Republic Act No. 9136 - Electric Power Industry Reform Act of 2001 PDF

REPUBLIC ACT NO. 9136 (a) “Aggregator” refers to a person or entity, engaged in AN ACT ORDAINING REFORMS IN THE ELECTRIC POWER consolidating electric power demand of end-users in the...

REPUBLIC ACT NO. 9136 (a) “Aggregator” refers to a person or entity, engaged in AN ACT ORDAINING REFORMS IN THE ELECTRIC POWER consolidating electric power demand of end-users in the INDUSTRY, AMENDING FOR THE PURPOSE CERTAIN LAWS AND FOR contestable market, for the purpose of purchasing and OTHER reselling electricity on a group basis; PURPOSES CHAPTER I (b) “Ancillary Services” refer to those services that are TITLE AND DECLARATION OF POLICY necessary to support the transmission of capacity and energy from resources to loads while maintaining reliable operation SECTION 1. Short Title. – This Act shall be known as the (c) “Captive Market” refers to electricity end-users who do “Electric Power Industry Reform Act of 2001”. not have the choice of a supplier of electricity, as may be SECTION 2. Declaration of Policy. – determined by the Energy Regulatory Commission (ERC) in (a) To ensure and accelerate the total electrification of the accordance with this Act; country; (d) “Central Dispatch” refers to the process of issuing direct (b) To ensure the quality, reliability, security and affordability instructions to electric power industry participants by the of the supply of electric power; grid operator to achieve the economic operation and (c) To ensure transparent and reasonable prices of electricity maintenance of quality, stability, reliability and security of in a regime of free and fair competition and full public the transmission system; (d) To enhance the inflow of private capital and broaden the (e) “Co-Generation Facility” refers to a facility which ownership base of the power generation, transmission and produces electrical an/or mechanical energy and forms of distribution sectors; useful thermal energy such as heat or steam which are used (e) To ensure fair and non-discriminatory treatment of public for industrial commercial heating or cooling purposes and private sector entities in the process of restructuring the through the sequential use of energy; electric power industry; (f) “Commission” refers to the decision-making body of the (f) To protect the public interest as it is affected by the rates ERC composed of a Chairman and four (4) members as and services of electric utilities and other providers of electric provided under Section 38 hereof; power; (g) “Concession Contract” refers to the award by the (g) To assure socially and environmentally compatible energy government to a qualified private entity of the responsibility sources and infrastructure; (h) “Contestable Market” refers to the electricity end-users (h) To promote the utilization of indigenous and new and who have a choice of a supplier of electricity, as may be renewable energy resources in power generation in order to determined by the ERC in accordance with this Act; reduce dependence on imported energy; (i) “Customer Service Charge” refers to the component in the (i) To provide for an orderly and transparent privatization of retail rate intended for the cost recovery of customer-related the assets and liabilities of the National Power Corporation services including, but not limited to, meter reading, billing (NPC); administration and collection; (j) To establish a strong and purely independent regulatory (j) “Demand Side Management” refers to measures body and system to ensure consumer protection and undertaken by distribution utilities to encourage end-users in enhance the competitive operation of the electricity the proper management of their load to achieve efficiency in market;and the utilization of fixed infrastructures in the system; (k) To encourage the efficient use of energy and other (k) “Department of Energy” or “DOE” modalities of demand side management (l) “Department of Finance” or “DOF” SEC. 3. Scope. – This Act shall provide a framework for the (m) “Distribution Code” refers to a compilation of rules and restructuring of the electric power industry, including the regulations governing electric utilities in the operation and privatization of the assets of NPC. maintenance of their distribution systems which includes, SEC. 4. Definition of Terms. – (n) “Distribution of Electricity” refers to the conveyance of (cc) “Inter-Class Cross Subsidy” refers to an amount charged electric power by a distribution utility through its distribution by distribution utilities to industrial and commercial end- system pursuant to the provisions of this Act; users as well as to other subsidizing customer sectors in (o) “Distribution System” refers to the system of wires and order to reduce electricity rates of other customer sectors associated facilities belonging to a franchised distribution such as the residential end-users, hospitals, and (p) “Distribution Wheeling Charge” refers to the cost or streetlights; charge regulated by the ERC for the use of a distribution (dd) “Inter-Regional Grid Cross Subsidy” refers to an amount system and/or the availment of related services; embedded in the electricity rates of NPC charged to its (q) “Distribution Utility” refers to any electric cooperative, customers located in a viable regional grid in order to reduce private corporation, governmentowned utility or existing the electricity rates in a less viable regional grid; local government unit which has an exclusive franchise to (ee) “Intra- Regional Grid Cross Subsidy” refers to an amount operate a distribution system in accordance with this Act; embedded in the electricity rates of NPC charged to (r) “Electric cooperative” refers to a distribution utility distribution utilities and non-utilities with higher load factor organized pursuant to Presidential Decree No. 269, as and/or delivery voltage in order to reduce the electricity amended, or as otherwise provided in this Act; rates charged to distribution utilities with lower load factor (s) “Electric Power Industry Participant” refers to any person and/or delivery voltage located in the same regional grid; or entity engaged in the generation, transmission, (ff) “IPP Administrator” refers to qualified independent distribution or supply of electricity; entities appointed by PSALM Corporation who shall (t) “End-user” refers to any person or entity requiring the administer, conserve and manage the contracted energy supply and delivery of electricity for its own use; output of NPC IPP contracts; (u) “Energy Regulatory Board” or “ERB” (gg) “Isolated Distribution System” refers to the backbone (v) “Energy Regulatory Commission” or “ERC” refers to the system of wires and associated facilities not directly regulatory agency created herein; connected to the national transmission system; (w) “Franchise Area” refers to a geographical area exclusively (hh) “Lifeline Rate” refers to the subsidized rate given to low- assigned or granted to a distribution utility for distribution of income captive market end-users who cannot afford to pay electricity; at full cost; (x) “Generation Company” refers to any person or entity (ii) “National Electrification Administration “ or “NEA” refers authorized by the ERC to operate facilities used in the to the government agency created under Presidential Decree generation of electricity; No. 269, as amended, and whose additional mandate is (y) “Generation of Electricity” refers to the production of further set forth herein; electricity by a generation company or a co-generation (jj) “National Power Corporation” or “NPC” refers to the facility pursuant to the provisions of this Act; government corporation created under (z) “Grid” refers to the high voltage backbone system of Republic Act No. 6395, as amended; interconnected transmission lines, substations and related (kk) “National Transmission Corporation or “TRANSCO” refers facilities; to the corporation organized pursuant to this Act to acquire (aa) “Grid Code” refers to the set of rules and regulations all the transmission assets of the NPC; governing the safe and reliable operation, maintenance and (ll) “Open Access” refers to the system of allowing any development of the high voltage backbone transmission qualified person the use of transmission, and/or distribution system and its related facilities; system, and associated facilities subject to the payment of (bb) “Independent Power Producer” or “IPP” refers to an transmission and/or distribution retail wheeling rates duly existing power generating entity which is not owned by NPC; approved by the ERC; (mm) “Philippine Energy Plan” or “PEP” refers to the overall (ddd) “Universal Charge” refers to the charge, if any, imposed energy program formulated and updated yearly by the DOE for the recovery of the stranded cost and other purposed and submitted to Congress pursuant to Republic Act No. 7638; pursuant to Section 34 hereof. (nn) “Power Development Program” or “PDP” CHAPTER II (oo) “Power Sector Assets and Liabilities Management ORGANIZATION AND OPERATION OF THE ELECTRIC POWER Corporation” or “PSALM Corp.” INDUSTRY (qq) “Renewable Energy Resources” refers to energy SEC. 5. Organization. – The electric power industry shall be resources that do not have an upper limit on the total divided into four (4) sectors, namely: generation, quantity to be used. Such resources are renewable transmission, distribution and supply. (rr) “Restructuring” refers to the process of reorganizing the SEC. 6. Generation Sector. – Generation of electric power, a electric power industry in order to introduce higher efficiency, business affected with public interest, shall be competitive greater innovation and end-user choice. and open. (ss) “Retail Rate” refers to the total price paid by end-users SEC. 7 Transmission Sector.