FOURTEENTH CONGRESS OF THE REPUBLIC) 
8 Mi? 12 :.I : I  
' 2  
OF THE PHILIPPINES 
1 
First Regular Session 
) 
/ 
S E N A T E  
S. B. No. ___ 
2121 
Prepared jointly by the Committees on Energy, Finance, Public Services and Ways and 
Means with Senators Enrile, Lapid, Estrada and Angara as authors thereof. 
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AN ACT 
AMENDING 
SECTIONS 
4,9,20,21,23,25,26,30,31,32,33,34,35,38,41,43,45,48,51 OF 
REPUBLIC ACT NO. 9136 ENTITLED "AN ACT ORDAINING REFORMS IN THE 
ELECTRIC POWER INDUSTRY AND FOR OTHER PURPOSES" 
Be it enacted bii the Senate and House of Representatives of the Philippines in Congress 
assembled: 
Section 1. Section 4, Chapter 1, of Republic Act No. 9136, otherwise known as the Electric 
Power Industry Reform Act of 2001, hereinafter referred to as "the Act", is hereby amended to 
read as follows: 
"SEC. 4. 
Definition of Terms. - 
(A) "AFFILIATE"I"ASSOC1ATED ENTITY OR PERSON" REFERS TO 
ANY ENTITY OR PERSON WHICH, ALONE OR TOGETHER WITH ANY 
OTHER ENTITY OR PERSON, DIRECTLY OR INDIRECTLY, THROUGH 
ONE OR MORE INTERMEDIARIES, CONTROLS, IS CONTROLLED BY, OR 
IS UNDER COMMON CONTROL WITH ANOTHER ENTITY OR PERSON. 
FOR PURPOSES OF THIS ACT, A HOLDING COMPANY SHALL BE DEEMED 
AN 
"AFFILIATE" 
OF THE GENERATION AND/OR 
DISTRIBUTION 
COMPANY IN WHICH IT HOLDS INTERESTS. 
Ka>l (B) 
"Aggregator" refers to a person or entity[, engaged] WHICH, 
WITHOUT A LEGISLATIVE FRANCHISE, IS DULY LICENSED BY THE 
COMMISSION TO ENGAGE in consolidating electric power demand of end-users OF 


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ELECTRICITY in [the] A contestable market[,] WITHIN A FRANCHISE 
TERRITORY OF ANOTHER PARTY for the purpose of purchasing and reselling 
electricity TO SUCH END-USERS on a group basis; 
I(b)l (C) 
"Ancillary Services" refer to those services that are necessary to 
support the transmission of capacity and energy from resources to loads while 
maintaining reliable operation of the transmission system in accordance with good utility 
practice and the Grid Code to be adopted in accordance with this Act; 
Kc)l (D) 
"Captive Market" refers to [electricity end-users who do not have 
the choice of a supplier of electricity, as may be determined by the Energy Regulatory 
Commission (ERC) in accordance with this Act;] THAT MARKET WITH RESPECT 
TO A DISTRIBUTION UTILITY WHICH, AS DETERMINED BY THE 
COMMISSION IN ACCORDANCE WITH THIS ACT, AFTER DUE NOTICE TO 
ALL INTERESTED PARTIES AND PUBLIC HEARING, CONSISTS OF END- 
USERS OF ELECTRICITY WITH LOAD REQUIREMENTS THAT DO NOT 
MEET THE THRESHOLD OF CONTESTABILITY AND MUST THEN BE 
SUPPLIED WITH ELECTRICITY EXCLUSIVELY BY THE DISTRIBUTION 
UTILITY HOLDING FRANCHISE OVER SUCH AREA; 
[(d)l (E) 
"Central Dispatch" refers to the process of issuing direct 
instructions to electric power industry participants by the grid operator to achieve the i 
[(ell (F) 
"Co-Generation Facility" refers to a facility which produces 
electrical and/or mechanical energy and forms of useful thermal energy, such as heat or 
steam, which are used for industrial, commercial heating or cooling purposes through the 
sequential use of energy; 


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[(Ql (Gi 
"Commission" refers to the decision-making body of the [ERC] 
ENERGY REGULATORY COMMISSION (ERC) composed of a Chairman and four 
(4) members as provided under Section 38 [hereof] OF THIS ACT[;]. 
FOR 
PURPOSES OF CONSTRUING AND INTERPRETING THE RELEVANT 
PROVISIONS OF THIS ACT, THE TERMS "COMMISSION", "ENERGY 
REGULATORY COMMISSION", 
AND 
"ERC" 
SHALL, UNLESS THE 
CONTEXT CLEARLY INDICATES OTHERWISE, SHALL REFER TO THE 
ONE AND THE SAME ENTITY: 
[k)l (H) 
"Concession Contract" refers to the award by the government to a 
qualified private entity of the responsibility for financing, operating, expanding, 
maintaining, and managing specific Government-owned assets; 
[(hl (1) 
"Contestable Market" refers to [the electricity end-users who have 
a choice of a supplier of electricity, as may be determined by the ERC in accordance with 
this Act;] THAT MARKET, WHICH SHALL BE DETERMINED BY THE 
COMMISSION IN ACCORDANCE WITH THIS ACT, AFTER DUE NOTICE TO 
ALL INTERESTED PARTIES AND PUBLIC HEARING, CONSISTING OF END- 
USERS 
OF ELECTRICITY WITHIN A FRANCHISE TERRITORY OF A 
DISTRIBUTION UTILITY THAT CAN CHOOSE THEIR SUPPLIER OF 
ELECTRICITY; 
(J) "CONTROL" FU3FERS TO THE POWER TO DIRECT OR CAUSE 
THE DIRECTION OF THE MANAGEMENT POLICIES OF AN ENTITY OR 
PERSON BY CONTRACT, AGENCY, OR SIMILAR ARRANGEMENTS. 
Kill (K) 
"Customer Service Charge" refers to the component in the retail 
rate intended €or the cost recovery of customer-related services including, but not limited 
to, meter reading, billing administration and collection; 


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[ti11 (L) 
"Demand Side Management" refers to measures, undertaken by 
distribution utilities to encourage end-users in the proper rrianagement of their load to 
achieve efficiency in the utilization of fixed infrastructures in the system; 
[(k)] (M) 
"Department of Energy" or "DOE" refers to the government 
agency created pursuant to Republic Act No. 7638 whose expanded functions are 
provided herein; 
[(UI (N) 
"Department of Finance" or "DOF" refers to the government 
agency created pursuant to Executive Order No. 127; 
[(m)] (0) 
"Distribution Code" refers to a compilation of rules and regulations 
governing electric utilities in the, 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 distribution systems with the facilities or 
installations of the parties connected thereto; 
Kn)l (P) 
"Distribution of Electricity" refers to the conveyance of electric 
power by a distribution utility through its distribution system pursuant to the provisions 
of this Act; 
[(o)] (Q) "Distribution System" refers to the system of wires and associated 
facilities belonging to a franchised distribution utility, extending between the delivery 
points on the transmission or sub-transmission system or generator connection and the 
point of connection to the premises of the end-user; 
[(p)] (R) "Distribution Wheeling Charge" refers to the cost or charge regulated by 
the ERC for the use o f  a distribution system and/or the availment of related services; 


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K41 (S) 
"Distribution Utility" refers to any electric cooperative, private 
corporation, government-owned utility, or existing local government unit, which has an 
exclusive franchise to operate a distribution system in accordance with this Act; 
[@)I (T) 
"Electric Cooperative" refers to a distribution utility organized 
pursuant to Presidential Decree No. 269, as amended, or as otherwise provided in this 
Act; 
[(SI1 (U) 
"Electric Power Industry Participant" refers to any person or entity 
engaged in the generation, transmission, distribution, or supply of electricity; 
[(t)l (V) 
"End-user" refers to any person or entity requiring the supply and 
delivery of electricity for its own use; 
[(u)] (W) 
"Energy Regulatory Board" or "ERB" refers to the [independent,] 
NOW DEFUNCT quasi-judicial regulatory body created under Executive Order No. 
172, as amended; 
[(4l (X) 
"Energy Regulatory Commission" or "ERC" refers to the 
regulatory agency created herein; 
[(w)] (Y) 
"Franchise Area refers to a geographical area exclusively assigned 
or granted to a distribution utility for distribution of electricity; 
[(y)] (AA) 
"Generation of Electricity" refers to the production of electricity 
by a generation company, or a co-generation facility, pursuant to the provisions of this 
Act: 


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[(z)] (BB) 
"Grid" refers to the high voltage backbone system of 
interconnected transmission lines, substations, and related facilities; 
[(aa)] (CC) 
"Grid Code" refers to the set of rules and regulations governing 
the safe, and reliable operation, maintenance, and development, of the high voltage 
backbone transmission system and its related facilities; 
[(bb)] (DD) 
"Independent Power Producer" or "IPP" refers to an existing 
[power generating entity] GENERATION COMPANY, which is not owned by NPC[;] 
AND WITH WHOM NPC OR A DISTRIBUTION UTILITY HAS A VALID AND 
EXISTING PURCHASED POWER CONTRACT; 
[(cc)] (EE) 
"Inter-Class Cross Subsidy" refers to an amount charged by 
distribution utilities to industrial and commercial end-users as well as to other subsidizing 
customer sectors in order to reduce electricity rates of other customer sectors , such as 
the residential end-users, hospitals, and streetlights; 
[(dd)] (FF) 
"Inter-Regional Grid Cross Subsidy" refers to an 
amount 
embedded in the electricity rates of NPC charged to its customers located in a viable 
regional grid in order to reduce the electricity rates in a less viable regional grid; 
[(ee)] (GG) 
"Intra-Regional Grid Cross Subsidy" refers io an 
amount 
embedded in the electricity rates of NPC charged to distribution utilities and non-utilities 
with higher load factor and/or delivery voltage in order to reduce the electricity rates 
charged to distribution utilities with lower load factor and/or delivery voltage located in 
the same regional grid; 


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[(fq] (HH) 
"IPP Administrator" refers to 
qualified independent entities 
appointed by PSALM Corporation who shall administer, conserve, and manage the 
contracted energy output of NPC IPP contracts; 
[(gg)] (11) 
"Isolated Distribution System" refers to the backbone system of 
wires and associated facilities not directly counected to the national transmission system; 
[(hh)] (J.7) 
"Lifeline Rate" refers to the subsidized rate given to low-income 
captive market end-users who cannot afford to pay at full cost; 
[(ii)] (KK) 
"National Electrification Administration" or "NEA" refers to the 
government agency created under Presidential Decree No. 269, as amended, and whose 
additional mandate is further set forth herein; 
[(jj)] (LL) 
"National Power Corporation" or "NPC" refers to the government 
corporation created under Republic Act No. 6395, as amended; 
[(kk)] (MM) "National Transmission Corporation" or "TRANSCO" refers to the 
corporation organized pursuant to this Act to acquire all the transmission assets of the 
NPC; 
[(ll)] (") 
"Open Access" refers to the [system of allowing] PRIVILEGE 
GRANTED TO any qualified person [the use ofj TO USE THE transmission[, and/or] 
AND 
SUB-TRANSMISSION FACILITIES AND ASSETS AND/OR THE 
distribution system and associated facilities OF ANY PUBLIC OR PRlVATE 
PERSON OR ENTITY, subject to the payment of JUST AND REASONABLE 
transmission and/or distribution [retail] wheeling [rates] CHARGES duly approved by 
the ERC, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING; 


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[(mm) ] (00) "Philippine Energy Plan" or "PEP" refers to the overall energy 
program formulated and updated yearly by the DOE and submitted to Congress pursuant 
to Republic Act No. 7638; 
[(nn)] (PP) 
"Power Development Program" or "PDP" refers to the indicative 
plan for managing electricity demand through energy-efficient programs and for the 
upgrading, expansion, rehabilitation, repair, and maintenance of power generation and 
transmission facilities, formulated and updated yearly by the DOE in coordination with 
the generation, transmission and distribution utility companies; 
[(oo)] (QQ) "Power Sector Assets and Liabilities Management Corporation" or 
"PSALM Corp." refers to the corporation created pursuant to Section 49 hereof; 
[(pp)] (RR) "Privatization" refers to the sale, disposition, change, and transfer 
of ownership and control of assets and IPP contracts, from the Government or a 
government corporation to a private person or entity; 
(SS) 
"PUBLIC 
HEARING" 
REFERS 
TO 
A 
PROCEEDING 
CONDUCTED BY THE COMMISSION AFTER ITS MEMBERS ARE 
FORMALLY CONVENED TO HEAR, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES, THE TESTIMONY OF WITNESSES UNDER OATH, 
SUBJECT TO CROSS-EXAMINATION BY 
ADVERSE PARTIES, 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. 
[(qq)] (TT) 
"Renewable Energy Resources" refers to energy resources, that do 
not have an upper limit on the total quantity to he used. Such resources are renewable on 
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a regular basis and the renewable rate is rapid enough to consider, availability over an 


