Article 88p. 88

NATURAL RESOURCES AND ENVIRONMENTAL LAWS STATUTES and IMPLEMENTING RULES AND REGULATIONS

Section 24. Distribution Retail Wheeling Charge. - The

retail wheeling rates of distribution utilities shall be filed

with and approved by the ERC pursuant to paragraph (f)

of Section 43 hereof.

Section 25. Distribution Retail Supply Rate. - The rates

charged

by

distribution

utilities

for

the

supply

of

electricity in their captive market shall be subject to

regulation by the ERC based on the principle of full

recovery of prudent and reasonable economic costs

incurred, or such other principles that will promote

efficiency as may be determined by the ERC.

Every distribution utility shall identify and segregate in

its bills to end-users the components of the distribution

retail supply rate, as defined in this Act.

Section

26.

Distribution

Related

Businesses.

-

Distribution utilities may, directly or indirectly, engage in

any related business undertaking which maximizes the

utilization of their 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

its

distribution

retail

wheeling

charges

as

determined by the ERC: Provided, further, That such

portion of net income used to reduce their distribution

retail wheeling charges shall not exceed fifty percent

(50%) of the net income derived from such undertaking:

Provided, finally, That separate accounts are maintained

for

each

business

undertaking

to

ensure

that

the

distribution business shall neither subsidize in any way

such business undertaking nor encumber its distribution

assets in any way to support such business.

Section 27. Franchising Power in the Electric Power

Sector. - The power to grant franchises to persons

engaged

in

the

transmission

and

distribution

of

electricity shall be vested exclusively in the Congress of

the Philippines and all laws inconsistent with this Act

particularly, but not limited to, Section 43 of PD 269,

otherwise known as the "National Electrification Decree,"

are hereby deemed repealed or modified accordingly:

Provided, That all existing franchises shall be allowed to

their full term: Provided, further, That in the case of

electric cooperatives, renewals and cancellations shall

remain with the National Electricity Commission under

the National Electrification Administration for five (5)

more years after the enactment of this Act.

Section

28.

De-monopolization

and

Shareholding

Dispersal.

-

In

compliance

with

the

constitutional

mandate

for

dispersal

of

ownership

and

de-monopolization of public utilities, the holdings of

persons, natural or juridical, including directors, officers,

stockholders

and

related

interests,

in

a

generation

company, distribution utility and their respective holding

companies shall not exceed fifteen (15%) percent of the

voting shares of stock unless the utility or the company

holding the shares or its controlling stockholders are

already listed in the Philippine Stock Exchange (PSE):

Provided,

That

controlling

stockholders

of

small

distribution utilities are required to list in the PSE within

five (5) years from the enactment of this Act if they

already own the stocks. New controlling stockholders

shall undertake such listing within five (5) years from the

time

they

acquire

ownership

and

control.

A

small

distribution company is one whose peak demand is One

hundred megawatts (100MW) or less.

The ERC shall, within sixty (60) days from the effectivity

of this Act, promulgate the rules and regulations to

implement and effect this provision.

Section 29. Supply Sector. - The supply of electricity to

the contestable market shall require a license from the

ERC,

except

for

distribution

utilities

and

electric

cooperatives with respect to their existing franchise

areas.

For this purpose, the ERC shall promulgate rules and

regulations prescribing the qualifications of electricity

suppliers

which

shall

include,

among

other

requirements,

a

demonstration

of

their

technical

capability,

financial

capability,

and

creditworthiness:

Provided, That the ERC shall have authority to require

electricity suppliers to furnish a bond or other evidence

of

the

ability

of

a

supplier

to

withstand

market

disturbances or other events that may increase the cost

of providing service.

Any law to the contrary notwithstanding, supply of

electricity

to

the

contestable

market

shall

not

be

considered a public utility operation. For this purpose,

any person or entity which shall engage in the supply of

electricity

to

the

contestable

market

shall

not

be

required to secure a local or national franchise.

The prices to be charged by suppliers for the supply of

electricity to the contestable market shall not be subject

to regulation by the ERC.

Electricity suppliers shall be subject to the rules and

regulations

concerning

abuse

of

market

power,

cartelization,

and

other

anti-competitive

or

discriminatory behavior to be promulgated by the ERC.

In its billings to end-users, every supplier shall identify

and segregate the components of its supply charge, as

defined herein.

Section 30. Wholesale Electricity Spot Market. - Within

one (1) year from the effectivity of this Act, the DOE shall

establish a wholesale electricity spot market composed

of the wholesale electricity spot market participants. The

market shall provide the mechanism for identifying and

setting the price of actual variations from the quantities

transacted

under

contracts

between

sellers

and

purchasers of electricity.

Jointly with the electric power industry participants, the

DOE shall formulate the detailed rules for the wholesale

electricity spot market. Said rules shall provide the

mechanism for determining the price of electricity not

covered

by

bilateral

contracts

between

sellers

and

purchasers of electricity users. The price determination

methodology contained in said rules shall be subject to

the approval of ERC. Said rules shall also reflect accepted

economic principles and provide a level playing field to

all electric power industry participants. The rules shall

provide, among others, procedures for:

(a) Establishing the merit order dispatch instructions for

each time period;

(b) Determining the market-clearing price for each time

period;

(c)

Administering

the

market

including

criteria

for

admission to and termination from the market which

includes security or performance bond requirements,

voting

rights

of

the

participants,

surveillance

and

assurance of compliance of the participants with the

rules and the formation of the wholesale electricity spot

market governing body;

(d) Prescribing guidelines for the market operation in

system emergencies; and

(e) Amending the rules.

The

wholesale

electricity

spot

market

shall

be

implemented by a market operator in accordance with

the wholesale electricity spot market rules. The market

operator

shall

be

an

autonomous

group,

to

be

constituted by DOE, with equitable representation from

electric power industry participants, initially under the

© 2018 Compiled by RGL

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