THIRTEENTH CONGRESS OF THE REPUBLIC) 
6 HAR 13 P!5:26 
OF THE PHILIPPINES 
1 
Second Regular Session 
) 
S. No. 22%5 
Introduced by Senator Manuel "Lito" M. Lapid 
EXPLANATORYNOTE 
After the Electric Power Industry Reform Act (EPIRA) was passed into 
law, evely electric consumer became optimistic that the cost of power will go 
down in a manageable level. Five years have passed since its enactment into 
law, and yet, charges made by distribution companies continue to escalate. 
It has been claimed by one of the largest distribution utility, MERALCO, 
that it is just following the provisions of EPIRA, when it passed on to the 
consumers the cost of generating power, its stranded cost as well as that 
NAPOCOR, transmission, system loss, distribution, metering, supply, lifeline rate 
subsidy, interclass subsidy, currency exchange rate adjustment, franchise tax 
and other costs of the company which form part of its so-called universal charge. 
Sec. 34 of the EPIRA Law explicitly institutionalized the passing of every 
cost of utility companies even if it is a result of a faulty business decision on the 
part of the company, their own operating costs, and other costs not even related 
to power actually consumed by the end-users. 
Moreover, Sec. 45 of the same law prohibited the existence of Cross 
Ownership in the Power utility providers but only to the extent of preventing 
generation and distribution companies to have stakes in transmission companies. 
However, cross ownership by and between generation and distribution utilities, 
which will in fact have more hurting effects as this can create sweetheart deals to 
the detriment of the end-consumers, was not prohibited in the law. 
The supposed 12-centavo per kilowatt-hour (kWh) provisional rate 
increase granted by the Energy Regulatory Commission (ERC) to Meralco for its 
distribution charges in January 2004, was overruled by the Supreme Court last 
June 2004 for being "illegal". The increase is actually on top of the quarterly per 
kwh rate increase that Meralco has been charging its customers which is a result 
of an approval of another component in its billing called Generation Rate 
Adjustment Mechanism (GRAM). In the same manner, the Court of Appeals, in 
its decision dated July 22, 2004 annulled and set aside the 17 centavos per kwh 
rate increase granted by ERC to said electric distribution company as a result of 
unbundling of its rates. 
This amendatory bill which seeks to correct some of the evident 
shortcomings of EPIRA may not totally get rid of the continuing surge in the price 
of electric power consumption, but, it will definitely prevent the unreasonable 
passing of the power utility companies' business costs to their consumers. 


This measure is consonant to the call of the President during her State of 
the Nation Address to make electricity affordable to the consumers. 
The immediate passage of this measure is earnestly sought. 
fl SENATOR 


THIRTEENTH CONGRESS OF THE REPUBLIC) 
6 MAR 13 P5 26 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
Introduced by Senator Manuel “Lito” M. Lapid 
AN ACT 
PROVIDING FOR A DEVISE TO DECREASE THE COST OF ELECTRIC 
POWER CONSUMPTION OF END CONSUMERS, BY WAY OF LIMITING THE 
PASS ON CHARGES OF DISTRIBUTION UTILITIES TO CONSUMERS AS 
AMONG POWER UTILITY COMPANIES, AMENDING FOR THE PURPOSE 
CERTAIN PROVISIONS OF REPUBLIC ACT NO. 9136 OTHERWISE KNOWN 
AS THE “ELECTRIC POWER INDUSTRY REFORM ACT OF 2001”, AND FOR 
OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION. I. - In order to avoid the expected increase in the price of 
electricity brought about by the impending removal of Cross Subsidy, Sec. 31 (c) 
of RA 9136 is hereby amended to read as follows: 
WELL AS COMPLETELY BANNING CROSS-OWNERSHIP FROM AND 
“Sec. 3 I. - xxx 
(a) xxx 
(b) xxx 
[(c) Initial Implementation of the cross subsidy removal scheme;] 
SECTION. 2. - In order to eliminate the unjust passing of the cost of 
electricity not actually consumed by the end consumers by the power distributors, 
Sec. 33 (b) (4) 
of RA 9136 is hereby amended to read as follows: 
“Sec. 33. xxx 
(a) 
(b) 
“Within three (3) months from the submission of the application for 
stranded cost recovery by the relevant distribution utilities, the ERG shall verify 
the reasonable amounts and determine the manner and duration for the full 


recovery of strended contract costs as denned herein: Provided, That the 
duration for such recovery shall not be shorter than fifteen (15) years nor longer 
than fwenty-five (25) years. PROVIDED FURTHER, THAT NO AMOUNT OF 
STRANDED COST TO BE PASSED ON TO END CONSUMERS SHALL 
INCLUDE THE COST OF POWER GENERATED BY IPPs THAT HAS NOT 
BEEN ACTUALLY CONSUMED AND DISTRIBUTED. 
Any amount to be 
included for stranded cost recovery shall be reflected as a separate item in the 
consumer billing statement.” 
SEC. 3. - In order to ease-up the heavy burden of paying high cost of 
electric power by the consumers, some components in the Universal Charge not 
directly related to the service of providing electricity to the actual paying 
subscriber should be removed, thereby amending Sec. 34 of RA 9136 to read as 
follows: 
“Sec. 34. Universal Charge. - Within one (1) year from the effectivity of 
this Act, a universal charge fo be determined, k e d  and approved by the ERC, 
shall be imposed on all electricity end-users EXCLUSIVELY for the following 
purposes: 
(a) Payment for the stranded debfs in excess of the amount assumed by 
the National Government and stranded contract costs of NPC [and as well as 
qualified stranded contract costs of distribution utilities] resulting from the 
restructuring of the industry; 
[ (b) Missionary electrification;] 
[ (c) 
The equalization of the taxes and royalties applied to 
indigenous or renewable sources of energy vis-a-vis imported energy 
fuels;] 
[ (a An environment charge equivalent to one-fourth of one centavo 
per kilowatt-hour (Po.O025/k Wh), 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 arrangement; and] 


I (e) 1 (b)x x x 
SEC. 4. - In order to avoid possible sweetheart deals from happening in 
the power industry, cross-ownership among corporations in generation, 
transmission and distribution should be banned completely. For the effective 
implementation of this provision, Sec. 45 of RA 9136 is hereby amended to read 
as follows: 
“Sec. 45. Cross Ownership, Market Power Abuse and Anti-Competitive 
Behavior. - x x x 
x x x  
NO DISTRIBUTION UTILITY, OR ITS RESPECTIVE SUBSIDIARY 
OR AFFILIATE OR STOCKHOLDER OR OFFICIALS OR ANY OF THEIR 
RELATIVES WITHIN THE FOURTH CIVIL DEGREE OF AFFINITY AND 
CONSANGUINTY SHALL HOLD ANY INTEREST, WHETHER DIRECTLY OR 
INDIRECTLY, IN ANY GENERATION COMPANY AND VISE VERSA. 
x x x  
SEC. 5. Repealing Clause. - All laws, Presidential Decrees, Issuances, 
Executive Orders, Letters of Instruction, rules or regulations inconsistent with the 
provision of this Act are hereby repealed or modified accordingly. 
SEC. 6. 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,