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indefinite time. These include, among others, biomass, solar, wind, hydro, and ocean 
energy; 
[(rr)] (VU) 
"Restructuring" refers to the process of reorganizing 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 alternatives enhancing exposure of 
the industry to competitive market forces; 
[(ss)] (VV) 
"Retail Rate" refers to the total price paid by end-users consisting 
of the charges for generation, transmission and related ancillary services, distribution, 
supply, and other related charges for electric service; 
[(tt)] (WW) 
"Small Power Utilities Group" or SPUG" refers to the functional 
unit of NPC created to pursue missionary electrification function; 
[(uu)] (XX) 
"Stranded contract costs of NPC or distribution utility" refer to the 
excess of the contracted cost of electricity under eligible contracts over the actual selling 
price of the contracted energy output of such contracts in the market. Such contracts 
shall have been approved by the ERB as of December 3 1,2000; 
[(vv)] (YY) 
"Stranded Debts of NPC" refer to any unpaid financial obligations 
of NPC which have not been liquidated by the proceeds from the sales and privatization 
of NPC assets; 
[(ww)] (ZZ) "Sub-transmission Assets" refer to the facilities related to the 
power delivery service below the transmission voltages and, based on the functional 
assignment of assets including, but not limited to, step-down transformers used solely by 
load customers, associated switchyarflsubstation, control and protective equipment, 
reactive compensation equipment to improve customer power factor, overhead lines, and 
the land where such facilities/equipment are located. These include NPC assets linking 


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the transmission system and the distribution system which are neither classified as 
generation nor transmission. 
REGARDLESS OF VOLTAGE, ANY FACILITY 
DIRECTLY SERVING AN END-USER SHALL BE CLASSIFIED AS A 
DISTRIBUTION ASSET ; 
[(xx)] (AAA) "Supplier" refers, to any person or entity authorized by the ERC to 
sell, broker, market, or aggregate electricity to the end-users; 
[(yy)] (BBB) "Supplier's Charge" refers to the charge imposed by electricity 
excluding the charges for generation 
suppljers for the sale of electricity to end-users, 
transmission and distribution wheeling; 
[(zz)] (CCC) "Supply of Electricity" [means the sale of electricity by a party 
other than a generator or a distributor in the franchise area of a distribution utility, using 
the wires of the distribution utility concerned;] SHALL REFER, UNLESS THE 
CONTEXT SUGGESTS OTHERWISE, TO THE BUSINESS OF BUYING AND 
SELLING, BROKERING, MARKETING ELECTRICITY BY A PERSON OR 
ENTITY, OTHER THAN A GENERATION COMPANY OR A DISTRIBUTION 
UTILITY, TO END-USERS OF ELECTRICITY, OR OF AGGREGATING 
DEMANDS FOR SUCH END-USERS OF ELECTRICITY, IN THE FRANCHISE 
TERRITORY OF A DISTRIBUTION UTILITY, USING FOR THE PURPOSE 
THE WIRES AND 
FACILITIES OF THE DISTRIBUTION UTILITY 
CONCERNED; 
[(aaa)] (DDD) "Transmission Charge" refers to the regulated cost or charges for 
the use of a transmission system which may include the availment of ancillary services; 
[(bbb)] (EEE)"Transmission Development Plan" or "TDP" refers to the program 
for managing the transmission system tlurough efficient planning for the expansion, 


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upgrading, rehabilitation, repair, and maintenance, to be formulated by DOE and 
implemented by the TRANSCO pursuant to this Act; 
[(ccc)] (FFF) "Transmission of Electricity" refers to the conveyance of 
electricity through the high voltage backbone system; and 
Kddd)l (GGG) 
"Universal Charge" refers to the charge, if any, [imposed 
for the recovery of the stranded cost and other purposes pursuant to Section 34 hereof.] 
TO BE DETERMINED, FIXED, AND APPROVED BY THE COMMISSION, 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING, 
IN 
ACCORDANCE WITH 
AND 
FOR 
THE 
PURPOSES 
MENTIONED IN SECTION 34 OF THIS ACT. 
Sec. 2. Section 9, Chapter 11 of the Act is hereby amended to read as follows: 
"SEC. 9. Functions and Responsibilities, - Upon the effectivity of this Act, the 
TRANSCO shall have the following functions and responsibilities: 
(a) 
[Act] TO ACT as the [system] GRID operator of the nationwide 
electrical transmission and subtransmission system, THAT SHALL 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 AUTHORIZED users[;], SUBJECT TO THE 
PAYMENT OF TRANSMISSION WHEELING CHARGE APPROVED BY THE 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
PUBLIC HEARING. TRANSCO SHALL NOT IN ANY WAY ENGAGE IN THE 
DISTRIBUTING AND RETAILING OF ELECTRICITY, WHICH IS A 
FUNCTION OF DISTRIBUTION UTILITIES; 


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(c) 
[Ensure] TO ENSURE and maintain the reliability, adequacy, security, 
stability, and integrity of the nationwide electrical TRANSMISSION grid in accordance 
with the performance standards for the operation and maintenance of the 
NATIONWIDE ELECTRICAL TRANSMISSION grid, as set forth in a Grid Code to 
be adopted and promulgated by the [ERC] COMMISSION within six (6) months from 
the effectivity of this Act; 
(d) 
[Improve] TO IMPROVE and expand its transmission ASSETS AND 
facilities, consistent with the Grid Code and the Transmission Development Plan [TDP] 
to be promulgated pursuant to this Act, IN ORDER to adequately serve generation 
companies, distribution utilities, and suppliers [requiring] THAT REQUIRE 
transmission service andor [AND OR] ancillary services through the transmission 
system: Provided, That THE TRANSCO shall submit any plan for THE expansion or 
improvement of its ASSETS AND facilities for approval by the [ERC;] COMMISSION, 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
HEARING; 
(e) 
Subject to SUCH technical constraints THAT MAY EXIST OR ARISE, 
IF ANY, AND TAKING INTO ACCOUNT ANY OUTSTANDING BILATERAL 
CONTRACTS, the [grid] SYSTEM operator of the TRANSCO shall provide central 
dispatch of all ELECTRIC generation PLANT facilities connected, directly or 
indirectly, to the transmission system in accordance with the dispatch schedule submitted 
by the market operator[, taking into account outstanding bilateral contracts]; 
PROVIDED HOWEVER, THAT SUCH SYSTEM OPERATOR SHALL BE 
ALLOWED TO SPIN-OFF USING TRANSCO’S SYSTEM OPERATION 
CHARGES AS THE OPERATING BUDGET WHEN ITS SCHEDULE AND 
DISPATCH RUNCTIONS REQUIRE COMPLETE INDEPENDENCE FROM 
TRANSCO AS THE GRID OWNER; and 


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(Q 
THE TRANSCO, JOINTLY WITH THE DOE, shall undertake the 
preparation AND FORMULATION of the TDP, WHICH SHALL BE APPROVED 
BY THE DOE. 
In the preparation AND FORMULATION of the TDP, THE TRANSCO AND 
THE DOE shall consult the other [participants of the] electric power industry [such as] 
PARTICIPANTS, ESPECIALLY the generation companies, distribution utilities, and 
the [electricity] end-users[.] OF ELECTRICITY. The TDP shall be [submitted to the 
DOE for integration] INTEGRATED with the Power Development Program and the 
Philippine Energy Plan, BOTH OF WHICH ARE provided for in Republic Act No. 
7683, otherwise known as “the Department of Energy Act of 1992”. 
[A] 
SUBJECT TO THE 
PRIOR AUTHORIZATION OF THE 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
PUBLIC HEARING, A generation company may develop and own or operate dedicated 
AND LIMITED point-to-point [limited] transmission ASSETS AND facilities that are 
consistent with the TDP[: Provided, That], IF IT IS CLEARLY SHOWN THAT such 
TRANSMISSION ASSETS AND facilities are required [only for the purpose of 
connecting] AND TO BE USED SOLELY BY THE GENERATION COMPANY 
TO CONNECT ITSELF to the transmission system[,and are used solely by the 
generating facility, subject to prior authorization by the ERC: Provide, further, That in [ 
OF THE TRANSCO. IN the event that such LIMITED TRANSMISSION assets 
AND FACILITIES are required for competitive purposes, ownership of the same shall 
be transferred to the TRANSCO at a fair market price[: Provided, finally, That in]. IN 
case of ANY DISPUTE OR disagreement on the fair market price OF SUCH 
TRANSMISSION ASSETS AND PACILITES, the [ERC] COMMISSION shall 
determine the fair market [value of the asset.] PRICE OF SAID LIMITED 
TRANSMISSION ASSETS AND FACILITES, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING. 


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Sec 3. Section 20, Chapter I1 of the Act is hereby amended to read as follows: 
“SEC. 20. TRANSCO Related Businesses. - THE 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[:] AND RESOURCES: 
Provided, That 
WHERE ASSETS FORMING PART OF THE RATE BASE OF THE TRANSCO 
ARE UTILIZED IN SUCH RELATED BUSINESS, a portion of the net income 
derived from such [undertaking utilizing assets which form part of the rate base] 
RELATED BUSINESS, WHICH PORTION SHALL NOT BE LESS THAN FIFTY 
PERCENT (50%) OF SUCH NET INCOME, shall be used to reduce THE 
transmission RATE OR wheeling [rates as determined by the ERC. Such portion of net 
income used to reduce the transmission wheeling rates shall not exceed fifty percent 
(50%) of the net income derived from such undertaking.] CHARGE PASSED-ON TO 
THE END-USERS OF ELECTRICITY. 
Separate accounts shall be maintained for each RELATED business 
[undertaking] to ensure that the transmission business shall neither subsidize in any way 
such RELATED business [undertaking] nor encumber [its] THE TRANSCO’S 
transmission assets in any way to support such RELATED business. 
Sec 4. Section 21 of the Act is hereby amended to read as follows: 
“SEC. 21. 
TRANSCO Privatization. - Within six (6) months from the 
effectivity of this Act, the PSALM Cop. shall submit a plan ON THE 
PRIVATIZATION OF THE TRANSCO for the endorsement by the Joint 
CONGRESSIONAL Power Commission TO, and FOR the approval of, the President of 
the Philippines. [The] THEREAFTER, THE President of the Philippines [thereafter] 
shall direct THE PSALM Corp. to [award, in] CONDUCT AN open competitive 
PUBLIC bidding, AND AWARD THE OWNERSHIP AND CONTROL OF THE 


