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

Fifteenth Congress
‘Third Regular Session

COMMITTEE REPORTNo. 2191

Submitted by the Committee,on Energy on 24 MAY 2012
Re: House Bill No.___ 02 44 ae
Recommending its approval in substitution of House Bills No. 1018, 1019,
5244, 5306, 5380 and 5578

Sponsors: Representatives Henedina Razon-Abad, Erico B. Aumentado,
Rodel M. Batocabe, Michael Angelo C. Rivera and Cresente M. Paez

Mr. Speaker: <
The Committee on Energy to which were referred:

House Bill No. 1018, introduced by Reps. Cresente C. Paez and Jose R.
Ping-ay, entitled:

“AN ACT REMOVING THE LENDING AUTHORITY OF THE
NATIONAL ELECTRIFICATION ADMINISTRATION AS
PROVIDED UNDER PRESIDENTIAL DECREE NO. 269, AS
AMENDED;

House Bill No. 1019, introduced by Reps. Cresente C. Paez and Jose R.
Ping-ay, entitle:

“AN ACT TRANSFERRING TO THE ENERGY REGULATORY
COMMISSION THE SUPERVISORY POWERS OVER
ELECTRIC COOPERATIVES REGISTERED UNDER HE
COOPERATIVES DEVELOPMENT AUTHORITY,”

House Bill No. 5244, introduced by Reps. Erico B. Aumentado, Teddy
Brawner Baguilat, Jr., Tomas V. Apacible, Mark LLandro L. Mendoza,
Salvador P. Cabaluna Ill, Michael Angelo C. Rivera, Rodel M. Batocabe,
Christopher S. Co, Alfredo A. Garbin, Jr., Homer A. Mercado, Sharon S.
Garin, Eulogio “Amang” R. Magsaysay, Arnel U. ‘Ty and Raymond
Democrito C. Mendoza, entitled:


“AN ACT PROVIDING FOR MEASURES TO STRENGTHEN
THE NATIONAL ELECTRIFICATION ADMINISTRATION,
AMENDING PD 269, PD 1645 AND OTHER RELATED LAWS,
AND FOR OTHER PURPOSES,”

House Bill No. 5306, introduced by Rep. Rodel M. Batocabe, entitled:

“AN ACT STREN NING. THE NATIONAL
ELECTRIFICATION ADMINISTRATION (NEA), AMENDING
PRESIDENTIAL DECREE NO. 269 FOR THE PURPOSE;”,

House Bill No. 5380, introduced by Reps. Michael Angelo C. Rivera and
Rodel M. Batocabe, entitled:

“AN ACT REVITALIZING THE NATIONAL ELECTRIFICATION
ADMINISTRATION (NEA), AMENDING PRESIDENTIAL
DECREE NO. 269 FOR THE PURPOSE;” and

House Bill No. 5578, introduced by Reps. Henedina Razon-Abad, Arnulfo
P. Fuentebella and Kimi S. Cojuangco, entitled:

“AN ACT STRENGTHENING THE NATIONAL
ELECTRIFICATION ADMINISTRATION, AMENDING FOR THE
PURPOSE PRESIDENTIAL DECREE NO. 269, OTHERWISE
KNOWN AS THE “NATIONAL ELECTRIFICATION DECREE.”

has See the same and recommends that the attached House Bill No.
E14, entitled:

“AN ACT STRENGTHENING THE NATIONAL.
ELECTRIFICATION ADMINISTRATION FURTHER AMENDING
FOR THE PURPOSE PRESIDENTIAL DECREE NO. 269, AS
AMENDED, OTHERWISE KNOWN AS THE “NATIONAL.
ELECTIFICATION ADMINISTRATION DECREE”

be approved in substitution of House Bills No. 1018, 1019, 5244, 5306,
5380 and 5578 with Representatives Henedina Razon-Abad, Arnulfo P.
Fuentebella, Cresente M. Paez, Jose R. Ping-Ay, Erico B. Aumentado, Teddy
Brawner Baguilat, Jr., Rodel M. Batocabe, Michael Angelo C. Rivera, Kimi S.
Cojuangeo, Tomas V. Apacible, Mark Leandro L. Mendoza, Salvador P.
Cabaluna Ill, Christopher S. Co, Alfredo A. Garbin, Jr., Homer A. Mercado,
Sharon S. Garin, Eulogio “Amang” R. Magsaysay, Arnel U. Ty, Raymond
Democrito C. Mendoza, Rufus B. Rodriguez and Eduardo R. Gullas as
authors thereof.


Respectfully submitted:

HENEDIN, ON-ABAD
Chairperson,
Committee on Energy

The HONORABLE SPEAKER
HOUSE OF REPRESENTATIVES,
QUEZON CITY


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NTH CONGRESS
cond Regular Session

House BittNo, 9¢ 14
(As prepared by the Committee on Energy in substitution of
House Bills No. 1018, 1019, 5244, 5306, 5380 and 5578)

q JOSE R. PING-AY,
ERICO B. AUMENTADO, TEDDY BRAWNER BAGUILAT, JR., RODEL M.
BATOCABE, MICHAEL ANGELO C. RIVERA, KIMI S. COJUANGCO, TOMAS
V. APACIBLE, MARK LEANDRO L. MENDOZA, SALVADOR P. CABALUNA III,
CHRISTOPHER S. CO, ALFREDO A. GARBIN, JR., HOMER A. MERCADO,
SHARON S. GARIN, EULOGIO “AMANG” R. MAGSAYSAY, ARNEL U. TY,
RAYMOND DEMOCRITO C. MENDOZA, RUFUS B. RODRIGUEZ AND
EDUARDO R. GULLAS

AN ACT
STRENGTHENING THE NATIONAL ELECTRIFICATION
ADMINISTRATION FURTHER AMENDING FOR THE PURPOSE
PRESIDENTIAL DECREE NO. 269, AS AMENDED, OTHERWISE KNOWN
AS THE “NATIONAL ELECTIFICATION ADMINISTRATION DECREE”

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
CHAPTER I - POLICY AND DEFINITIONS

SECTION 1. This Act shall be known as the “National Electrification
Administration Reform Act of 2012.”

