Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Nineteenth Congress
First Regular Session

House Bill No,_2984

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
ENHANCING THE GOVERNANCE STRUCTURE OF THE
ENERGY REGULATORY COMMISSION

EXPLANATORY NOTE
‘The Energy Regulatory Commission is the ultimate guardian of the public interest in

the power sector, As such. it is necessary that its governance structure fosters independence,
transparency, and accountability.

However. the structure of the ERC shows areas for significant improvement. For
example, the Chairperson and the Chief Executive Officer functions of the agency are
concentrated on the same person. making the Chief Executive Officer less accountable.

The Code of Corporate Governance for GOCCs recommends that “ideally. the roles of
the Chairman and the CEO should be with different individuals in order to ensure an
appropriate balance of power. increased accountability. greater capacity of the Board for
independent decision-making. and optimum capacity to exercise supervisory function over
Management”.

As a mitigating factor, the Code also recommends that “Where both positions of the
Chairman and the CEO are unified in the same individual. checks and balances should be
clearly provided by the Governing Board to help ensure that independent, outside views.
perspectives. and judgments are given proper hearing in the Board.” However, Section 38 of
the Electric Power Industry Reform Act appears not to provide these checks and balances.

Consistent with the practices recommended in the Code. this bill aims to make the ERC
more accountable by providing:

(1) additional qualifications and requirements for ERC Commissioners to ensure board
diversity:

(2) prohibitions and disqualifications for ERC Commissioners and their relatives to
prevent conflicts of interest;

(3) the separation of the Chairperson and CEO functions to assure a balance of power:

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(A) defined duties and responsibilities of the Chairperson, the Commission. and the
Executive Director to increase individual and board accountability:

(5) open meetings during deliberations of the Commission to guarantee public
transparency;

(6) access to information to enhance knowledge and education on regulatory matters
affecting public welfare; and

(7) liabilities for violation of. among others. open meeting and access to information
provisions.

In view of the foregoing, the passage of this bill is earnestly sought.

JOEYSARTE SALCEDA

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

‘Nineteenth Congress
First Regular Session

House Bill No. 2964

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
ENHANCING THE GOVERNANCE STRUCTURE OF THE
ENERGY REGULATORY COMMISSION

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

Chapter I
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the “Energy Regulatory
Commission Governance Act of 2022”.

SEC. 2. Declaration of Policy. ~ The State recognizes the significant role of the Energy
Regulatory Commission in ensuring transparent and reasonable prices of electricity in a regime
of free and fair competition and full public accountability to achieve greater operational and
economic efficiency. Likewise, public interest demands the protection of consumers as they
are affected by the rates and services of electric utilities and other providers of electric power.
Towards this end, the State shall:

(a) Establish a strong, independent, transparent, and accountable regulatory body: and

(b) Institutionalize a system to ensure the efficient and effective performance of the
functions and mandates of the regulatory body to enhance competitiveness in the electric power
industry.

SEC. 3. Scope. - This Act shall enhance the existing governance mechanisms of the
Energy Regulatory Commission to foster independence, transparency, and accountability

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

(a) Career Executive Service Board refers to the governing body of the Career
Executive Service (CES) created under Presidential Decree No. 1 Series of 1972

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(b) Career Executive Service Eligibility refers to the eligibility conferred to a person
who passes the four-stage CES Eligibility Examination process and meets the other
requirements prescribed by the Career Executive Service Board.

(©) Career Executive Service Officer refers to a person with CES eligibility appointed
by the President to a CES rank upon the recommendation by the Career Executive Service
Board.

(a) Commission refers to the decision-making body of the Energy Regulatory
Commission under Republic Act 9136 composed of one (1) Chairperson and four (4)
Commissioners.

(e) Consumer refers to all captive and contestable customers who buy electricity either
from a distribution utility, a retail electricity supplier. or a generation company

(f) Deliberation refers to a communication between or among members of the
Commission in a meeting: Provided, That a quorum exists.

(g) Electric Power Industry Participant refers to any person or entity engaged in the
generation, transmission, distribution, or supply of electricity.

(h) Energy Regulatory Commission refers to the regulatory agency created under
Republic Act No. 9136.

(i) Joint Congressional Power Commission refers to the Commission created under
Republic Act No, 9136.

(j) Key ERC Personnel refers to employees who hold executive or managerial positions
in the ERC.

(k) Meeting refers to a deliberation of the Commission with respect to any case, issue,
or matter within its jurisdiction.