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TRANSCO THROUGH A CONTRACT OF SALE, OR AWARD THE 
ADMINISTRATION, MANAGEMENT, OPERATION, AND MAINTENANCE, 
AS WELL AS THE PRESERVATION, IMPROVEMENT, AND/OR EXPANSION 
OF the transmission ASSETS AND facilities, including THE grid interconnections and 
ancillary services THROUGH A CONCESSION CONTRACT to [a] THE qualified 
[party either through an outright sale or a concession contract.] WINNING BIDDER. 
The buyer/concessionaire, AS THE CASE MAY BE, shall be responsible for the 
EFFICIENT 
ADMINISTRATION, 
MANAGEMENT, 
OPERATION, 
AND 
MAINTENANCE, AS WELL AS FOR THE PRESERVATION, improvement, 
AND/OR expansion[, operation, and/or maintenance of its] OF THE transmission assets 
and [the] FACILITIES, INCLUDING THE GRID INTERCONNECTIONS AND 
ANCILLARY SERVICES AND THE ADMINISTRATION, MANAGEMENT, 
AND FOR THE operation of any related business[.] OR BUSINESSES. The award 
[shall result in maximum] TO THE QUALIFIED WINNING BIDDER MUST BE 
BASED ON THE MOST ADVANTAGEOUS, BENEFICIAL, AND OPTIMAL 
present value [of proceeds] to the national government. In case a concession contract is 
awarded, the concessionaire shall [have a] BE GIVEN AN INITIAL CONCESSION 
contract period of twenty-five (25) years, subject to review and renewal for a maximum 
period of another twenty-five (25) years. 
IF THE AWARDEE OF THE CONCESSION CONTRACT IS MERELY 
HIRED UNDER A COMPENSATION SCHEME TO ADMINISTER, MANAGE, 
OPERATE, MAINTAIN, PRESERVE, AND TO FINANCE AND SUPERVISE 
THE IMPROVEMENTS AND/OR EXPANSIONS OF THE ELECTRIC 
TRANSMISSION 
ASSETS 
AND 
FACILITIES 
AND 
THE 
GRID 
INTERCONNECTIONS AND THE ANCILLARY SERVICES FOR THE 
TRANSCO, THE AWARDEE OF THE CONCESSION CONTRACT SHALL NOT 
BE REQUIRED TO OBTAIN A NATIONAL FRANCHISE, AND NEITHER 
SHALL HE OR IT BE REQUIRED TO QUALIFY UNDER THE NATIONALITY 


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REQUIREMENTS OF THE CONSTITUTION 
FOR PUBLIC UTILITY 
OPERATORS. 
HOWEVER, IF THE WINNING BIDDER OR AWARDEE OF THE 
CONCESSION CONTRACT TAKES OVER THE POSSESSION AND CONTROL 
OF THE ELECTRIC TRANSMISSION ASSETS AND FACILITIES AND THE 
GRID INTERCONNECTIONS AND ANCILLARY SERVICES, AS BUYER OR 
LESSEE 
THEREOF, 
AND 
ADMINISTERS, 
MANAGES, 
MAINTAINS, 
OPERATES, IMPROVES, AND EXPANDS THEM AS HIS OR ITS OWN 
BUSINESS, THEN IN THAT CASE THE AWARDEE OF THE CONCESSION 
CONTRACT MUST OBTAIN A NATIONAL FRANCHISE THEREFOR, AND 
HE OR IT MUST QUALIFY UNDER THE NATIONALITY REQUIREMENTS 
OF THE CONSTITUTION FOR PUBLIC UTILITY OPERATORS, 
[In any case, the awardee shall] THE AWARDEE, WHETHER 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 contract, AS THE CASE MAY BE, 
shall [include, but not limited to, the provision for] PROVIDE, AMONG OTHERS, 
SUCH performance and financial guarantees or [any] other covenants [which] THAT the 
national government may require. [Failure to comply with such obligations shall result in 
the imposition of appropriate sanctions or penalties by the ERC.] THE FAILURE OF 
THE AWARDEE TO COMPLY WITH ANY OF SUCH GUARANTEES OR 
COVENANTS SHALL CONSTITUTE A DEFAULT ON THE PART OF THE 
AWARDEE AND SHALL CAUSE THE IMMEDIATE RESCISSION AND 
CANCELLATION OF THE CONTRACT OF SALE OR OF THE CONCESSION 
CONTRACT AND, IN ADDITION, THE IMPOSITION OF APPROPRIATE 
SANCTIONS, FINES, 
OR 
PENALTIES 
BY 
THE 
COMMISSION 
IN 
ACCORDANCE WITH SECTION 44 OF THIS ACT. 


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The awardee [shall] MUST be financially and technically 
capable AND 
SOUND, with proven domestic 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. 5. Section 23 of the Act is hereby amended to read as follows: 
SEC. 23. Functions of Distribution Utilities. - A distribution utility shall have the 
obligation to provide distribution services and connections to its system for any end-user 
within its franchise area consistent with the distribution code. Any entity engaged therein 
shall provide open and non-discriminatory access to its distribution system to all users. 
Any distribution utility shall be entitled to impose and collect distribution 
wheeling charges and connection fees from such end-users as approved by the ERC. 
A distribution utility shall have the obligation to supply electricity in the least cost 
manner to its captive market[,].[subject to the collection of retail rate duly approved by 
the ERC.] 
FOR THIS PURPOSE, “LEAST COST” SHALL MEAN THE EFFICIENT 
EFFECTIVE RATE THAT WOULD BE INCURRED TO MEET THE 
REQUIREMENT OF THE CAPTIVE MARKET 
UTILITY. 
FOR THE PURPOSE OF ENCOURAGING 
OF EACH DISTRIBUTION 
GREATER COMPETITION, 
THE DOE, WITHIN SIX MONTHS FROM THE EFFECTIVITY OF THIS 
AMENDATORY ACT, SHALL ESTABLISH THE MANNER AND MECHANISM 
OF DETERMINING “LEAST COST”. 


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To achieve economies of scale in utility operations, distribution utilities may, 
after due notice and public hearing, pursue structural and operational reforms such as but 
not limited to, joint actions between or among the distribution utilities, subject to the 
guidelines issued by the ERC. Such joint actions shall result in improved efficiencies, 
reliability of service, reduction of costs and compliance to the performance standards 
prescribed in the IRR of this Act. 
Distribution utilities shall submit to the ERC a statement of their compliance with 
the technical specifications prescribed in the Distribution Code and the performance 
standards prescribed in the IRR of this Act. Distribution utilities which do not comply 
with any of the prescribed technical specifications and performance standards shall 
submit to the ERC a plan to comply, within three (3) years, with said prescribed technical 
specifications and performance standards. The ERC shall, within sixty (60) days upon 
receipt of such plan, evaluate the same and notify the distribution utility concerned of its 
action. Failure to submit a feasible aud credible plan and/or failure to implement the same 
shall serve as grounds for the imposition of appropriate sanctions, fines or penalties. 
Distribution utilities shall prepare and submit to the DOE their annual 
distributions development plans. In the case of electric cooperatives, such plans shall be 
submitted through the National Electrification Administration. 
Distribution utilities shall provide universal service within their franchise, over a 
reasonable time from the requirement thereof, including unviable areas, as part of their 
social obligations, in a manner that shall sustain the economic viability of the utility, 
subject to the approval by the ERC in the case of private or government-owned utilities. 
To this end, distribution utilities shall submit to the DOE their plans for serving such 
areas as part of their distribution development plans. 
Areas which a franchised 
distribution utility cannot or does not find viable may be transferred to another 
distribution utility, if any is available, who will provide the service, subject to approval 
by ERC. In cases where franchise holders fail and/or refuse to service any area within 


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this franchise territory and allowed another utility to service the same, then the status quo 
shall be respected. 
Distribution utilities may exercise the power of eminent domain subject to the 
requirements o€ the Constitution and existing laws. 
Sec. 6 Section 25 of the Act is hereby amended to read as follows: 
SEC.25. Retail Rate - The retail rates charged by distribution utilities for the 
supply of electricity in their captive market shall be subject to regulation by the 
[ERCICOMMISSION based on the principle of [full recovery of prudent and reasonable 
economic costs incurred,] LEAST COST SUPPLY or such other principles that will 
promote ECONOMIC efficiency as may be determined by the [ERCICOMMISSION. 
Every distribution utility shall identi€y and segregate in its bills to end-users the 
components of the retail rate, as defined in this Act. 
Sec. 7. Section 26 of the Act is hereby amended to read as follows: 
"SEC. 26. 
Distribution Related Businesses. - [Distribution utilities] 
SUBJECT TO THE APPROVAL OF THE COMMISSION, AFTER DUE NOTICE 
TO ALL INTERESTED PARTIES AND PUBLIC HEARING, A DISTRIBUTION 
UTILITY may, directly or indirectly, engage in any BUSINESS related TO ITS MAIN 
business [undertaking which maximizes] IN ORDER TO MAXIMIZE the utilization of 
[their] ITS assets[:] AND RESOURCES: 
Provided, That WHERE ASSETS 
FORMING PART OF THE RATE BASE ARE UTILIZED IN SUCH RELATED 
BUSINESS, a portion of the net income derived from such [undertaking utilizing assets 
which form part of the rate base] RELATED BUSINESS, WHICH PORTION SHALL 
NOT BE LESS THAN FIFTY PERCENT (50%) OF SUCH NET INCOME, shall be 
used to reduce its distribution wheeling [charges] CHARGE AND RETAIL RATE [as 


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determined] APPROVED by the [ERC: Provided, further, That such portion of net 
income used to reduce their distribution wheeling charges shall not exceed fifty percent 
(50%) of the net income derived from such undertaking: Provided, pnally, That separate 
accounts are maintained for each business undertaking to ensure that the distribution 
business shall neither subsidize in any way such business undertaking nor encumber its 
distribution assets in any way to support such business.] COMMISSION. IN THE 
CASE OF THE ELECTRIC COOPERATIVES, A REASONABLE TRANSITION 
PERIOD SHALL BE PROVIDED UNTIL SUCH TIME THAT A NEW RATE 
METHODOLOGY IS ADOPTED BY THE COMMISSION. 
SEPARATE ACCOUNTS SHALL BE MAINTAINED FOR EACH 
RELATED BUSINESS TO ENSURE THAT THE DISTRIBUTION BUSINESS 
SHALL NEITHER SUBSIDIZE, IN ANY WAY, SUCH IXELATED BUSINESS 
NOR ENCUMBER, IN ANY WAY, ITS DISTRIBUTION ASSETS TO SUPPORT 
SUCH RELATED BUSINESS. 
Sec. 8. Section 30 of the Act is hereby amended to read as follows: 
"SEC. 30. Wholesale Electricity Spot Market. - Within one (1) year from the 
effectivity of this Act, the DOE shall establish a wholesale electricity spot market, 
HEREINAFTER REFERRED TO AS THE WESM, composed of the [wholesale 
electricity spot market] WESM participants. The market shall provide the mechanism for 
identifying and setting the price o f  actual variations from the quantities transacted under 
/ 
detailed rules for the wholesale electricity spot market.. Said rules shall provide the 
mechanism for determining the price of electricity not covered by bilateral contracts 
between sellers and 
purchasers o f  electricity users. [The price determination 
methodology contained in said rules] THE METHOD CONTAINED IN THE SAID 


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RULES FOR DETERMINING THE PRICE OF ELECTRICITY IN THE WESM 
shall be subject to the approval of 
[ERC.] THE COMMISSION, AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC HEARING. Said rules 
shall also reflect accepted economic principles and provide a level playing field to all 
electric power industry participants. The rules shall provide, among others, procedures 
for: 
(a) 
Establishing the merit order dispatch instructions for each time period; 
PROVIDED HOWEVER, THAT IN EVERY CASE, AS A GENERAL RULE, 
THE CHEAPER ELECTRICITY SHALL BE DISPATCHED AHEAD OF THE 
HIGHER PRICED ELECTRICITY. 
(b) 
Determining the market-clearing price for each time period; 
(c) 
Administering the market, including criteria for admission to [and 
termination] OR DISMISSAL from the market [which includes], AS WELL AS ANY 
REQUIRED security or performance [bond requirements] BOND, voting rights of the 
participants, surveillance, [and] assurance of compliance [ofl BY the participants with the 
rules, and the formation of the [wholesale electricity spot market governing body] 
GOVERNING BODY OF THE WESM: 
(d) 
Prescribing guidelines for the market operation in system emergencies; 
and 
(e) 
Amending the rules. 
The wholesale electricity spot market shall be implemented by a market operator 
in accordance with the wholesale electricity spot markets rules. The market operator shall 
be an autonomous group, to be constituted by DOE, with equitable representation from 
electric power industry participants, initially under the administrative supervision of the 