SEC. 2. Section 2 of Presidential Decree No. 269, as amended, is
hereby further amended, to read as follows:

“SEC. 2. Declaration of National Policy. - {The total electrification of the
Philippines on an area coverage basis being vital to the welfare of its people
and the sound development of the Nation, it is hereby declared to be the
policy of the state to pursue and foster, in an orderly and vigorous manner,
the attainment of this objective. For this purpose, the State shall promote,

encourage and assist all public service entities engaged in supplying electric


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service, particularly electric cooperatives, which are willing to pursue
diligently this objective.

Because of their non-profit nature, cooperative character and the
heavy financial burdens that they must sustain to become effectively
established and operationally viable, electric cooperatives, particularly, shall
be given every tenable support and assistance by the National Government,
its instrumentalities and agencies to the fullest extent of which they are
capable; and, being by their nature substantially self-regulating and
Congress, having, by the enactment of this Decree, substantially covered all
phases of their organization and operation requiring or justifying regulation,
and in order to further encourage and promote their development, they
should be subject to minimal regulation by other administrative agencies.

Area coverage electrification cannot be

hieved unless service to the
more thinly settled areas and therefore more costly to electrify is combined
with service to the most densely settled areas and therefore less costly to
electrify. Every public service entity should hereafter cooperate in a national

program of electrification on an area coverage basis, or else surrender its

franchise in favor of those public service entities which will. It is hereby
found that the total electrification of the Nation requires that the laws and
administrative practices relating to franchised electric service areas be
revised and made more effective, as herein provided. It is therefore hereby

declared to be the policy of the State th:

at franchises for electric

rvice areas
shall hereafter be so issued, conditioned, altered

repealed, and shall be
subject to such continuing regulatory surveillance, that the same shall
conduce to the most expeditious electrification of the entire Nation on an.
area coverage basis.

IT IS HEREBY DECLARED THE POLICY OF THE STATE TO:

(A) PROMOTE THE SUSTAINABLE DEVELOPMENT IN THE RURAL
AREAS THROUGH RURAL ELECTRIFICATION;

(B) EMPOWER, AND STRENGTHEN THE NATIONAL
ELECTRIFICATION ADMINISTRATION (NEA) TO PURSUE THE RURAL
ELECTRIFICATION PROGRAM THROUGH THE ELECTRIC COOPERATIVES
AS ITS IMPLEMENTING ARM; AND

x


(C) EMPOWER AND ENABLE ELECTRIC COOPERATIVES TO COPE,
WITH THE CHANGES BROUGHT ABOUT BY THE RESTRUCTURING OF
THE ELECTRIC POWER INDUSTRY PURSUANT TO REPUBLIC ACT NO.
9136, OTHERWISE KNOWN AS “THE ELECTRIC POWER INDUSTRY
REFORM ACT OF 2001.”

SEC. 3. A new section is hereby inserted to be designated as Section
2-A, to read as follows:

2-A. SCOPE. - THIS ACT SHALL ESTABLISH A FRAMEWORK
FOR STRUCTURAL REFORMS IN THE NEA AND THE ELECTRIC
COOPERATIVES.”

SEC. 4. Five new paragraphs, te be designated as Paragraphs (s), (t),
(u), (v) and (w), are hereby inserted under Section 3 of Presidential Decree
No. 269, as amended, to read as follows:

“SEC. 3. Definitions. As used in this Decree, the following words or
terms shall have the following meanings, unless a different meaning clearly
appears from the context: .

XXX XXX XXX

(Ss) CDA 2 TO THE COOPERATIVE DEVELOPMENT
AUTHORITY CRE D UNDER REPUBLIC ACT NO, 6939;

(tT) DOE SHALL REFER TO TI DEPARTMENT OF ENERGY
CREATED UNDER REPUBLIC ACT NO. 7638, AS AMEND

(VU) ELECTRIC COOPERATIVE SHALL RI eR TO AN ELECTRIC
DISTRIBUTION UTILITY ORGANIZED AND REGISTERED PURSUANT TO
PRESIDENTIAL DECREE NO. 269, AS AMENDED, REPUBLIC ACT NO.
9520, AND OTHER RELATED LAWS;

(vy) EPIRA SHALL REFER TO REPUBLIC ACT NO. 9136 OR THE
“ELECTRIC POWER INDUSTRY REFORM ACT OF 2001”; AND

(W) ERC SHALL REFER TO THE ENERGY REGULATORY
COMMISSION CREATED UNDER REPUBLIC ACT NO. 9136.”

CHAPTER II
‘THE NATIONAL ELECTRIFICATION ADMINISTRATION
SEC. 5. Section 4 of Presidential Decree No. 269, as amended, is

IALL RI

hereby further amended to read as follow

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32

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[See. 4, NEA Authorities, Powers and Directives. The NEA is hereby
authorized, empowered and directed to promote, encourage and assist

public service entities, particularly cooperatives, to the end of achieving the
objective of making se:

vice available throughout the nation on an area

coverage basis as rapidly as possible; and for such purpose it is hereby,
without limiting the generality of the foregoing and in addition to other
authorizations, powers and directives established by this Decree, specifically
authorized, empowered and directed:

{a) To have @ continuous succession under its corporate name until
otherwise provided by law;

(b) To prescribe and thereafter to amend and repeal its by-laws not
inconsistent with this Decree;

(c) To adopt and use a seal and alter it at its pleasure;

(@) To sue and to be sued in any court: Provided, That NEA shall,
unless it consents otherwise, be immune to suits for acts ex delicti;

(e) To make contract of every name and nature and to execute all
instruments ne:

ary or convenient for the carrying on of its business;
() To make loans to public service entities, with preference to
cooperatives, for the construction or acqu

ition, operation and maintenance
of generation, transmission and distribution facilities and all related
prope

ics, equipment, machinery, fixtures, and materials for the purpose of
supplying area coverage service, and thereafter to make loans for the
restoration, improvement or enlargement of such facilities: Provided, That
the public service entity supplying for a loan, if neither a cooperative nor a
local government, must be in operation at the time of application;

(g) To promote, encourage and assist public service entities and
government agencies and corporations having related functions and
purposes, with preference to cooperatives, in planning, developing,
coordinating, establishing, operating, maintaining, repairing and renovating

facilities and systems to supply area coverage servic:

, and for such purpose
to furnish, to the extent possible and without change therefor, technical and
professional assistance and guidance, information, data and the results of

any investigation, study, or receipt conducted or made by the NEA;

