SEVENTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
FIRST REGULAR SESSION
S e n a te
iBfficf o( tl)f Jtijfcrrtarp
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*17 JAN 19 P6 S3
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S E N A T E  
RECEIVED BY:
S enate Bill No. - 1 ^ 0 3
In tro d u ced  by Sen, Win G atchalian
AN ACT
PROVIDING A FINANCIAL BENEFIT TO HOST COMMUNITIES 
OF ENERGY GENERATING FACILITIES
EXPLANATORY NOTE
The D epartm ent of Energy was empowered to devise ways to 
give direct benefits to host com m unities of energy resources and 
energy generating facilities through Republic Act No. 7638. 
Energy 
Regulations (ER) 1-94 implemented the said law and provided both 
financial and non-financial benefits. 
The financial benefit to host 
com m unities of energy generating facilities is Php 0.01 per kWh of 
total electricity sales. 
It is used for electrification, development and 
livelihood, and reforestation, w atershed, health a n d /o r environment.
An assessm ent of ER 1-94 two decades after its im plementation 
shows areas for improvement. First, local governm ents have to wait 
for the fund to accum ulate to pursue projects that will redound to the 
benefit of consum ers; Second, com m unities experience delay in 
receiving goods and services arising from the benefit due to lengthy 
procedural policy; 
Third and last, 
the m onetary am ount indicated 
failed to take into account inflation.
This bill seeks to improve ER 1-94 by (1) using the financial 
benefit as an electricity bill subsidy; (2) stream lining the process such 
th at the power producers directly give the benefit to the distribution 
utilities which will then apply the subsidy; and (3) adjusting the 
m onetary am ount to its current value and indexing it to the Consum er 
Price Index. All these ensures th at com m unities speedily experience


the benefits arising from hosting energy generating facilities in their 
areas.
As such, the immediate passage of thi^dneasure isf sought.
g a t c h a l :


SEVENTEENTH CON GRESS OF THE 
REPUBLIC OF THE PH ILIPPINES 
F ir s t R e g u la r S e ssio n
S e n a te
ef tijr S)f{rffarp
JAN 19 P6 S3
W CEIVeOBVi
SENATE
S.B . No.
1303
In tro d u c e d  by SEN. WIN GATCHALIAN
AN ACT
PROVIDING A FINANCIAL BENEFIT TO HOST COM MUNITIES 
OF ENERGY GENERATING FACILITIES
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assem bled:
CHAPTER I
GENERAL PROVISIONS
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SECTION 1. T itle. -  This Act shall be known as the “Benefits to Host
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Com munities Act of 2016.”
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SECTION 2. D e c la ra tio n  of Policy. -  It is hereby declared the policy of the 
State to recognize the contribution m ade by pertinent local government units 
(LGUs) in hosting, within their respective territorial jurisdiction, Energy 
Generating Facilities through which the rest of the countiy is energized.


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Further, it is also a policy of the State to promote harm ony and cooperation 
among the host LGUs and the power producers whereby the host LGUs are 
provided with benefits under a coordinated and participative process while 
power producers are accorded comm unity and LGU support.
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SECTION 3. S cope. -  This Act shall apply to all Energy Generating Facilities, 
except those expressly m entioned under Section 7 of this Act, located in all 
municipalities, cities and provinces, except those falling within Metropolitan 
Manila, M etropolitan Cebu, M etropolitan Davao, and other highly urbanized 
cities as defined under Section 452 of Republic Act 7160 or the Local 
Government Code of 1991.
SECTION 4. D efin itio n  of T erm s. — As used in this Act, the following words 
or term s shall have the following m eaning, unless provided otherwise:
a) 
City -  refers to the LGU defined in Republic Act No. 7610 or the 
Local Government Code of 1991;
b) 
D epartm ent of Energy (DOE) -  refers to the government agency 
created p u rsu an t to Republic Act. No. 7638;
c) 
Distribution Utility -  refers to an electric cooperative, a private 
corporation, a government-owned utility, or an existing LGU, 
th at has an exclusive franchise to operate a distribution system;
d) 
Electricity Sales -  refer to the sales proceeds derived by the 
power producer from the actual generation of the energy 
generating facility net of station own use and losses;
e) 
Energy Generating Facility -  refers to any power plant 
constructed or operated to supply electricity;