(1) Public Hearing refers to an official proceeding of a government agency during which

the public is accorded the right to express its position on the subject matter at hand.
Chapter II
COMPOSITION OF THE COMMISSION

SEC. 5. The Commission. — The Commission shall be the sole governing body of the
ERC, and shall formulate its policies and direct its affairs. All executive functions of the ERC
shall rest on the Commission: Provided, That such executive functions shall be limited to the
duties and responsibilities enumerated in Section 11 of this Act.

SEC. 6. Qualifications. — All members of the Commission shall be:

(a) natural-born citizens and residents of the Philippines:

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(b) at least thirty-five (35) years of age:

(©) of good moral character;

(d) of recognized probity and independence; and

(e) of distinguished competence in any of the following fields: energy. law. economic:

finance, commerce, engineering. or other experience relevant to the energy sector with at least
ten (10) years of active practice in their respective fields of expertise.

No member shall have been a candidate for any elective national or local office in the
immediate preceding elections, whether regular or special: Provided further, That one (1) shall
be a lawyer, one (1) shall be an economist. one (1) shall be an engineer, and one (1) shall be a
certified public accountant or have a background in finance.

SEC. 7. Requirements. ~ The members of the Commission shall, upon assumption of
office:

(a) Publicly disclose any employment, consultancy, or any connection with, and any
pecuniary interest in an Electric Power Industry Participant;

(b) Publicly disclose if his or her spouse, partner, and any relative by consanguinity or
affinity within the fourth civil degree is employed or has a consultancy or any connection with,
or has any pecuniary interest in an Electric Power Industry Participant;

(©) Divest through sale or legal disposition any all interests in an Electric Power
Industry Participant; and

(@) Terminate employment or consultancy with any Electric Power Industry Participant.

SEC. 8. Prohibited Acts. - The members of the Commission, within the duration of
their term, are prohibited from:

(a) Taking up any employment or consultancy arrangement with any Electric Pow
Industry Participant;

(b) Holding any connection to and any pecuniary interest in an Electric Power Industry
Participant;

(c) Holding any other office or employment; and

(d) Directly or indirectly practicing any profession, participating in any business, or be
financially interested in any contract with, or any franchise, or special privileges granted by the
government or any subdivision, agency, or instrumentality thereof, including government-

owned land controlled corporations or their subsidiaries.

The members of the Commission, after the cessation of their service. are prohibited
from:

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(a) Running for office in the election immediately succeeding their cessation from
office; and

(b) Personally appearing or practicing as counsel or agent on any matter pending before
the Commission for two (2) years following the cessation of their service.

Any spouse, partner, and relative by consanguinity or affinity within the fourth civil
degree of the members of the Commission are prohibited from:

(a) Taking up any employment or consultancy arrangement with an Electric Power
Industry Participant during the incumbency of the member of the Commission to whom he or
she is related to;

(b) Holding any connection to and pecuniary interest in any Electric Power Industry
Participant during the incumbency of the member of the Commission to whom he or she is
related to; and

(©) Appearing as counsel or agent or any matter pending before the Commission or
transacting business directly or indirectly therein during the incumbency of the member of the
Commission to whom he or she is related to, and within two (2) years from cessation of their
service.

SEC. 9. The Chairperson. ~ The Chairperson shall be from the fields of energy, law,
economics, finance, commerce, or engineering with at least ten (10) years of experience in
energy and/or public utility regulation: Provided, That the qualifications and requirements in
Sections 6 and 7 of this Act are complied with.

SEC. 10. Duties and Responsibilities of the Chairperson. — The Chairperson shall:
(a) Provide leadership direction for the Commission in matters such as but not limited
to development and determination of strategies and policies in order to effectively comply with

its mandate under Republic Act 9136;

(b) Ascertain that the strategies and policies agreed upon by the Commission are
effectively implemented by the Executive Director;

(c) Promote collaborative relationships and open communication between and among
members of the Commission;

(d) Set, in consultation with other members of the Commission, the Executive Director,
and the Secretariat, the Commission's meeting schedule and agenda to take full account of the
important issues facing the Commission and the concerns of management, and ensure that
adequate time is available for thorough discussion of each;

(e) Ensure that the members of the Commission undergo capacity building programs to
continuously enhance technical competence, are properly briefed on issues pending before the
Commission, and receive. in a timely manner, adequate, accurate, clear, complete. and reliable
information to fulfill their duties;

