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

EIGHTEENTH CONGRESS
First Regular Session

House Bill Number 466

Introduced by: Rep. PRESLEY C. DE JESUS (PHILRECA Partylist)

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

EXPLANATORY NOTE

This legislative measure is a collation of various proposals from the
stakeholders in the power industry. It is admitted that putting all those into one final
piece of a proposed bill is not a walk in the park. The proposals collected vary to an
extent in terms of ways in pursuing reforms.

The outpour of citizens’ action will re-direct the energies of the members in
literally dismantling the law which may negate the milestones; however few, EPIRA
has achieved. It is therefore a requirement that the leadership of Congress must,
‘once it decides to hear the various proposals, identify specific provisions which
should not put instability to the current investment on additional power supply, if the
problem indeed is simply on supply unavailability. It is therefore indispensable to
contemplate on Congress's collective action to pin down on the solutions “without
burning the house”

In particular, this bill features the following:

¢ Retain state ownership of Agus-Pulangui Hydroelectric plants complexes to
ensure stability of power supply and thereby avert power crises in
Mindanao grid;

* Create the Mindanao Power Corporation to manage and operate the Agus
and Pulangui Hydro Electric Power Plants;

* Optimize the powers and functions of the DOLE to protect the electric
consumers against market abuse;

¢ Rationalize application of the wholesale Electricity spot market to achieve
the objective of stabilizing power supply and maximum utilization thereof, at
least cost manner,


* Authorize the government, through the National Power Corporation, to
engage in power generation and contracting capacity undertaking as
supplementary to stabilize market prices during emergency shutdown of
base load plants;

* Transfer of small power utilities group (SPUG) operation to the National
Electrification Administration (NEA)

* Ensure true market competition by enhancing safeguards on ownership
limitation and restrictions;

¢ Simplify the distribution of the shares of national wealth tax, the
communities hosting any source of energy are entitled for eighty percent
(80%), with the provision that the generation facilities deduct the same
amount from the generation charges imposed to electric consumers;

* Enhance the selection process for the heads of agencies in the power
sector, and

¢ Expand the use of the universal charge through funding the rehabilitation of
lines previously constructed using subsidy funds from NEA and/or Priority
Development Assistant fund (PDAF) to electricity far-flung areas.

The passage of the billis-eamestly sought.

ep. PRESLEY C. DE JE:
PHILRECA Party-List


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

EIGHTEENTH CONGRESS
First Regular Session

House Bill Number 486

Introduced by: Rep. PRESLEY C. DE JESUS (PHILRECA Partylist)

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

Be it enacted by the senate and the House of Representatives of the Philippines in congress
assembled:

CHAPTER | ~ POLICY AND DEFINITIONS

SECTION 1. Title — this act shall be known as the “Revised Electric Power Industry
Reform Act or REPIRA’ it shall hereinafter be referred to as the act.

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

CHAPTER Il — AMENDATORY PROVISIONS
‘Section 3. Section 2 of EPIRA is hereby amended to read as follow:
Section 2. Declaration of policy. It is hereby declared the policy of the state:

(a) Xxx

(b) Xxx

(©) Xxx

(d) To enhance the inflow of private capital the ownership base of the power
generation, transmission and distribution sectors IN ORDER TO
MINIMIZE THE FINANCIAL RISK EXPOSURE OF THE NATIONAL
GOVERNMENT AND THEREBY RATIONALIZE OWNERSHIP TO
PREVENT MONOPOLY AND OLIGOPOLY IN ANY OF THE SECTORS
OF THE INDUSTRY;

(e) Xxx


() Xxx
(9) Xxx

(h) To promote the utilization of indigenous and new and renewable energy
resources in power generation in order to reduce dependence on
imported energy AND COME UP WITH POLICIES THAT WOULD
ENCOURAGE RATHER THAN RESTRICT INVESTOR IN THIS AREA;
To provide for an orderly and transparent privatization of the assets and
liabilities of the National Power Corporation (NPC), WITH THE
ASSURANCE OF PROVIDING A WELL UNDERSTOOD PROCESS
GIVING EQUAL OPPORTUNITY OF PARTICIPATION;

To established a strong and purely independent regulatory body,
MANNED BY INDEPENDENT OFFICER WITH EXTENSIVE
BACKGROUND OF INDUSTRY PRACTICE , and system to ensure
consumer protection and enhance the competitive operation of the
electricity market; and

(k) 20x"

@

ft)

SECTION 4. Section 4 of EPIRA shall amended to read as follows:

“Section 4. Definition of Terms.-

“(a) "Aggregator" refers to a person or entity, engaged in consolidating electric
power demand of end-users in the contestable market, for the purpose of
purchasing [and], reselling, MANAGING FOR THE OPTIMUM UTILIZATION
OF THE AGGREGATED DEMAND, OR SIMPLY POOLING FOR THE
TENDERING PROCESS IN LOOKING FOR SUPPLY, OF electricity on
group basis;

Xx

“(pp)” 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 ANOTHER CORPORATION OR FIRM OR A
private person or entity;

Xxx"

SECTION 5. Section 23 of the EPIRA shall be amended to read as follows:
“Section 23. Functions of Distribution Utilities. - x0
Xxx

“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. IN PURSUING JOINT ACTIONS PARTICULARLY IN
AGGREGATING DEMAND TO ATTRACT INVESTMENTS THAT WOULD RESULT
TO THE REDUCTION OF THE PER KILOWATT HOUR OF ELECTRICITY, THE
DISTRIBUTION UTILITIES MAY CREATE A SUBSIDIARY COMPANY, THE
OWNERSHIP OF WHICH SHALL BE SUBJECT TO THE LIMITATIONS IMPOSED
UNDER THE CROSS-OWNERSHIP PROVISION. 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.
xo"

SECTION 6. Section 30 of the EPIRA is hereby repealed to read as follows:


“SEC.30. Wholesale Electricity Spot Market — Within one (1) year from the affectivity
of this Act, the DOE shall establish a wholesale electricity spot market composed of
the wholesale electricity spot market participants. The market shall provide the
mechanism for identifying and setting the price of actual variations from the quantities
transacted under contracts between sellers and purchasers of electricity. “Jointly with
the electric power industry participants, the DOE shall formulate the 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 of electricity users. The price determination methodology contained
in said rules shall be subject to the approval of ERC. Said rules shall also reflect
accepted economic principles SUCH AS THE REQUIREMENT OF ESTABLISHING
AVAILABILITY OF SUPPLY PRIOR TO THE INTRODUCTION OF THE WESM and
provide a level playing field to all electric power industry participants. The rules shall
provide, among others, procedures for:

(2) xx;
(b) 20x;
(c) 200;

“(d) Prescribing guidelines for the market operation in system emergencies, WHICH
INCLUDE THE REQUIREMENT OF ESTABLISHING THE AVAILABILITY OF
SUPPLY IN A CERTAINGRID PRIOR TO THE IMPLEMENTATION OF THIS
SAME; and

“(e) Amending the rules.

“The wholesale electricity spot market shall be implemented by a market operator in
accordance with the wholesale electricity spot market rules. The market operator
shall be an autonomous group, to be constituted by DOE, with equitable
Tepresentation from electric power industry participants, initially under the
administrative supervision of the TRANSCO. The market operator shall undertake
the preparatory work and initial operation of the wholesale electricity spot market. Not
later than one (1) 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.
NOTWITHSTANDING THE FAILURE OF ESTABLISHING WESM IN MINDANAO
GRID, TRANSCO SHALL ACT AS THE MARKET OPERATOR OF THE GRID, IN
CONTRA-DISTINCTION TO THE ROLE OF THE NGCP WHICH IS THE DE FACTO
SYSTEMS OPERATOR OF THE GRID.

“Subject to the compliance with the membership criteria, WHICH SHALL BE
PREMISED ON PROVISIONS THAT WILL DETERMINE VOLUNTARINESS ON
THE NATURE OF MEMBERSHIP, all generating companies, distribution utilities,
suppliers, bulk consumers/end-users and other similar entities authorized by the ERC.
shall be eligible to become members of the wholesale electricity spot market.

Xx

“In cases of national and international security emergencies or natural calamities,
INCLUDING DURING A DECLARATION OF SUPPLY SHORTAGE IN A
PARTICULAR GRID SUCH AS BUT NOT LIMITED TO THE ONE IN MINDANAO,
the ERC is hereby empowered to suspend the operation of the wholesale electricity
spot Market or declare a temporary wholesale electricity spot market failure, OR IS
HEREBY EMPOWERED TO PREVENT THE IMPLEMENTATION OF THE WESM.


OR A SIMILAR STRUCTURE OF MARKET OPERATIONS WHEN SUCH WILL
CLEARLY RESULT TO INCREASE OF RETAIL ELECTRICITY PRICES DUE TO
THE DEMAND INCREASE WITHOUT THE CORRESPONDING INCREASE OR
THE CORRESPONDING ADDITIONAL SUPPLY THE SAID GRID.”