- The transmission of electric consisting of the charges for generation, transmission and power shall be regulated common electricity carries business, related ancillary services, distribution, supply and other subject to the ratemaking powers of the ERC. related charges for electric service; SEC. 8. Creation of the National Transmission Company.- (tt) “Small Power Utilities Group” or “SPUG” There is hereby created a National Transmission Corporation, (uu) “Stranded contract costs of NPC or distribution utility” hereinafter referred to as TRANSCO, which shall assume the refer to the excess of the contracted cost of electricity under electrical transmission function of the National Power (vv) “Stranded Debts of NPC” refer to any unpaid financial Corporation (NPC obligations of NPC which have not been liquidated by the SEC. 9. Functions and Responsibilities. – Upon the effectivity proceeds from the sales and privatization of NPC assets; of this Act, the TRANSCO shall have the following functions (ww) “Subtransmission Assets” refer to the facilities related and responsibilities: to the power delivery service below the transmission SEC. 10. Corporate Powers of the TANSCO. – As a corporate voltages and based on the functional assignment of assets entity, TRANSCO shall have the following corporate powers: (xx) “Supplier” refers to any person or entity authorized by SEC. 11. TRANSCO Board of Directors. –The Board shall be the ERC to sell, broker, market or aggregate electricity to the composed of a Chairman and six (6) members. The Secretary end-users; of the Department of Finance (DOF) shall be the ex official (yy) “Supplier’s Charge” refers to the charge imposed by Chairman of the Board. electricity suppliers for the sale of electricity to end-users, SEC. 12. Powers and Duties of the Board. – The following are excluding the charges for generation, transmission and the powers of the Board: distribution wheeling; (a) To provide strategic direction for TRANSCO, and formulate (zz) “Supply of Electricity” means the sale of electricity by a medium and long-term strategies party other than a generator or a distributor in the franchise (b) To develop and adopt policies and measures for the area of a distribution utility using the wires of the distribution efficient and effective management and operation of utility concerned; TRANSCO; (aaa) “Transmission Charge” refers to the regulated cost or (c) To organize, re-organize, and determine the charges for the use of a transmission system which may organizational structure and staffing patterns of TRANSCO; include the availment of ancillary services; (d) To fix the compensation of the President of TRANSCO and (bbb) “Transmission Development Plan” or “TDP” to appoint and fix the compensation of other corporate (ccc) “Transmission of Electricity” refers to the conveyance of officers; electricity through the high voltage backbone system; and (e) For cause, to suspend or remove any corporate officer SEC. 21. TRANSCO Privatization. – Within six (6) months from appointed by the Board; the effectivity of this Act, the PSALM Corp. shall submit a plan (f) To adopt and set guidelines for the employment of for the endorsement by the Joint Power Commission and personnel on the basis of merit the approval of the President of the Philippines. (g) Any provisions of the law to the contrary notwithstanding, SEC. 22. Distribution Sector. – The distribution of electricity to write-off bad debts. to end-users shall be a regulated common carrier business SEC. 13. Board Meetings. – The Board shall meet as often as requiring a national franchise. may be necessary upon the call of the Chairman of the Board SEC. 23. Functions of Distribution Utilities. – A distribution or by a majority of the Board members. utility shall have the obligation to provide distribution SEC. 14. Board Per Diems and Allowances. – The members of services and connections to its system for any end-user the Board shall receive per diem for each regular or special within its franchise area consistent with the distribution code. meeting of the board actually attended by them, and, upon SEC. 24. Distribution Wheeling Charge. – The distribution approval of the Secretary of the Department of Finance, such wheeling charges of distribution other allowances as the Board may prescribe. utilities shall be filed with and approved by the ERC pursuant SEC. 15. Quorum. – The presence of at least four (4) to Paragraph (f) of Section 43 hereof. members of the Board shall constitute a quorum, which shall SEC.25. Retail Rate. – The retail rates charged by distribution be necessary for the transaction of any business. The utilities for the supply of electricity in their captive market affirmative vote of a majority of the members present in a shall be subject to regulation by the ERC based. quorum shall be adequate for the approval of any resolution, SEC. 26. Distribution Related Businesses. – Distribution decision or order, except when the Board shall otherwise utilities