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TRANSCO. The market operator shall undertake the preparatory work and initial 
operation of the wholesale electricity spot market. Not later than one (I) year after the 
implementation of the wholesale electricity spot market , an independent entity shall be 
formed and the functions, assets and liabilities of the market operator shall be transferred 
to such entity with the joint endorsement of the DOE and the electric power industry 
participants. Thereafter, the administrative supervision of the TRANSCO over [such 
entity shall cease.] THE WESM AND THE INDEPENDENT MARKET 
OPERATOR SHALL CEASE AND TERMINATE. 
Subject to the compliance with the membership criteria, all generating 
companies, distribution utilities, suppliers, bulk consumersknd-users and other similar 
entities authorized by the ERC shall be eligible to become members of the wholesale 
electricity spot market. 
The ERC may authorize other similar entities to become eligible as members, 
either directly or indirectly, of the wholesale electricity spot market. All generating 
companies, distribution ntilities, suppliers , bulk consumerdend-users and other similar 
entities authorized by the ERC, whether direct or indirect members of the wholesale 
electricity spot market, shall be bound by the wholesale electricity spot market rules with 
respect to transactions in that market. 
NEA may, in exchange for adequate security and a guarantee fee, act as a 
guarantor for purchases of electricity in the wholesale electricity spot market by any 
electric cooperative or small distribution utility to support their credit standing consistent 
with the provisions hereof. For this purpose, the authorized capital stock of NEA is 
hereby increased, to Fifteen billion pesos (P15,000,000,000.00). 
All electric cooperatives which have outstanding uncollected billings to any local 
government unit shall repori such billings to NEA which shall, in turn, report the same to 


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the Department of Budget and Management (DBM) for collection pursuant to Executive 
Order 190, issued on December 21, 1999. 
The cost of administering and operating the wholesale electricity spot market 
shall be recovered by the market operator through a charge imposed to all market 
members: Provided, That such charge shall be filed with and approved by the [ERC.] 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
PUBLIC HEARING. 
In cases of national and international security emergencies or natural calamities, 
the ERC is hereby empowered to suspend the operation of the wholesale electricity spot 
market or declare a temporary wholesale electricity spot market failure. 
TO ENCOURAGE AND PROMOTE THE DEVELOPMENT OF THE 
WESM, THE COMMISSION MAY, FROM TIME TO TIME, EITHER MOTU 
PROPZO, OR UPON THE PETITION OF ANY DISTRIBUTION UTILITY, 
REVIEW THE APPROPRIATE LEVEL OF DEMAND TO BE SOURCED FROM 
THE WESM , SUBJECT TO A PUBLIC HEARING. 
Sec. 9. Section 31 of the Act is hereby amended to read as follows: 
“SEC. 3 1. 
Reiail Competition and Open Access. - Any law to the contrary 
notwithstanding, retail competition and open access on distribution wires shall be 
implemented not later than three (3) years upon 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; 
(c) Initial implementation of the cross subsidy removal scheme; 


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(d) Privatization of at least [seventy (70%) percent] FIFTY PERCENT (50%) 
of the total capacity of [generating] THE GENERATION assets of NPC in Luzon and 
Visayas; and 
(e) Transfer of the management and control of at least [seventy percent (70%)] 
FIFTY PERCENT (50%) of the total energy output of power plants under contract 
with NPC to the IPP Administrators. 
PROVIDED THAT, WITH RESPECT TO THE CONDITIONS UNDER 
SUBSECTIONS (D) AND (E) ABOVE ,(i) THE COMMISSION SHALL ENSURE 
THAT NECESSARY SAFEGUARDS ARE ESTABLISHED TO AVOID ABUSE 
OF MARKET POWER BY NPC AND PSALM AND IN FURTHERANCE 
THEREOF, 
PSALM 
AND 
NPC 
SHALL SUBMIT TO THE JOINT 
CONGRESSIONAL POWER COMMISSION A COMMITTED AND DETAILED 
SCHEDULE OF THE PRIVATIZATION OF NPC’S GENERATION ASSETS IN 
LUZON AND VISAYAS TO THE LEVEL OF SEVENTY PERCENT (70%); AND 
(ii) FULL OPEN ACCESS TO THE HOUSEHOLD LEVEL SHALL BE 
IMPLEMENTED SUBJECT TO COMPLIANCE WITH THE GRID AND 
NATIONAL LIMITS FOR MAXIMUM INSTALLED GENERATING CAPACITY 
AS MAY BE PROMULGATED BY THE COMMISSION. 
THE ERC MAY DECLARE OPEN ACCESS PRIOR TO THE 
FULFILLMENT OF THE CONDITIONS UNDER SUBSECTIONS (D) AND (E) 
ABOVE, ON THE CONDITION THAT GENERATION PARTICIPANTS IN THE 
OPEN ACCESS ELECTRICITY MARKET SHALL BE LIMITED TO THOSE 
GENERATION COMPANIES THAT COMPLY WITH THE LIMITS SET 
FORTH IN SEC. 45 (A)OF THIS ACT. FOR PURPOSES HEREOF, ALL 
GOVERNMENT ENTITIES SUCH AS THE NPC, PSALM OR ANY OTHER 
GOVERNMENTAGENCYAND GOVERNMENTOWNEDORCONTROLLED 
CORPORATIONS SHALL BE DEEMED AS ONE RELATED GROUP. 


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PEZA SHALL, IN THE EXERCISE OF ITS AUTHORITY OVER 
DISTRIBUTION UTILITIES WITHIN ITS ECONOMIC ZONES, ADHERE TO 
THE POLICIES AND STANDARDS SET FORTH IN THIS ACT AND SHALL 
ADOPT RULES AND 
GUIDELINES IN COMPLIANCE WITH AND 
CONSISTENT HERETO. 
WITH RESPECT TO NEW ECONOMIC ZONES 
ESTABLISHED UNDER REPUBLIC ACT 7916, PEZA SHALL GIVE PRIORITY 
TO THE INCUMBENT DISTRIBUTION UTILITY SERVING THE FRANCHISE 
AREA OF SUCH ECONOMIC ZONES, PROVIDED THAT SUCH INCUMBENT 
DISTRIBUTION UTILITY IS QUALIFIED AND IS ADEQUATELY SERVING 
SUCH FRANCHISE AREA. 
Upon the initial implementation of open access, the (ERC] COMMISSION shall 
[allow] CONSTITUTE IN A FORMAL ORDER TO BE ISSUED AFTER DUE 
NOTICE TO ALL INTERESTED PARTIES AND PUBLIC HEARING all 
[electricity] end-users OF ELECTRICITY with a monthly average peak demand of [at 
least] NOT LESS THAN one megawatt (IMW) for the IMMEDIATELY preceding 
twelve (12) BILLING months to be the contestable market. [Two] AFTER TWO (2) 
years 
[thereafter,] 
IMMEDIATELY 
FOLLOWING 
THE 
INITIAL 
IMPLEMENTATION OF OPEN ACCESS, the threshold level for the contestable 
market shall be reduced to seven hundred fifty kilowatts (750kW). At [this] THAT level, 
aggregators shall be allowed to supply electricity to end-users whose aggregate demand 
within a contiguous area is at least seven hundred fifty kilowatts (750kW). [Subsequently 
and every] EVERY year thereafter, the [ERC] COMMISSION shall REVIEW AND 
evaluate the performance of the CONTESTABLE market[. 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 the household [demand level.] END-USERS OF ELECTRICITY. 
In the case of electric cooperatives, retail competition and open access shall be 
implemented not earlier than five (5) years upon the effectivity of this Act. 


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Sec. 10. Section 32 ofthe Act is hereby deleted 
[“SEC. 32. 
NPC Stranded Debt and Contract Cost Recovery. - Stranded 
debt of NPC shall refer to any unpaid financial obligations of NPC. 
Stranded contract costs of NPC shall refer to the excess of the contracted cost of 
electricity under eligible IPP contracts of NPC over the actual selling price of the 
contracted energy output of such contracts in the market. Such contracts shall have been 
approved by the ERE3 as of December 3 1,2000. 
The national government shall directly assume a portion of the financial 
obligations of NPC in an amount not to exceed Two hundred billion pesos (P200, 
000,000,000.00). 
The ERC shall verify the reasonable amounts and determine the manner and 
duration for the full recovery of stranded debt and stranded contract costs as defined 
herein:, Provided, That the duration for such recovery shall not be shorter than fifteen 
(15) years nor longer than twenty-five (25) years. The ERC shall, at the end of the first 
year of the implementation of stranded cost recovery, and every year thereafter, conduct a 
review to determine whether there is under-recovery or over-recovery and adjust (true- 
up) the level of stranded cost recovery charge accordingly. Any amount to he included 
for stranded cost recovery shall he reflected as a separate item in the consumer billing 
statement.] 
Sec. 1 I. Section 33 of the Act is hereby deleted: 
[“SEC. 33. 
Distribution Utilities Stranded Contract Costs Recovery. - 
Stranded contract costs of distribution utilities shall refer to the excess of the contracted 
cost of electricity under eligible contracts of such utilities over the actual selling price of 


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such contracts in the market. Such contracts shall have been approved by the ERB as of 
December 31,2000. 
A distribution utility shall recover stranded contract costs: Provided, however 
That such costs of the IPPs of distribution utilities are subject to review by ERC in order 
to determine fairness and reasonableness in relation to the average price of land-based 
IPP projects entered into by NPC, at the time they were contracted. The ERC shall take 
into consideration all factors that affect the total cost of NPC IPP generation projects, 
including direct or indirect subsidies or incentives provided by the Government. 
Within one (1) year from the start of open access, any distribution utility that 
seeks recovery of stranded contract costs shall file with the ERC notice of such intent 
together with, an estimate of such obligations, including the present value thereof and 
such other supporting data as may be required by the ERC. Any distribution utility that 
does not file within the date specified shall not be eligible for such recovery. 
Any distribution utility which seeks to recover stranded cost shall have a duty to 
mitigate its potential stranded contract costs by making reasonable best efforts to: 
(a) Reduce the costs of its existing contracts with IPPs to a level not exceeding 
(b) Submit to an annual earnings review by the ERC and use its earnings above 
its authorized rate of return, to reduce the hook value of contracts until the end of the 
stranded cost recovery period. 
~ 
the average buying price of other land-based electric power generators; and 
Other mitigating measures which are reasonably known and generally accepted 
within the electric power industry shall be utilized. The ERC shall not require the 
distribution utility to take a loss to reduce stranded contract costs or divest assets, unless 
the divestiture is imposed as a penalty as provided herein. 


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The relevant distribution utility shall submit to the ERC quarterly reports showing 
the amount of stranded costs recovered and the balance remaining to be recovered. 
Within three (3) months from the submission of the application for stranded cost 
recovery by the relevant distribution utilities, , the ERC shall verify the reasonable 
amounts, and determine the manner and duration for the full recovery of stranded 
contract costs as defined herein: Provided, That the duration for such recovery shall not 
be shorter than fifteen (15) years nor longer than twenty-five (25) years. Any amount to 
be included for stratided cost recovery shall be reflected as a separate item in the 
consumer billing statemznt. 
The ERC shall, at the end of the first year of the implementation of stranded cost 
recovery, and every year thereafter, conduct a review to determine whether there is 
under-recovery or over-recovery and adjust (true-up) the level of stranded cost recovery 
charge accordingly. In case of an over-recovery, the ERC shall ensure that any excess 
amount shall be remitted to the Special Trust Fund created under Section 34 hereof. A 
separate account shall be created for these amounts, which shall be held in trust for any 
future claims of distribution utilities for stranded cost recovery. At the end of the stranded 
cost recovery period, any remaining amount in this account shall be used to reduce the 
electricity rates to the end-users.] 
Sec. 12. A new Section is added to read as follows: 
Sec. 32 
NON-RECOVERY OF STRANDED DEBTS AND CONTRACT 
COSTS OFALL INDUSTRY PARTICIPANTS- 
IN ORDER TO REFLECT THE TRUE COST OF POWER AND TO 
AVOID ADDITIONAL BURDEN TO THE CONSUMERS , THERE SHALL 
HENCEFORTH BE NO RECOVERY OF STRANDED DEBTS AND CONTRACT 


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COSTS 
FOR 
THE 
NATIONAL 
POWER 
CORPORATION, 
PSALM, 
GENERATION COMPANIES, AND DISTRIBUTION UTILITIES. 
Sec. 13. Section 34 of the Act is hereby 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,] 
COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
PUBLIC HEARING, shall be imposed on all [electricity] end-users OF 
ELECTRICITY, ON THE BASIS OF THE NUMBER OF KILOWATT HOURS 
OF ELECTRICITY RESPECTIVELY CONSUMED BY THEM, for the following 
purposes: 
[(a) 
Payment for the stranded debts in excess of the amount assumed by the 
National Government and stranded contract costs of NPC and as well as qualified 
stranded contract costs of distribution utilities resulting from the restructuring of the 
industry;] 
[(b)](A) 
Missionary electrification; 
[(c)(B) 
The equalization of the taxes and royalties applied to indigenous or 
renewable sources of energy vis-&vis imported energy fuels;] 
[(d)](B) An environmental charge equivalent to one-fourth of one centavo per 
kilowatt-hour (PO.O025/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; and 
I(4l (C) 
A charge to account for all forms of cross-subsidies for a period 
not exceeding three (3) years. 