4


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(h) To approve or disapprove any loan from other lenders to public
service entities which at the time are borrowers from NEA under
subparagraphs (f) or (i) of this section, end thereafter, pursuant to Section
10 (b) to disapprove advances of loans from other lenders;

(i) To make loans for the purpose of financing the wiring of premises of
persons served or to be served as a result of loans made under
subparagraph (f) of this Section, and for the acquisition and installation by
such persons of electrically-powered appliances, equipment, fixtures and
al
and industrial uses, such loans to be made directly (1) to public service

machinery of all kinds for residential, recreational, commercial, agricultu

entities which have received loans under sub-paragraph (f) of this section,
which entities shall in turn relend such funds to persons served or to be
served by them, or (2) to any persons served or to be served by public service
entities which have received loans under sub-paragraph (f) of this section:
Provided, That at no time shall the total loans made under this sub-
paragraph (i) to a public service entity and/or to persons served or to be
served by such entity exceed twenty-five (25%) per centum of the

outstanding loans to such en

y made under sub-paragraph (f) of this
section;

(i) To so cooperate, coordinate and exchange such information, studies
and reports with, and to seek such cooperation and coordination from, other
departments, agencies and instrumentalities of the National Government,
including the NPC, as will most effectively conduce to the achievement of the
purposes of this Decree;

(k) To borrow funds from any source, private or government, foreign or

domestic, and, not incons

stently with section 8, to issue bonds or other

evidences of indebtedness therefor and to secure the lenders thereof by
pledging, sharing or subordinating one or more of the NEA’s own loan
securities;

() To receive from Cooperatives all articles of incorporation,
amendments, consolidation, merger, conversion and dissolution, and all
certificates of changes in the location of principal offices and of elections to

dissolve, and, upon determining that such are in conformity with this

5


Decree, to certify the same, to file them in the records of the NEA, and to
maintain a registry of such filings the provisions of Act No. 1459, as
amended, to the contrary notwithstanding;

(m) To acquire, by purchase or otherwise {including the right of
eminent domain, which is hereby granted to the NEA, to be exercised in the
manner provided by law for the institution and completion of expropriation
proceedings by the National and local governments,) real and physical
properties, together with all appurtenant rights, easements, licenses and
privileges, whether or not the same be already devoted to the public use of
generating, transmitting or distributing electric power and energy, upon
NEA’s determination that such acquisition is necessary to accomplish the

purposes of this Decree and, if such properties be already devoted to the
public use de

cribed in the foregoing, that such use will be better served
and accomplished by such acquisition: Provided, That the power herein
granted shall be exercis

dt

y the NEA solely as agent for and on behalf of
one or more public service entities which shall timely receive, own and
utilize or replace such properties for the purpose of furnishing adequate and
dependable service on an area coverage basis, which entity or entities shall
then be, or in connection with the acquisition shall become, borrowers from
the NEA under sub-paragraph (f) of this section: Provided further, That the
costs of such acquisition, including the cost of any eminent domain
proceedings, shall be borne, either directly or by reimbursement to the NEA,
whichever the NEA shall elect, by the public service entity or entities on
whose behalf the acquisition is undertaken; and otherwise to acquire,
improve, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise
dispose of property incident to, or necessary, convenient or proper to carry
out, the purposes for which NEA was created;

(n) At least annually, not later than June 30th, to report to the
President and when the same comes into existence, the Prime Minister and
the National Assembly, on the status of electrification of the Philippines,
including a comprehensive reporting of loans made, loan funds advanced,
Joans secured from other sources and the advances thereof, the names and

locations of the borrowers, the aumber of services contemplated by such

6


6

)
10
i

13
14

l6
7
18
19

20

31

loans, the number actually receiving service as a result of such loans, the
number of electrified and the remaining number of unelectrified households
throughout the Nation, the amounts of usage by consumers, loan and other
activities programmed for the ensuing year, and all such other information
and data as will accurately reveal the progress being made toward the
achievement of the purposes of this Decree; and to publish such report for
dissemination to and use by other interested departments, agencies and
instrumentalities of the National Government and by borrowers under this
Decree; and

(0) To exercise such powers and do such things as may be necessary
to carry out the business and purposes for which the NEA was established,
or which from time to time may be declared by the Board of Administrators
to be necessary, useful, incidental or auxiliary to accomplish such purposes;
and generally, to exercise all the powers of a corporation under the
Corporation Law insofar as they are not inconsistent with the provisions of
this Decree.]

“SEC. 4. POWERS, FUNCTIONS AND PRIVILEGES OF THE NATIONAL
ELECTRIFICATION ADMINISTRATION. - TO STRENGTHEN THE ELECTRIC
COOPERATIVES, HELP THEM BECOME ECONOMICALLY AND
FINANCIALLY VIABLE AND PREPARE THEM FOR THE IMPLEMENTATION
OF OPEN ACCESS AND RETAIL COMPETITION PURSUANT TO SECTION 31
OF REPUBLIC ACT NO. 9136, THE NEA SHALL:

(A) SUPERVISE THE MANAGEMENT AND OPERATIONS OF ALL
ELECTRIC COOPERATIVES;

(B) EXERCISE STEP-IN RIGHTS AS HEREIN DEFINED;

(C) PROVIDE INSTITUTIONAL, FINANCIAL .AND TECHNICAL
ASSISTANCE TO ELECTRIC COOPERATIVES;

(0) PURSUE THE TOTAL ELECTRIFICATION OF THE COUNTRY
THROUGH THE ELECTRIC COOPERATIVES, IN COORDINATION WITH THE
NATIONAL. POWER CORPORATION - SMALL POWER UTILITIES GROUP
(NPC-SPUG);

(©) DEVOTE ALL RETURNS FROM ITS CAPITAL INVESTMENT TO
ATTAIN THE OBJECTIVES OF THIS ACT;

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20

29
30
31
32
33

{fF} ENSURE THE ECONOMIC AND FINANCIAL VIABILITY AND
OPERATION OF ALL THE ELECTRIC COOPERATIVES;

(G) DEVELOP, SET AND ENFORCE INSTITUTIONAL, TECHNICAL
AND FINANCIAL COMPLIANCE STANDARDS FOR THE EFFICIENT
MANAGEMENT AND OPERATION OF ELECTRIC COOPERATIVES SUCH AS,
BUT NOT LIMITED TO, THE OBSERVANCE OF APPROPRIATE
PROCUREMENT PROCEDURE, INCLUDING TRANSPARENT AND
COMPETITIVE BIDDING. SUCH SHALL BE ENFORCED THROUGH A
MECHANISM OF INCENTIVES AND DISINCENTIVES TO COMPLYING AND
NON-COMPLYING ELECTRIC COOPERATIVES, RESPECTIVELY;

