HUUSE F REPRESENTATIVES

RECENED
25 AUG 2016

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Republic of the Ph
Congress of the Phili
Quezon City

Seventeenth Cong;
First Regular Sessi

House Bill No. 33 Baus AND INT

Introduced by: Representative Carlos Roman L. Uybarreta, 1-Care Partylist

EXPLANATORY NOTE

The total electrification of the country has been the ultimate goal of the
government since the organization of the electric cooperatives. To attain such
objective, the electric cooperatives were mandated to provide electric service to
every home on an area coverage concept. This allows the electrification of the
financially unviable and thinly populated areas despite the fact that they are more
costly to energize. However, because of their non-profit nature, electric
cooperatives incur heavy financial burdens that they have to bear to become
operationally viable. The electric cooperatives, therefore, need every tenable
support and assistance from the National Government, its instrumentalities and
agencies to the fullest extent they are capable.

With the Philippines located in what is known as the “Typhoon Belt’, an
average of twenty (20) typhoons visit the country each year. In the last decade, the
Philippines has been consistently ranked in the top five (5) most disaster-prone
countries in the world. Taking off from the experience with “Typhoon Yolanda,”
which was recorded as the strongest typhoon ever to landfall anywhere in the world,
almost all sectors and stakeholders were focused in the “Rescue and Relief
Operations” in order to protect life and property. And while the government has
established a National Disaster Risk Reduction and Management Framework that
provides for a comprehensive hazards evaluation and a multi-sectoral, inter-agency
and community-based approach to disaster risk reduction and management, it had
been recognized that without electricity:

* Very little, if any, meaningful rescue and relief efforts can take place;

© Health conditions quickly deteriorate without water, health and other
basic services; and

* Civil unrest quickly develops as there is no effective communication that
will monitor and coordinate law enforcement.

For these reasons, ensuring the supply of electric service after a force majeure
or fortuitous event has become a national security concern and recognized as a high
priority by the government. For the same reason, the government, through the


National Electrification Administration has embarked on a Sitio Electrification
Program, which resulted in the energization of 32,688 sitios from 2011 to 2015.

The electric cooperatives, however, are non-profit entities whose electric rates
are regulated by the Energy Regulatory Commission under a rate setting
methodology which does not allocate funds to cover the reconstruction or
rehabilitation of the electric cooperatives’ damaged infrastructure after a force
majeure or fortuitous event. Based on historical data from 2004 to 2014, the extent of
the cost of damaged infrastructure suffered by an individual electric cooperative
ranges from as low as .09% to as high as 169.92% of the total Net Utility Plant In
Service and Construction In Progress. The cost of damaged infrastructure is largely
dependent on the intensity or magnitude of the force majeure or fortuitous event.
Without the financial assistance provided through grants or subsidies from the
national government, the electric cooperatives are forced to secure calamity loans
which are often converted to long-term loans for the reconstruction or rehabilitation
of the their damaged facilities. The total cost to amortize these calamity loans are
then passed on to the member-consumers. While the ever-increasing, incidence of
calamities is oftentimes regional, it creates high recurring costs for the electric
cooperatives and their member-consumers and if the costs are not nationalized, it
will result in financially distressed electric cooperatives and communities. This
situation negates the very intent of the electric cooperatives creation which is to
provide affordable electric rates to the member-consumers and to promote economic
development, and prosperity in the local communities.

While historically, the government has provided grant funds or subsidies for
the rehabilitation or restoration of their calamity damaged infrastructure, such
funding is not guaranteed and generally the release of which is significantly delayed.
Over the past 11 years (2004-2014) the national government has provided a total of
Php 6.3 billion to around 75 electric cooperatives which were damaged by calamities,
but in each case the decision to provide the funding was made after the fact and only
upon the approval of the President.

