Group III

ELECTRIC POWER INDUSTRY REFORM 4. To enhance the inflow of private

ACT OF 2001 capital and broaden the ownership
base of thepower generation,
RA 9136
transmission and distribution sectors;
The Electric Power Industry Reform Act of
5. To ensure fair and non-discriminatory
2001 or EPIRA was enacted with the intention of
treatment of public and private sector
ensuring affordable and reliable electricity to all
entitiesin the process of restructuring
power consumers in the Philippines. It seeks to
the electric power industry;
achieve this through the introduction of sweeping
6. To protect the public interest as it is
reforms including the restructuring and the
affected by the rates and services of
deregulation of the entire power industry and the
electricutilities and other providers of
privatization of most state-owned power
electric power;
generation and transmission assets. The EPIRA
7. To assure socially and environmentally
was passed with the following end goals: lower
compatible energy sources and
power rates, sufficient capacity and an
infrastructure;
environment equally protective of investors and
8. To promote the utilization of
consumers.
indigenous and new and renewable
In addition, it also declares as policy of the
energy resources inpower generation
State the following:
in order to reduce dependence on
imported energy;
1. To ensure and accelerate the total
9. To provide for an orderly and
electrification of the country;
transparent privatization of the assets
2. To ensure the quality, reliability,
and liabilities ofthe National Power
security and affordability of the supply
Corporation (NPC);
of electricpower;
10. To establish a strong and purely
3. To ensure transparent and reasonable
independent regulatory body and
prices of electricity in a regime of free
system to ensureconsumer protection
and faircompetition and full public
and enhance the competitive
accountability to achieve greater
operation of the electricity market;
operational andeconomic efficiency
11. To encourage the efficient use of
and enhance the competitiveness of
energy and other modalities of
Philippine products in theglobal
demand side
market;
management.
 Group III
The Energy Regulatory Commission
Through the EPIRA law, the Energy
Regulatory Commission or the ERC was created.
It is an independent, quasi-judicial regulatory body
abolishing the Energy Regulatory Board. Under
the EPIRA law, the powers and functions of the
Energy Regulatory Board consistent with the
provisions of the EPIRA law are transferred to
the ERC. The transfer of powers and functions
includes all applicable funds and appropriations,
records, equipment, property and personnel.
Under the EPIRA law, the ERC shall be
composed of a Chairman and four members to be
appointed by the President of the Philippines.
Requirements for the Chairman and members
of the ERC:
1. Natural-born citizens and residents of the
Philippines
2. Persons of good moral character
3. At least 35 years of age
4. Of recognized competence in any of the
following fields: energy, law, economics,
finance, commerce, or engineering with at
least three years actual and distinguished
experience in their respective fields of
expertise
The EPIRA law further requires that at least
one of the four members of the ERC should be a
member of the Philippine Bar with at least ten years
of experience in the active practice of law and one
should be a certified public accountant with at least
ten years of experience in active practice. In addition,
the EPIRA law mandates that the Chairman of the
ERC must be a member of the Philippine Bar who
shall act as the Chief Executive Officer of the ERC.
In the case of Freedom from Debt Coalition
vs. Energy Regulatory Commission the Supreme
Court speaking through Justice Tinga stated that
EPIRA provides for a framework for the
restructuring of the industry, including the
privatization of assets of the National Power
Corporation (NPC), the transition to a competitive
structure, and the delineation of the roles of various
government agencies and the private entities. The law
ordains the division of the industry into four distinct
sectors, namely: generation, transmission, distribution,
and supply. Corollary, the NPC generating plants
have to be privatized and its transmission business
spun off and privatized thereafter.
Abolition of Energy Regulatory Board
Pursuant to the EPIRA law, the Energy
Regulatory Board has been abolished and its place is
the Energy Regulatory Commission. The functions of
the ERB have been transferred to the ERC. With its
new and expanded functions, the ERC is tasked to
promote competition, encourage market
development, ensure customer choice and penalize
abuse of market power in the restructured electricity
industry. In addition, the ERC is granted the
following functions:
1. Enforce the rules and regulations
governing the operations of the electricity
spot market and the activities of the spot
 Group III
market operator and other participants in
the spot market for the purposes of
ensuring a greater supply and rational
pricing of electricity.
2. Amend or revoke, after due notice and
hearing, the authority to operate of any
person or entity which fails to comply
with the provisions of the EPIRA law or
its Implementing Rules and Regulations or
any order or resolution of the ERC. In the
event that a divestment is required, the
ERC shall allow the affected party
sufficient time to remedy the infraction or
for an orderly disposal, but in no case
exceed twelve months from the issuance
of the order.
3. Exercise original and exclusive jurisdiction
over all cases contesting rates, fees, fines,
and penalties imposed by the ERC in the
exercise of the above-mentioned powers,
functions and responsibilities and over all
cases involving disputes between and
among participants or players in the
energy sector.
Moreover, the EPIRA law further directs the
ERC to regulate and facilitate the unbundling of rates
prescribed under Section 36 of the said law.
Other Important Matters Regarding EPIRA and
the ERC
A. A public utility must submit to government
regulations
In the case of Republic vs.
Meralco, the Court stated that the
business operations of a public utility
are vested with public interest hence it
must submit to the regulation of
government authorities and surrenders
certain business prerogatives,
including the amount of rates that it
may charge.
Moreover, in Surigaodel Norte
Electric Cooperative, Inc. vs. ERC,
the Court held that:
The regulation of rates to be
charged by public utilities is founded
upon the police powers of the State
and statutes prescribing rules for the
control and regulation and regulation
of public utilities are a valid exercise
thereofSubmission to regulation
may be withdrawn by the owner by
discontinuing use; but as long as use
of the property is continued, the same
is subject to public regulation.
B. ERC has authority to issue provisional rate
increases
Under Sections 44 and 80 of
the EPIRA, the ERC is endowed with
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the statutory authority to approve Presidential Decree No. 40 and all laws, decrees, rules
provisional rate adjustments. and regulations, or portion thereof,inconsistent with
this Act are hereby repealed or modified accordingly.
Section 44 states that:
Application for rate adjustment or any relief
The powers and functions of the Energy
affecting the consumers must be verified and
RegulatoryBoard not inconsistent with the
published
provisions of this Act are hereby transferred to the
ERC. The foregoingtransfer of powers and functions
Under Section 4 ( e ), Rule III of the
shall include all applicable funds and appropriations,
Implementing Rules and Regulations of the EPIRA,
records, equipment,property and personnel as may
it states that every petition or application for rate of
be necessary.
adjustment or for any relief affecting the consumers
Meanwhile, Section 80 states:
must be verified and accompanied with a
The applicability provisions of certification of the notice of publication in a
CommonwealthAct No. 146, as amended, otherwise newspaper of general circulation in the same locality.
known as the Public Service Act; Republic Act
6395, as amended,revising the charter of NPC;
Presidential Decree 269, as amended, referred to as
the National ElectrificationDecree; Republic Act
7638, otherwise known as the Department of
Energy Act of 1992; Executive Order172, as
amended, creating the ERB; Republic Act 7832
otherwise known as the Anti-Electricity andElectric
Transmission Lines / Materials Pilferage Act of
1994,shall continue to have full force and
effectexcept insofar as they are inconsistent with this
Act.

The provision with respect to electric power of

Section 11(c) of Republic Act 7916, as amended,and
Section 5(f) of Republic Act 7227, are hereby
repealed or modified accordingly.