOURCE OF ENERGY SHALL BE
ENTITLED TO THE EIGHTY PERCENT (80%) OF THE NATIONAL WEALTH TAX;
PROVIDED, THAT THE GENERATION FACILITIES ANDIOR ENERGY
RESOURCE DEVELOPERS SHALL DEDUCT THIS AMOUNT FROM THE POWER
BILLS OF THE ELECTRIC COOPERATIVES/DISTRIBUTION UTILITIES;
PROVIDED FURTHER, THAT THIS SHALL HAVE RETROACTIVE EFFECT FROM
THE TIME THE GENERATION FACILITIES AND/OR ENERGY RESOURCE
DEVELOPERS STARTED TO OPERATE IN THE HOST COMMUNITIES.

Section 11. Section 70 of EPIRA is hereby amended to read as follows:

“SEC. 70. Missionary Electrification. THE MISSIONARY ELECTRIFICATION
FUNCTIONS OF NPC-SPUG SHALL BE PERFORMED BY THE NATIONAL
ELECTRIFICATION ADMINISTRATION AS AN ADDITIONAL MANDATE IN
ACCORDANCE UNDER SECTION 58 OF THIS ACT WHICH IS TO ASSIST THE
ELECTRIC COOPERATIVES IN COMPLYING WITH THIS ACT. THE NEA SHALL
BE RESPONSIBLE IN PROVIDING POWER GENERATION AND ITS
ASSOCIATED POWER DELIVERY SYSTEMS IN AREAS THAT ARE NOT
CONNECTED TO THE TRANSMISSION SYSTEM. The missionary electrification
function shall be funded from the revenues from sales in missionary areas and from
the universal charge to be collected from all electricity end-users as determined by
the ERC AND TO BE REMITTED AND ADMINISTERED TO NEA. THE NEA MAY
OPT TO TRANSFER OR RELINQUISH THE OPERATION OF THE OFF-GRID
POWER PLANTS TO THE ELECTRIC COOPERATIVE AFTER A SOUND
EVALUATION OF THE SAID EC, IF EC IS TECHNICALLY AND FINANCIALLY
CAPABLE OF MAINTAINING THE PLANT AND IF SO DOING THE ASSETS OF
NPC-SPUG BE TRANSFERRED TO NEA.”

Section 12. Section 71 of EPIRA is hereby amended to read as follows:
“SEC. 71. Electric Power Crisis Provision.-Upon the determination by the President
of the Philippines of an imminent shortage of the supply of electricity, THE
PRESIDENT SHALL authorize the establishment of additional generating capacity.”

CHAPTER lil - GENERAL PROVISIONS


Section 13. Implementing Rules and Regulations. The Secretary of the
Department of Energy, in coordination with the other agencies involved in power,
shall create a technical writing group that will be tasked to draft the Implementing
Rules and Regulations.

Section 14. Separability Clause. If any part or section of this Act is declared
unconstitutional, such declaration shall not affect in any manner other parts or
sections of this Act.

Section 15. Repealing Clause. — All laws, decrees, proclamations,
issuances, or ordinances that are contrary to or inconsistent with the provisions of
this Act are hereby amended, repealed or modified accordingly.

Section 16. Effectivity Clause. This Act shall take effect fifteen (15) days
after its publication in at least two (2) newspapers of general circulation.

Approved,