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The universal charge [shall be a non-bypassable charge which] shall be passed on 
and collected PER BILLING MONTH BY THE DISTRIBUTION UTILITIES from 
all THEIR RESPECTIVE end-users OF ELECTRICITY on [a monthly] THE basis 
[by the distribution utilities.] OF THE NUMBER OF KILOWATT HOURS OF 
ELECTRICITY ACTUALLY CONSUMED BY EACH OF SUCH END-USERS OF 
ELECTRICITY PER BILLING MONTH. Collections by the distribution utilities and 
the TRANSCO in any given BILLING month shall be remitted to the PSALM Corp. on 
or before the fifteenth (15th) DAY 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 SELF-GENERATED ELECTRICITY OF AN END-USER WHO OR 
WHICH IS NOT DIRECTLY CONNECTED TO THE DISTRIBUTION SYSTEM 
OF A DISTRIBUTION UTILITY OR TO THE TRANSMISSION GRID AND ITS 
SUBTRANSMISSION FACILITIES SHALL NOT BE SUBJECT TO OR LIABLE 
FOR THE UNIVERSAL CHARGE IMPOSED IN THIS SECTION, EXCEPT 
FOR THE PAYMENT OF THE OBLIGATION SPECIFIED IN SUBSECTION 
(d)OF THIS ACT, IF THE SELF GENERATED ELECTRICITY OF THE END 
USER COMES FROM THE UTILIZATION AND EXPLOITATION OF THE 
NATURAL RESOURCES OF THE COUNTRY. 
EVEN IF THE END USER WHO OR WHICH GENERATES 
ELECTRICITY FOR ITS OWN USE FROM ITS OWN GENERATION 
FACILITY IS CONNECTED TO THE DISTRIBUTION SYSTEM OF A 
DISTRIBUTION UTILITY OR TO THE TRANSMISSION SYSTEM OF 
TRANSCO, THE SAME SHALL NOT BE SUBJECT TO THE UNIVERSAL 
CHARGE IF THE SELF GENERATED ELECTRICITY DOES NOT PASS 
THROUGH THE DISTRIBUTION SYSTEM OF A DISTRIBUTION UTILITY 
OR OF THE TRANSMISSION SYSTEM OF TRANSCO, EXCEPT FOR THE 
PAYMENT OF THE OBLIGATION SPECIFIED IN SUBSECTION (d) OF TlIS 


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SECTION, IF THE SELF GENERATED ELECTRICITY OF THE END USER 
COMES FROM THE UTILIZATION AND EXPLOITATION OF THE 
NATURAL RESOURCES OF THE COUNTRY. 
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 WHICH SHALL BE disbursed 
only SUCH AMOUNTS AS MAY BE NEEDED STRICTLY, for the purposes 
specified [herein] IN THIS SECTION in an open and transparent manner. THE 
RECORDS OF DISBURSEMENTS FROM SUCH SPECIAL TRUST FUND 
ACCOUNT SHALL BE OPEN FOR MONITORING AND INSPECTION UPON 
WRITTEN REQUEST OF CONSUMERS, CONSUMER REPRESENTATIVES 
OR ORGANIZATIONS. All amounts collected for the universal charge shall be 
ALLOCATED AND distributed EXPEDITIOUSLY FOR THE PAYMENT OF THE 
OBLIGATIONS SPECIFIED IN (A), (B), AND (C) ABOVE AND to [the] THEIR 
respective beneficiaries, within [a] SUCH reasonable period [to be provided by the 
ERC.] OF TIME AS SHALL BE DETERMINED BY THE COMMISSION. 
“SEC. 35. Royalties, Returns and Tax Rates for Indigenous Energy Resources. - 
See. 14. Section 35 of this Act is hereby amended to read as follows: 
The provisions of Section 79 of Commonwealth Act No. 136 (C.A. No. 137) and any 
law to the contrary notwithstanding AND FOR THE PURPOSE OF LOWERING 
RATES OF ELECTRICITY TO END USERS, the President of the Philippines shall 
reduce the royalties, returns, and taxes [collected] OF THE NATIONAL 
GOVERNMENT for the exploitation of all indigenous sources of energy, including but 
not limited to, natural gas and geothermal steam, [so as to effect parity of tax treatment 
with the existing rates for, and other imported fuels.] WHENEVER THE INTEREST 
OF THE GENERAL PUBLIC SO REQUIRES. 


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To ensure [lower rates] CHEAPER ELECTRICITY for end-users, the [ERC 
shall] COMMISSION, AFTER DUE NOTICE TO ALL INTERESTED PARTIES 
AND PUBLIC HEARING, SHALL forthwith CORRESPONDINGLY reduce the 
PRICES AND/OR rates of ELECTRIC power from all indigenous sources of energy 
AND IMPROVE THE GRID’S GENERATION MIX OR PORTFOLIO OF 
PLANTS. 
FRANCHISE TAXES IMPOSED BY LOCAL GOVERNMENT UNITS 
SHALL BE LIMITED ONLY TO THE DISTRIBUTION AND WHEELING 
CHARGES OF THE DISTRIBUTION UTILITIES WHICH IS PASSED ON TO 
THE END-USERS. 
Sec. 15. Section 38, Chapter IV, of the Act is hereby amended to read as follows: 
“SEC. 38. 
Creation of the Energy Regulatory Commission. - [There is 
hereby created an independent, quasi-judicial regulatory body to be named the Energy 
Regulatory Commission (ERC). For this purpose, the existing Energy Regulatory Board 
(ERB) created under Executive Order No. 172, as amended, is hereby abolished.] THE 
ENERGY REGULATORY BOARD (ERB) CREATED UNDER EXECUTIVE 
ORDER NO. 172, AS AMENDED, IS HEREBY ABOLISHED. 
IN LIEU 
THEREOF, THERE IS HEREBY CREATED AN IMPARTIAL, INDEPENDENT, 
AND QUASI-JUDICIAL REGULATORY BODY TO BE NAMED THE ENERGY 
REGULATORY COMMISSION (ERC), WHICH FOR PURPOSES OF THIS ACT 
IS REFERRED TO AS THE “COMMISSION”. 
ALL THE POWERS 
FORMERLY VESTED IN THE ENERGY REGULATORY BOARD UNDER 
EXECUTIVE ORDER NO. 172, AS AMENDED, THAT ARE CONSISTENT 
WITH THE PROVISIONS OF THIS ACT MAY BE EXERCISED BY TH 
COMMISSION. 


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The Commission shall be composed of a Chairman and four (4) members to be 
appointed by the President of the Philippines. The Chairman and the members of the 
Commission shall be natural-born citizens and residents of the Philippines, persons of 
good moral character, at least thirty-five (35) years of age, and of 
recognized 
competence in any of the following fields: energy, law, economics, finance, commerce, 
or engineering, with at least three (3) years actual, and distinguished experience in their 
respective fields of expertise: Provided, That out of the four (4) members of the 
Commission, at least one (1) shall be a member of the Philippine Bar with at least ten 
(10) years experience in the active practice of law, and one (1) shall be a certified public 
accountant, with at least ten (10) years experience in active practice. 
Within three (3) months from the creation of the ERC, the Chairman shall submit 
for the approval by the President of the Philippines the new organizational structure and 
pluntilla positions necessary to carry out the powers and functions of the ERC. 
The Chairman of the Commission, who shall be a member of the Philippine Bar, 
shall act as the Chief Executive Officer of the Commission. 
All members of the Commission shall have a term of seven (7) years: Provided, 
That for the first appointees, the Chairman shall hold office for seven (7) years, two (2) 
members shall hold office for five (5) years; and the other two (2) members shall hold 
office for three (3) years: Provided, further, That appointment to any future vacancy shall 
only be for the unexpired term of the predecessor: Provided, jinally, That there shall be 
no reappointment and in no case shall any member serve for more than seven (7) years in 
the Commission. 
/ 
The Chairman and members of the Commission shall assume office at the 
Provided, That, if upon the effectivity of this Act, the 
beginning of their terms: 
Commission has not been constituted, and the new staffing pattern and pluntillu 


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positions have not been approved and filled-up, the current Board and existing personnel 
of ERB shall continue to hold office. 
The existing personnel of the ERB, if qualified , shall be given preference in the 
filling up ofplantilla positions created in the ERC, subject to existing civil service rules 
and regulations. 
Members of the Commission shall enjoy security of tenure, and shall not be 
suspended or removed from office except for just cause as specified by law. 
The Chairman and the members of the Commission [or any ofJ AND their 
relatives within the fourth civil degree of consanguinity or affinity, WHETHER SUCH 
PERSONAL RELATIONS ARE legitimate, [or] common law, [shall be] OR 
OTHERWISE, ARE prohibited from holding any interest whatsoever, either as investor, 
stockholder, officer, or director, in any company or entity engaged in the business of 
transmitting, generating, supplying, AGGREGATING, or distributing [any form of 
energy and must, therefore, divest through sale or legal disposition of any and all interests 
in the energy sector upon assumption of office.] ELECTRICITY. 
UPON THE ASSUMPTION BY THE CHAIRMAN AND THE ASSOCIATE 
MEMBERS OF THE COMMISSION OF THEIR RESPECTIVE POSITIONS, 
THE CHAIRMAN AND THE ASSOCIATE MEMBERS OF THE COMMISSION 
AND THEIR RESPECTIVE RELATIVES WITHIN THE PROSCRIBED 
DEGREE OF PERSONAL RELATIONS MUST DIVEST THEMSELVES OF ALL 
THEIR PROHIBITED INTEREST, THROUGH REAL ARMS LENGTH 
TRANSACTIONS OR OTHER VALID FORMS OF DISPOSITION, WITH 
CORRESPONDING PAYMENT OF ALL TAXES DUE, IF ANY, ON SUCH 
TRANSACTION OR OTHER FORMS OF DISPOSITION AND WITHOUT ANY 
PROVISION GRANTING A RIGHT TO THE TRANSFEROR OF SUCH 
PROHIBITED INTEREST TO REPURCHASE SUCH TRANSFERRED OR 


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DISPOSED PROHIBITED INTEREST, AND MUST RESIGN FROM ALL THEIR 
PROSCRIBED POSITIONS IN THE ELECTRIC POWER INDUSTRY. 
The presence of at least three (3) members of the Commission shall constitute a 
quorum and the majority vote of two (2) members in a meeting where a quorum is 
present shall be necessary for the adoption of any rule, ruling, order, resolution, decision 
or other act of the Commission in the exercise of its quasi-judicial functions: Provided, 
That in fixing rates and tariffs, an affirmative vote of three (3) members shall be 
required. 
Sec. 16. Section 41 of the Act is hereby amended as follows: 
"SEC. 41. 
PROTECTION AND Promotion of Consumer RIGHTS AND 
Interests. - [The ERC shall handle consumer complaints and ensure the adequate 
promotion of consumer interests.]THE COMMISSION SHALL ENSURE THE 
ADEQUATE PROTECTION AND PROMOTION OF THE INTERESTS OF THE 
ELECTRICITY CONSUMERS AND UPHOLD THEIR BASIC RIGHTS AS 
FOLLOWS: 
TO HAVE QUALITY, RELIABLE, AFFORDABLE, SAFE, AND 
REGULAR SUPPLY OF ELECTRIC POWER 
TO BE ACCORDED COURTEOUS, PROMPT, AND NON- 
/ 
DISCRIMINATORY SERVICE BY THE ELECTRIC SERVICE 
REASONABLE PRICE OF ELECTRICITY CONSISTENT WITH 
THE PROVISIONS OF THIS ACT. 