(H) FORMULATE AND IMPOSE ADMINISTRATIVE SANCTIONS AND
PENALTIES AND WHEN WARRANTED, FILE CRIMINAL CASES AGAINST
THOSE WHO ARE FOUND IN VIOLATION OF ANY OF THE PROVISIONS OF
THIS ACT AND ITS IMPLEMENTING RULES AND REGULATIONS;

(I) SERVE AS GUARANTOR TO ALL ELECTRIC COOPERATIVES IN
THEIR TRANSACTIONS SUCH AS, BUT NOT LIMITED TO, CO-SIGNING IN
POWER SUPPLY CONTRACTS;

(J) GRANT LOANS TO ELECTRIC COOPERATIVES FOR THE
CONSTRUCTION OR ACQUISITION, OPERATION AND MAINTENANCE OF
GENERATION, SUB-TRANSMISSION AND DISTRIBUTION FACILITIES AND
ALL RELATED PROPERTIES, EQUIPMENT, MACHINERY, FIXTURES, AND
MATERIALS FOR THE PURPOSE OF SUPPLYING ELECTRICITY ON AN
AREA COVERAGE BASIS, AND THEREAFTER FOR THE RESTORATION,
IMPROVEMENT OR EXPANSION OF SUCH FACILITIES AND FOR SUCH
OTHER PURPOSES AS MAY BE DEEMED NECESSARY;

(Kk) DETERMINE THE AUTHORIZED SIGNATORIES OF THE
ELECTRIC COOPERATIVES IN BANK TRANSACTIONS AND OTHER LEGAL
INSTRUMENTS IN CASES OF DISPUTES AND CONFLICTS;

(L) SUBJECT TO THE PRIOR APPROVAL OF THE MONETARY
BOARD, BORROW FUNDS FROM ANY SOURCE, PRIVATE OR
GOVERNMENT, FOREIGN OR DOMESTIC, AND SECURE THE LENDERS
THEREOF BY PLEDGING, SHARING OR SUBORDINATING ONE OR MORE,
OF ITS OWN LOAN SECURITIES;



(M) EXERCISE PRIMARY AND EXCLUSIVE JURISDICTION IN THE
ADJUDICATION OF COMPLAINTS ON ELECTRIC COOPERATIVE
OFFICERS, ELECTION DISPUTES
EFFECTIVE IMPLE!

AND ALL MATTERS RELATING TO THE
MENTATION OF THE PROVISIONS OF THIS ACT;

(N) ENLIST THE ASSISTANCE OF LAW ENFORCEMENT AGENCIES
IN THE IMPLEMENTATION OF ORDERS AND REGULATIONS ISSUED BY
IT;

(0) EXERCISE SUCH OTHER POWERS AND FUNCTIONS AS MAY
BE NECESSARY TO CARRY OUT THE BUSINESS AS MAY BE
DETERMINED BY THE BOARD OF ADMINISTRATORS AS VITAL, USEFUL,
INCIDENTAL OR AUXILIARY TO ACCOMPLISH SUCH PURPOSES; AND

(P} GENERALLY, TO EXERCISE ALL THE POWERS OF A
CORPORATION UNDER BATAS PAMBANSA BILANG 68, OTHERWI:
KNOWN AS THE “CORPORATION CODE OF THE PHILIPPIN
AS THEY ARE NOT INCONSISTENT WITH THE PROVISIO}

5S” INSOFAR
OF THIS ACT.”

SEC. 6. A new section, to be designated as Section 4-A, is hereby
inserted, to read as follows:

“SEC. 4-A. SUPERVISORY POWERS OF THE NATIONAL
ELECTRIFICATION ADMINISTRATION OVER ELECTRIC COOPERATIVES. = IN
THE EXERCISE OF ITS SUPERVISION OVER TRIC COOPERATIV]
THE NEA SHALL HAVE THE FOLLOWING POWERS:

(A) ISSUE ORDERS, RULES AND REGULATIONS, MOTU PROPRIO
OR UPON PETITION OF THIRD PARTIES, CONDUCT INVESTIGATIONS
REFERENDA AND OTHER SIMILAR ACTIONS ON ALL MATTERS
AFFECTING THE ELECTRIC COOPERATIV! ND

(B)  ISsuI PREVENTIVE OR DISCIPLINARY MEASURES,
INCLUDING BUT NOT LIMITED TO, SUSPENSION OR REMOVAL AND
REPLACEMENT OF ANY OR ALL OF THE MEMBERS OF THE BOARD OF
DIRECTORS, OFFICERS OR EMPLOYEES OF THE ELECTRIC
COOPERATIVE, AS THE NEA MAY DEEM FIT AND NECESSARY AND TO
TAKE ANY OTHER REMEDIAL MEASURES AS THE LAW OR ANY
AGREEMENT OR ARRANGEMENT WITH NEA MAY PROVIDE, TO ATTAIN
THE OBJECTIVES OF THIS ACT.

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THE NEA SHALL, IN THE EXERCISE OF ITS SUPERVISORY AND
DISCIPLINARY POWERS UNDER THIS ACT, STRI OBSERVE DUE
PROCESS.”

SEC. 7. A new section, to be designated as Section 4-B, is hereby

inserted, to read as follows:
EC. 4-B. NEA STEP-IN RIGHTS. - TO PROTECT THE INTEREST OF
THE MEMBER-CONSUMERS AND THE PUBLIC IN GENERAL, THE NEA
SHALL HAVE THE RIGHT TO INTERVENE AND TAKE PREVENTIVE
MEASURES IN CASE AN ELECTRIC COOPERATIVE FALLS UNDER ANY OF
THE FOLLOWING CIRCUMSTANC!
(1) UNABLE TO PAY ITS LIABILITIES AS THEY BECOME
DUE IN THE ORDINARY COURSE OF BUSINESS;
(2) HAVE INSUFFICIENT REALIZABLE ASSETS, AS MAY BE
DETERMINED BY THE NEA, TO MEET ITS CURRENT
‘LIABILI
(3) UNABLE TO PROVIDE ELECTRIC SERVICE DUE TO
TECHNICAL AND/OR FINANCIAL —_ INSUFFICIENCIES
INCLUDING, BUT NOT LIMITED TO, HIGH SYSTEMS LOSS,
LOW COLLECTION EFFICIENCY, BELOW STANDARD
CURRENT RATIO, OPERATING LOSS, HUGE LIABILITIES,
NEGATIVE NET WORTH AND INSTITUTIONAL PROBLEMS
SUCH AS GOVERNANCE, CONSUMER PER EMPLOYEE RATIO
AND ADHERENCE TO POLICIES; AND
(4) UNABLE TO PERFORM ITS ELECTRIC DISTRIBUTION
UTILITY OBLIGATIONS OR CONTINUE IN BUSINESS DUE TO.
ORGANIZATIONAL AND/OR INTERNAL CONFLICTS.

