SIXTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES — )
First Regular Session )

HOUSE OF REPRESENTATIVES
Hoiise Bill No. 8743

Introduced by REP. BEN P, EVARDONE
Lone District, Eastern Samar

EXPLANATORY NOTE

Since the assumption of His Excellency President Benigno Aquino III, production and servi
sectors of our economy posted an unprecedented growth,

In the industry sector, particularly in manufacturing, NSCB data showed an increase in almost
all industry manufacturing groups based on Gross Value Added in Manufacturing as of the 3 Quarter
of 2013. The service sector has also done its part in expanding the economy, notably the BPO industry
that, in 2012, earned around $12 Billion, By 2016, it will hit revenues up to $25Billion, approximately
10% of Philippine GDP, By that time, the industry would be directly employing some 1.3 million
Filipinos and some 3.2 million in indirect employment,

Note that the manufacturing companies’ and BPOs’ gains happened at a time when electricity
rates were the highest or the second highest in Asia. In fact, the Philippines posted more than 7%
GDP growth in 2013.

‘This 7% GDP growth was a shout-out for the Department of Energy (DOE) to double their

es this rule of thumb:

efforts to provide sufficient and affordable electricity. Indeed, DOE recogni r
versa.”

“the higher the economic growth, the higher the demand for electricity, and vi

In mid-2013, DOE presented this power situationer’: The Philippines 2013 total capacity in
MegaWatts (MW) was 17,025MW°, shared by Luzon (12,528MW"), Visayas (2,448MWS), and
Mindanao (2,049MW*), However, the currently available capacity for Luzon is only about
10,500MW, Visayas has 2,000 more or less, and Mindanao has around 1,600MW.

DOE is uneasy, Its supply-demand projections from 2013-2020 do not look good for Luzon,
Visayas and Mindanao. Based on DOE's estimates, there is already an energy crisis in Mindanao,
which will get worse before it gets better (provided that all the committed and indicative power

* http Awww. amanetwork,com/news/story/293312/economy/business/higher-demand-for-electrcity-to-
‘gfow-as-phl-economy-expands-energy-dept

Source: DOE List of existing power plants as of May 2013, includes embedded generators, excludes
off-grid generators
* broken down into: Coal (5,568MW), Oil-based (3,074MW), Natural Gas (2,862MW), Geothermal
{1,.848MW), Hydro (3,521MWV), Wind (33M), Biomass (119MW), and Solar (1MW)

comprised of: Coal (4,531MW), Oil-based (1,778MW), Natural Gas (2,861MW), Geothermal
(824MW), Hydro (2,462MWW), Wind (33), Biomass (38MW)
° Coal (806M), Oilbased (670M), Natural Gas (MW), Geothermal (915MW), Hydro (11MW), and
Biomass (44MW)
* coming from: Coal (232MW), Oil-based (625MW), Geothermal (108M), Hydro (1,047MW),
Biomass (36MW), and Solar (1MW)



which will get worse before it gets better (provided that all the committed and indicative power
projects are realized), while an energy crisis looms in Luzon and Visayas, following this scenario —

Luzon’s committed capacity (based on committed power projects for Luzon) is only
767.4MW of which SSOMW must all be available by March 2015, or else Luzon grid will have @
supply deficit of 184MW, when peak demand between March and May 2015 reaches around
10,700MW. All of the 767.4MW must be available by March 2016, or else Luzon grid will have a
supply deficit of 339MW from March to July 2017 when peak demand reaches around 11,606MW.
Worst, if no new generation plant is constructed after March 2016, a supply deficit of 833MW wil
occur between March and May 2018, when peak demand reaches around 12,500MW, and which will
reach 13,000MW by March 2020. Now, DOE is praying harder for the realization of Luzon Grid’s
Indicative Power Projects with a total rated capacity of 10,152.5MW.

Visayas and Mindanao grids sing a similar tune: Unless the committed power projects (with
429.6MW total rated capacity) in Visayas become available by September 2016 when peak demand
reaches 2,400MW, Visayas will feel the effects of the supply deficit as early as November 2014.”

(On the other hand, Mindanao, already suffering from a 119MW-supply deficit as of August 2013, is
seen to suffer even more in 2014 with supply deficit increasing to 191MW, and in 2015 when the
supply deficit reaches 377MW.*

While everyone recognizes the vital role of electricity in our day-to-day life, the energy
market players seemed not to care,

After the latest suspiciously simultaneous power plants’ ‘maintenance’ shutdowns, power
rates soared, compelling the Supreme Court to restrain the hike. Afterwards, MERALCO wamed of
rotating blackouts in the country’s prime business region, Metro Manila, and Luzon,

This warning—which some dismissed as a ‘veiled’? threat while others see it as a ‘blackmail’
or ‘strangulation’—surely brought chills to the country’s manufacturing and ‘sunshine’ industry
(BPO), among others. At the same time, it encouraged the drafting of this proposal,

‘This bill hopes to neutralize Meralco's threat and prevent the recurrence of similar ones in the
future. It seeks to avoid a no-win situation for the Filipino electricity consumers, who have been left
to the mercy of energy providers the moment EPIRA took effect.