SECTION 7.Section 34 of the EPIRA shall be amended to road as follows:

“SEC. 34. Universal charge, - Within one (1) year from the effectivity of this Act, a
universal charge to be determined, fixed and approved by the ERC, shall be imposed
on all electricity end-users for the following purposes:

(a) 20%
(b) 20%
(©) xx

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

“(e) A charge to account for all forms of cross subsidies for a period not exceeding
three (3) years [.]; AND

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

“The universal charge shall be non-by passable charge which shall be passed on and
collected from all end-users on the monthly basis by the distribution utilities.
Collections by the distribution utilities and the TRANSCO in any given month shall be
remitted to the PSALM Corp. on or before the fifteenth (15th) of the succeeding
month, net of any amount due to the distribution utility. Any end-user or self-
generating entity not connected to a distribution utility shall remit its corresponding
universal charge directly to the TRANSCO.

“The PSALM Corp., as administrator of the fund, shall create a Special Trust Fund
which Shall be disbursed only for the purposes specified herein in an open and
transparent manner. All amounts collected for the universal charge shall be
distributed to the respective beneficiaries within a reasonable period to be provided
by the ERC.”

SECTION 8. Section 35 of the EPIRA is hereby amended to read as follows:

“SEC.35. Royalties, Retums and Tax Rate- The provisions of section 79 of
Commonwealth Act No. 137 (C.A No. 137) and any law to the contrary
notwithstanding, the President of the Philippines shall reduce the royalties, returns
and taxes collected for the FOLLOWING:

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

“2. TAX FOR ELECTRIC COOPERATIVES”


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

SECTION 9. Section 37 of the EPIRA shall be amended to read as follows:

“SEC.37. Powers and Functions of the DOE. - In addition to its existing powers and
functions, the DOE is hereby mandated to supervise the restructuring of the
electricity industry. In pursuance thereof, Section 5 of R. A. 7638 otherwise known as
“The Department of Energy Act of 1992” is hereby amended to read as follows:

(a) 10x

(b) 200;

(0) xxx;

“(d) Ensure the reliability, quality and security of supply of electric power, PRIMED
ON INTEREST OF THE PROTECTING THE CONSUMERS FROM
UNREASONABLE INCREASE OF PRICES;

(€) Xo,

(I) Xxx,

(ii) Xx;

(iil) Xoo; and

(iv) Xxx.
“(f) Jointly with the electric power industry participants, establish the wholesale
electricity spot market WHEN IT IS WARRANTED BY UNCONDITIONAL
DECLARATION, WHICH MUST BE CONCURRED IN BY THE ERC, OF
STABILITY IN POWER SUPPLY, and formulate the detailed rules governing the

operations thereof,
(9) Xxx;

(h) Xoo;

“(i) Develop policies and procedures and, as appropriate, promote a system of
energy development incentives to enable and encourage electric power industry
participants to provide adequate capacity to meet demand, ESPECIALLY A
SUDDEN SURGE OF DEMAND THAT MAY ARISE ON EMERGENCY SITUATION
BROUGHT UPON BY A SIMULTANEOUS OUTAGE BY SEVERAL
GENERATORS, OR A SINGLE ONE, REPRESENTING A HUGE BULK OF
SUPPLY ON PER GRID BASIS, including, among others, reserve requirements;

() Xxx

(k) Xxx

(I) Xxx

(m) Xxx

(n) Xxx

(0) Xxx

“(p) EXERCISE SUPERVISION OVER GOVERNMENT AGENCIES IN THE POWER
‘SECTOR, FOR THEIR COMPLIANCE TO THIS ACT IN ORDER TO MONITOR AND TAKE
REMEDIAL MEASURES IN PENALIZING ABUSE OF MARKET POWER,


CARTELIZATION AND ANTI-COMPETITIVE OR DISCRIMINATORY BEHAVIOUR OF
INDUSTRY PARTICIPANTS [formulate such rules and regulations as may be necessary

To implement the objectives of this Act}; [and]

(q) FORMULATE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY
TO IMPLEMENT THE OBJECTIVES OF THIS ACT; AND

(rf) EXERCISE SUCH OTHER POWERS AS MAY BE NECESSARY OR
INCIDENTAL TO ATTAIN THE OBJECTIVES OF THIS ACT.”