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TO BE AN INFORMED ELECTRIC CONSUMER AND GIVEN 
ADEQUATE ACCESS TO INFORMATION ON MATTERS 
AFFECTING THE ELECTRIC SERVICE OF THE CONSUMER 
CONCERNED; 
TO BE ACCORDED PROMPT AND SPEEDY RESOLUTION OF 
COMPLAINTS BY 
BOTH THE DISTRIBUTION UTILITY 
AND/OR THE COMMISSION; 
TO KNOW AND CHOOSE THE ELECTRIC SERVICE RETAILER 
UPON THE IMPLEMENTATION OF RETAIL COMPETITION; 
AND 
TO 
ORGANIZE 
THEMSELVES 
AS 
A 
CONSUMER 
ORGANIZATION IN THE FRANCHISE AREA WHERE THEY 
BELONG AND WHERE THEY ARE 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-USERS OF 
ELECTRICITY, and IT SHALL ensure AND SAFEGUARD the adequate, 
EFFECTIVE, AND SUSTAINED promotion [of consumer interests.] 
AND 
PROTECTION OF THE INTERESTS OF END-USERS OF ELECTRICITY. 
THE COMMISSION SHALL ALSO ENSURE THAT DISTRIBUTION 
UTILITIES SHALL SUPPLY THE LEAST COST ELECTRICITY FOR THEIR 
CAPTIVE END-USERS. 


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Sec. 17. Section 43 ofthe Act is hereby amended as follows: 
“SEC. 43. 
Functions of the [ERC.] COMMISSION. - The [ERC] 
COMMISSION shall, AMONG OTHERS, promote competition[,];encourage market 
development[,];PROTECT 
END-USERS 
OF 
ELECTRICITY 
FROM 
DISCRIMINATORY, UNFAIR, OR 
OPPRESSIVE RATES; ensure [customer], 
UPON THE ESTABLISHMENT OF THE CONTESTABLE MARKET, END- 
USER’S choice; and CONTROL, PREVENT, AND penalize abuse of market power in 
the restructured [electricity] ELECTRIC POWER industry. 
[In appropriate cases, the ERC] THE COMMISSION is authorized to issue A 
cease and desist order, WHENEVER IT IS NEEDED TO SERVE THE 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 PUBLIC HEARINGS ON ALL APPLICATIONS FOR RATE 
INCREASE AND ON ANY ISSUE, THE RESOLUTION OF WHICH, WILL 
AFFECT PRIVATE RIGHTS OR IMPOSE OBLIGATIONS OR WILL RESULT 
IN ANY INCREASE IN THE PRICE OF ELECTRICITY TO THE CONSUMERS. 
HENCEFORTH, NO PROVISIONAL AUTHORITY SHALL BE ISSUED FOR 
APPLICATIONS FOR RATE ADJUSTMENTS THAT PERTAIN TO BASIC 
RATE COMPONENTS ATTRIBUTABLE TO THE REGULATED ENTITY 
SUCH AS TRANSMISSION WHEELING RATES FOR TRANSCO AND ,, , 
~ 
DISTRIBUTION RELATED CHARGES FOR DISTRIBUTION COMPANIES. 
THE COMMISSION MAY GRANT PROVISIONAL AUTHORITY FOR 
OPERATIONAL 
APPLICATIONS 
OR 
PASS-THROUGH 
CHARGES 
PROVIDED 
THAT 
IN SUCH 
CASES. 
THE 
COMMISSION SHALL 
IMMEDIATELY SUBJECT SUCH APPLICATIONS TO PUBLIC HEARINGS 


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AND RENDER A FINAL DETERMINATION AND DECISION THEREON NOT 
LATER THAN ONE HUNDRED TWENTY (120)DAYS FROM THE ISSUANCE 
OF THE PROVISIONAL AUTHORITY. 
[Towards this end, it shall] IN ADDITION, THE COMMISSION SHALL 
PERFORM AND EXERCISE AND be responsible for the following [key] POWERS 
AND functions [in the restructured industry]: 
(a) 
Enforce the implementing rules and regulations of this Act; 
(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: 
(i) Performance standards for TRANSCO 0 & M Concessionaire, 
distribution utilities, and suppliers: Provided, That in the establishment of the 
performance standards, the nature and function of the entities shall be considered; 
and 
(ii) 
Financial capability standards for the generating companies, the 
TRANSCO, distribution utilities, and suppliers: Provided, That in the formulation 
of the financial capability standards, the nature and function of the entity shall be 
considered: Provided, further, That such 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 
/ 
public hearings the universal charge, to be imposed on all electricity end-users 
pursuant to Section 34 hereof]; AND 
(111) DETERMINE, FIX, AND APPROVE, AFTER DUE NOTICE 
TO ALL INTERESTED PARTIES AND PUBLIC HEARING, THE 


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ITEMIZED AMOUNTS OF THE UNIVERSAL CHARGE TO BE 
IMPOSED ON ALL END-USERS OF ELECTRICITY PURSUANT TO 
SECTION 34 OF THIS ACT. 
(c) 
Enforce the rules and regulations governing the operations of the 
electricity spot market and the activities of the spot market operator and other participants 
in the spot market, for the purpose of ensuring a greater supply and rational pricing of 
electricity; 
(d) 
Determine the level of cross subsidies in the existing retail rate until the 
same is removed pursuant to Section 74 hereof; 
(e) 
Amend, REVISE, or revoke, after due notice TO ALL INTERESTED 
PARTIES and PUBLIC hearing, the authority to operate [of] GRANTED TO any 
person or entity which fails to comply with the PERTINENT provisions [hereof, the 
IRR, or any] OF THIS ACT, OR WITH ANY OF THE IMPLEMENTING RULES 
AND REGULATIONS OF THIS ACT, OR WITH ANY DECISION, order, or 
resolution of the [ERC.] COMMISSION. In the event a divestment, CESSATION, OR 
DESISTANCE is required, the [ERC] COMMISSION shall, THROUGH A 
FORMAL ORDER FOR THAT PURPOSE, allow the affected party [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 no case SHALL THE SAID REASONABLE 
TIME exceed twelve (12) months from the issuance of the SAID FORMAL order[;] 0 
THE COMMISSION; 
methodology for setting] IN THE INTEREST OF THE GENERAL PUBLIC AND IN 
THE INTEREST OF THE END-USERS OF ELECTRICITY, AFTER TAKING 
INTO ACCOUNT ALL RELEVANT CONSIDERATIONS, INCLUDING THE 


40 
1 
EFFICIENCY OR INEFFICIENCY OF THE REGULATED ENTITIES, AND 
2 
AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND PUBLIC 
'3 
HEARING, JUST AND REASONABLE transmission and distribution NON- 
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DISCRIMINATORY wheeling [rates and] CHARGES, AS WELL AS JUST AND 
5 
REASONABLE NON-DISCRIMINATORY retail rates for the captive market of [a] 
6 
distribution [utility, taking into account all relevant considerations, including the 
7 
efficiency or ine€ficiency of the regulated entities. The rates must be such as to] 
8 
I UTILITIES, WHICH SHALL allow the recovery of ALL just and reasonable costs[,] 
9 
and [a] GIVE A JUST AND reasonable return on THE rate base (RORB) OF THE 
10 
REGULATED ENTITIES to enable [the entity] THEM to operate viably[. The ERC 
11 
may adopt alternative forms of internationally-accepted rate-setting methodology as it 
12 
may deem appropriate. The rate-setting methodology so adopted and applied must ensure 
13 
a reasonable price of electricity. The rates prescribed shall be non-discriminatory. To 
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achieve this objective and to ensure the complete removal of cross subsidies, the cap on 
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the recoverable rate of system losses prescribed in Section 10 of Republic Act No. 7832, 
16 
is hereby amended and shall be replaced by caps which shall be determined by the ERC 
17 
based on load density, sales mix, cost of service, delivery voltage and other technical 
18 
considerations it may promulgate. The ERC shall determine such form of rate-setting 
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methodology, which shall promote efficiency. In case the rate setting methodology used 
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is RORB, it shall be subject to the following guidelines:], AND WHICH SHALL 
ENSURE A JUST AND REASONABLE PRICE OF ELECTRICITY. 
THE 
COMMISSION, 
TO 
PROMOTE 
EFFICIENCY 
AND 
FAIRNESS IN THE ELECTRIC POWER INDUSTRY AND WHEN 
JUSTIFIED AND DEMANDED BY THE NATIONAL INTEREST, MAY 
ADOPT, AFTER DUE NOTICE TO ALL INTERESTED PARTIES AND 
PUBLIC 
HEARING, ANY 
OTHER ALTERNATIVE FORM OF 
INTERNATIONALLY-ACCEPTED METHOD OF RATEMAKING THAT 
SHALL BEST SERVE THE MUTUAL INTEREST OF THE GENERAL 


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PUBLIC, THE END-USERS OF ELECTRICITY, AND THE ELECTRIC 
INDUSTRY PARTICIPANTS. 
IN EVERY CASE, THE RATEMAKING METHOD SO ADOPTED 
AND APPLIED MUST BE NEITHER EXTORTIONARY TO THE END- 
USERS OF ELECTRICITY NOR CONFISCATORY TO THE TRANSCO 
OR TO THE DISTRIBUTION UTILITIES, AND MUST FURTHERMORE 
ENSURE THAT THE PRICE OF ELECTRICITY IS 
JUST AND 
REASONABLE. TOWARDS THIS END, THE COMMISSION SHALL 
PUBLISH THE REGULATORY GUIDELINES ON THE RATEMAKING 
METHODOLOGY ADOPTED AND ALL DOCUMENTS RELATED TO 
ANY DECISIONS SHALL BE CONSIDERED PUBLIC DOCUMENTS 
FOR PURPOSES OF TRANSPARENCY. 
THE RATEMAKING POWER HEREIN GRANTED TO THE 
COMMISSION MUST BE EXERCISED IN SUCH A MANNER THAT 
EVERY DOUBT MUST BE RESOLVED IN FAVOR OF THE 
PROTECTION OF THE RIGHTS OF THE GENERAL PUBLIC. 
IN ALL CASES OF RATE-MAKING, THE SOLICITOR GENERAL 
OR HIS REPRESENTATIVE MUST BE NOTIFIED OF AND SHALL 
APPEAR IN THE PROCEEDINGS SO THAT THE INTEREST OF THE 
GENERAL PUBLIC AND THE INTEREST OF THE END-USERS OF 
ELECTRICITY WILL BE PROTECTED. 
IN DETERMINING A JUST AND REASONABLE RETURN ON RATE 
BASE OF THE TRANSCO OR OF A DISTRIBUTION UTILITY, THE 
COMMISSION MUST OBSERVE THE FOLLOWING GUIDELINES: 


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(I) THE RATE BASE SHALL CONSIST OF THE AVERAGE 
VALUE 
OF 
ALL 
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT IMPROVEMENTS OF THE TRANSCO OR OF THE 
DISTRIBUTION UTILITY, AT THE BEGINNING AND AT THE END OF 
ITS FISCAL YEAR, AS SHOWN IN THE PROPERTY ACCOUNTS OF 
THE TRANSCO OR OF THE DISTRIBUTION UTILITY, AS THE CASE 
MAY BE, WHICH ARE DIRECTLY USED AND 
USEFUL IN 
PROVIDING THE SERVICE TO THE END-USERS OF ELECTRICITY, 
LESS THE ACCRUED ALLOWANCE FOR DEPRECIATION TAKEN 
FOR THE YEAR ON THE REGULATED ENTITY'S DEPRECIABLE 
ASSETS, 
FACILITIES, 
PROPERTY, 
AND 
PERMANENT 
IMPROVEMENTS, PLUS TWO MONTHS PRUDENT OPERATING 
CAPITAL. 
(11) THE VALUE OF THE FRANCHISE OF THE TRANSCO OR 
OF THE DISTRIBUTION UTILITY SHALL NOT BE INCLUDED IN 
THE RATE BASE FOR PURPOSES OF RATEMAKING. 
[(i)] (111) 
[For purposes of determining the rate base, the] THE 
TRANSCO or [any] A distribution utility [may be allowed] IS AUTHORIZED 
to revalue its [eligible] assets [not more than], FACILITIES, PROPERTY, 
AND PERMANENT IMPROVEMENTS CONSTITUTING ITS RATE 
BASE once every three (3) years [by an] THROUGH THE SERVICES OF AN 
EXPERIENCED, WELL-ESTABLISHED, REPUTABLE, AND independent 
appraisal 
company[:], 
IN 
ACCORDANCE 
WITH 
SOUND 
AND 
CONSISTENTLY MAINTAINED METHOD OF VALUATION: Provided, 
however, 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 PERIOD THAT 


