QuestionsQuestions (Republic Act No. 10637)
It is a legislative franchise (for commercial purposes and in the public interest) to construct, install, establish, operate, and maintain an electric power distribution system to convey electricity to end-users in the City of Cotabato and portions of Datu Odin Sinsuat and Sultan Kudarat, Maguindanao, subject to the Constitution and applicable laws.
The facilities and systems must be operated and maintained at all times in a superior manner. The grantee must modify, improve, or change facilities whenever required by the ERC/DOE or other concerned government agency to keep up with reasonable improvements in electric power services.
Whenever practicable and for order, safety, and aesthetics along public ways, the grantee may allow use of free spaces upon reasonable compensation. The ERC decides in case of dispute between parties.
It must secure from the ERC (or any other agency with jurisdiction over its operation) the necessary certificate of public convenience and necessity and other appropriate permits and licenses for construction and operation.
The grantee may make excavations or lay conduits in public places, highways, roads, streets, alleys, sidewalks, or bridges with prior approval of DPWH or the concerned LGU. Disturbed areas must be repaired and replaced at the grantee’s expense in accordance with DPWH/LGU standards; failure after a 10-day notice allows DPWH/LGU to repair at double expense chargeable to the grantee.
The grantee must supply electricity to its captive market in the least costly manner and, as far as feasible and whenever required, modify facilities to provide efficient and reliable service and reasonable electricity costs. It must charge reasonable and just power rates to all consumer types so business and industries can compete.
The grantee must provide open and nondiscriminatory access to its distribution system and services for any end-user within its franchise area, consistent with RA 9136 (Electric Power Industry Reform Act), and must not engage in activities constituting abuse of market power or unfair trade practices that hinder competitiveness.
Retail rates and charges for distribution are regulated by and subject to ERC approval. The grantee must identify and segregate the components of the retail rate in the electricity bill pursuant to RA 9136 (unless amended), and make such rates public and transparent.
It must establish a consumer desk to handle complaints and ensure adequate promotion of consumer interests, and it must act with dispatch on all complaints brought before it.
The President may (1) temporarily take over and operate the grantee’s stations/facilities, (2) temporarily suspend operation in the interest of public safety, security, and public welfare, or (3) authorize temporary use/operation by a government agency, upon due compensation.
The grantee may exercise eminent domain insofar as reasonably necessary for efficient maintenance and operation of services. It may install facilities over/across government public property and may acquire private property actually necessary for the franchise’s purposes, but must institute proper condemnation proceedings and pay just compensation.
The grantee must hold national, provincial, city, and municipal governments free from claims, accounts, demands, or actions arising from accidents or injuries (to property or persons) caused by the construction, installation, operation, and maintenance of its distribution system.
It is liable for injury and damage arising from or caused by accident to persons and property due to defective construction or due to neglect/omission to keep poles and wires in safe condition.
It cannot do so without prior approval of Congress of the Philippines. Congress must also be informed within 60 days after completion of the transaction. Failure to report renders the franchise ipso facto revoked.
It is effective for 25 years from the date of expiration of the grantee’s franchise under Commonwealth Act No. 487, as amended, unless sooner cancelled. It is deemed ipso facto revoked if the grantee fails to operate continuously for two years.
Within five years from commencement of operations, it must offer Filipino citizens at least 30% of its outstanding capital stock (or higher if later required by law) in a securities exchange; if public offer is not applicable, it must use cooperatives or other public participation methods and comply with Section 28 of RA 9136. Noncompliance renders the franchise ipso facto revoked.
The grantee must submit an annual report to Congress through the relevant House/Senate committees on or before April 30 of the succeeding year. Failure to submit the required Annual Report carries a fine of P500 per working day of noncompliance, collected by the ERC (separate from ERC-imposed reportorial penalties). A reportorial compliance certificate from Congress is required before ERC accepts any permit/certificate application.