Recognizing, that restoration of electric service following a major calamity is
truly a matter of national security and of the highest priority, the National
Electrification Administration initiated the development of a policy which now
requires all electric cooperatives to prepare a Vulnerability and Risk Assessment and
to develop an Emergency Response Plan. The Vulnerability and Risk Assessment
requires the development and implementation of action plans to protect, strengthen
and/or mitigate damages to the electric cooperatives’ critical assets from possible
calamities. On the other hand, the Emergency Response Plan requires a disaster plan
which includes defining the organization structure, establishing the delegation of
authority, assigning the responsible individuals to carry out detailed plans for the
restoration of the electric cooperatives’ facilities, ensuring business continuity, and
identifying options to provide for alternative headquarter facilities, information and
technology loss, and setting-up the priority of service restoration efforts following a
force majeure or fortuitous event.


With the completion of the Vulnerability and Risk Assessment and
development of the Emergency Response Plan, the electric cooperatives under the
direction of the National Electrification Agency are expected to take every
reasonable measure to be prepared for an onslaught of a force majeure or fortuitous
event. Unfortunately, the availability of funds necessary to nationalize the cost
associated with disaster prevention, preparedness, mitigation measures and
rehabilitation or restoration efforts remains uncertain, These financially cripple the
electric cooperatives and local communities and will further burden families already
devastated both emotionally and financially.

Cognizant of the effects of climate change which can no longer be avoided
and with increasing intensity and magnitude now termed as “New Normal” the
approval of Congress is hereby sought for the creation of an Electric Cooperatives
Disaster Management Fund, for the purpose of allocating grant or subsidy funds
from the national government thereof, and streamlining the processes of availment
of such funds for the implementation of mitigation measures defined in the electric
cooperatives’ Vulnerability and Risk Assessments as well as for the immediate
restoration or rehabilitation of their damaged infrastructure when the extent of such
damages are beyond its financial capability and that of the member-consumers.

In view thereof, the passage of this measure is earnestly sought.

CARLOS Tome UYBARRETA

Representative, I-CARE Party List


Republic of the Philippines
Congress of the Philippines
Quezon City

Seventeenth Congress
First Regular Session

House Bill No. 8893

Introduced by: Representative Carlos Roman L. Uybarreta, 1-Care Partylist

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

assembled:

AN ACT INSTITUTIONALIZING THE ELECTRIC COOPERATIVES DISASTER
MANAGEMENT FUND AND PROVIDING FUNDS THEREFOR, AMENDING FOR

THE PURPOSE CERTAIN LAWS

CHAPTER I
TITLE, POLICY AND DEFINITIONS.

SECTION 1. Title. This Act shall be known as the “Electric Cooperatives Disaster
Management Fund”.

SECTION 2 Declaration of Policy. It is hereby declared the policy of the State to:

a)

Support and assist, to the fullest extent, Electric Cooperatives adversely
affected by Force Majeure or Fortuitous Event in order to immediately
restore electric service, recognizing that the absence of electric service after a
Force Majeure or Fortuitous Event is a national security issue, thereby:

1) Facilitating the rescue and relief operations, availability of basic
services such as food, water, medicine and hospitals and mitigation of
civil unrest;

2) Aiding the normal functioning of local governments and
communities, and easing the recovery of the adversely affected
individuals and families;

3) Assisting efforts of the affected Local Government Units in
expediting the rendering of aid, assistance and emergency services, and
the reconstruction and rehabilitation of devastated areas.

Provide an orderly and continuing means of financial assistance to the
Electric Cooperatives in carrying out their responsibilities of providing
reliable electric service necessary to alleviate the sufferings and damages
brought about by Force Majeure or Fortuitous Event by:
1) allocating funds in the form of grants for Disaster Mitigation,
Disaster Preparedness and Restoration or Rehabilitation of Electric
Cooperatives’ damaged facilities that are readily accessible;
2) _ providing a streamlined process for the availment of the fund;
3) requiring the Electric Cooperatives to develop and implement
comprehensive Vulnerability Risk Assessments which identify Disaster
Preparedness and Disaster Mitigation measures to protect and strengthen


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critical infrastructure assets and Emergency Response Plans to address
immediate Restoration or Rehabilitation efforts.

SECTION 3. Scope. This Act shall be applicable to all Electric Cooperatives throughout
the country.