SECTION 10. Section 38 of EPIRA is herein amended to read as follows:
SEC. 38. Creation of the energy regulatory commission-xxx

“The commission shall be composed of a chairman and four (4) members to be
SELECTED AND appointed by the president of the Philippines FROM THE ROSTER OF
NOMINEES TO BE SUBMITTED BY THE JCPC OR A SUBSTITUTE BODY CREATED
WHEN JCPC'S TERM EXPIRES, WHICH SHALL BE CALLED MULTI-STAKEHOLDERS
POWER ADVISORY COUNCIL FORMED, PURSUANT TO THEIR ADDITIONAL
MANDATE DEFIND IN SEC. 62 OF THIS AMENDATORY ACT. The chairman and the
members of the commission shall be natural- bom citizens and residents of the Philippines,
person of good moral character, at least thirty- five (35) years of age, GRADUATE OF AT
LEAST FOUR- YEAR COURSE IN ANY OF THE FOLLOWING FIELDS: ENERGY,
ECONOMICS, FINANCE, COMMERCE ENGINEERING OR ANY RELATED FIELDS and
WITH AT LEAST TEN (10) YEARS OF PROFESSIONAL AND RELEVANT EXPERIENCE
LINKED TO THE PROVISION OF HIGH LEVEL POLICY ADVICE OR POLICY MAKING IN
THE ELECTRIC POKWER INDUSTRY [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 four (4) members of the commission, at least one (1) shall be member of the
Philippines Bar with at least ten (10) years of experience in the active practice of law, ONE
(1) REPRESENTATIVE FROM THE ELECTRIC CONSUMER GROUPS, and one (1) shall
be certified public accountant with at least ten (10) years of experience in active practice.

“Xxx”

SECTION 11. Section 43 of EPIRA is further amended to read as follows:
“SEC. 43. Function of the EPIRA — 200

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

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


“()) performance standards for TRANSCO O & M Concessionaire, and suppliers:
provided, that in the establishment of the performance standards, the nature and the
function of the entities shall be considered; and

“(ll) financial capability standards for the generating companies, the TRANSCO,
distribution utilities and suppliers: provide, further, that such standards are set to
ensure that the electric power industry participant meet the minimum financial AND
TECHNICAL standards to protect the public interest. PROVIDED,
FUTHERMORE, THAT MONITORING, SUPERVISION AND ENFORCEMENT OF
FINANCIAL AND TECHNICAL STANDARDS OF ‘THE ELECTRIC
COOPERATIVES WILL BE IMPLEMENTED BY THE NATIONAL
ELECTRIFICATION ADMINISTRATION, INCLUDING EXISTING GUIDELINES
PROMULGATED BY THE ENERGY REGULATORY COMMISSION, PRIOR TO
THIS AMENDMENT. 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.

(d) Xxx
(€) Xxx

SECTION 12. Section 45 of the EPIRA shall be amended to read as follow:

“SEC. 45. Cross Ownership, market power abuse and anti- competitive Behavior-xxx

“No generation company or distribution utility, or its respective subsidiary or affiliate
or stockholder or official of a generation company or distribution utility, AND ANY OF THEIR
RELATIVES WITHIN THE SIXTH CIVIL DEGREE OF CONSANGUINITY OR AFFINITY, or
other entity engaged in generating and supplying electricity specified by ERC [ within the
fourth civil degree of consanguinity or affinity), EXCEPT WITH THE OFFICIALS OF A NON-
STOCK AND NON- PROFIT ELECTRIC COOPERATIVES, shall be allowed to hold any
interest, direct or indirect, in TRANSCO or its concessionaire. Likewise, the TRANSCO, or
its concessionaire or any of its stockholder or officials or any of their relatives within the
[fourth] SIXTH civil degree of consanguinity or affinity, shall not hold any interest, whether
direct or indirect, in any generation company or distribution utility. Except for government-
appointed representatives, no person who is an officer or director of TRANSCO or its
concessionaire shall be an officer or director of any generation company, distribution utility or
supplier.

“An’ affiliate” means any person which alone or together with any other person which, alone
or together with any other person, directly or indirectly, through one or more intermediaries,
controls, controlled by, or is under common control with another person. As used herein
“control” shall mean the power to direct or cause the direction of management policies of a
person by contract, agency or otherwise.

“To promote true market competition and prevent harmful monopoly and market power
abuse, the ERC shall enforce the following safeguards:


“(a) no company or related group can own, operate or control more than fifteen
percent (15%) [thirty percent (30%)] of the installed generating capacity] AS IN LUZON,
VISAYAS AND MINDANAO GRID, THE SAME LEVEL OF OWNERSHIP SHALL BE
MAINTAINED ON A PER ISLAND GRID BASIS EVEN AFTER THE INTERCONNECTION
OF THE THREE MAIN GRIDS, “Related group” include a person's business interest,
including its subsidiaries, affiliates, director or officers any of their relatives by consanguinity
or affinity, legitimate or common law, within the [fourth] SIXTH civil degreef,].

