Article 87p. 87

NATURAL RESOURCES AND ENVIRONMENTAL LAWS STATUTES and IMPLEMENTING RULES AND REGULATIONS

for cause, to remove, suspend, or otherwise discipline

any subordinate employee of TRANSCO

(e) To submit an annual report to the Board on the

activities and achievements of TRANSCO at the close of

each fiscal year and upon approval thereof, submit a

copy to the President of the Philippines and to such

other agencies as may be required by law

(f) To represent TRANSCO in all dealings and transactions

with other offices, agencies, and instrumentalities of the

Government and with all persons and other entities,

private or public, domestic or foreign; and

(g) To exercise such other powers and duties as may be

vested in him by the Board from time to time.

Section 17. Exemption from the Salary Standardization

Law. - The salaries and benefits of employees in the

TRANSCO shall be exempt from Republic Act No. 6758

and shall be fixed by the TRANSCO Board.

Section 18. Profits. - The net profit, if any, of TRANSCO

shall be remitted to the PSALM Corp. not later than thirty

(30) days after the immediately preceding quarter.

Section 19. Transmission Charges. - The transmission

charges

of

the

TRANSCO

shall

be

filed

with

and

approved by the ERC pursuant to paragraph (f) of

Section 43 hereof.

Section 20. TRANSCO Related Businesses. - TRANSCO

may engage in any related business which maximizes

utilization of its assets: Provided, That a portion of the

net income derived from such undertaking utilizing

assets which form part of the rate base shall be used to

reduce transmission wheeling rates as determined by

the ERC. Such portion of net income used to reduce the

transmission

wheeling

rates

shall

not

exceed

fifty

percent (50%) of the net income derived from such

undertaking.

Separate accounts shall be maintained for each business

undertaking to ensure that the transmission business

shall

neither

subsidize

in

any

way

such

business

undertaking nor encumber its transmission assets in any

way to support such business.

Section 21. TRANSCO Operations & Maintenance (O&M)

Concessionaire. - The TRANSCO shall award, in open

competitive bidding, a concession contract to a qualified

party for the operation, maintenance, improvement and

expansion of its transmission assets and the operation of

any related business for a period of twenty-five (25)

years, subject to review and renewal for a maximum

period of another twenty-five (25) years. The contract

shall

include,

but

not

limited

to, the provision for

performance and financial guarantees or any other

covenants which may be required in order to fulfill the

obligations of the concession contract.

The TRANSCO O & M Concessionaire shall comply with

the Grid Code and the TDP as approved. Failure to

comply

with

such

obligations

shall

result

in

the

imposition of appropriate sanctions or penalties by the

ERC: Provided, however, That in cases of major or serious

economic and/or technical reasons, TRANSCO O & M

Concessionaire may seek authority from the ERC to

defer any expansion or improvement.

The concessionaire shall be financially and technically

capable,

with

proven

domestic

and/or

international

experience

and expertise as a leading transmission

system operator under a competitive electric power

industry

structure.

The

experience

of

the

strategic

partner must be with a transmission system of equal, if

not greater, capacity and coverage as the Philippines.

Section 22. Distribution Sector. - The distribution of

electricity to end-users shall be a regulated common

carrier business requiring a franchise. Distribution of

electric power to all end-users may be undertaken by

private

distribution

utilities,

cooperatives,

local

government units presently undertaking this function

and other duly authorized entities, subject to regulation

by the ERC.

Section

23.

Functions

of

Distribution

Utilities.

-

A

distribution utility shall have the obligation to provide

distribution services and connections to its system for

any end-user within its franchise area consistent with

the distribution code. Any entity engaged therein shall

provide

open

and

non-discriminatory

access

to

its

distribution system to all users.

Any distribution utility shall be entitled to impose and

collect

distribution

retail

wheeling

charges

and

connection fees from such end-users as approved by the

ERC. A distribution utility shall have the obligation to

supply electricity in the least cost manner to its captive

market, subject to the collection of distribution retail

supply rate duly approved by the ERC.

To achieve economies of scale in utility operations,

distribution utilities may, after due notice and public

hearing, pursue structural and operational reforms such

as but not limited to, joint actions between or among

the distribution utilities, subject to the guidelines issued

by the ERC. Such joint actions shall result in improved

efficiencies, reliability of service, reduction of costs and

compliance to the performance standards prescribed in

the IRR of this Act. Distribution utilities shall submit to

the ERC a statement of their compliance with the

technical specifications prescribed in the Distribution

Code and the performance standards prescribed in the

IRR of this Act. Distribution utilities which do not comply

with any of the prescribed technical specifications and

performance standards shall submit to the ERC a plan to

comply, within three (3) years, with said prescribed

technical specifications and performance standards. The

ERC shall, within sixty (60) days upon receipt of such

plan, evaluate the same and notify the distribution utility

concerned of its action. Failure to submit a feasible and

credible plan and/or failure to implement the same shall

serve as grounds for the imposition of appropriate

sanctions, fines or penalties.

Distribution utilities shall prepare and submit to the DOE

their annual distribution development plans. In the case

of

electric

cooperatives,

such

plans

shall

also

be

submitted

through

the

National

Electrification

Administration.

Distribution utilities shall provide universal service within

their franchise, including unviable areas, as part of their

social obligations in a manner that shall sustain the

economic viability of the utility, subject to the approval

by the ERC in the case of private or government-owned

utilities. Areas which a franchised distribution utility

cannot or does not find viable may be transferred to

another distribution utility, if any is available, who will

provide the service, subject to approval by ERC. In cases

where franchise holders fail and/or refuse to service any

area within their franchise territory and allowed another

utility to service the same, then the status quo shall be

respected. To this end, distribution utilities shall submit

to the DOE their plans for serving such areas as part of

their distribution development plans. In cases of major

or

serious

economic

and/or

technical

reasons,

the

distribution utility shall seek prior authority from the

ERC to defer such expansion or improvement.

Distribution utilities may exercise the power of eminent

domain subject to the requirements of the constitution

and existing laws.

© 2018 Compiled by RGL

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