SECTION 4. Definition of Terms. As used in this Act, the following words or terms shall
have the following meanings, unless provided otherwise:

a)

b)

d)

8)

h)

)

Climate Change - shall refer to a change in the state of the climate that can be
identified by changes in the mean and/or the variability of its properties, and
that persists in an extended period, typically decades or longer, whether due
to natural internal processes or external forces such as modulation of the solar
cycles, volcanic eruptions and persistent anthropogenic changes in the
composition of the atmosphere or in land use;

Disaster ~ shall refer to a serious disruption of the functioning of a community
or a society involving widespread human, material, economic or
environmental losses and impacts, which exceeds the ability of the affected
community to cope using its own resources.

Disaster Mitigation ~ shall refer to the reduction or limitation of the adverse
impacts of hazards. Mitigation measures encompass engineering techniques
and hazard-resistant construction as well as improved environmental, land
use planning, climate change and other sectoral policies and public
awareness.

Disaster Preparedness- shall refer to the knowledge and capacities developed
by the Electric Cooperatives in cooperation with the government to
effectively anticipate, respond to, and recover from, the impacts of likely,
imminent or current hazard events or conditions. It may include
preparedness for response such as but not limited to contingency planning,
Vulnerability Risk Assessment, Emergency Response Planning, and
stockpiling of equipment and materials;

Disaster Prevention- shall refer to the avoidance of adverse impacts of hazards.
It expresses the concept and intention to completely avoid potential adverse
impacts through action taken in advance such as the Reconstruction or
Rehabilitation of the distribution lines and facilities of the Electric
Cooperatives to make it stronger than the old/damaged structure. This may
involve the modification of the specifications of the electrical materials and
equipment and the design and construction of the lines with primary
consideration on the strength of materials and infrastructure;

Electric Cooperatives ~ shall refer to a distribution utility created and operating
pursuant to Presidential Decree No. 269, as amended;

Emergency Response Plan- shall refer to the development and preparation of
written and formal plan regarding “organizational structure and steps”
which will enable the Electric Cooperative to restore its system in a safe and
timely manner after a Force Majeure or Fortuitous Event;

Energy Regulatory Commission - shall refer to the regulatory agency created
under Republic Act No. 9136;

Force Majeure ~ shall refer to an event that is a result of elements of nature
that cannot be reasonably anticipated or controlled, such as, but not limited
to typhoon, storm, tropical depression, flood, drought, volcanic eruption,
earthquake, tidal wave or landslide;

Fortuitous Event - shall refer to an act of war (declared or undeclared),
sabotage, blockade, revolution, riot, insurrection, civil commotion or any



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violent or threatening action;

k) Joint Congressional Power Commission - shall refer to the Commission created
under Republic Act No. 9136.

1) Malampaya Fund- shall refer to a Special Fund created under Presidential
Decree No. 910 intended to finance energy resource development and
exploitation programs and projects of the government and for such other
purposes duly approved by the President;

m) National Electrification Administration ~ shall refer to the government agency
created under Presidential Decree 269, as amended;

n) National Disaster Risk Reduction and Management Fund- shall refer to the
calamity fund appropriated under the Annual General Appropriations Act
which is used for disaster risk reduction or mitigation, prevention and
preparedness activilies as provided under Republic Act No. 10121; and

0) Restoration or Rehabilitation- shall refer to the actions or activities undertaken
by the Electric Cooperatives to rebuild, replace, or repair the necessary
facilities to provide reliable electric service to member-consumers after a
Force Majeure or Fortuitous Event, taking into consideration designs,
materials, or equipment that will make the infrastructure more resilient.

p) Vulnerability and Risk Assessment- shall refer to the Electric Cooperatives
identification of critical assets and the development of Disaster Preparedness,
Disaster Prevention and Mitigation measures to protect, restore or strengthen
critical assets prior to the onset of a Force Majeure or Fortuitous Event;

CHAPTER IT
CREATION AND IMPLEMENTATION OF THE ELECTRIC COOPERATIVES
DISASTER MANAGEMENT FUND

SECTION 5. Creation of the Electric Cooperatives Disaster Management Fund. To
implement the aforesaid policy of the State, there is hereby created an Electric
Cooperatives Disaster Management Fund, which shall be managed and administered
by the National Electrification Administration