THE SECURITIES AND EXCHANGE COMMISSION { SEC) IS HEREBY TASKED TO
CONSIDER IN THEIR TEMPLATE OF APPLICATION FOR REGISTRATION OF ALL
POWER INDUSTRY PLAYERS INFORMATION RELATIVE TO ABOVE AND WILL BE
HELD RESPONSIBLE IN CASE OF VOLATION OF THE PROVISION FOR ANY POWER
INDUSTRY PLAYER THAT CAN REGISTER EVEN IF NOT QUALIFIED PURSUANT TO.
THE ABOVE PROHIBITION.

*(b) [Distribution utilities may enter into bilateral power supply contracts subject to review by
the ERC: provided, that such review shall only be required for distribution utilities whose
markets have reached household demands level. For the purpose of preventing market
power abuse between associated firms engage 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 effectively of this Act. An
associated firm with respect to another entity refers to any person which, alone or together
with any other persons, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such entity; and] FOR THE PURPOSE OF
PREVENTING MARKET POWER ABUSE BETWEEN ASSOCIATED FIRMS ENGAGED IN
GENERATION AND DISTRIBUTION, DISTRIBUTION UTILITY IS ONLY ALLOWED TO
SOURCE FROM BILATERAL POWER SUPPLY CONTRACT OF ITS TOTAL DEMAND
FROM ITS ASSOCIATED FIRMS ENGAGED IN GENERATION AS FOLLOWS:

DU'S TOTAL DEMAND ALLOWED BILATERAL CONTRACT

50 MW AND BELOW 60%

51-100 MW. 50%

101-250 MW 40% _|
251- 500 MW 30%

501 AND ABOVE 25%

“(©) [ for the first five (5) years from the establishment of the wholesale electricity spot
market, no distribution utility shall source more than ninety percent (90%) of its total demand
from bilateral power supply contracts] UPON OPERATION OF THE VARIOUS
WHOLESALE ELECTRICITY SPOT MARKET, NO DISTRIBUTION UTILITY SHALL
SOURCE MORE THAN 90% OF ITS TOTAL DEMAND FROM A BILATERAL CONTRACT
IF THE SAME IS MORE THAN 15 MW AND THAT THERE IS NO AVAILABLE
RENEWABLE ENERGY SOURCES THAN CAN BE DEVELOPED IN ITS FRANCHISE
AREA. TO THE CONTRARY, A DISTRIBUTION UTILITY WITH A TOTAL DEMAND OF 15
MW BELOW MAY OPT TO SECURE ITS POWER REQUIREMENT THROUGH
BILATERAL CONTRACT OR DEVELOP ITS OWN GENERATING PLANT, ESPECIALLY IF
RENEWABLE ENERGY IS EMEBEDDED IN ITS FRANCHISE AREA.

SECTION13. Section 47 of the EPIRA is hereby amended to read as follows:



“SEC. 47. NPC privatization, [Except for the assets of SPUG, the generating assets,
real estate, and other disposable assets as well as generation contracts on NPC shall be
privatized in accordance with this Act. Within six (6) months from the affectivity of this Act,
the PSALM corp. shall submit a plan for the endorsement by the Joint Congressional Power
Commission and the approval of the President of the Philippines, on the total privatization of
the generation assets, real estate, other disposable assets as well as existing generation
contracts of NPC and thereafter, implement the same in accordance with the following
guidelines, except as provided for in paragraph (f) herein:] EXCEPT FOR THE AGUS AND
PULANGUI HYDRO ELECTRIC PLANTS COMPLEXES, THE GENERATION ASSETS,
REAL ESTATE, AND OTHER DISPOSABLE ASSETS AS WELL AS IPP CONTRACTS
OF NPC SHALL BE PRIVATIZED IN ACCORDANCE WITH THIS ACT AND THE
FOLLOWING GUIDELINES, EXCEPT AS PROVIDED FOR IN PARAGRAPH (F) HEREIN:

