FIFTEENTH
CONGRESS
)
REPUBLIC
OF THE PHILIPPINES
)
FIRST REGULAR SESSION
)
HOUSE OF REPRESENTATIVES
Introduced
by Representative
Rufus B. Rodriguez
and
Representative
Maximo B. Rodriguez,
Jr.
4501
House Bill No.
_
EXPLANATORY
NOTE
For the.first two months and a half of 2011, oil companies in the Philippines have'
already increased gas and diesel prices by a total P5 per liter. And with the ongoing
crisis in the Middle East, prices may still rise. We therefore need to look into altemative------·-
sources of energy in order to lessen our dependence on oil.
While our country is endowed with alternative or indigenous energy resources
that are relatively abundant, certain government impositions associated with making
available such resources for electricity generation are more burdensome than those
applied on imported fuels such that rates of electricity generated
using indigenous
energy resources are rendered artificially high.
For instance, as of May 2007, government royalties (or government share) on
indigenous natural qas was around P1.46/kWh, which was 5 to 8 times more than the
taxes
imposed
on imported fuels such as coal (PO.17/kWh), oil (PO.20/kWh)
and
liquefied natural gas (PO.29/kWh). If taxes and royalties were to be removed on both
indigenous
and imported fuels, the rates of electricity generated
using indigenous
energy
resources
would
be
substantially
lower.
Moreover,
between
indigenous
petroleum which is intensively used for generating electricity and other local extractive
industries such as mining, the former is being subjected to royalties of about 60% while
the latter enjoys a much lower tax rate of 3%. Thus, instead of enjoying lower electricity.
rates, the Filipino is effectively being penalized for utilizing its own energy resources.
It's about time that the Filipino people should fully benefit from its energy
resources
by removing
the
disparities
in the tax/royalty
treatment
of indigenous
resources not covered by the Renewable Energy Act of 2008. This will directly result in
reducing the commodity
prices of these energy resources
as they are utilized for
electricity generation, which reduction will translate into lower electricity rates to the
Filipino consumers.


This
bill, therefore,
seeks
to lower the government
share
in the exploration,
development
and production
of indigenous
energy resources
other than those already
covered
by the Renewable
Energy Act of 2008 and set such government
share at the
level that maintains
the relative preference
to. indigenous
renewable
energy
resources
while still providing
substantial
revenue for the government.
It also aims to remove the
disparities
in tax/royalty
treatment
between
indigenous
energy resources
and imported
fuels.
These are sought to ultimately lower electricity
rates to the Filipino consumers
in
a significant
and sustainable
manner.
In view of the foregoing,
immediate approval of this bill is earnestly requested.


FIFTEENTH
CONGRESS
)
REPUBLIC
OF THE PHILIPPINES
)
FIRST REGULAR
SESSION
)
HOUSE OF REPRESENTATIVES
Introduced
by Representative
Rufus
B. Rodriguez
and
Representative
Maximo. B. Rod.r:....:.i~g-=-ue-=-z:.:.:.,-.:J
__r.
_
4501
House Bill No.
_
AN ACT
DIRECTING
THE
REDUCTION
OF
ELECTRICITY
RATES
THROUGH
THE.
UTILIZATION
OF
THE
GOVERNMENT
SHARE
IN
THE
DiSCOVERY,
EXPLORATION,
DEVELOPMENT
AND/OR
PRODUCTION
OF
INDIGENOUS
SOURCES
OF
ENERGY
FOR
THE
PURPOSE
OF
LOWERING
THE
COST
OF
ELECTRICITY
Be it enacted
by (he Senate
and
House
of Representatives
of the Philippines
in
Congress assembled:
SECTION
1. This Act shall be known as the "Electricity
Rate Reduction
Act of 2011".
SEC. 2. Declaration
of Policy - It is hereby declared the policy of the State that, to the
end-users
of electricity:
(i) the government
impositions
relating to indigenous
sources of
energy shall be effectively
at par with or more favorable
than analogous
impositions
on
imported
fuels in keeping with the Constitutional
precept
of preserving
the benefits
of
the national
patrimony
to the Filipino
people;
(ii) the competitiveness
of indigenous
sources
of energy
vis-it-vis
imported
fuels
shall
be ensured
thereby
increasing
the
country's energy self-sufficiency;
and (iii) the true and lower cost of electricity generated
from indigenous
sources of energy shall be reflected in view of the economic goal under
the Constitution
of increasing the amount of goods and services produced by the nation
for the benefit of the people.
SEC. 3. Definition of Terms - As used in this Act:
(a) "Department
of Energy"
or "DOE"
refers
to the government
agency
created
pursuant to Republic Act No. 7638.
(b) "Energy
Regulatory
Commission"
or "Commission"
refers
to the
independent
quasi-judicial
regulatory agency created pursuant to Republic Act No. 9136.
(c) "Government
Share" refers to the amount due the national government
and local
government
units from the discovery, exploration,
development
and/or production