FOR THIS PURPOSE, THE NEA MAY TAKE-OVER THE
MANAGEMENT AND OPERATION OF THE ELECTRIC COOPERATIVE,
APPOINT OR ASSIGN THIRD PERSONS TO THE BOARD, OR CREATE A
MANAGEMENT TEAM WHOSE MEMBERS POSSESS THE QUALIFICATIONS
AND EXPERIENCE SUITED FOR THE TASK.

IF WITHIN A REASONABLE PERIOD, NOT EXCEEDING ONE (1) YEAR
FROM ITS TAKE-OVER, THE NEA DETERMINES THAT SUCH ELE

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COOPERATIVE IS UNABLE TO CONTINUE ITS OPERATION IN THE
ORDINARY COURSE OF BUSI

SS, IT MAY INITIATE STRUCTURAL
REFORMS TO ENSURE ITS CONTINUED OPERATION AND EFFICIENT
DELIVERY OF ELECTRIC SERVICE WITHIN ITS FRANCHISE AREA; AND

IN THE CASE OF ORGANIZATIONAL AND/OR INTERNAL CONFLICTS
AS PROVIDED UNDER ITEM (4) OF THIS SECTION, THE NEA SHALL GIVE
HE AGENCY WHERE THE ELECTRIC COOPERATIVE IS REGIST
‘THE OPPORTUNITY TO RESOLVE OR TAK)
WITHOUT PREJUDICE TO TH! ERCIS

RED,
REMEDIAL MEASURES,
OF ITS STEP-IN RIGHTS.”

SEC. 8. A new section, to be designated as Section 4-C, is hereby
inserted, to read as follows:

“SEC. 4-C. INJUNCTION OR TEMPORARY RE:

[RAINING ORDER. ~ NO
INJUNCTION OR TEMPORARY RESTRAINING ORDER SHALL BE ISSUED
AGAINST THE IMPLEMENTATION OF ANY ORDER, RULING OR DECISION
OF THE NEA, EXCEPT BY THE COURT OF APPEALS, AND ONLY UPON
THE POSTING OF A BOND SUFFICIENT TO COVER THE LIABILITIES AND
EXPENDITURES ARISING DURING THE PENDENCY OF THE WRIT OR
INJUNCTION OR TEMPORARY RESTRAINING ORDER: PROVIDED, THAT
THE INJUNCTION SHALL ONLY BE EFFECTIVE FOR A PERIOD OF NOT
EXCEEDING SIXTY (60) DAYS.”

CHAPTER HI
THE ELECTRIC COOPERATIVE

SEC. 9. Section 16, Paragraph (j), of PD 269, as amended, is hereby
further amended, to read as follows:
“SEC.

16. Powers. A cooperative is hereby vested with all powers
nee

sary or convenient for the accomplishment of its corporate purpose
and capable of being delegated by the President or the National Assembly
when it comes into existence; and no enumeration of particular powers
hereby granted shall be construed to impair any general grant of power
herein contained, nor to limit any such grant to a power or powers of the
same class as those so enumerated. Such powers shall include but not be
limited to, the power:

XXX XXX XXX


hun

6

{@) To construct, maintain and operate electric transmission and
distribution lines along, upon, under and across publicly owned lands and
public thoroughfares, including, without limitation, all roads, highways,
streets, alleys, bridges and causeways; Provided, That such shall not prevent
or unduly impair the primary public uses to which such lands and
thoroughfares are otherwise devoted;]

(J) TO CONSTRUCT, ACQUIRE, OWN OPERATE AND MAINTAIN
ELECTRIC SUB-TRANSMISSION AND DISTRIBUTION LINES ALONG, UPON,
UNDER AND ACROSS PUBLICLY OWNED LANDS AND PUBLIC
THOROUGHFARES, INCLUDING, WITHOUT LIMITATION, ALL ROADS,
HIGHWAYS, STREETS, ALLEYS, BRIDGES AND CAUSEWAYS. IN THE
EVENT OF THE NEED OF SUCH LANDS AND THOROUGHFARES FOR THE
PRIMARY PURPOSE OF THE GOVERNMENT, THE ELECTRIC
COOPERATIVE SHALL BE PROPERLY COMPENSATED.

(J-1) TO CONSTRUCT, ACQUIRE, OWN, OPERATE AND MAINTAIN
GENERATING FACILITIES WITHIN ITS FRANCHISE AREA. IN PURSUANCE
‘THEREOF, WHERE AN ELECTRIC COOPERATIVE PARTICIPATES IN A BID
ON AN EXISTING GENERATING FACILITY, ITS QUALIFIED BID SHALL BE
GIVEN PREFERENCE IN CASE OF A TIE: PROVIDED, HOWEVER, THAT IN
CASES WHERE THERE IS NO OTHER QUALIFIED BIDDER, THE BIDDING
SHALL REMAIN VALID AS BASIS FOR THE DETERMINATION OF THE
FINAL AWARD.”

XXX XXX XXX

SEC. 10. A new section, to be designated as Section 26-A, is hereby
inserted, to read as follows:

“SEC. 26-A. INDEPENDENCE OF THE BOARD OF DIRECTORS AND
OFFICERS OF ELECTRIC COOPERATIVES. - TO ENSURE THE LONG-TERM.
BUSINESS AND ECONOMIC VIABILITY OF ELECTRIC COOPERATIVES,
THE MANAGEMENT, OPERATIONS AND STRATEGIC PLANNING OF
ELECTRIC COOPERATIVES SHALL, AS MUCH AS PRACTICABLE, BE
INSULATED FROM POLITICS.