may, directly or indirectly, engage in any related agree that a greater vote is required. business undertaking which maximizes the utilization of their SEC. 16. Powers of the President of TRANSCO. – The assets President of TRANSCO shall be appointed by the President of SEC. 27. Franchising Power in the Electric Power Sector. – The the Philippines. In the absence of the Chairman, the power to grant franchises to persons engaged in the President shall preside over boardmeetings. transmission and distribution of electricity shall be vested SEC. 17. Exemption from the Salary Standardization Law. – exclusively in the Congress of the Philippines and all laws The salaries and benefits of employees in the TRANSCO shall inconsistent with this Act particularly, but not limited be exempt from Republic Act. No. 6758 and shall be fixed by to, Section 43 of PD 269, otherwise known as the “National the TRANSCO Board. Electrification Decree. SEC. 18. Profits. – The net profit, if any, of TRANSCO shall be SEC. 28. De-Monopolization and Shareholding Dispersal. – In remitted to the PSALM Corp. not later than ninety (90) days compliance with the constitutional mandate for dispersal of after the immediately preceding quarter. ownership and de-monopolization of public utilities. SEC. 19. Transmission Charges. – The transmission charges of SEC. 29. Supply Sector. – The supply sector is a business the TRANSCO shall be filed with and approved by the ERC affected with public interest. Except for distribution utilities pursuant to Paragraph (f) of Section 43 hereof. and electric cooperatives with respect to their existing SEC. 20. TRANSCO Related Businesses. – TRANSCO may franchise areas, all suppliers of electricity to the contestable engage in any related business which maximizes utilization of market shall require a license from the ERC. its assets: Provided, That a portion of the net income derived SEC. 30. Wholesale Electricity Spot Market. – Within one (1) from such undertaking utilizing assets which form part of the year from the effectivity of this Act, the DOE shall establish a rate base shall be used to reduce transmission wheeling rates wholesale electricity spot market composed of the wholesale as determined by the ERC. electricity spot market participants. SEC. 31. Retail Competition and Open Access. – Any law to SEC. 20. TRANSCO Related Businesses. – the contrary notwithstanding, retail competition and open SEC. 21. TRANSCO Privatization. – access on distribution wires shall be implemented not later SEC. 22. Distribution Sector. – than three (3) years upon the effectivity of this Act. SEC. 23. Functions of Distribution Utilities. – SEC. 32. NPC Stranded Debt and Contract Cost Recovery. – SEC. 24. Distribution Wheeling Charge. – Stranded debt of NPC shall refer to any unpaid financial SEC.25. Retail Rate. – obligations of NPC. SEC. 26. Distribution Related Businesses. – SEC. 33. Distribution Utilities Stranded Contract Costs SEC. 27. Franchising Power in the Electric Power Sector. – Recovery. – Stranded contract costs of distribution utilities SEC. 28. De-Monopolization and Shareholding Dispersal. – shall refer to the excess of the contracted cost of electricity SEC. 29. Supply Sector. – under eligible contracts of such utilities over the actual selling SEC. 30. Wholesale Electricity Spot Market. – price of such contracts in the market. Such contracts shall SEC. 31. Retail Competition and Open Access. – have been approved by the ERB as of December 31, 2000. SEC. 32. NPC Stranded Debt and Contract Cost Recovery. – SEC. 34. Universal Charge. – Within one (1) year from the SEC. 33. Distribution Utilities Stranded Contract Costs effectivity of this Act, a universalcharge to be determined, Recovery. – fixed and approved by the ERC., shall be imposed on all SEC. 34. Universal Charge. – electricity end users for the following purposes. SEC. 35. Royalties, Returns and Tax Rates for Indigenous SEC. 35. Royalties, Returns and Tax Rates for Indigenous Energy Resources. – Energy Resources. – The provisions of Section 79 of SEC. 36. Unbundling of Rates and Functions. – Commonwealth Act No. 137 (C.A. No. 137) SEC. 36. Unbundling of Rates and Functions. – Within six (6) months from the effectivity of this Act, NPC shall file with the ERC its revised rates. SECTION 1. Short Title. – SECTION 2. Declaration of Policy. – SEC. 3. Scope. – SEC. 4. Definition of Terms. – SEC. 5. Organization. – SEC. 6. Generation Sector. – SEC. 7 Transmission Sector.- SEC. 8. Creation of the National Transmission Company.- SEC. 9. Functions and Responsibilities. – SEC. 10. Corporate Powers of the TANSCO. – SEC. 11. TRANSCO Board of Directors. – SEC. 12. Powers and Duties of the Board. – SEC. 13. Board Meetings. – SEC. 14. Board Per Diems and Allowances. – SEC. 15. Quorum. – SEC. 16. Powers of the President of TRANSCO. – SEC. 17. Exemption from the Salary Standardization Law. – SEC. 18. Profits. – SEC. 19. Transmission Charges. –