;.
of
indigenous
energy
resources
under
new
and
existing
service
contracts
pursuant to relevant laws.
(d) "Indigenous sources of energy" refers to energy sources that are native to the
Philippines except those that are subject of or covered by Republic Act No. 9513
or the Renewable Energy Act of2008;
(e) "Net proceeds from the sale of the energy resource" refers to the difference
between the gross proceeds from the sale of such energy resource and the sum
of expenses allowed to be recovered under the relevant service contract.
SEC. 4. Government
Share - Notwithstanding any law to the contrary, the Government
Share shall henceforth be utilized and applied to reduce the commodity price of the
indigenous energy resources sold by a service contractor for generation of electricity
such that the Government Share is effectively reduced, as it is hereby reduced, to three
percent (3%) of the net proceeds from the sale of the energy resource over the life of'
the relevant service contract.
The
commodity
price
reduction
under
the
preceding
section
shall
be fully
reflected as a reduction in the price of electricity produced by generation companies
utilizing
the
indigenous
energy
resource.
The
commodity
price
reduction
shall
be
subject to annual adjustment or reconciliation to ensure that such reduction shall be
revenue-neutral to the service contractor.
SEC. 5. Utilization of the Reduction
in the Electricity
Price - In order that end-users will
fully benefit from the reduction in the electricity price of any generation company utilizing
the indigenous energy resource:
(a) Any distribution utility obtaining supply from said generation company shall pass on
the full reduction in electricity price to its end-user customers, thereby lowering the retail
rates of electricity; and
(b) Any end-user which said generation company may serve during the implementation
of retail competition and open access as provided for under Section 31 of Republic Act
No. 9136 shall also be included among those to which the reduction in electricity price
shall be passed on.
The Commission shall determine the reduction in electricity rates to end-users
across end-user classifications, giving priority to efficient end-users such as industrial·
loads for maximum multiplier effect on the national economy and marginalized
end-
users for more meaningful benefits.
SEC. 6. Implementing
Rules
and
Regulations
- Within three
(3) months
from the
effectivity of this Act, the DOE, in consultation with the Commission,
shall issue the
rules and regulations
implementing the same: Provided,
That the provisions
on the
utilization of the Government
Share for the reduction of the commodity price of the
indigenous energy shall take effect immediately.
For ease of implementation, the Department of Energy shall pursue amendments
to the relevant existing service contracts to provide for the reduced Government Share
under Section 4 above: Provided, That the rights of the concerned service contractors


shall not be impaired thereby; and Provided,
further, That the DOE shall ensure that
reduction of Government
Share shall be fully reflected in the reduction of electricity
rates to end-users in accordance with Sections 4, 5 and 6 herein. In any event, the
implementation
of this Act shall not be dependent
upon such amendments
being
adopted by the parties.
SEC. 7. Separability
Clause - If for any reason, any provision of this Act or any part
thereof shall be held unconstitutional or invalid, the other parts or provisions of this Act,
which are not affected thereby, shall remain in force and effect.
SEC. 8. Repealing
Clause - All laws, decrees, orders, rules and regulations including
Presidential
Decree No. 87, or parts thereof, which are inconsistent with any of the
provisions of this Act are hereby repealed, amended or modified accordingly.
SEC. 9. Effectivity
Clause - This Act shall take effect fifteen (15) days after its complete
publication in at least two newspapers of general circulation.
Approved,