TOWARDS THIS END, NO PERSON SHALL BE ELECTED OR
APPOINTED AS AN OFFICER OR BE ELIGIBLE TO RUN AS A BOARD
MEMBER OF AN ELECTRIC COOPERATIVE IF:

(A) THE PERSON OR THE SPOUSE HOLDS ANY PUBLIC OFFIC!

(B) THE PERSON OR THE SPOUSE HAS BEEN A CANDIDATE IN
THE LAST PRECEDING LOCAL OR NATIONAL ELECTION;

(C) THE PERSON HAS BEEN CONVICTED BY FINAL JUDGMENT
OF A CRIME INVOLVING MORAL TURPITUDE;

(D) THE PERSON HAS BEEN TERMINATED FOR CAUSE FROM
PUBLIC OFFICE OR PRIVATE EMPLOYMENT;

(E) THE PERSON IS RELATED TO ANY MEMBER OF THE EC
BOARD OF DIRECTORS, GENERAL MANAGER AND DEPARTMENT
MANAGERS WITHIN THE FOURTH CIVIL DEGREE OF CONSANGUINITY OR
AFFINITY;

(®) TI
PERSON; AND.

PERSON IS A REPRESE)

‘ATIVE OF A JURIDICAL

(G) THE PERSON IS EMPLOYED BY OR FINANCIALLY
INTERESTED IN A COMPETING ENTERPRISE OR A BUSINESS SELLING
ELECTRIC ENERGY OR ELECTRICAL HARDWARE TO THE COOPERATIVE
OR DOING BUSINESS WITH THE COOPERATIVE INCLUDING THE USE OR
RENTAL OF POLES.”

SEC. 11. A new section, to be designated as Section 26-B, is hereby
inserted, to read as follows:

“SEC. 26-B. FIT AND PROPER RULE. - TO ENSURE THAT THE
MANAGEMENT AND OPERATIONS OF AN ELECTRIC COOPERATIVE ARE
CARRIED OUT WITH DUE REGARD TO ITS ECONOMIC VIABILITY, THE
NEA SHALL PRESCRIBE, PASS UPON AND REVIEW THE QUALIFICATIONS
AND DISQUALIFICATIONS OF INDIVIDUALS APPOINTED OR ELECTED TO
AN ELECTRIC COOPERATIVE AND DISQUALIFY THOSE FOUND UNFIT.

THE INTEGRITY, EXPERIENCE, EDUCATION, COMPETENCE AND
PROBITY OF A CANDIDATE SHALL BE CONSIDERED IN DETERMINING
WHETHER THE PERSON IS FIT AND PROPER TO BECOME A DIRECTOR
OR OFFICER OF THE ELECTRIC COOPERATIVE.

3


20

FOR THIS PURPOSE, THE FOLLOWING SHALL BE THE MINIMUM
QUALIFICATIONS OF A DIRECTOR OR OFFICER OF THE ELECTRIC
COOPERATIVE:

(A) MUST BE A FILIPINO CITIZEN;

(B) | MUST BE A GRADUATE OF A 4-YEAR COLLEGE DEGREE;

(C) MUST BE BETWEEN TWENTY FIVE (25) AND SEVENTY (70)
YEARS OLD, ON THE DATE OF THE ELECTION;

(D) MUST BE OF GOOD MORAL CHARACTER;

(E) MUST BE A MEMBER OF THE ELECTRIC COOPERATIVE IN
GOOD STANDING FOR THE LAST FIVE (5) YEARS;

(F) MUST BE AN ACTUAL RESIDENT AND CONSUMER IN THE
DISTRICT THE PERSON SEEKS TO REPRESENT FOR AT LEAST TWO (2)
YEARS IMMEDIATELY PRE ING THE ELECTION; AND

(G) MUST HAVE ATTENDED AT LEAST TWO (2) ANNUAL GENERAL,
MEMBERSHIP ASSEMBLIES (AGMA) FOR THE LAST FIVE (5) YEARS.

THE NEA MAY, AFTER DUE NOTICE TO THE BOARD OF DIRECTORS
AND OFFICERS OF THE ELECTRIC COOPERATIVE, DISQUALIFY,
SUSPEND OR REMOVE ANY DIRECTOR OR OFFICER WHO COMMITS ANY

PROHIBITED ACT OR FAILS TO COMPLY WITH THE PROVISIONS OF THIS
ACT.”

SEC. 12. Section 32 of Presidential Decree No. 269, as amended, is

hereby further amended, to read

s follows:

(See. 32. Conversion of Existing Corporation. Any corporation
heretofore organized or registered under the Philippine Non-Agricultural
Cooperative Act and supplying or having the corporate power to supply
electric energy may convert itself into a cooperative under this Decree by
complying with the following requirements, and shall thereupon become the
subject to this Decree with the same effect as if originally organized
hereunder:

(a) The proposition for the conversion of such corporation and
proposed articies of conversion to give effect thereto shall be submitted to a

meeting of the members or stockholders of such corporation, the notice of

14


5

which shall have attached thereto a copy of the proposed articles of
conversion or an accurate summary thereof.

(b) If the proposition for the conversion and the proposed articles of
conversion, with any amendments, are approved by the affirmative vote of

not less thar: two-thirds of the total v

*s cast thereon by members at such
meeting, and/or, if such corporation is a stock corporation or has both
members and voting stockholders, by the affirmative vote of the holders of
not less than two-thirds of those shares of the capital stock of such
corporation represented at such meeting and voting thereon, articles of
conversion in the form approved shall be executed and acknowledged on
behalf of such corporation by its president or vice-president and its seal

shall be affixed thereto and attested by its secretary. The articles of

conversion shall recite that they are executed pursuant to this Decree and
shall state: (1) the name of the corporation and the address of its principal
office prior to the conversion into a cooperative; (2) a statement that such
corporation elects to become a cooperative, non-profit, membership
corporation subject to this Decre

(3) its name as a cooperative; (4) the
addresses of the principal office of the cooperative; and (5) the names and
address of the directors of the cooperative, and (6) the manner in which
members or stockholders of such corporation may or shall becore members
of the cooperative; and may contain any other provisions not inconsistent
with this Decree that are deemed necessary or advisable for the conduct of
the business of the cooperative. The president or vice president executing
such articles of conversion shall make and annex thereto an affidavit stating
that the provisions of this section were duly complied with in respect to
such articles. The articles of conversion shall be deemed to be the articles of
incorporation of the cooperative.|

“SEC. 32. REGISTRATION OF ALL ELECTRIC COOPERATIVES. - ALI.
ELECTRIC COOPERATIVES MAY REMAIN OR CONVERT AND REGISTER
AS: (A) A NON-STOCK, NON-PROFIT COOPERATIVE; (B) A STOCK
COOPERATIVE; OR (C) A STOCK CORPORATION IN ACCORDANCE WITH
THE GUIDELINES TO BE INCLUDED IN THE IMPLEMENTING RULES AND
REGULATIONS (IRR) OF THIS ACT.