(2) xxx
(b) 20x
(c) 0x
(d) xxx
(€) 0x

(f) The Agus and the Pulagui complexes in Mindanao shall be excluded from among
the generation companies that will be [initially] privatized. Their ownership shall be
transferred to the PSALM corp. and both shall continue to be operated by the NPC.
Said complexes [may be privatized not earlier than ten (10) years from effectivity of
this Act, and except for Agus III, shall not be subject to build- operate- transfer (B-O-
T), Build- Rehabilitate- Operate-Transfer (B-R-O-t) and other variations thereof
pursuant to republic Act No. 6957, as amended by republic Act. No. 7718. The
Privatization of Agus and Pulangui complexes shall be left to the discretion of PSALM
corp. in consultation with congress] SHALL BE RETAINED TO GENERATE POWER
WHICH WILL SERVE AS BUFFER SUPPLY TO AVERT POWER CRISES. THE
GOVERNMENT THROUGH THE NPC SHALL ENSURE ITS IMMEDIATE
REHABILITATION TO MAXIMIZE ITS CAPACITY OUTPUT THROUGH LOANS
WHICH SHALL BE RECOVERED IN A GENERATION RATE TO BE FILED WIYH
THE ERC WHOSE REVENUE SHALL BE USED FOR THE REPAYMENT OF ITS
REHABILITATION AND OPERATION EXPENSES. PROVIDED, THAT ELECTRIC
COOPERATIVES SHALL BE PRIORITIZED IN CONTRACTING THESE
COMPLEXES’ CAPACITY TO SERVE THE NEED OF THE RESIDENTIAL
CONSUMERS.

“FOR THE PURPOSED OF ENSURING THE VIABILITY OF OPERATION OF THE
AGUS AND PULANGUI HYDRO ELECTRIC PLANTS COMPLEXES. A MINDANAO
POWER CORPORATION SHALL BE CREATED THAT WILL MANAGE, OPERATE
AND MAINTAIN THE PLANTS. FOR THIS PURPOSE, THE ASSETS AND
LIABILITIES OR OBLIGATION AND DEBTS OF NAPOCOR /PSALM RELATED TO
THE OPERATION OF THE MINDANAO GENERATION (MINGEN) SHALL BE
SEPARATED FROM THE BOOK OF ACCOUNTS OF NAPOCOR AND
TRANSFERRED TO THE NEW ENTITY, THE MINDANAO POWER
CORPORATION.

“THE MINDANAO POWER CORPORATION SHALL BE A GOVERNMENT OWNED
AND CONTROLLED CORPORATION BUT SHALL BE MANAGED AND
OPERATED IN PRIVATELY OWNED TYPE OF MANAGEMENT, WHOSE
COMPOSITION IN ITS BOARD OF DIRECTORS SHALL INCLUDE ONLY THE


SECRETARY OF THE MINDANAO DEVELOPMENT AUTHORITY AS CHAIRMAN.
OTHER BOARD MEMBERS COMPOSED OF A MAXIMUM OF FIVE EXCLUDING
THE CHAIRMAN SHALL BE A REPRESENTATIVE OF ELECTRUC
COOPERATIVES IN MINDANAO, PRIVATELY OWNED DU’S IN MINDANAO,
CONSUMER ORGANIZATION, BUSINESS SECTOR REPRESENTATIVE, AND
FROM LAKE LANAO WATERSHED PROTECTION AND DEVELOPMENT
COUNCIL.

(g)Xxx
(h)Xxx

() Not later than three (3) years from the effectivity of this AMENDATORY Act,
and in no case later than the initial implementation of open access, at least
seventy percent (70%) of the total capacity of generating assets of NPC and
of the total capacity of the power plants under contract with NPC located in
Luzon and Visayas, WITH THE EXCEPTION OF THOSE WHICH ARE
INCLUDED FROM PRIVATIZATION AND SALE BY THIS AMENTATORY
ACT, shall have been privatized: provided, that any unsold capacity [shall be
privatized not later than eight (8) years from the effectivity of this Act] AT THE
TIME OF THE APPROVAL OF THIS AMENDMENT, WITH THE
EXCEPTION OF THOSE TO BE FORMED UNDER THE MINDANAO
POWER CORPORATION, SHALL BE RETAINED AS ASSETS NPC TO
SERVE AS ANCILLARY SERVICE PROVIDER OF THE LUZON AND
VISAYAS GRID; and

“@) NPC SHALL [may] generate and sell electricity [only] from the undisposed

generating assets [and IPP contracts of PSALM corp. and shall not incur any new

obligations to purchased power through bilateral contracts with generation
companies or other suppliers] EXCLUSIVE OF THE AGUS AND PULANGUI

HYDRO COMPLEXES IN MINDANAO WHICH SHALL BE OPERATED BY A

SEPARATE ENTITY AND IPP CONTRACTS, INCLUDING NEW POWER SUPPLY

PORFOLIO WHICH SHOULD NOT BE LESS THAN THE REQUIRED ANCILLARY

CAPACITY OF EACH GRID IN LUZON, VISAYAS AND MINDANAO AS

DETERMINED BY THE GRID MANAGEMENT COMMITTEE AND TO BE

UPRATED ON THE BASE LOAD REQUIREMENT OF THE GRID PLUS TEN

(10%).

