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REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

Mec

SIXTEENTH CONGRESS  inoey WA
First Regular Session —— Z

House Bill No.__“ £ 3751

Introduced byMAGDALO Party List Representatives
Gary C. Alejano and Francisco Ashley L. Acedillo

EXPLANATORY NOTE

‘When President Fidel V. Ramos assumed presidency in 1992, he was welcomed by a crippling power
crisis throughout the country prompting him to seek emergency powers from Congress. Republic Act No.
7648, otherwise known as the “Electric Power Crisis Act of 1993”, granted emergency powers to then
President Ramos to respond to the alarming shortage of the supply of electricity during that period.

RA 7648 allowed special constitutional powers to issue licenses to independent power producers (IPP) for
the construction, repair, rehabilitation, improvement or maintenance of power plants, projects and
facilities, This effectively fast tracked the usually long and tedious process required to bid out government
projects. Moreover, said law also created an oversight committee in each House of Congress to monitor
the implementation of the same and the exercise of authority granted under the law.

Howev
effectivi

the authority granted under RA 7648 was only valid for a period of one (1) year from its

Sadly,challenges that beset the power industry have not ceased. Early last year saw the recurrence of
intermittent power brownouts in Mindanao,and no less than the President admitting that said power
problem has been neglected for years.

Moreover, just before 2013 ended, Manila Electric Company (Meralco), the largest power distributor in
the country, announced its plan to raise electricity rates byPhp 4.15per kilowatt hour, the highest in the
country’s history, when it was forced to buy expensive electricity from the Wholesale Electricity Spot
Market (WESM) after its major source of power, the Malampaya natural gas platform, went on @
maintenance shutdown from November 10 to December 11

‘Thereafter, at the start of the year, following the High Court’s 60-day freezeon the planned power rate
hike this January, Meralco warned of rotating blackouts in the summer if the bleak possibility that
generation companies might altogether refuse to sel electricity to Meralco ensues. Worse, Meralco adds
that said generation companiesmay decide to sell only such amount of electricity as is commensurate to
the resulting rate of P5.6673 per kilowatt-hour.”

It is therefore not surprising that renewed calls on the grant of emergency powers to the President to
expeditiously address the looming energy crisis have surfaced.

It is in light of all the foregoing that this measure granting emergency powers to the President to address
the loomingpower crises is being put forward.

With the powers granted under this Bill, the President can expedite and fast track the approval,
establishment and operationalization of power generation projects. With more players and alternative
sources of power, it is expected that the additional capacity will not only address the growing demand but
also promote competition and result to lower power rates.

Meralco warns of _—blackouts without © power-~—«rate.~—“ihike.-—Information accessed from

httn//wwwgmanetwork.com/news/story/343136 /economy/companies/meralco-wamns-of-blackouts-without-power-rate:hike on
4/13/2014

bid.

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Out of the abundance of caution, however, this measure expressly prohibits the government from granting
sovereign guarantee for the payment of obligations incurred by the Independent Power Producers (IPPs).

Likewise, this measure proscribes the inclusion of onerous “fake or pay” contracts or similar provisions
which appeared to have been abused in the past.

Whenever it is necessary for the national welfare and in the public interest, and pursuant to the policy
declared under the Bill, the President is likewise authorized to compel IPPs to supply power to
distribution utilities and power distribution cooperatives to ensure the availability of power to end-
users,with the power to fix a reasonable rate of return on rate base for the concerned IPPs, not to exceed
‘twelve percent (12%) per annum.

Finally, in order to prevent the imposition of the additional burden unto consumers who are already
reeling not only from the recent calamities but also from seemingly endless actual and/or threathened
increases in the cost of gasoline and diesel, liquified pertroleum gas (LPG), water, transport fare as well
as in the premium contributions imposed by the Social Security System and PhilHealth, the President
shall also be empowered to authorize and allow the use of the Special Funds which include the
Malampaya Fund to finance the maintenance, rehabilitation, and replacement of energy infrastructure in
preparation for and/or in response to natural and man-made calamities, as well as to finance subsidy for
energy consumption by end users in case of market failure.

‘Armed with theextra-ordinary powers granted under this Bill, it is expected that the President would be
able to address and ultimately resolve the looming power crisis, if not immediately, at least in the short
and medium term.