SUCH CHOICE SHALL CARRY THE ATTENDANT REQUIREMENTS OF
COMPLIANCE WITH THE LAWS AND REGULATORY GUIDELINES
GOVERNING THE RESPECTIVE GOVERNMENT AGENCIES HAVING
JURISDICTION OVER THEIR REGISTRATION.

THE NEA SHALL HAVE THE AUTHORITY OVER ELECTRIC
COOPERATIVES, WHETHER STOCK OR NON-STOCK, WITH RESPECT TO
THEIR OPERATIONS AS ELECTRIC DISTRIBUTION UTILITIES. AS SUCH,
THE ELECTRIC COOPERATIVES SHALL SUBMIT REPORTORIAL.

REQUIREMENTS AS MAY BE NECESSARY INCLUDING, BUT NOT LIMITED
TO:

(A) MONTHLY FINANCIAL AND STATISTICAL REPORT (MFSR);

(B) MONTHLY STATUS OF BARANGAY AND SITIO ENERGIZATION
AND HOUSE CONN:

(C) MONTHLY
REPORT;

(D) MONTHLY F
(PSMR);

(E) MONTHLY SUMMARY OF COMPLAINTS RECEIVED AND
ACTED UPON;

(F} MONTHLY REPORT ON COMPLIANCE WITH THE GRID AND
DISTRIBUTION CODE;

(G) | MONTHLY ENGINEERING REPORT (MER);

(H) | QUARTERLY REPORT ON POWER SUPPLY CONTRACTS;

(l} © ANNUAL WORKPLAN;

(J) ANNUAL DISTRIBUTION DEVELOPMENT PLAN (DDP);

(K) 5-YEAR INVESTMENT PLAN SUBMITTED ANNUALLY;

(L) “ANNUAL CASH OPERATING BUDGET (COB);

(M) AUDITED FINANCIAL STATEMENTS;

(N) ANNUAL COLLECTIVE BARGAINING AGREEMENT (CBA) OR
COLLECTIVE NEGOTIATION AGREEMENT (CNA); AND

(0) COPY OF CAPITAL EXPENDITURE (CAPEX) AND OPERATING
EXPENDITURE (OPEX) PLANS.

ITUTIONAL SERVICES DEPARTMENT (ISD)

ORMANCE STANDARD MONITORING REPORT


26
27
28
29
30
31

33

LIKEWISE, SUPERVISORY AND OVERSIGHT FUNCTIONS OF THE
NEA AS MAY BE DETAILED IN THIS ACT AND ITS IRR SHALL BE
APPLICABLE TO BOTH STOCK AND NON-STOCK COOPERATIVES.

ELECTRIC COOPERATIVES WHICH REGISTER WITH THE CDA
SHALL CONTINUE TO ENJOY THE BENEFITS AND INCENTIVES UNDER
THIS ACT.

EXISTING ELECTRIC COOPERATIVES MAY LIKEWISE OPT TO
REGISTER AS STOCK CORPORATIONS WITH THE SECURITIES AND
EXCHANGE COMMISSION (SEC): PROVIDED, HOWEVER, THAT SUCH
STOCK CORPORATIONS SHALL NO LONGER ENJOY THE BENEFITS AND
INCENTIVES CONTAINED UNDER THIS ACT.

DESPITE THE CONVERSION AND REGISTRATION OF AN ELECTRIC
COOPERATIVE UNDER THE CDA, THE NEA SHALL RETAIN ITS
SUPERVISORY AND DISCIPLINARY POWERS OVER SUCH ELECTRIC

COOPERATIVE IN THE CONDUCT OF ITS OPERATION AS AN ELECTRIC
DISTRIBUTION UTILITY.

TO ENABLE THE NEA TO EFFECTIVELY MONITOR THE STATUS OF
IMPLEMENTATION OF THE RURAL ELECTRIFICATION PROGRAM,
DISTRIBUTION UTILITIES ARE HEREBY REQUIRED TO FURNISH THE NEA
COPIES OF REPORTS WITH RESPECT TO THEIR OPERATIONS INSOFAR
AS RURAL ELECTRIFICATION IS CONCERNED.”

SEC. 13. A new section, to be designated as Section 32-A, is hereby
inserted to read as follows:

“SEC. 32-A. INCENTIVES OF ELECTRIC COOPERATIVES. ~
CONSISTENT WITH THE DECLARED POLICY OF THIS ACT, ELECTRIC
COOPERATIVES WHICH COMPLY WITH THE FINANCIAL AND
OPERATIONAL STANDARDS SET BY THE NEA SHALL ENJOY THE
FOLLOWING INCENTIVES:

(A) TO BE ENTITLED TO CONGRESSIONAL ALLOCATIONS,

GRANTS, SUBSIDIARIES AND OTHER FINANCIAL ASSISTANCE FOR
RURAL ELECTRIFICATION; AND.

(B) TO RECEIVE ALL SUBSIDIES, GRANTS, AND OTHER

ASSISTANCE WHICH SHALL FORM PART OF THE DONATED CAPITAL AND

7


ww

16

FUNDS OF THE ELECTRIC COOPERATIVES: PROVIDED, HOWEVER, THAT
THESE SHALL NOT BE SOLD, TRADED NOR DIVIDED INTO SHARE
HOLDINGS AT ANY TIME. SUCH DONATED CAPITAL AND FUNDS SHALL
BE APPRAISED AND VALUED FOR THE SOLE PURPOSE OF DETERMINING
THE EQUITY PARTICIPATION OF THE MEMBERS: PROVIDED, THAT IN
CASE OF DISSOLUTION OR CONVERSION OF THE ELECTRIC
COOPERATIVE, SAID DONATED CAPITAL AND FUNDS SHALL BE
SUBJECT TO ESCHEAT.

