Article 90p. 90

NATURAL RESOURCES AND ENVIRONMENTAL LAWS STATUTES and IMPLEMENTING RULES AND REGULATIONS

(b) submit to an annual earnings review by the ERC and

use its earnings above its authorized rate of return to

reduce the book value of contracts until the end of the

stranded cost recovery period.

Other mitigating measures which are reasonably known

and

generally

accepted

within

the

electric

power

industry shall be utilized. The ERC shall not require the

distribution utility to take a loss to reduce stranded

contract costs or divest assets, unless the divestiture is

imposed as a penalty as provided herein.

The relevant distribution utility shall submit to the ERC

quarterly reports showing the amount of stranded costs

recovered and the balance remaining to be recovered.

The

ERC

shall

verify

the

reasonable

amounts

and

determine the manner and duration for the full recovery

of stranded contract costs as defined herein: Provided,

That the duration for such recovery shall not be shorter

than fifteen (15) years nor longer than twenty-five (25)

years. The ERC shall, at the end of the first year of the

implementation of stranded cost recovery and every

year thereafter, conduct a review to determine whether

there is under-recovery or over recovery and adjust

(true-up) the level of stranded cost recovery charge

accordingly.

Section 34. Universal Charge. - Within one (1) year from

the effectivity of this Act, a universal charge to be

determined, fixed and approved by the ERC, shall be

imposed on all electricity end-users for the following

purposes:

(a)

Payment

for

the

stranded

debts

and

stranded

contract costs of NPC and qualified distribution utilities

resulting from the restructuring of the industry;

(b) Missionary electrification;

(c) The equalization of the taxes and royalties applied to

indigenous or renewable sources of energy vis-à-vis

imported energy fuels;

(d) An environmental charge equivalent to one-fourth of

one centavo per kilowatt-hour (P0.0025/kWh), which

shall accrue to an environmental fund to be used solely

for watershed rehabilitation and management. Said fund

shall be managed by NPC under existing arrangements;

and

(e) A charge to account for all forms of cross-subsidies for

a period not exceeding three (3) years.

The universal charge shall be a non-bypassable charge

which

shall

be

passed

on

and

collected

from

all

end-users on a monthly basis by the distribution utilities.

Collections by the distribution utilities and the TRANSCO

in any given month shall be remitted to the PSALM Corp.

on or before the fifteenth (15 th ) of the succeeding

month, net of any amount due to the distribution utility.

Any end-user or self-generating entity not connected to

a

distribution

utility

shall

remit

its

corresponding

universal charge directly to the TRANSCO.

The PSALM Corp., as administrator of the fund, shall

create a Special Trust Fund which shall be disbursed only

for

the

purposes

specified

herein in an open and

transparent

manner.

All

amounts

collected

for

the

universal charge shall be distributed to the respective

beneficiaries within a reasonable period to be provided

by the ERC.

Section

35.

Royalties,

Returns

and

Tax

Rates

for

Indigenous Energy Resources. - The provision of Section

79 of Commonwealth Act No. 137 (C.A. No. 137) and any

law

to

the

contrary

notwithstanding,

the

royalties,

returns and taxes collected for the exploitation of all

indigenous sources of energy, including but not limited

to, natural gas and geothermal steam, shall be adjusted

so as to effect parity of tax treatment with the existing

rates for imported coal, crude oil, bunker fuel and other

imported fuels.

To ensure that the adjustment of tax rates and royalties

shall result in lower rates for end-users, the Department

of

Finance

shall,

within

sixty

(60)

days

from

the

effectivity of this Act, issue the rules and regulations

thereof. Consistent with this objective, the ERC shall

forthwith revise the rates of power from all indigenous

sources of energy.

Section 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. The rates of NPC shall

be unbundled between transmission and generation

rates and the rates shall reflect the respective costs of

providing each service. Inter-grid and intra-grid cross

subsidies for both the transmission and the generation

rates shall be removed in accordance with this Act.

Within six (6) months from the effectivity of this Act,

each distribution utility shall file its revised rates for the

approval by the ERC. The distribution retail wheeling

charge shall be unbundled from the distribution retail

supply rate and the rates shall reflect the respective

costs of providing each service. For both the distribution

retail wheeling and supply charges, inter-class subsidies

shall be removed in accordance with this Act.

Within six (6) months from the date of submission of

revised rates by NPC and each distribution utility, the

ERC shall notify the entities of their approval.

Any electric power industry participant shall functionally

and structurally unbundle its business activities and

rates in accordance with the sectors as identified in

Section 5 hereof. The ERC shall ensure full compliance

with this provision.

CHAPTER

III

Role

of

the

Department

of

Energy

Section 37. Powers and Functions of the DOE. - In

addition to its existing powers and functions, the DOE is

hereby mandated to supervise the restructuring of the

electricity industry. In pursuance thereof, Section 5 of R.

A. 7638 otherwise known as "The Department of Energy

Act of 1992" is hereby amended to read as follows:

"(a)

Formulate

policies

for

the

planning

and

implementation of a comprehensive program for the

efficient supply and economical use of energy consistent

with the approved national economic plan and with the

policies on environmental protection and conservation

and maintenance of ecological balance, and provide a

mechanism

for

the

integration,

rationalization,

and

coordination of the various energy programs of the

Government

(b) Develop and update annually the existing Philippine

Energy Plan, hereinafter referred to as 'The Plan', which

shall

provide

for

an

integrated and comprehensive

exploration, development, utilization, distribution, and

conservation of energy resources, with preferential bias

for

environment-friendly,

indigenous,

and

low-cost

sources

of

energy.

The

plan shall include a policy

direction

towards

the

privatization

of

government

agencies related to energy, deregulation of the power

and energy industry, and reduction of dependency on

oil-fired plants. Said Plan shall be submitted to Congress

not later than the fifteenth day of September every year

thereafter;

(c) Prepare and update annually a Power Development

Program

(PDP)

and

integrate

the

same

into

the

© 2018 Compiled by RGL

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