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(f) Preside over meeting of the Commission; Provided, That the Chairperson has the
right to vote on matters pending before the Commission;

(g) Ascertain that all key and appropriate issues are discussed. deliberated upon, and
resolved by the Commission in a timely manner;

(h) Create an environment that allows constructive discourse during open meetings.
executive sessions, and public hearings;

(i) Ensure that the Commission's decisions are in furtherance of its mandate under
Republic Act 9136;

(i) Secure that the Commission avoids acts which unduly influence, impede, or hamper
the Executive Director or any ERC employee from effectively fulfilling his or her duties and
responsibilities: and

(k) Establish good corporate governance practices and procedures and promote the
highest standards of independence, transparency, integrity, and probity.

SEC. 11. Duties and Responsibilities of the Members of the Commission. — In addition
to the functions enumerated in Republic Act 9136, the members of the Commission shall:

(a) Regularly attend and actively participate in the meetings of the Commission where
any case, issue, or matter within its jurisdiction is under consideration;

(b) Recommend to the Chairperson the inclusion in the agenda of any case, issue, or
matter deemed appropriate in the performance of the Commission's functions;

(c) Be properly informed about and thoroughly analyze cases, issues, and matters
pending before the Commission;

(d) Take part in continuous education and capacity building programs of the
Commission to enhance technical competence;

(e) Abstain from acts which unduly influence, impede, or hamper the Executive
Director or any ERC employee from effectively fulfilling his or her duties and responsibilities;

( Appoint the Executive Director of the ERC: Provided, That the requirements,
prohibited acts, qualifications, and duties and responsibilities stated in Sections 7, 8, 12, and
13 of this Act are complied wit

(g) Act on the selection and appointment of Key ERC Personnel: Provided, That the
selection process for Key ERC Personnel must be in accordance with ERC's Enhanced Merit
Selection Plan and/or other plans related to personnel selection duly approved by the
Commission;

(h) Review and act on the endorsement of the proposed ERC budget: Provided, That
such endorsement must come from the Executive Director and must be substantiated with
supporting documents;

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(i) Initiate, motu poprio or upon formal complaint, investigations against the Executive
Director and act upon these investigations: Provided. That such investigation is without
prejudice to the filing of administrative or criminal cases against the Executive Director; and

(j) Perform in good faith and to the best of its ability, the functions stated in Republic
Act 9136 and the duties and responsibilities specified in this Act.

Chapter HI
ERC OPERATIONS.

SEC. 12. The Executive Director. ~The Commission, acting collectively, shall appoint
an Executive Director who shall act as the Chief Executive Officer of ERC until resignation,
retirement, or unless terminated earlier for cause. The Executive Director who shall be a Career
Executive Service Officer of the ERC, shall have relevant experience in any of the fields of
law. economics, commerce, management, finance, or engineering for at least ten (10) years,
and shall be subject to the same requirements and prohibitions as indicated in Sections 7 and 8
of this Act.

When an Executive Director who has rendered at least ten (10) years of service in such
capacity retires, he or she shall receive during the duration of his or her natural life. retirement
benefits equivalent to his or her last salary plus representation and other allowances.

SEC. 13. Duties and Responsibilities of the Executive Director. ~ The duties and
responsibilities of the Executive Director shall include but shall not be limited to:

(a) Developing and proposing, for the Commission's approval, the operationalization
of the strategies and policies agreed upon by the Commission;

(b) Effectively executing the approved operationalization of the strategies and policies
agreed upon by the Commission;

(c) Leading the management of the daily operations of ERC in accordance with the
plans and within the budget approved by the Commission;

(a) Assuming fall responsibility for the overall supervision and control of all divisions,
units, and services of the ERC:

(e) Assigning to each division, unit, and service of the ERC such duties that are
considered necessary or expedient;

( Coordinating the workings of the divisions, units, and services of the ERC:

(g) Establishing a mechanism for capacity building for all employees of the ERC to
continuously enhance technical competence: Provided, That such mechanism will be based on
the principle of meritocracy:

(b) Ensuring compliance with the ERC’s Enhanced Merit Selection Plan and/or other
plans related to personnel selection duly approved by the Commission when it comes to the
hiring and promotion of employees;

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(i) Leading the management to ensure effective working relationships with the
Commission by regularly communicating with the Chairperson to review key developments,
issues, opportunities, and concerns;