“THE CAPACITY FEE OF ALL NPC POWER PLANTS AND POWER SUPPLY
CONTRACTS THAT WILL SERVE AS ANCILLARY SHALL BE RECOVERED IN
FORM OF ANCILLARY SERVICE CHARGE TO BE COLLECTED FROM ALL
ELECTRICITY END USER BY THE GRID OPERATOR AND REMITTED
DIRECTLY TO THE NPC.

“ANCILLARY CHARGES SHALL INCLUDE FIXED COST AND A CERTAIN

MARGIN WHICH SHOULD BE APPLIED BY NPC TO THE ERC FOR COST
DETERMINATION AND APPROVAL.

“IN CASE OF EMERGENCY AND IN ORDER TO STABILIZE THE PRICE IN THE

WESM, NPC POWER PLANTS SHALL OPERATE AS BASE LOAD PLANTS WITH
GENERATION COST TO BE DETERMINED BY ERC BASED ON THE TECHNOLOGY
USED.”

SECTION 14. Section 48 of EPIRA is hereby amended as follows:

10


“SEC. 40 [National Power Board of Directors] NATIONAL POWER CORPORATION
~ upon the passage of this Act, section 6 of R.A. 6395, as amended, and section 13 of R.A.
7638, as amended, referring to the composition of the national power of board of directors,
are hereby repealed and a new board shall be immediately organized. The new board shall
be composed of the secretary finance as chairman, with the following as member: the
secretary of energy, the secretary of budget and management, the secretary of agriculture,
the director general of the national economic and development of authority, the secretary of
Environment and natural resources, the secretary of interior and local government, the
secretary of the department of trade and industry, and the president of the national power
corporation.

THE NATIONAL POWER CORPORATION SHALL REMAIN AS A GOVERNMENT
OWNED AND CONTROLLED CORPORATION (GOCC), HOWEVER, ITS OPERATIONAL
GOVERNANCE AND CONDUCT OF BUSINESS SHOULD BE BASICALLY SIMILAR TO
THAT OF A PRIVATE UTILITY THAT ENSURES BUSINESS VIABILITY AND
THEREFORE THE QUALIFICATION AND HIRING OF PERSONNEL AS WELL AS ITS
ORGANIZATION STRUCTURE SHOULD BE ALIGNED TO THAT OF A PRIVATELY
OWNED COMPANY OR CORPORATION.

“FOR THIS PURPOSE, THE DEPARTMENT OF TRADE AND INDUSTRY (DTI) SHALL
ESTABLISH THE BUSINESS STRUCTURE OF NPC, INCLUDING PLANTILLA POSITION
AND SALARY SCALE AS WELL AS JOB DESCRIPTIONS, WITHIN SIX (6) MONTHS
FROM THE EFFECTIVITY OF THIS AMENDATORY ACT.

“THE COMPOSITION OF THE CORPORATE BOARD OF NPC SHALL BE PART OF THE
PLANTILLA THAT SHALL BE DETERMINED BY THE DTI, EXCLUDING POLITICAL
APPOINTEES.”

SECTION 15. Section 62 of the EPIRA of the EPIRA is hereby amended to read as follows:
“SEC. 62. Joint congressional Power Commission- xxx

“The commission shall, in aid of legislation, perform the following functions, among
others:

(b) XxX
(©) XXX
(d) Xxx
(e) Xxx
(XXX

“(g) Determine inherent weaknesses in the law THAT BREEDS REGULATORY
FLAWS and recommended necessary remedial legislation or executive measures; [and]

“(h) [Perform such other duties and functions as may be necessary to attain its
objectives.] ENHANCE THE QUALITY OF THE SEARCH, SCREENING, AND SECTION
PROCESS FOR THE FOLLOWING POSITIONS: SECRETARY OF THE DEPARTMENT
OF ENERGY, CHAIRMAN OF THE ERC, PRESIDENT OF NPC, PRESIDENT OF PEMC,
PRESIDENT AND CEO OF TRANSCO, PRESIDENT AND CEO OF PSALM, AND OTHER
HEADS OF AGENCIES COVERED BY EPIRA];

1


“() SUBMIT A LIST OF FIVE (5) NOMINIES FOR EACH POSITION ENUMERATED
IN SECTION 62 (H) TO THE PRESIDENT OF THE PHILIPPINES FOR FINAL
APPOINTMENT AT LEAST ONE (1) YEAR BEFORE THE INCUMBENT’S TERM
EXPIRES; AND

“() PERFORM SUCH OTHER DUTIES AND FUNCTIONS AS MAY BE
NECESSARY TO ATTAIN ITS OBJECTIVES.