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SUCH EXTRAORDINARY INFLATION OR DEVALUATION LASTS: 
Provided, further, That the [ERC] COMMISSION, IN THAT EVENT, shall 
exert [efforts 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. 
(IV) THE CAP ON THE RECOVERABLE RATE OF A JUST AND 
REASONABLE SYSTEMS LOSS PRESCRIBED IN SECTION 10 OF 
REPUBLIC ACT NO. 7832 SHALL BE MAINTAINED IN THE DENSELY 
POPULATED CITIES, URBAN CENTERS, AND MUNICIPALITIES OF 
THE COUNTRY: PROVZDED, THAT IT SHALL BE ACCORDINGLY 
AMENDED AND REPLACED IN AREAS OTHER THAN THE DENSELY 
POPULATED CITIES, URBAN CENTERS, AND MUNICIPALITIES OF 
THE COUNTRY BY CAPS WHICH SHALL BE DETERMINED AND 
FIXED BY THE COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING, BASED ON LOAD 
DENSITY, SALES MIX, COST OF SERVICE, DELIVERY VOLTAGE, 
AND 
OTHER 
TECHNICAL 
CONSIDERATIONS 
THAT 
THE 
COMMISSION MAY PROMULGATE: PROVZDED FURTHER, THAT 
ANY NEW CAP FOR RECOVERABLE SYSTEMS LOSS IN AREAS 
OTHER THAN THE DENSELY POPULATED CITIES, URBAN 
CENTERS, AND MUNICIPALITIES OF THE COUNTRY SHALL ALSO 
TAKE INTO CONSIDERATION AND PROVIDE FOR A JUST AND 
REASONABLE SYSTEMS LOSS FOR THE INEFFICIENCIES OF THE 
SYSTEMS OF ELECTRIC COOPERATIVES IN PERFORMING THEIR 
MISSIONARY ELECTRIFICATION FUNCTIONS. 
n 
(V) CORPORATE INCOME TAX LEVIED ON THE NET 
TAXABLE INCOME OF THE TRANSCO OR OF A DISTRIBUTION 


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UTILITY SHALL NOT, DIRECTLY OR INDIRECTLY, BE PASSED ON 
TO THE END-USERS OF ELECTRICITY. 
[(ii)] (VI) 
Interest expenses [are not allowable] 
OF THE 
TRANSCO OR OF A DISTRIBUTION UTILITY SHALL NOT BE 
ALLOWED AS deductions [from permissible] FOR PURPOSES OF 
DETERMINING A JUST AND REASONABLE return on rate base[;]. 
[(iii)] (VII) 
[In] FOR PURPOSES OF determining [eligible] THE 
JUST AND REASONABLE cost of services that will be passed on to the end- 
users[,] OF ELECTRICITY, the [ERC] THE COMMISSION shall establish 
minimum efficiency performance standards for the TRANSCO and THE 
distribution utilities, including systems losses, interruption frequency rates, and 
collection efficiency[;] OF THE REGULATED ENTITIES. 
[(iv)] (VIII) [Further, in] IN determining THE rate base[,] OF THE 
TRANSCO OR OF ANY DISTRIBUTION UTILITY, THE COMMISSION 
SHALL NOT ALLOW the TRANSCO or any distribution utility [shall not be 
allowed] to include THE COSTS OF management inefficiencies [like cost], 
SUCH AS, BUT NOT LIMITED TO, THE COSTS of project delays not 
[excused] EXCUSABLE by force majeure[,] OR THE penalties and related 
interest CHARGES ARISING during construction [applicable to these 
unexcused delays; and] PERIOD BECAUSE OF SAID INEXCUSABLE 
DELAYS. 
[(v)] (IX) 
Any significant operating costs or project investments of 
the TRANSCO and OF A distribution [utilities] UTILITY, which shall become 
part of the rate base, shall be subject to [verification by the ERC] THE 
APPROVAL OF THE COMMISSION, AFTER DUE NOTICE TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING, IN ORDER to ensure 


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that the [contracting and] 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 PROCUREMENT SHALL BE DONE IN ACCORDANCE WITH 
OPEN COMPETITIVE PUBLIC BIDDING AND IN COMPLIANCE WITH 
THE REQUIREMENTS OF EXISTING APPLICABLE PROCUREMENT 
LAWS, AS WELL AS IN ACCORDANCE WITH transparent and accepted 
industry procurement and purchasing practices to protect the public interest. 
(8) 
Three (3) years after the imposition of the universal charge, ensure that the 
charges of the TRANSCO or any distribution utility shall bear no cross subsidies between 
grids, within grids, or between classes of customers, except as provided herein; 
(h) 
Review and approve any changes on the terms and conditions of service of 
the TRANSCO or any distribution utility; 
(i) 
Allow the TRANSCO to charge user fees for ancillary services to all 
electric power industry participants or self-generating entities connected to the grid. Such 
fees shall be fixed by the ERC after due notice and public hearing; 
0) 
Set a lifeline rate for the marginalized end-users; 
(k) 
Monitor and take measures in accordance with this Act to penalize abuse 
(1) 
Impose fines or penalties for any non-compliance with or breach of this 
rules and regulations which it promulgates or 
Act, the IRR of this Act, and the 
administers; 


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(m) 
Take any other action delegated to it pursuant to this Act; 
(n) 
Before the end of April of each year, submit to the Office of the President 
of the Philippines and Congress, copy furnished the DOE, an annual report containing 
such matters or cases which have been filed before or referred to it during the preceding 
year, the actions and proceedings undertaken , and its decision or resolution in each case. 
The ERC shall make copies of such reports available to any interested party upon 
payment of a charge which reflects the printing costs. The ERC shall publish all its 
decisions involving rates and anti-competitive cases in at least one (1) newspaper of 
general circulation, and/or post electronically, and circulate to all interested electric 
power industry participants copies of its 
resolutions to ensure fair and impartial 
treatment: 
(0) 
Monitor the activities in the generation and supply of the electric power 
industry with the end in view of promoting free market competition and ensuring that the 
allocation or pass through of bulk purchase cost by distributors is transparent, non- 
discriminatory and that any existing subsidies, shall be divided pro-rata among all retail 
suppliers; 
(p) 
Act on applications for or modifications of certificates of public 
convenience and/or necessity, licenses, or permits of franchised electric utilities in 
accordance with law; and revoke, review, and modify such certificates, licenses or / 
permits in appropriate cases, such as in cases of violations of the Grid Code, Distributio 
Code, and other rules and regulations issued by the ERC in accordance with law; 
(9) 
Act on 
management projects; 
applications for cost recovery and return on demand si Y e 
(r) 
In the exercise of its investigative and quasi-judicial powers, act against 
any participant or player in the energy sector for violations of any law, rule, and 


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regulation governing the same, including the rules on cross-ownership, anti-competitive 
practices, abuse of market positions, and similar or dated acts by any participant in the 
energy sector or by any person, as may be provided by law, and require any person or 
entity to submit any report or data relative to any investigation or hearing conducted 
pursuant to this Act; 
(s) 
Inspect, on its own or through duly authorized representatives, the 
premises, books of accounts, and records of any person or entity at any time, in the 
exercise of its quasi-judicial power for purposes of determining the existence of any anti- 
competitive behavior and/or market power abuse and any violation of rules and 
regulations issued by the ERC; 
(t) 
Perform such other regulatory functions as are appropriate and necessary 
in order to ensure the successful restructuring and modernization of the electric power 
industry, such as, but not limited to, the rules and guidelines, under which generation 
companies, distribution utilities which are not publicly listed shall offer and sell to the 
public a portion, not less than fifteen percent (15%) of their common shares of stocks: 
Provided, however, That generation companies, distribution utilities or their respective 
holding companies that are already listed in the PSE are deemed in compliance. For 
existing companies, such public offering shall be implemented not later than five (5) 
years from the effectivity of this Act. New companies shall implement their respective 
public offerings not later than five (5) years from the issuance of their certificate of 
/ 
contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of the 
above-mentioned powers, functions and responsibilities, and over all cases involving 
disputes between and among participants or players in the energy sector. 


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All notices of hearings to be conducted by the ERC for the purpose o€ fixing rates 
or fees shall be published at least twice for two successive weeks in two (2) newspapers 
of nationwide circulation. 
Sec. 18. Section 45 of the Act is hereby amended to read as follows: 
“SEC. 45. 
Cross Ownership, Market Power Abuse and Anti-Competitive 
Behavior. - No participant in the electricity industry or any other person [rnayj 
SHALL engage in any KIND OF anti-competitive behavior, including, but not limited 
to, cross-subsidization, price or market manipulation, or ANY other unfair trade practices 
THAT ARE detrimental to the DEVELOPMENT, encouragement, and protection of 
THE contestable markets. 
No generation company, distribution utility, A COMPANY SUPPLYING 
ELECTRICITY, or ANY OF its [respective subsidiary or affiliate or stockholder or 
official of a generation company or distribution utility, or other entity engaged in 
generating and 
supplying electricity specified 
by 
ERC] 
SUBSIDIARIES, 
AFFILIATES, STOCKHOLDERS, OFFICIALS, OR DIRECTORS, OR THE 
OFFICIALS, DIRECTORS, OR OTHER STOCKHOLDERS OF SUCH 
SUBSIDIARIES OR AFFILIATES, OR 
ANY 
RELATIVES OF SUCH 
STOCKHOLDERS, OFFICIALS, OR DIRECTORS within the fourth civil degree of 
consanguinity or affinity, shall be allowed to HAVE AND hold, DIRECTLY OR 
INDIRECTLY, any interest[, directly or indirectly,] in THE TRANSCO or [its] IN 
THE TRANSCO’S concessionaire. Likewise, the TRANSCO, or its concessionaire, or 
any of [its] THE stockholders, [or] officials, OR DIRECTORS OF THE TRANSCO 
OR 
ITS 
CONCESSIONAIRE, or 
any 
[of 
their] 
relatives OF 
SUCH 
STOCKHOLDERS, OFFICIALS OR DIRECTORS OF THE TRANSCO OR ITS 
CONCESSIONAIRE within the fourth civil degree of consanguinity or affinity, shall 
not BE ALLOWED TO HAVE AND hold, DIRECTLY OR INDIRECTLY, any 
interest[, whether directly or indirectly,] in any generation company, [or] distribution 


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utility[.], OR A COMPANY SUPPLYING ELECTRICITY. Except for ex oficio 
government-appointed representatives, no [person who is an] officer or director, OR 
STOCKHOLDER of the TRANSCO or [its] OFFICER, DIRECTOR, OR 
STOCKHOLDER OF THE TRANSCO'S concessionaire shall be an officer or director 
of any generation company, distribution utility, or [supplier.] A COMPANY 
SUPPLYING ELECTRICITY. 
To promote true market competition and prevent harmful monopoly and market 
power abuse, the [ERC] COMMISSION shall enforce the following safeguards: 
(a) 
No company or related group [can] SHALL BE ALLOWED TO own, 
operate or control more than thirty percent (30%) of the installed generating capacity of a 
grid and/or twenty-five (25%) of the [national] installed NATIONAL generating 
capacity. "Related group" includes a person's business interests, including its subsidiaries, 
affiliates, directors or officers or any of their relatives by consanguinity or affinity, 
legitimate or common law, within the 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 INTERESTED PARTIES AND PUBLIC 
HEARING[:]. [Provided, That such review shall only be required for distribution 
utilities whose markets have not reached household demand level. For the purpose of 
preventing market power abuse between associated firms engaged in generation and 
distribution, no distribution utility shall be allowed to source from bilateral power supply 
contracts more than fifty percent (50%) of its total demand from an associated firm 
engaged in generation but such limitation, however, shall not prejudice contracts entered 
into prior to the effectivity of this Act. An associated firm with respect to another entity 
refers to any person which, alone or together with any other person, directly or indirectly, 
through one or more intermediaries, controls, is controlled by, or is under common 
control with, such entity; and] 


