GAPE: aN

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. ~~ 2416

Introduced by Rep. Precious Hipolito Castelo

EXPLANATORY NOTE

About 4.5 million Meralco customers, captive at that, must have been systematically robbed
but cannot do anything about it.

Note that as a result of a COA Audit Report, findings show overcharges of Meralco of P8
billion in 2004 and P4 billion in 2007 which are enough to establish that the rates granted by
the Energy Regulatory Commission (ERC) to Meralco in May 2003 was indisputably unjust
and unreasonable.

In this light, this bill calls for a regular regulatory audit of Meralco to be undertaken by COA
and for that matter, similar power utilities or distributors such as the Visayan Electric Co. or
Veco in Cebu.

Truly, there is a need to review the reach of Republic Act No. 3019, otherwise known as the
Anti-Graft and Corrupt Practices Act in so far as action or inaction by officials of the ERC
might have given Meralco ‘unwarranted benefits, advantage or preference’ by wanton
approval of every request of increase of power rates.

This bill seeks to protect end-users, consumers and customer solely and largely dependent
‘on Meralco for their power requirements which already had a long history of having raked so
much profit way above what should have been set as ‘just and reasonable rates’ to allow
retumn-on-rate base for it to operate viably

In fact, under these conditions, Meralco shall be compelied to refund to the consuming public
all overcharges that are deemed unreasonable or unjustly imposed.

This bill stkes @ balance between the profit motive of the private companies and the
benefits of the consuming public, hence the urgent passa fS-hill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2416

HOUSE BILL NO.

Introduced by Rep. Precious Hipolito Castelo

AN ACT
MANDATING REGULAR REGULATORY AUDIT OF MERALCO BY THE COMMISSION
ON AUDIT AS PRINCIPAL BASIS FOR VALIDATION OF RATES AS MAY BE GRANTED
BY THE ENERGY REGULATORY COMMISION ON SUCH POWER UTILITIES AND
DISTRIBUTORS AND FOR OTHER PURPOSES

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

SECTION 1. This Act shall be known as the “Power Rate Validation Act.”

SEC. 2. Under this Act, the Commission on Audit is mandated to conduct regular
regulatory audit of Meralco and such other utilities and distributors as principal basis for
validation of rates as may be granted by the Energy Regulatory Commission on requests for
power rate increases.

It shall serve as a check-and-balance mechanism against otherwise unreasonable
rates that could inflict social and economic costs to various end-users, customers and the
‘consuming public in general.

SEC. 3. It shall be prohibited for Meralco or similar power utilities and distributors to
fail to comply with the provision of this Act and violation hereof shall compel such power
utilities and distributors to refund overcharges beyond the prescribed reasonable rates.

SEC. 4. The Commission on Audit shall issue appropriate guidelines to effectively
carry out the provisions of the Act.

SEC. 5. All laws, issuances, decrees, orders, rules and regulations or parts thereof
not consistent with this Act are hereby repealed or modified accordingly.

SEC. 6. This Act shall take effect thirty (30) days after its Publication in the Official
Gazette or in at least two (2) newspapers of general circulation.

Approved,