SECTION 6. Powers and Functions of the National Electrification Administration. The
National Electrification Agency shall have the following additional powers and
functions:

a) Formulates policies and coordinates the implementation of all activities of
the Electric Cooperatives relative to disaster management;

b) Establishes, administers and monitors the implementation of the Electric
Cooperatives’ comprehensive and integrated programs such as but not
limited to: Vulnerability Risk Assessment and Emergency Response Plan;

©) Reviews and approves all activities of the Electric Cooperatives relative to
Disaster Mitigation, Disaster Preparedness and Disaster Prevention Plans as
a result of the Vulnerability Risk Assessment;

d) Develops the criteria and requirements to enable the Electric Cooperatives to
avail of the Flectric Cooperatives Disaster Management Fund;

©) Develops the procedural requirements for program participation and fund
allocation;

f) Determines the annual budget of the Electric Cooperatives Disaster
Management Fund and submits the same for approval by Congress;

g) Receives all donations (funds, materials, and/or equipment) which are
intended for the express purpose of addressing the restoration of Electric
Cooperatives infrastructure damaged by a Force Majeure or Fortuitous



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Event; and
h) Promulgates such rules and regulations as may be necessary to implement
the objectives and provisions of this Act.

CHAPTER IIT
RESPONSIBILITIES OF THE ELECTRIC COOPERATIVES

SECTION 7. Responsibilities of the Electric Cooperatives. In addition to their primary
mandate to implement the rural electrification program of the country under existing
laws, the Electric Cooperatives shall be vested with all the powers necessary to ensure
the protection, preparedness and mitigation of the adverse impact of any Force Majeure
or Fortuitous Event to its infrastructures. Electric Cooperatives shall also ascertain the
ability of their manpower to undertake emergency response for the immediate
Restoration or Rehabilitation of their damaged infrastructures after a Force Majeure or
Fortuitous Event. To accomplish such responsibilities, the Electric Cooperatives shall
come up with comprehensive and integrated programs such as but not limited to the
following:

a) Undertake a disaster Vulnerability Risk Assessment of all their

infrastructures in accordance with the National Electrification Agency

approved template;

Prepare in the order of priority, projects and programs, including the

financial requirements necessary to protect and mitigate the disaster

vulnerability of all its infrastructures for review and approval by the National

Electrification Agency;

Institutionalize an Emergency Response Plan to be activated immediately

before and after the occurrence of a Force Majeure or Fortuitous Event;

d) Comply with the National Electrification Agency policies and procedural

requirements for the program participation and fund allocation;

Submit reports as may be required by the National Electrification Agency;

and

f) Undertake all other activities necessary to implement the objectives and
provisions of this Act.

b)

cS

°)

CHAPTER IV
FUND SOURCES AND ALLOCATION

SECTION 8. Fund Sources. The Electric Cooperatives Disaster Management Fund shall
be funded through, but not limited, to the following sources:

a. National Disaster Risk Reduction and Management Fund;
b. Malampaya Fund;
c. General Appropriations Act

SECTION 9. Donations. All donations (funds, materials, and/or equipment), whether
local or international, intended for the express purpose of Restoring or Rehabilitating
the Electric Cooperatives infrastructure damaged by a Force Majeure or Fortuitous
Event, shall be received directly by the National Electrification Agency. International
donations shall be exempt from all duties, fees, taxes and other charges.

SECTION 10. Appropriations. The sum of Seven Hundred Fifty Million Pesos
(Php750,000,000.00) for the initial implementation of this Act shall be taken out from the
National Disaster Risk Reduction and Management Fund and the Malampaya Fund.


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Thereafter, such amounts necessary for the sustainable implementation of this Act shall
be included in the annual General Appropriations At

SECTION 11. Allocation of the Electric Cooperatives Disaster Management Fund. The
Electric Cooperatives Disaster Management Fund shall be allocated in the following
manner:

a) Fifty percent (50%) for the Electric Cooperatives’ Disaster Prevention,
Disaster Preparedness and Disaster Mitigation measures duly approved by
the National Electrification Agency;

b) Forty percent (40%) for the Restoration or Rehabilitation of the Electric
Cooperatives damaged infrastructures after a Force Majeure or Fortuitous
Event; and

©) Ten percent (10%) for the repayment of outstanding obligations of the Electric
Cooperatives incurred for the purpose of financing the Restoration or
Rehabilitation of its infrastructures damaged by a Force Majeure or
Fortuitous Events.