More importantly, the President would also be in a better position to protect consumers and the public-at~
large from the debilitating effects not only of rotating blackouts but also from the unprecedented and
record-setting increases in the cost of power.

In view of the foregoing, immediate approval of this measure is earnestly sought.

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GARY C. #LEJANO F iCISCO ASHLEY L. ACEDILLO-


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REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

3751

House Bill No.

Introduced by MAGDALO Party List Representatives
Gary C. Alejano and Francisco Ashley L. Acedillo

AN ACT
PRESCRIBING URGENT MEASURES NECESSARY AND PROPER TO
EFFECTIVELY ADDRESS THE ELECTRIC POWER CRISIS AND FOR OTHER
RELATED PURPOSES

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

SECTION 1. Short Title, - This Act shall be known as the “Electric Power Crisis Act of
2014”.

SEC. 2. Declaration of Policy. ~ It is hereby declared the policy of the State to adopt
adequate and effective measures to address electric power crisis which threathens to disrupt the
country’s economic and social life and which is looming to assume the nature and magnitude of

a public crisis if not a calamity, if not properly addressed.

SEC. 3. Negotiated Contracts. — Pursuant to the above declared policy and in the public
interest and whenever it is advantageous to the Government and the public, the President may
enter into negotiated contracts for the construction, repair, rehabilitation, improvement and/or
maintenance of power plants, projects and facilities, subject to the following requirements:

a) In order to inform competitive contractors, the list of projects to be undertaken under

this Act, together with their description, the budgetary estimates involved and other
salient features, shall be published in a newspaper of general circulation thirty (30)
days after the effectivity of this Act;

b) Upon perfection of the contract, the terms and conditions of the same, with the name

and qualifications of the contractor, shall likewise be published in a newspaper of
general circulation two (2) weeks before the signing of the contract;
c) The contracts shall be awarded only to contractors with:
i) _ proven competence and experience in similar projects;
ii) competent key personnel and sufficient and reliable equipment; and

iii) sound financial capacity; and


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4) All the awarded projects shall be subject to existing government auditing rules and

regulations governing negotiated contracts.

Provided, That the President shall not grant sovereign guarantee for the payment of
obligations incurred by the independent power producers (IPPs); Provided further, That the
President shall not enter into negotiated contracts which will bring the total production capacity
in excess of the power requirement of the country as projected by the Department of Energy
(DOE); Provided finally, that no take-or-pay contracts or similar onerous provisions shall be
entered into in the exercise of the powers provided in this Act.

SEC, Power To Compel IPPs To Supply Power; Return on Rate Base. ~ Further
pursuant to the above declared policy, the President is hereby authorized, whenever it is
necessary for the national welfare and in the public interest, to compel IPPs to supply power to
distribution utilities and/or power distribution cooperatives and to fix the rate of return of the
IPPs to a reasonable percentage of their rate base, as may be determined by the President in
consultation with IPPs and other stakeholders; Provided, That said rate of return on rate base

shall not exceed twelve percent (12%) per annum.

‘Any increase in power rates shall take effect only upon approval of the Energy
Regulatory Commission (ERC), and only after proper notice, hearing and due proceedings.

SEC. 5. Authority Of The President To Tap Available Funds Including Special Funds.
~ Likewise pursuant to the above declared policy and whenever it is necessary for the national
welfare and in the public interest, the President is hereby empowered to authorized and allow the
use of all available funds, including the savings of the Government from its operations in the
current and previous years, as well as Special Funds, including the Special Fund created under
Presidential Dectee No. 910 otherwise known as the “Malampaya Fund”, to finance the
maintenance, rehabilitation, and replacement of energy infrastructure in preparation for and/or in
response to natural and man-made calamities,as well as to finance subsidy for energy

consumption by end users in case of market failure.

SEC. 6. Duration of Grant of Powers. ~The authority granted to the President under this
Act shall subsist, be valid and effective for a period of one (1) year from the effectivity of this
‘Act, unless sooner withdrawn by a resolution of Congress, without prejudice to rights and
benefits that may have been vested, and culpabi

s and liabilities that may have been incurred.