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IN ORDER TO PREVENT ABUSE OF MARKET POWER AND ANTI- 
COMPETITIVE BEHAVIOR, NO DISTRIBUTION UTILITY SHALL BE 
ALLOWED TO SOURCE FROM A BILATERAL ELECTRIC POWER SUPPLY 
CONTRACT OR CONTRACTS MORE THAN FIFTY PERCENT (50%) OF ITS 
TOTAL ELECTRIC POWER SUPPLY REQUIREMENTS FROM ANY 
GENERATION COMPANY OR GROUP OF GENERATING COMPANIES 
WHOLLY OWNED OR CONTROLLED BY THE SAME INTERESTS, 
PROVIDED FURTHER, THAT SUCH BILATERAL CONTRACTED CAPACITY 
SHALL NOT EXCEED TWENTY PERCENT (20%) OF THE INSTALLED 
CAPACITY OF THE GRID AS MAY BE DETERMINED BY THE ERC. 
ANY 
DISTRIBUTION UTILITY THAT HAS, ON THE EFFECTIVITY OF THIS ACT, 
SUCH CONTRACT OR CONTRACTS WHICH EXCEED THE ALLOWABLE 
FIFTY PERCENT (50%) LIMIT SET FORTH HEREIN SHALL DESIST FROM 
FURTHER 
AWARDING 
ADDITIONAL 
ELECTRIC 
POWER 
SUPPLY 
CONTRACT OR CONTRACTS WITH ANY GENERATION COMP.4NY OR 
GROUP 
OF 
GENERATING 
COMPANIES 
WHOLLY 
OWNED 
OR 
CONTROLLED BY THE SAME INTERESTS, UNTIL ITS PRESENT ELECTRIC 
POWER SUPPLY REQUIREMENTS, WHEN ADDED TO THE PROPOSED 
ADDITIONAL ELECTRIC POWER SUPPLY CONTRACT OR CONTRACTS 
WITH ANY GENERATION COMPANY OR GROUP OF GENERATING 
COMPANIES WHOLLY OWNED OR CONTROLLED BY THE SAME 
INTERESTS SHALL COMPLY WITH THE FIFTY PERCENT (50%) LIMIT 
AND TWENTY PERCENT (20%) GRID CAPACITY LIMIT SET FORTH 
HEREIN: PROWDED, THAT ANY EXTENSION OR EXPANSION OF 
EXISTING ELECTRIC POWER SUPPLY CONTRACT OR CONTRACTS 
SHALL BE DEEMED AS NEW CONTRACT OR CONTRACTS FOR PURPOSES 
OF THE LIMITATION SET FORTH HEREIN. 
(c) 
For the first five (5) years from the establishment of the wholesale / 
electricity spot market, [no distribution utility shall sowce more than ninety percent 


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(90%) of its total demand from bilateral 
power supply contracts] THE 
DISTRIBUTION UTILITIES SHALL SUBMIT OR FILE WITH THE 
COMMISSION ITS SUPPLY MANAGEMENT PROGRAM TO ENSURE 
COMPLIANCE WITH ITS OBLIGATION TO SUPPLY ELECTRICITY IN THE 
LEAST COST MANNER TO ITS CAPTIVE MARIU%T. THIS SUBMISSION 
SHALL BE CONSIDERED CONFIDENTIAL AND PROPRIETARY, PROVIDED 
THAT 
THE 
COMMISSION, 
MAY, 
MOTU 
PROPRIO, 
COMMENCE 
INVESTIGATION AND PROCEEDINGS AGAINST THE DISTFUBUTION 
UTILITY FOR FAILURE TO COMPLY WITH THE OBLIGATION TO SUPPLY 
ELECTRICITY IN THE LEAST COST MANNER. 
For purposes of this Section, the grid basis shall consist of three (3) separate grids, 
namely: Luzon , Visayas , and Mindanao . The ERC shall have the authority to modify or 
amend this definition of a grid when two or more of the three separate grids become 
sufficiently interconnected to constitute a single grid, or as conditions may otherwise 
permit. 
Exceptions from these limitations shall be allowed for isolated grids that are not 
connected to the high voltage transmission system. [Except as otherwise provided for in 
this Section, any restriction on ownerships and/or control between or within sectors of the 
electricity industry may be imposed by ERC only insofar as the enforcement of the 
provisions of this Section is concerned]. 
The [ERC] COMMISSION shall, within one (1) year from the effectivity of this 
Act, promulgate rules and regulations, CONSISTENT WITH THE PROVISIONS OF 
THIS ACT, to ensure and promote competition, encourage market development, [andl 
customer choice, and [discourage/penalize] DETER AND/OR PENALIZE ANY abuse 
of market power, cartelization, [and] OR any anti-competitive or discriminatory 
behavior, in order to further the intent of this Act and IN ORDER TO protect the 


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[public] interest[.] OF THE GENERAL PUBLIC AND THE END-USERS OF 
ELECTRICITY. Such rules and regulations shall COVER AND define the following: 
(a) 
the relevant markets for purposes of establishing abuse or misuse of 
monopoly or market position; 
(b) 
areas of isolated grids; and 
(c) 
the periodic reportorial requirements of electric power industry 
participants as may be necessary to enforce the provisions of this Section. 
The [ERC] COMMISSION shall, motu proprio, monitor and, WHEN 
WARRANTED 
BY 
THE 
ATTENDANT FACTS, 
penalize 
any 
SUCH 
MONOPOLIZATION, CARTELIZATION, ABUSE OF market power [abuse] or 
anti-competitive AND/or discriminatory act or behavior by any [participant in the] 
electric power industry[.] PARTICIPANT. Upon finding that [a market] AN 
ELECTRIC 
POWER 
INDUSTRY 
participant 
has 
engaged 
in 
such 
MONOPOLIZATION, CARTELIZATION, ABUSE OF MARKET POWER, OR 
ANTI-COMPETITIVE AND/OR DISCRIMINATORY act or behavior, the [ERC] 
COMMISSION shall FORTHWITH ISSUE A CEASE AND DESIST ORDER TO 
THE ERRING 
ELECTRIC POWER INDUSTRY PARTICIPANT, AND 
THEREAFTER PERMANENTLY stop and redress the same. Such [remedies shall, 
without limitation, include] REDRESS SHALL INCLUDE, AMONG OTHER 
REMEDIES THAT MAY BE APPROPRIATE UNDER THE CIRCUMSTANCES, 
the imposition of price [controls,] CONTROL, THE issuance of [iiijunctions, 
requirement of] INJUNCTIVE RELIEF, AND THE divestment or disgorgement of 
excess profits, and THE imposition of fines and penalties pursuant to THE 
APPLICABLE PROVISIONS OF this Act. 


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The [ERC] COMMISSION shall, within one (1) year from the effectivity of this 
Act, promulgate SUCH rules [and regulations providing for a complaint procedure that, 
without limitation, provides] AS MAY BE NECESSARY, NOT INCONSISTENT 
WITH THE PROVISIONS OF THIS ACT, THAT WILL ESTABLISH A 
PROCEDURE WHEREBY the accused party, with DUE notice [and] TO ALL 
INTERESTED PARTIES AND PUBLIC HEARING, SHALL BE GIVEN BY THE 
COMMISSION an opportunity to be heard. 
Sec. 19. Section 48 of the Act is hereby amended to read as follows: 
SEC. 48. National Power Board of Directors. - Upon the passage of this Act, 
Section 6 0fR.A. 6395, as amended, and Section 13 of RA 7683, as amended, referring 
to the composition of the National Power Board of Directors, are hereby repealed and a 
new Board shall he immediately organized. The new Board shall be composed of the 
Secretary of Finance as Chairman, with the following as members: the Secretary of 
Energy, the Secretary of Budget and management, the Secretary of Agriculture, the 
Director General of the National Economic and Development Authority, the Secretary of 
Environment and Natural Resources, the Secretary of Interior and Local Government, the 
Secretary of Trade and Industry, [and] the President of the National Power Corporation 
AND THE PRESIDENT OF THE POWER SECTOR ASSETS AND LIABILITIES 
MANAGEMENT CORPORATION.” 
/ 
SEC. 51 Powers. - The Corporation shall, in the performance of its functions and 
for the attainment of its objective, have the following powers: 
(a,) 
To formulate and implement a program for the sale and 
privatization of the NPC assets and IPP contracts and the liquidation of NPC 


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debts and stranded contract costs, such liquidation to be completed within the 
term of existence of the PSALM Corp.; 
(b.) 
To take title to and possession of, administer and conserve the 
assets transferred to it; to sell or dispose of the same at such price and under such 
terms and conditions as it may deem necessary or proper, subject to applicable 
laws, rules and regulations. 
(c.) 
To take title to and possession of the NPC IPP contracts and to 
appoint, after public bidding in transparent and open manner, qualified 
independent entities who shall act as the IPP Administrators in accordance with 
this Act; 
(d.) 
To calculate the amount of the stranded debts and stranded contract 
costs of NPC which shall form the basis for ERC in the determination of the 
universal charge; 
(e.) 
To liquidate the NPC stranded contract costs utilizing proceeds 
from sales and other property contributed to it, including the proceeds from the 
universal charge; 
(f.) 
To adopt rules and regulations as may be necessary or proper for 
the orderly conduct of its business or operations; 
(g.) 
(h.) 
To sue and be sued in its name; 
To appoint or hire, transfer, remove and fix the compensation of its 
personnel: Provided, however, That the Corporation shall hire its own personnel 
only if absolutely necessary, and as far as practicable, shall avail itself of the 
services of personnel detailed from other government agencies; 
(i.) 
To own, hold, acquire, or lease real and personal properties as ma 
be necessary or required in the discharge of its functions; 
(j.) 
To borrow money and incur such liabilities, including the issuan 
of bonds, securities or other evidences of indebtedness utilizing its assets as 
collateral and/or through the guarantees of the National Government: Provided, 
however, That all such debts or borrowings shall have been paid off before the 
end of its corporate life; 


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To restructure existing loans of NPC; 
To collect, administer, and apply NPC's portion of the universal 
(k.) 
(1.) 
charge; and 
(m.) 
To restructure the sale, privatization or disposition of NPC assets 
and IPP contacts which shall optimize the value and sale prices of said assets. 
(n.) 
TO HAVE ACCESS AT ALL TIMES AND EXAMINE, 
INSPECT, AUDIT, TAKE COPIES OF BOOKS OF ACCOUNTS, 
FINANCIAL STATEMENTS, DOCUMENTS, PAPERS, CONTRACTS 
ENTERED INTO, PERTAINING TO THE REMITTANCES AND 
UTILIZATION OF THE UNIVERSAL CHARGE; 
(0.) 
TO 
BRING 
OR 
DEFEND 
ACTIONS 
FOR 
THE 
PROTECTION, PRESERVATION, RECOVERY OF THE SPECIAL 
TRUST FUND TO THE BENEFICIARIES OF THE UNIVERSAL 
CHARGE; 
SEC. 21. 
Separability Clause. - 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 effect. 
SEC. 22. 
Applicability and Repealing Clause. - The applicable provisions of 
Commonwealth Act No. 146, as amended, otherwise known as the "Public Services Act"; 
Republic Act 6395, as amended, revising the charter of NPC; Presidential Decree 269, s 
amended, referred to as the National Electrification Decree; Republic Act 7638, otherwise 
known as the Department of Energy Act of 1992; Republic Act 7832 otherwise known as the 
Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994, shall continue T 
to have kll force and effect, except insofar as such acts and decree, and only to that extent, are 
inconsistent with any of the provisions of this Act. 


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modified accordingly.] 
[The provisions with respect to electric power of Section 1 l(c) of Republic Act 
7916, as amended, and Section 5(f) of Republic Act 7227, are hereby repealed or 
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SEC. 23. 
Effectivi& Clause. - This Act shall take effect on the fifteenth day 
Presidential Decree No. 40 and all laws, decrees, rules and regulations, or portions 
thereof, inconsistent with this Act are hereby repealed or modified accordingly. 
9 
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Approved, 
12 
following its publication in at least two (2) national papers of general circulation. 
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