Law Summary
Manner of Operations of Facilities
- Electric distribution facilities must be maintained and operated in a superior manner.
- Modifications and improvements must be made when required by the Energy Regulatory Commission (ERC), Department of Energy (DOE), or other government agencies.
- Free space on poles or rights-of-way may be rented to third parties with reasonable compensation.
- ERC resolves disputes regarding use of facilities.
Authority of ERC/DOE
- The grantee must secure necessary permits and a certificate of public convenience and necessity from ERC/DOE or other relevant agencies.
Ingress and Egress
- Grantee may legally erect and maintain poles and wires and excavate public areas with approval from DPWH and relevant LGUs.
- Any alteration caused to public places must be immediately repaired and restored at the grantee’s expense according to standards of DPWH and LGUs.
Responsibility to the Public
- Supply electricity at least cost to captive market.
- Modify and improve facilities as necessary for efficient, reliable service and cost reduction.
- Charge reasonable and just rates to support competitiveness.
- Provide open, non-discriminatory access to distribution systems per Republic Act No. 9136.
- Prohibited from abuse of market power and unfair trade practices.
Rates for Services
- Retail rates are regulated and approved by ERC/DOE.
- Billing must show detailed rate components.
- Rates should be public and transparent.
- Lifeline rates must be implemented for marginalized customers.
Promotion of Consumer Interests
- Establish a consumer desk for complaints.
- Timely action required on complaints.
Right of the Government
- The President may temporarily take over or authorize operation of distribution system during war, rebellion, emergencies, or disasters with due compensation.
Tax Provisions
- Subject to all applicable taxes under the NIRC, Local Government Code, and other laws.
- Existing tax exemptions or incentives are maintained.
- Tax returns filed with locational authorities and subject to BIR audit.
Right of Eminent Domain
- Authorized to exercise eminent domain for efficient service operation.
- Installation of facilities over public property allowed.
- Private property may only be acquired by condemnation with just compensation.
Acceptance and Compliance
- Grantee must accept the franchise in writing within 60 days of enactment.
Warranty in Favor of Governments
- Grantee holds national and local governments harmless from claims related to accidents or injuries arising from distribution system.
Liability for Damages
- Grantee liable for damages due to defective construction or neglect in maintenance.
Sale, Lease, Transfer, Usufruct, etc.
- No transfer, lease, sale, or granting of usufruct without Congressional approval except to wholly-owned subsidiaries or survival corporations.
- Transferees subject to same franchise conditions.
Equality Clause
- Any more favorable terms granted to competitors are extended to the grantee, and vice versa except for territory and franchise life span.
Separability Clause
- Invalid provisions do not affect the validity of the remaining sections.
Applicability Clause
- Grantee subject to Public Services Act and Electric Power Industry Reform Act of 2001.
Repealability and Nonexclusivity Clause
- Franchise subject to amendment or repeal by Congress and is not exclusive.
Reportorial Requirement
- Annual financial and operational reports to be submitted to Congress.
Extension/Renewal of Franchise
- Franchise term extended for 25 years from previous expiration.
- Franchise revoked automatically if grantee ceases operation for two consecutive years.
Effectivity Clause
- Act takes effect 15 days after publication in two newspapers of general circulation upon grantee’s initiative.