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f)
g)
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Host Com munities -  refers to host cities, host municipalities, 
and host provinces where the Energy Generating Facility is 
located as determ ined under Section 6 of this Act;
Municipality - refers to the LGU defined in Republic Act No. 
7610 or the Local Government Code of 1991.
Power Producer -  refers to any person, natural or juridical, who 
is engaged in the construction a n d /o r operation of an Energy 
Generating Facility; and
Province -  refers to the LGU defined in Republic Act No. 7610 or 
the Local Government Code of 1991.
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CHAPTER II
FINANCIAL BENEFIT TO HOST COM MUNITES
SECTION 5. F in a n c ia l B en efit. -  Host Com munities of Energy Generating 
Facilities shall only enjoy a financial benefit of Php 0.0269 per kilowatt-hour of 
an Energy Generating Facility’s total Electricity Sales. This financial benefit 
shall be applied exclusively to subsidize the electricity bill of the Host 
Communities. 
The m anner of application shall be determ ined by the 
D epartm ent of Energy (DOE): Provided, T hat fifty percent (50%) shall be alio ted 
for the Host Municipality or Host City, and fifty percent (50%) shall be alloted 
for the Host Province.
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Every three (3) years after the im plem entation of this Act, the DOE shall
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adjust the am ount to its present value using the consum er price index
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published by the Philippine Statistical Authority.
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SECTION 6. R e c ip ie n ts. -  The recipients of the financial benefit shall be:


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a) In case of power barges, the Host M unicipality/City and Host Province is 
that where the power barge is moored;
b) The Host M unicipality/City and Host Province is that where the Energy 
Generating Facility is physically located.
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SECTION 7. E x e m p tio n s. -  The following Energy Generating Facilities shall
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be exempted from providing the financial benefit required under this Act:
a) An Energy Generating Facility with an aggregate installed capacity or 
operating generating capacity th at is less than ten (10) m egawatts (MW);
b) An Energy Generating Facility located in a special economic zone which 
sells or exports less than ten (10) MW of its surplus power output outside 
of the special economic zone where it is located;
c) An Energy Generating Facility for the exclusive internal use of the owner; 
and
d) An on-going energy generating project with a negotiated benefits package 
which is better than or at least substantially equal to the benefits 
provided hereunder, as determ ined and certified by the DOE.
In any case of two or more proximate Energy Generating Facilities 
owned or operated directly or indirectly by the sam e person or entity, each of 
which was split to m eet the criteria for exemption under Section 7 (a) and (b), 
the DOE Secretary shall consider said facilities as one.
SECTION 8. F in a n c ia l B e n efit A d m in is tra to r, -  The financial benefit 
from the total Electricity Sales of Energy Generating Facilities shall be 
adm inistered and held in tru st by each Power Producer acting individually as 
financial benefit adm inistrators for the recipients.
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SECTION 9. R e sp o n sib ilitie s of th e  F in a n c ia l B en efit A d m in istra to r.
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-  The duties and responsibilities of a Power Producer acting as a financial
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benefit adm inistrator shall include the following:
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a) Open, keep, and m aintain a separate account for the financial benefit 
fund which shall not be co-mingled with its general fund;
b) Deposit the financial benefit fund in interest bearing accounts;
c) Directly disburse the fund to Distribution Utilities as a subsidy in the 
electricity bill of the Host Communities, following the m anner prescribed 
by the DOE;
d) M aintain complete and comprehensive records of its m onthly total 
electricity sales, total am ount of the financial benefit fund held in trust, 
total 
am ount 
disbursed 
from 
the 
financial 
benefit 
fund, 
the 
corresponding Distribution Utilities to whom the fund was disbursed to, 
and other information required by DOE;
e) Subm it to DOE every six (6) m onths a detailed statem ent of the status 
and use of the fund as well as other information required;
f) Allow duly authorized representatives of the DOE full access to its 
accounts, books, and records; and
g) Post a bond, should it be required by DOE, in an am ount to be 
determ ined by the sam e government agency.
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SECTION 10. R e sp o n sib ilitie s of C o n c ern e d  D is trib u tio n  U tilitie s. -
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Concerned Distribution Utilities are those whose franchise area includes Host
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Communities. These concerned Distribution Utilities shall:
a) 
Provide DOE and Power Producers with a list of Host Communities 
within its franchise area as well as other information required;
b) Apply as a subsidy to the electricity bill of Host Com munities, in the 
m anner prescribed by DOE, the am ount directly received from the 
Power Producers;