Under this bill, the President of the Republic is authorized:

1. To enter into a negotiated contract for the immediate construction of new government-
‘owned and controlled power plants, under TRANSCO, which shall serve as standby and
ancillary generators/power plants for Luzon, Visayas and Mindanao. Under the EPIRA,
the Government and TRANSCO are not allowed to undertake the construction of
‘generation plants

2. To enter into a negotiated contract for the repair, rehabilitation, improvement, and
maintenance of existing government-owned or controlled power plants, projects and
facilities,

” Visayas grid Indicative Power Projects have a total of 718MW rated capacity.

* Mindanao grid’s Committed Power Projects is around 51SMW rated capacity which must all be
available by March 2015; its Indicative Power Projects have a total of 2,534.6MW rated capacity
Which must be realized through 2020.

* htto://newsinfo inquirer. net/561553/senators-unfazed-by-rotating-blackouts



3. To further promote the development and utilization of renewable energy sources by
granting additional incentives to power generators producing electricity through
renewable energy systems;

4, To suspend the imposition and collection of VAT, whenever necessary to lower the cost
of electricity.

Hence, it is on this score that its immediate passage is earnestly sought.

Rep. B
Lone

N P. EVARDONE
istrict, Eastern Samar


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SIXTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
House Bilt No._ 3743

Introduced by
REP. BEN P. EVARDONE
Lone District, Eastern Samar

AN ACT
PRESCRIBING URGENT RELATED MEASURES NECESSARY AND PROPER TO.
EFFECTIVELY ADDRESS THE IMPENDING ELECTRIC POWER CRISIS AND
FOR OTHER PURPOSES
Section 1. Short Title. — This act shall be known as the "Electric Power Crisis

Prevention Act of 2014."

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

adopt adequate and cost effective measures to address the impending electric power eri

that threatens to disrupt the country's economic and social life that could assume the nature of

a catastrophic calamity.

Section 3. Ancillary Generators, — The President is authorized to enter into a
negotiated contract for the immediate construction of new government-owned and —
controlled power plants, under the National Transmission Corporation (TRANSCO), which
shall serve as standby and ancillary generators/power plants for Luzon, Visayas, and
Mindanao. For this purpose, the President is hereby authorized to utilize all available
government resources including the Malampaya Fund referred to in Presidential Decree No,
910.

All earnings derived from the operation of such standby and ancillary
generators/power plants shall be retained by the National Transmission Corporation for its

use in the operation and maintenance of the same.


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Section 4. Negotiated Contracts. — Pursuant to the above declared policy and in the
public interest and whenever it is advantageous to the Government, the President may enter
into negotiated contracts for the repair, rehabilitation, improvement or maintenance of
existing government-owned or ~controlled power plants, projects, and facilities, subject to the

following requirements:

(a) In order to inform competitive contractors, the list of projects to be undertaken this
Act, together with their description, the budgetary estimates involved and other salient
features, shall be published in a newspaper of general circulation thirty (30) days after the
effectivity of this Act;

(b) Upon perfection of the contract, the terms and conditions of the same, with the
name and qualifications of the contractor, shall likewise be published in a newspaper of

general circulation two (2) weeks before the signing of the contract;

(© The contracts shall be awarded only to contractors with:
(proven competence and experience in similar projects;
(ii) competent key personnel and sufficient and reliable equipment; and

sound financial capacity; and

(@) All the awarded projects shall be subject to existing government auditing rules and

regulations governing negotiated contracts.

Section 5. Other Powers. — The President is authorized to suspend, whenever
necessary to lower the cost of electricity, the imposition and collection of value added tax

(VAT) on electric power.

Section 6, Prohibitions. — The President is prohibited to grant Sovereign Guarantee
Payments or any other form of guarantee for purposes of this Act.

Section 7. Incentives. - To further encourage the development and utilization of
renewable energy resources such as but not limited to solar, wind, hydro, geothermal and

biomass, the President is authorized to grant incentives to power generators producing


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electricity through renewable energy systems in addition to those provided under existing

laws, rules and regulations.

Section 8, Exemption — Alll actions as may be invoked by the President under this
Acct shalll be exempt from the provisions of Republic Act 9184.

Section 9. Duration of Grant of Powers. — The authority granted to the President
under this Act shall subsist, be valid and effective for a period of one (1) year from the

effectivity of this Act, unless sooner withdrawn by a resolution of Congress, without

prejudice to rights and benefits that may have been vested, and culpabilities and liabi

that may have been incurred,

Section 10, Oversight Committee. — There is hereby created an Oversight
Committee in each House of Congress to be composed of five (5) members of each, as may
be designated by the Senate President and the Speaker of the House of Representatives, to

monitor the implementation of this Act and the exercise of the authority granted thereunder,

‘The Oversight Committee shall submit periodic reports, evaluations and

recommendations to the Senate and the House of Representative

Section 11, Reportorial Requirement. — The President shall submit a quarterly

report to Congress on the Implementation of this Act.
Section 12. Separability Clause. — If for any reason any provision of this Act is
declared unconstitutional or invalid, other parts or provisions hereof which are not affected

thereby shall continue to be in full force and elect.

Section 13. Repealing Clause. — All laws, decrees, orders, rules and regulations, or

Portions thereof, inconsistent with this Act are hereby repealed or modified accordingly.

Section 14. Effectivity Clause. — This Act shall take effect on the day following its

Publication in at least two (2) national newspapers of general circulation.

Approved