In case of a deficiency of the fund allocated for the Restoration or Rehabilitation
of the Electric Cooperatives damaged infrastructure after a Force Majeure or Fortuitous
Event, the amount intended for the Electric Cooperatives Disaster Prevention,
Preparedness and Mitigation measures which has not been released by the National
Electrification Agency to the Electric Cooperatives shall be immediately re-allocated to
cover such shortfall. In case the amount of the initial annual budget is inadequate to
cover the Restoration or Rehabilitation costs for the year, the annual budget for the
succeeding year shall be increased to an amount equivalent to the previous year’s
Electric Cooperatives Disaster Management Funds’ total expenditures, and such
amount shall be maintained unless there is a need to increase pursuant to this Section.

If the Electric Cooperatives Disaster Management Fund for the year is inadequate
to cover the Restoration or Rehabilitation costs for Electric Cooperatives infrastructure
damaged by Force Majeure or Fortuitous Event, the National Electrification Agency
shall seek for the allocation of supplementary budget corresponding to the outstanding
balance from the National Disaster Risk Reduction Management Fund or the
Malampaya Fund subject to the approval of the President.

SECTION 12. Outstanding Calamity Loans of Electric Cooperatives. Upon the effectivity of
this Act, all outstanding financial obligations of Electric Cooperatives to the National
Electrification Agency and other financing institutions incurred for the purpose of
financing the Restoration or Rehabilitation of the Electric Cooperatives’ damaged
infrastructures by a Force Majeure or Fortuitous Events shall be assumed and paid by
the National Electrification Agency from the Electric Cooperatives Disaster
Management Fund in accordance with a program duly approved by the Joint
Congressional Power Commission within six (6) months from the effectivity of this Act
which shall be implemented within three (3) years from its approval. The Energy
Regulatory Commission shall ensure the reduction in the electricity rates of the Electric
Cooperatives commensurate with the resulting savings due to the removal of the
amortization payments of their loans. Within five (5) years from the condonation of
calamity loans, any Electric Cooperative which shall transfer ownership or control of its
assets, franchise or operations to any individual or entity other than another Electric
Cooperative shall repay the national government the total loans including accrued
interests thereon.


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CHAPTER V
GENERAL PROVISIONS,

SECTION 13. Reportorial Requirements. The National Electrification Agency shall take
the necessary measures to ensure that the provisions of this Act are properly
implemented and submit annual reports on the program implementation and fund
utilization to the Department of Energy, the Joint Congressional Power Commission
and the Office of the President;

SECTION 14. Congressional Oversight. Upon the effectivity of this Act, the Joint
Congressional Power Commission shall exercise oversight functions over the
implementation of this Act.

SECTION 15. Evaluation. Within five (5) years after the effectivity of this Act, the Joint
Congressional Power Commission shall conduct a systematic evaluation of the
accomplishments and impact of this Act for purposes of determining remedial
legislation.

SECTION 16. Implementing Rules and Regulations. The National Electrification Agency
shall, in consultation with relevant government agencies, Electric Cooperatives and
end-users, promulgate the Implementing Rules and Regulations within six (6) months
from the effectivity of this Act, subject to the approval of the Joint Congressional Power
Commission.

SECTION 17. Separability Clause. If for any reason, any provision of this Act is declared
unconstitutional or invalid, the other parts or provisions hereof which are not affected
thereby shall continue to be in full force and in effect.

SECTION 18. Repealing Clause. Any law, presidential decree or issuance, executive
order, letter of instruction, administrative rule or regulation contrary to or inconsistent

with the provisions of this Act are hereby repealed, modified or amended accordingly.

SECTION 19. Effectivity. This Act shall take effect on the fifteenth day following its
publication in at least two (2) national papers of general circulation.

Approved.