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c) 
M aintain complete and comprehensive records of the total am ount 
received from the Power Producers, the list of Host Com munities who 
benefited from the subsidy to the electricity bill, the am ount of the 
subsidy, and other information required by DOE;
d) 
Subm it to DOE eveiy six (6) m onths a detailed statem ent of the am ount 
and use of the subsidy as well as other information required; and
e) 
Allow duly authorized representatives of the DOE full access to its 
accounts, books, and records.
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SECTION 11. Review  a n d  A u d it. -  Eveiy six (6) m onths, each Power 
Producer shall subm it to the DOE a detailed statem ent of the sources and use 
of the Financial Benefit given to Host Communities.
With respect to said funds, the DOE shall have the right to inspect, 
review, and audit the books of accounts of the Power Producers and the 
Distribution Utilities to ascertain and ensure compliance with this Act, 
particulaiy th at the funds had been and are being expended in accordance 
herewith. Should the DOE determ ine th at the funds are not being spent by the 
Power Producers and Distribution Utilities in accordance with this Act, the 
DOE may assign the funds to another entity to enable the fund purpose to be 
duly accomplished.
SECTION 12. Im p le m e n ta tio n  a n d  E n fo rc e m e n t M e a su re s. -  The DOE 
shall take all necessary reasonable m easures to ensure the proper enforcement 
of this Act, which shall not be limited to those specified under this Section.
In the event of violation or non-compliance of the Power Producer an d /o r 
the Distribution Utility with the provisions of this Act, the DOE, upon prior 
notice and hearing and without prejudice to civil and criminal cases, shall 
impose a penalty twice the am ount of the financial benefit not disbursed by the


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Power Producer to the Distribution Utility, an d /o r not applied by the 
Distribution Utility as a subsidy; Provided, That in the case of willful violation 
of or willful failure to comply with this Act, the DOE may, w ithout prior notice 
and hearing, but after proper investigation or verification, m otu poprio, or upon 
verified com plaint by an aggrieved party, proceed with the penalty stated in this 
Act.
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CHAPTER IV 
GENERAL PROVISIONS
SECTION 13. Im p le m e n tin g  R u les a n d  R e g u la tio n s. -  Within fifteen 
(15) days from the effectivity of this Act, the DOE, in consultation with the 
stakeholders, shall formulate the rules and regulations necessary to implement 
the provisions of this Act.
SECTION 
14. T ra n s itio n  P erio d . -  All existing funds considered as 
benefits to Host Communities, except those expressly provided for by law, shall 
be kept in tru st by the Power Producer pending the issuance of the 
implementing rules and regulations of this Act by the DOE. 
Interest earned 
during the transition period shall be for the benefit of the trust.
SECTION 15. S e p a ra b ility  C la u se . 
— If for any reason, any provision of 
this Act is declared unconstitutional or invalid, the other parts or provisions 
hereof which are not affected thereby shall continue to be in full force and in 
effect.
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SECTION 16. R ep ealin g  C la u se . -  The obligations of Power Producers to 
Host Com m unities under Section 5(i) of Republic Act No. 7638 and its 
implementing rules and regulations, applicable orders, and circulars are 
hereby am ended. 
Furtherm ore, all other laws, decrees, orders, rules and 
regulations or parts thereof which are inconsistent with or contrary to the 
provisions of this Act are hereby repealed, am ended, or modified accordingly.
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SECTION 17. E ffectiv ity . -  This Act shall take effect fifteen (15) days after
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its publication in at least two (2) national new spapers of general circulation.
Approved.