(j) Ensuring that the management gives priority to providing documents and reports
which contain relevant, accurate, timely, and clear information necessary for the Commission,
to fulfill its duties:

(k) Maintaining regular dialogue with the Commission while ensuring that the
Commission, especially the Chairperson, is alerted to forthcoming complex, contentious,
sensitive, or strategic issues facing the ERC:

(1) Advising the Commission on any matter referred to the Executive Director;

(m) Managing the affairs of the ERC in accordance with good corporate governance
practices and procedures while promoting the highest standards of independence, transparency,
integrity, and probity;

(n) Initiating investigations and recommending administrative sanctions against erring
employees, without prejudice to the filing of any criminal action against the concemed
employee;

(0) Regularly submitting to the Commission updates on the operations of ERC; and
(p) Performing such other duties as the Commission may assign.

Alll decisions of the Executive Director involving budgeting and disbursement of funds
shall be subject to the approval of the Commission.

Chapter IV
TRANSPARENCY AND ACCOUNTABILITY

SEC. 14. Open Meeting. ~ All meetings of the Commission shall be open to the public:
Provided, That the public may only participate during public hearings: Provided further, That
a live web streaming or any related technology of the open meeting shall be posted: Provided
finally, That the transcript of stenographic notes and minutes of the open meeting shall be made
available to the public, whether on the website or otherwise, within one (1) week from the date
of the open meeting.

The Commission, upon a majority vote, may decide to meet in an executive session:
Provided, That before going into an executive session, the Commission must convene in an
open meeting, identify the reason for the executive session while stating all the subjects that
may be revealed without compromising the purpose for which the executive session was called,
declare whether the Commission will reconvene in an open meeting at the end of the executive
session, and take a roll call vote to enter into executive session.

Executive sessions may be called for the following reasons:

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(a) To discuss the discipline or dismissal of or complaints or charges brought against a
public officer, employee, or staff of ERC; and

(b) To discuss trade secrets, confidential, competitively-sensitive, or other proprietary
information.

SEC. 15. Public Notice of Open Meeting. ~The Commission shall provide the public
with notice of its meeting and the agenda at least seven (7) working days before the scheduled
date of the meeting: Provided, That for emergency meetings. the notice may be posted within
a reasonable time prior to the meeting: Provided further, That public notices shall be posted in
a manner easily accessible to the public such as but not limited to actual and web posting.

SEC. 16. Orders, Decisions, and Resolutions. ~ All orders, decisions, and resolutions
shall undergo deliberations and once approved by the required number of votes during open
meetings provided a quorum is present, shall forthwith be promulgated within thirty (30) days
from the date of the open meeting and published online in accordance with Section 18 hereof.

SEC. 17. Support Desk. - a support desk shall be made available to the public which
will supply assistance to Consumers for a better understanding of all proceedings and issuances
of the Commission as well as any and all matters which affect the electricity rates charges to
Consumers: Provided, That the matter shall not be confidential information.

A new office may be created for this Support Desk should the Commission deem it
necessary.

SEC. 18. Online Publication. ~ All petitions, applications, and reportorial requirements
of Electric Power Industry Participants, including all annexes thereto, except for those
considered as confidential information, as well as orders, decisions, and resolutions of the
Commission, shall be posted on the ERC website within five (5) days from submission in the
case of petitions, applications, and reportorial requirements, or promulgation in the case of
orders, decisions, and resolutions

SEC. 19. Access to Information. Every Consumer has a right to information and shall,
on request, be given access to any information of public concern under the control of the
Commission: Provided, That the access to information shall not be granted if:

(a) The information is considered confidential information under the ERC Rules and
Practice and Procedure;

(b) The information consists of minutes or records of advice given, or of opinions
expressed during decision-making or policy formulation in the course of executive sessions;

(c) The information requested consists of drafts of orders, resolutions, decisions, or
memoranda of the Commission in the exercise of its regulatory function; and

(d) The information requested pertains to trade secrets, competitively-sensitive, or other

proprietary information, whenever the revelation thereof would prejudice the interests of a
natural or juridical person in trade, industrial, financial, or commercial competition

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SEC. 20. Procedure or Access. ~ Any person who desires to obtain information shall
submit, free of charge, a request to the Commission personally, by mail. or through electronic
means. Within fifteen (15) working days from the receipt thereof or as soon as practicable, the
Commission shall comply with the request: Provided, That the period may be extended if a
fortuitous event occurred, the information requested requires a search of the Commission's field
's or an examination of voluminous records, or other analogous cases

SEC. 21. Access and Processing Fees. — The Commission may charge a reasonable fee
which shall in no case exceed the actual cost of reproduction, copying, or transcription of the
information requested: Provided, That the Commission may waive the fees whenever it is
fied that the person who requested is indigent or that the cost of reproduction is negligible.

