SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES 1.2. MAR 201;

Introduced by Representative Rufus B. Rodriquez and
Representative Maximo B. Rodriguez, Jr. XX

House Bill No. 4185
EXPLANATORY NOTE

il companies in the Philippines have been regularly increasing gas and diesel prices
We therefore need to look into alternative 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

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

Its 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 eamnestly requested

RUFYS B. RODRIGUEZ

MAXIMO Jlbes JR


SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No. 41.85

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 the Senate and House of Representatives of the Philippines in Congress
assembled.

SECTION 4. This Act shall be known as the "Electricity Rate Reduction Act of 2014"

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 shalll 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,