SQ
SECTION 16. Section 66 of the EPIRA is hereby amended to read as follows:

“SEC. 66. Benefits to Host Communities. - The obligations of generation companies
and energy resource developers to communities hosting energy generating facilities and/or
energy resource developers as defined under Chapter 1I, Sections 289 of the Local
Government Code and Section 5(i) of Republic Act No. 7683 and their implementing rules
and regulations and applicable orders and circulars [consistent with this Act shall continue:
Provided, That the obligations mandated under Chapter Il, Section 291 of Republic Act No.
7160, shall apply to privately-owned corporations entities utilizing the national wealth of the
locality] INCONSISTENT WITH THIS ACT ARE HEREBY AMENDED TO SIMPLIFY THE
DISTRIBUTION OF THE SHARES IN NATIONAL WEALTH TAX.

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

preety
SECTION 17. Section 70 of EPIRA is hereby amended to read as follows:

“SEC. 70. Missionary Electrification. - [Notwithstanding the divestment and/or
privatization of NPC assets, IPP contracts and spun-off corporations, NPC shall remain as
National Government-owned and -controlled corporation to perform the missionary
electrification function through the Small Power Utilities Group (SPUG) and shall be
responsible for providing power generation and its associated power delivery systems in
areas that are not connected to the transmission system] THE MISSIONARY
ELECTRIFICATION FUNCTIONS OF NPC-SPUG SHALL BE PERFORMED BY THE
NATIONAL ELECTRIFICATION ADMINISTRATION AS AN ADDITIONAL MANDATE IN
ACCORDANCE UNDER SECTION 58 OF THIS ACT WHICH IS TO ASSIST THE
ELECTRIC COOPERATIVES IN COMPLYING WITH THIS ACT. THE NEA SHALL BE
RESPONSIBLE IN PROVIDING POWER GENERATION AND ITS ASSOCIATED POWER
DELIVERY SYSTEMS IN AREAS THAT ARE NOT CONNECTED TO THE
TRANSMISSION SYSTEM. The missionary electrification function shall be funded from the
revenues from sales in missionary areas and from the universal charge to be collected from
all electricity end-users as determined by the ERC AND TO BE REMITTED AND
ADMINISTERED BY THE NEA. THE NEA MAY OPT TO TRANSFER OR RELINQUISH
THE OPERATION OF THE OFF-GRID POWER PLANTS TO THE ELECTRIC
COOPERATIVE AFTER A SOUND EVALUATION OF THE SAID EC, IF EC IS
TECHNICALLY AND FINANCIALLY CAPABLE OF MAINTANING THE PLANT AND IF
SO DOING THE ASSETS OF NPC-SPUG BE TRANSFERRED TO NEA.”

SECTION 18. Section 71 of EPIRA is hereby amended to read as follows:

12


“SEC. 71. Electric Power Crisis Provision.- Upon the determination by the President
of the Philippines of the imminent shortage of the supply of electricity, [Congress may
authorize, through a joint resolution, the establishment of additional generating capacity
under such terms and conditions as it may approve] THE PRESIDENT SHALL AUTHORIZE
THE ESTABLISHMENT OF THE ADDITIONAL GENERATING CAPACITY.”

CHAPTER Ill - GENERAL PROVISIONS

SECTION19. Implementing Rules and Regulations. The Secretary of the
Department of Energy, in coordination with the other agencies involved in power, shall
create a technical writing group that will be tasked to draft the Implementing Rules and
Regulations

SECTION 20. Separability Clause. If any part or section of this Act is declared
unconstitutional, such declaration shall not affect in any manner other parts or sections of
this Act.

SECTION 21. Repealing Clause. - All laws, decrees, proclamations, issuances, or
ordinances that are contrary to or inconsistent with the provisions of this Act are hereby
amended, repealed or modified accordingly.

SECTION 22. Effect on Other Acts. All acts or parts of Acts inconsistent herewith
are repealed or modified accordingly.

SECTION 23. Effectivity Clause. This Act shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of the general circulation.

Approved,

13