Chapter 9

General Provisions

Section 68. Review of IPP Contracts

This creates an inter-agency committee chaired by:

  • the Secretary of Finance
  • the Secretary of the Department of Justice
  • the Director General of NEDA

The Committee shall review all IPP contracts.

In cases where such contracts are grossly disadvantageous, or onerous to the Government, the Committee shall cause the appropriate government agency to file an action under the arbitration clauses

PSALM shall diligently seek to reduce stranded costs, if any.

Section 69. Renegotiation of Power Purchase and Energy Conversion Agreements between Government Entities

Within 3 months from the effectivity of this Act, all power purchase and energy conversion agreements between PNOC-EDC and NAPOCOR, including but not limited to the Palimpinon, Tongonan and Mt. Apo Geothermal complexes, shall be reviewed by the ERC in order to remove any hidden costs or extraordinary mark-ups in the cost of power or steam above their true costs.

All amended contracts shall be submitted to the Joint Congressional Power Commission for approval. The ERC shall ensure that all savings realized from the reduction of said mark-ups shall be passed on to all end-users.

Section 70. Missionary Electrification

NAPOCOR shall remain to perform the missionary electrification through the Small Power Utilities Group (SPUG).

It shall be responsible for providing power in areas not connected to the grid, which shall be funded from the revenues from:

  • sales in missionary areas
  • the universal charge
    • This is to be collected from all electricity end-users

Section 71. Electric Power Crisis Provision

Congress may authorize, through a joint resolution, the establishment of additional generating capacity.

Section 72. Mandated Rate Reduction

Upon the effectivity of this Act, residential end-users shall be granted a rate reduction from NAPOCOR rates of P0.30/kWh.

Such reduction shall be reflected as a separate item in the consumer billing statement.

Sec. 73. Lifeline Rate

A socialized pricing mechanism called a lifeline rate for the marginalized end-users shall be set by the ERC, which shall be exempted from the cross subsidy phase-out under this Act for a period often (10) years, unless extended by law. The level of consumption and the rate shall be determined by the ERC after due notice and hearing.

Sec. 74. Cross Subsidies

Cross subsidies within a grid between grids and / or classes of customers shall be phased out in a period not exceeding three (3) years from the establishment by the ERC of a universal charge which shall be collected form all electricity end-users. Such level of cross subsidies shall be made transparent and identified separately in the billing statements provided to end-users by the suppliers.

The ERC may extend the period for the removal of cross subsidies for a maximum period of one

(1) year upon finding that cessation of such mechanism would have a material adverse effect upon the public interest, particularly the residential end-user; or would have an immediate, irreparable, and adverse financial effect on distribution utility.


Section 75. Statutory Construction

With respect to NAPOCOR’s debts and IPP and related contracts, nothing in this Act shall be construed as: (1) an implied waiver of any right, action or claim, against any person or entity, of NAPOCOR or the Philippine Government arising from or relating to any such contracts; or (2) a conferment of new or better rights to creditors and IPP contractors in addition to subsisting rights granted by the NAPOCOR or the Philippine Government under existing contracts.

Section 76. Education and Protection of End Users

End-users shall be educated about the implementation of retail access and its impact on end-users and on the proper use of electric power.

Such education shall include, but not limited to, the existence of competitive electricity suppliers, choice of competitive electricity services, regulated transmission and distribution services, systems reliability, aggregation, market, itemized billing, stranded cost, uniform disclosure requirements, low-income bill payment, energy conservation and safety measures.

The DOE, in coordination with the NAPOCOR, NEA, ERC and the Office of Press Secretary-Philippine Information Agency (OPS-PIA), shall undertake an information campaign to educate the public on the restructuring of the electric power industry and privatization of NAPOCOR.

Section 77. Implementing Rules and Regulations

The DOE shall promulgate the Implementing Rules and Regulation (IRR) of the Act within 6 months from the effectivity of this Act. This is:

  • subject to the approval by the Power Commission
  • in consultation with:
    • relevant government agencies
    • electric power industry participants
    • NGOs
    • end-users

Section 78. Injunction and Restraining Order

The implementation of the provisions of the Act shall not be restrained or enjoined except by an order issued by the Supreme Court of the Philippines.