AS A FURTHER INCENTIVE, THE NEA MAY PRIORITIZE THE GRANT
OF INCENTIVES IN FAVOR OF ELECTRIC COOPERATIVES THAT ARE
MANAGED EFFECTIVELY AND EFFICIENTLY AND CONSISTENTLY
COMPLY WITH THEIR MANDATES AND DIRECTIVES.”

CHAPTER IV
FINAL PROVISIONS

SEC. 14. A new section, to be designated as Section 64-A, is hereby
inserted, to read as follows:

“SEC, 64-A. PENALTIES. - ANY PERSON WHO WILLFULLY VIOLATES
ANY RULE OR REGULATION PROMULGATED PURSUANT TO THE
AUTHORITY GRANTED IN THIS ACT SHALL, UPON CONVICTION, BE
PUNISHED BY A FINE OF NOT LESS THAN FIFTY THOUSAND PESOS
{PS0,000.00) BUT NOT MORE THAN FIVE HUNDRED THOUSAND PESOS
(P500,000.00) OR BY IMPRISONMENT OF NOT LESS THAN SIX (6)
MONTHS BUT NOT MORE THAN ONE (1) YEAR, OR BOTH, AT THE
DISCRETION OF THE COURT: PROVIDED, THAT IF THE VIOLATION IS
COMMITTED BY A JURIDICAL PERSON, THE PENALTY HEREIN SHALL BE
IMPOSED UPON THE OFFICIAL AND/OR EMPLOYEE THEREOF
RESPONSIBLE FOR THE VIOLATION: PROVIDED, FURTHER, THAT IF THE
VIOLATION IS COMMITTED BY A GOVERNMENT OFFICIAL OR EMPLOYEE,
INCLUDING THOSE IN GOVERNMENT-OWNED OR -CONTROLLED
CORPORATIONS, HE/SHE SHALL, IN ADDITION TO THE PENALTY AS

PROVIDED HEREIN, BE SUBJECTED TO ADMINISTRATIVE DISCIPLINARY
ACTION.”



SEC. 15. A new section, to be designated as Section 64-B, is hereby
inserted, to read as follows:

“SEC. 64-B. CONGRESSIONAL OVERSIGHT. UPON THE EFFECTIVITY
OF THIS ACT, THE JOINT CONGRESSIONAL POWER COMMISSION
CREATED UNDER SECTION 62 OF REPUBLIC ACT NO. 9136 SHALL
EXERCISE OVERSIGHT POWERS OVER THE IMPLEMENTATION OF THIS
ACT.”

SEC. 16. Implementing Rules and Regulations. ~ Within six (6) months
from the effectivity of this Act, the DOE sl

1, in consultation with the
Senate and House of Representatives Committees on Energy, NEA, CDA,
SEC, BSP and the electric cooperatives, promulgate the Implementing Rules
and Regulations of this Act.

SEC. 17. Separability Clause. ~ If any provision of this Act is declared
invalid or unconstitutional, the other provisions not affected thereby shall
remain valid and subsisting.

SEC. 18. Repealing Clause. — Any provision of law, presidential

decree, executive order, or rules and regulations inconsistent with the
prov:

ions of this Act or with the rules and regulations issued pursuant
thereto is hereby repealed or modified accordingly.
SEC. 19,

sffectivity. ~ This Act shall take effect immediately upon its

publication in at least two (2} newspapers of general circulation.

Approved,


FACT SHEET
House Bill No. _veld
AN ACT STRENGTHENING THE NATIONAL ELECTRIFICATION
ADMINISTRATION FURTHER AMENDING FOR THE PURPOSE
PRESIDENTIAL DECREE NO. 269, AS AMENDED, OTHERWISE
KNOWN AS THE “NATIONAL ELECTRIFICATION ADMINISTRATION
DECREE”

Introduced by: REPS, HENEDINA RAZON-ABAD, ARNULFO P. FUENTEBELLA,
CRESENTE M. PAEZ, JOSE R. PING-AY, ERICO B. AUMENTADO, TEDDY BRAWNER
BAGUILAT, JR., RODEL M. BATOCABE, MICHAEL ANGELO C. RIVERA, KIMI S.
COJUANGCO, TOMAS V. APACIBLE, MARK LEANDRO L. MENDOZA, SALVADOR P.
CABALUNA Ill, CHRISTOPHER S. CO, ALFREDO A. GARBIN, JR., HOMER A.
MERCADO, SHARON S. GARIN, EULOGIO “AMANG” R. MAGSAYSAY, ARNEL U. TY,
RAYMOND DEMOCRITO C. MENDOZA, RUFUS B. RODRIGUEZ AND EDUARDO R.
GULLAS

Committee Referral: ENERGY (Primary)
Committee Chairperson: REP. HENEDINA R. ABAD

OBJECTIVES:

* To strengthen the National Electrification Administration (NEA) to pursue the
rural electrification program through the electric cooperatives (ECs) as its
implementing arm

= To ensure that the NEA hes adequate powers to protect its financial interest in
the ECs and provide them with better options to guarantee the continued
delivery of adequate and reliable electric service to the end-users

KEY PROVISIONS:
* Establishes a framework for structural reforms in the NEA end the ECs

* Strengthens the supervisory powers, functions and privileges of the NEA over
the ECs. and provides step-in rights of the NEA for ECs encountering
problems in their management and operations.

* Specifies the conditions for the issuance of an injunction or temporary
restraining order against the implementation of any order, ruling or decision of
the NEA

* Defines the qualifications and disqualifications of the officers and the Board of
Directors of the ECs.


Specifies the options on the registration of the ECs and enumerates the
reporiorial requirements.

Provides certain incentives to the ECs.

Provides penalties to any person found in violation of any rule or regulation
promulgated pursuant to the authority granted in the Act.

Empowers the Joint Congressional Power Commission to oversee the
implementation of the Act.

RELATED LAWS:

Presidential Decree No. 269 ~ NEA Creation
Presidential Decree No. 1645 — Increase of NEA Capitalization and
Broadening of its Lending and Regulatory Powers

Republic Act No, 6938 - Cooperative Code of the Philippines

Republic Act No, 9136 - Electric Power Industry Reform Act of 2001