SEC. 22. Exemption from Compliance. ~ The Commission is excused from complying
with a subsequent identical or substantially similar request from the same requesting party:
Provided, That it has previously complied with a similar request for information unless a
reasonable interval has elapsed between compliance with the previous request and the making
of the current request.

SEC. 23. Administrative Offenses and Penalties. - Any ERC official or employee who
refuses to comply with Section 14 of this Act shall be suspended from service for six (6) months
and one (1) day to one (1) year without pay on the first offense, and shall be dismissed from
service and be perpetually disqualified from re-employment in any government agency or
instrumentality on the second offense.

Any ERC official or employee who refuses to comply with, or fails to perform the acts
required within the specified period of time in Sections 15, 16, and 18, shall be reprimanded
on the first offense, shall be suspended from service for one (1) to thirty (30) days on the second
offense, and shall be dismissed from service and be perpetually disqualified from re-
employment in any government agency or instrumentality on the third offense.

Any ERC official or employee who refuses to comply with, or fails to act on a request
for information pursuant to Section 19 and 20 of this Act shall be suspended from service for
six (6) months and one (1) day to one (1) year without pay on the first offense, and shall be
dismissed from service and be perpetually disqualified from re-employment in any government
agency or instrumentality on the second offense.

SEC. 24. Criminal Offenses and Penalties. — The penalty of imprisonment of not less
than one (1) month but not more than six (6) months and a fine ranging from ten thousand
pesos (P 10,000.00) to one hundred thousand pesos (P 100,000.00) shall be imposed upon any
ERC official or employee who:

(a) Falsely denies or conceals the existence of information that is a proper subject for
disclosure under Section 19 of this Act;

(b) Destroys, or causes to be destroyed, information and/or documents being requested
that is a proper subject of disclosure under Section 19 under this Act for the purposes of
frustrating the requesting party's access thereto;

(c) Divulges or release information covered by confidentiality under Sections 14 and
19 of this Act; and

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(@) Divulges or releases information that is altered. tampered, or modified to the extent
that the released information materially differs from the original contents of the document:
Provided, That altering or modifying a document for the purpose of severing an exempt
information from non-exempt information in a single document shall not be punishable under
this Section.

If the violation committed in this Act is induced by and/or assisted by a private
individual or corporation, partnership, or any kind of judicial entity, the penalty provided herein
shall be imposed on its executive officer and or other officials responsible therefor: Provided,
That they shall suffer, in addition to the penalties provided herein, the automatic revocation of
their license to operate.

Chapter IV
MISCELLANEOUS PROVISIONS

SEC. 25. Transitory Provision. — The current members of the Commission shall
continue to serve in such capacity until the completion of their term.

The qualifications, requirements, and prohibitions stated in Sections 6, 7, and 8 of this
Act shall apply to new members of the Commission.

‘The current Chairperson shall immediately divest himself of his role and powers as the
Chief Executive Officer of the Commission upon the effectivity of this Act.

‘The current Executive Director shall assume the duties and responsibilities laid out in
Section 13 of this Act upon the effectivity of this Act; Provided, That upon such assumption,
the current Executive Director shall immediately comply with the requirements and
prohibitions stated in Sections 7 and 8 this Act: Provided further, That the current Executive
Director shall serve as such until his resignation, retirement or termination for cause.

SEC. 26. Oversight Committee.— Upon the effectivity of this Act, the JCPC established
under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 shalll exercise
oversight powers over the implementation of this Act.

SEC. 27. Separability clause. ~ If any provision of this Act shall be declared invalid or
unconstitutional, such declaration shall not affect the validity of the remaining provisions of
this Act.

SEC. 12. Repealing clause. ~ All provisions of laws, presidential decrees, letters of
instruction and other presidential issuances or parts thereof, which are incompatible or
inconsistent with the provisions of this Act are hereby deemed repealed, amended or modified
accordingly.

SEC. 62. Effectivity. — This Act shall take effect fifteen (15) days after its publication
in two (2) newspapers of general circulation.

Approved,

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