OUST. OF REPRESENTATIVES:

Republic of the Philippines RECEIVED
HOUSE OF REPRESENTATIVES 18 AIL?
Quezon City pate:_18 JUL 2016
TIME: SUT
By; A
SEVENTEENTH CONGRESS
ni REGISTRATION UNIT
FirstRegular Session BILLS AND INDEX SERVICE
1650

HOUSE BILL NO.

Introduced by Honorable Alfredo “Albee” B. Benitez

EXPLANATORY NOTE

The passage of the Electric Power Industry Reform Act in 2001 generated
hopes not only for a more accessible power supply over the all the regions of the
country but also for more affordable power rates. The law supposedly promotes
“transparent and reasonable prices of electricity in a regime of free and fair

competition”.

Unfortunately, thirteen years after the approval of EPIRA, its intention of
bringing down the rates through the cultivation of market competition remains
elusive, Electricity rates in the Philippines are among the highest in the region
(NSCB, 2013). The Trade Union Congress of the Philippines report that 11 to 15
percent of Filipino workers’ take home pay goes to the cost of electricity alone.

While the EPIRA included safeguards against the monopolistic control of the
local power industry by introducing the Wholesale Electricity Spot Market and
prohibited cross-ownership, some private corporations have still found ways to
circumvent the law through the loopholes in the approved policy. For instance, even
with the introduction of WESM, distribution utilities are still allowed to enter into
bilateral supply contracts. The 2013 USAID study reported that majority of the
energy sales in WESM are not spot sales. Some 90 percent of the power purchases
are instead bilateral agreements. Possible collusion seems to occur when currently


some companies that have interests in both a distribution and generation utility
become participants in bilateral agreement, and thus negate the intention of the
EPIRA.

This bill seeks to amend the provision in EPIRA allowing DUs to enter into
bilateral power supply agreements and which the role of ERC is only to evaluate
Power Supply Agreements (PSAs). The bill mandates ERC to conduct the transparent
and competitive selection process in power supply contracts between Distribution
Utilities and generation companies. Such amendment to EPIRA will provide for a
closer scrutiny of power contracts and will make DOE accountable for questionable
transactions between the distribution and generation sectors.

In view of the foregoing, the immediate enactment of this measure is

earnestly sought.

ALFREDO “ALBEE” B. BENITEZ



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

1650
HOUSE BILL NO.

Introduced by Honorable Alfredo “Albee” B, Benitez

AN ACT REQUIRING THE ENERGY REGULATORY COMMISSION TO
CONDUCT A TRANSPARENT BIDDING PROCESS FOR POWER SUPPLY,
AMENDING FOR THE PURPOSE SECTION 45 (b) OF REPUBLIC ACT NO.

9136, OTHERWISE KNOWN AS THE “ELECTRIC POWER INDUSTRY

REFORM ACT OF 2001”

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

SECTION 1. Section 45 (b) of Republic Act No. 9136 is hereby amended to
read as follows:

“Section 45. Cross Ownership, Market Power Abuse and Anti-Competitive
Behavior, — x x x

XXX
XXX
(a)xxx

(b) [Distribution utilities may enter into bilateral power supply contracts
subject to review by ERC.] THE ENERGY REGULATORY COMMISSION
(ERC) SHALL UNDERTAKE A TRANSPARENT AND COMPETITIVE
BIDDING PROCESS FOR THE SUPPLY OF ELECTRICITY TO BE
PARTICIPATED BY DISTRIBUTION UTILITIES (DUs). THE DU
AWARDED WITH THE WINNING BID SHALL ENTER INTO A



BILATERAL POWER SUPPLY AGREEMENT WITH THE GENERATION
COMPANY WHERE THE POWER WAS SOURCED. THE POWER SUPPLY
AGREEMENT SHALL BE SUBMITTED TO ERC, WITHIN THIRTY DAYS
AFTER THE BIDDING, FOR FINAL APPROVAL.

THE ERC SHALL CREATE AN OFFICE WITHIN THE COMMISSION
WHICH SHALL BE TASKED TO CONDUCT THE BIDDING FOR POWER
SUPPLY AGREEMENTS AND SHALL REVIEW FINAL AGREEMENT
DOCUMENTS OF THE DU AND GENERATION COMPANY, AS WELL AS:
MONITOR THE EXECUTION AND IMPLEMENTATION OF CONTRACTS.

XXX”

SEC. 2, Repealing Clause. — All laws, Presidential Decrees, Issuances,
Executive Orders, Letters of Instruction, rules and regulations inconsistent
with the provisions of this Act are hereby repealed or modified accordingly.

SEC. 3. Effectivity Clause. - This Act shall take effect fifteen (15) days
from the date of its publication in at least two (2) newspapers of general
circulation.

Approved,