Article 94p. 94

NATURAL RESOURCES AND ENVIRONMENTAL LAWS STATUTES and IMPLEMENTING RULES AND REGULATIONS

Section 44. Transfer of Powers and Functions. - The

powers and functions of the Energy Regulatory Board

not inconsistent with the provisions of this Act are

hereby transferred to the ERC. The foregoing transfer of

powers and functions shall include all applicable funds

and appropriations, records, equipment, property and

personnel as may be necessary.

Section 45. Cross Ownership, Market Power Abuse And

Anti-Competitive

Behavior.

-

No

participant

in

the

electricity industry may engage in any anti-competitive

behavior

including,

but

not

limited

to,

cross-subsidization, price or market manipulation, or

other

unfair

trade

practices

detrimental

to

the

encouragement and protection of contestable markets.

No generation company or distribution utility, or its

respective subsidiary or affiliate or stockholder or official

of a generation company or distribution utility, or other

entity engaged in generating and supplying electricity

specified by ERC shall be allowed to hold any interest,

direct or indirect, in TRANSCO or its concessionaire.

Likewise, the TRANSCO, or its concessionaire or any of its

stockholders or officials or any of their relatives within

the fourth civil degree of consanguinity or affinity, shall

not hold any interest, whether direct or indirect, in any

generation company or distribution utility. Except for

government-appointed representatives, no person who

is an officer or director of TRANSCO or its concessionaire

shall

be

an

officer

or

director

of

any

generation

company, distribution utility or supplier.

To

promote

true

market

competition

and

prevent

harmful monopoly and market power abuse, the ERC

shall enforce the following safeguards:

(a) Starting not later than five (5) years from the approval

of this Act and until such time that the ERC has reduced

the threshold level to one hundred kilowatts (100kW), no

company or related group can own and operate or

control and operate more than forty percent (40%) of the

installed generating capacity of a grid and/or thirty

percent (30%) of the national installed capacity; and

(b) Distribution utilities may enter into bilateral power

supply contracts subject to review by ERC.

For purposes of this Section, the grid basis shall consist

of three (3) separate grids, namely Luzon, Visayas and

Mindanao. The ERC shall have the authority to modify or

amend this definition of a grid when two or more of the

three separate grids become sufficiently interconnected

to

constitute

a

single

grid

or

as

conditions

may

otherwise permit.

Exceptions from these limitations shall be allowed for

isolated grids that are not connected to the high voltage

transmission system. Except as otherwise provided for in

this Section, any restriction on ownership and/or control

between or within sectors of the electricity industry may

be imposed by ERC only insofar as the enforcement of

the provisions of this Section is concerned.

The ERC shall, within one (1) year from the effectivity of

this Act, promulgate rules and regulations to promote

competition,

encourage

market

development

and

customer

choice

and

discourage/penalize

abuse

of

market power, cartelization and any anti-competitive or

discriminatory behavior, in order to further the intent of

this Act and protect the public interest. Such rules and

regulations shall define the following:

(a) the relevant markets for purposes of establishing

abuse or misuse of monopoly or market position;

(b) areas of isolated grids; and

(c)

the

periodic

reportorial requirements of electric

power industry participants as may be necessary to

enforce the provisions of this Section.

The ERC shall, motu propio, monitor and penalize any

market

power

abuse

or

anti-competitive

or

discriminatory act or behavior by any participant in the

electric power industry.

Upon finding that a market participant has engaged in

such act or behavior, the ERC shall stop and redress the

same. Such remedies shall, without limitation, include

the imposition of price controls, issuance of injunctions,

requirement of divestment or disgorgement of excess

profits and imposition of fines and penalties pursuant to

this Act.

The ERC shall, within one (1) year from the effectivity of

this Act, promulgate rules and regulations providing for

a complaint procedure that, without limitation, provides

the accused party with notice and an opportunity to be

heard.

Section 46. Fines and Penalties. - The fines and penalties

that shall be imposed by the ERC for any violation of or

non-compliance with this Act or the IRR shall range from

a minimum of Fifty thousand pesos (P50,000.00) to a

maximum of Fifty million pesos (P50,000,000.00).

Any person who is found guilty of any of the prohibited

acts pursuant to Section 45 hereof shall suffer the

penalty of prision mayor and a fine ranging from Ten

thousand

pesos

(P10,000.00)

to

Ten

million

pesos

(P10,000,000.00), or both, at the discretion of the court.

The members of the Board of Directors of the juridical

companies participating in or covered in the generation

companies, the distribution utilities, the TRANSCO or its

concessionaire or supplier who violate the provisions of

this Act may be fined by an amount not exceeding

double the amount of damages caused by the offender

or by imprisonment of one year or two years or both at

the discretion of the court. This rule shall apply to the

members of the Board who knowingly or by neglect

allows the commission or omission under the law.

If the offender is a government official or employee, he

shall, in addition, be dismissed from the government

service

with

prejudice

to

reinstatement

and

with

perpetual or temporary disqualification from holding

any elective or appointive office.

If the offender is an alien he may, in addition to the

penalties

prescribed,

be

deported

without

further

proceedings after service of sentence.

Any

case

which

involves

question of fact shall be

appealable to the Court of Appeals and those which

involve question of law shall be directly appealable to the

Supreme Court. The administrative sanction that may be

imposed by the ERC shall be without prejudice to the

filing of a criminal action, if warranted.

To ensure compliance with this Act, the penalty of

prision correccional or a fine ranging from Five thousand

pesos (P5,000.00) to Five million pesos (P5,000,000.00),

or both, at the discretion of the court, shall be imposed

on

any

person,

including

but

not

limited

to

the

president, member of the Board, Chief Executive Officer

or

Chief

Operating

Officer

of

the

corporation,

partnership, or any other entity involved, found guilty of

violating or refusing to comply with any provision of this

Act or its IRR, other than those provided herein.

Any party to an administrative proceeding may, at any

time,

make

an

offer

to

the

ERC,

conditionally

or

otherwise for a consented decree, voluntary compliance

or desistance and other settlement of the case. The offer

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