Definitions and unlawful illegal use
- Section 2 declares unlawful for any person, whether natural or juridical, public or private, to:
- Tap, make, or cause to be made any connection with overhead lines, service drops, or other electric service wires without previous authority or consent of the private electric utility or rural electric cooperative concerned.
- Tap, make, or cause to be made any connection to existing electric service facilities of any duly registered consumer without the consumer’s or the electric utility’s consent or authority.
- Tamper, install, or use a tampered electrical meter, jumper, current reversing transformer, shorting or shunting wire, loop connection, or any device that interferes with proper/accurate registry or metering of electric current or otherwise results in electricity being stolen or wasted.
- Damage or destroy an electric meter, equipment, wire, or conduit, or allow them to be so damaged or destroyed, if it interferes with proper/accurate metering of electric current.
- Knowingly use or receive the direct benefit of electric service obtained through the acts described in Section 2(a)–(d).
- The Act targets both the perpetrator and the knowing beneficiary in illegal use cases (Section 2).
Theft of transmission lines/materials
- Section 3 declares unlawful for any person to:
- Cut, saw, slice, separate, split, severe, smelt, or remove any electric power transmission line/material or meter from a tower, pole, any installation site, or any lawful storage/deposit/inventory location without the owner’s consent, whether or not done for profit or gain.
- Take, carry away, remove, or transfer any electric power transmission line/material or meter from a tower, pole, any installation site, or any lawful storage/deposit/inventory location without the owner’s consent, whether or not done for profit or gain.
- Store, possess, or keep in premises/custody/control any electric power transmission line/material or meter without the owner’s consent, whether or not done for profit or gain.
- Load, carry, ship, or move any electric power transmission line/material from one place to another (by land, air, or sea) without first securing a clearance/permit from its owner or the National Power Corporation (NPC) or its regional office concerned, as the case may be.
- For Section 3, “electrical power transmission line/material” refers to specified items with minimum voltage of sixty-nine kilovolts (69 kV), including:
- Steel transmission line towers (galvanized steel angular members and plates or creosoted and/or tannelized woodpoles/concrete poles) designed to carry and support conductors.
- ACSR aluminum conductor steel reinforced in excess of one hundred (100) MCM.
- Overhead ground wires made of 7 strands of galvanized steel wires, 3.08 millimeters in diameter, designed to protect electrical conductors from lightning strikes.
- Insulators made of porcelain or glass shell, designed to insulate electrical conductors from steel towers or woodpoles.
- Transmission line hardwares/materials of aluminum alloy or malleable steel designed to interconnect the listed towers, conductors, ground wires, and insulators for safe and reliable operation.
Prima facie evidence rules
- Section 4 establishes that specified circumstances constitute prima facie evidence of illegal use of electricity by the person benefitted thereby.
- The prima facie evidence in Section 4 serves as the basis for:
- Immediate disconnection by the electric utility after due notice.
- Preliminary investigation by the prosecutor and subsequent filing in court of the pertinent information.
- Lifting of any temporary restraining order or injunction issued against a private electric utility or rural electric cooperative.
- Section 4 enumerates prima facie evidence circumstances, including:
- A bored hole on the glass cover of the electric meter or at the back/any other part of the meter.
- Salt, sugar, and other elements inside the meter that could result in inaccurate registration by preventing accurate registration of consumption.
- Wiring connection affecting normal operation or registration of the electric meter.
- A tampered, broken, or fake seal; or mutilated/altered/tampered meter recording chart/graph or computerized chart/graph/log.
- A current reversing transformer, jumper, shorting and/or shunting wire, and/or loop connection or similar device in any part of the building/premises under the consumer’s control or on the electric meter.
- Mutilation, alteration, reconnection, disconnection, bypassing, or tampering of instruments, transformers, and accessories.
- Destruction (or attempt to destroy) integral accessory of the metering device box or its metering accessories.
- Acceptance of money/valuable consideration by an officer/employee of the utility concerned, or an offer to such officer/employee, for not reporting the enumerated circumstances.
- To qualify as prima facie evidence, discovery of the enumerated circumstances must be personally witnessed and attested to by an officer of the law or a duly authorized representative of the Energy Regulatory Board (ERB).
- Section 4 also provides that possession/control/custody of electric power transmission line/material by any person not engaged in transformation, transmission, distribution, or manufacture of such line/material constitutes prima facie evidence the line/material is the fruit of the offense under Section 3, allowing confiscation from the person in possession/control/custody.
Immediate disconnection and incentives
- Section 6 authorizes the private electric utility or rural electric cooperative to disconnect immediately after serving a written notice or warning, and to deny restoration without court/administrative order when:
- The owner of the house/establishment (or someone acting for him) is caught in flagrante delicto doing any act enumerated in Section 4(a); or
- Any enumerated circumstance in Section 4 is discovered for the second time.
- Section 6 requires a written notice or warning upon the first discovery to trigger the second-discovery disconnection authority.
- Section 6 provides an exception allowing immediate disconnection to be avoided or service to be restored upon deposit of the amount representing differential billing with the utility, the cooperative, or the competent court, as the case may be.
- If the court finds illegal use not committed by the same person, the deposit is credited against future billings with legal interest chargeable against the utility/cooperative, and the utility/cooperative must immediately pay the person double the value of the payment/deposit with legal interest, creditable against immediate future billings; this is without prejudice to criminal, civil, or administrative actions.
- If the court finds the same person guilty, the person must, upon final judgment, pay the utility/cooperative double the value of the estimated electricity illegally used, referred to as differential billing.
- Section 5 creates an incentive scheme: a monetary reward of at least PHP 5,000 is given to any person who reports to the NPC or police authorities any act that may violate Section 3.
- The Department of Energy (DOE), in consultation with the NPC, must issue incentive implementation guidelines within thirty (30) days from the Act’s effectivity.
- For Section 6, differential billing is the amount to be charged for unbilled electricity illegally consumed, determined through methodologies using one or more bases for the amount and one or more bases for the recovery period, including:
- Bases for monthly consumption include: (a) highest recorded monthly consumption within the five-year billing period preceding discovery; (b) estimated monthly consumption per load inspection during discovery; (c) higher consumption between average consumptions before or after the highest drastic drop within the five-year period; (d) highest recorded monthly consumption within four (4) months after discovery; or (e) the result of the ERB test during discovery.
- Bases for recovery period include: (1) time of abrupt/abnormal drop in consumption, or (2) a change in service connection (change of meter, change of seal, reconnection), or if none exists, up to a maximum of sixty (60) billing months to the time of discovery.
- The recovery period may be shortened but shall not be less than one (1) year preceding the date of discovery.
Contract surcharge enforcement and injunction limits
- Section 8 authorizes private utilities and rural electric cooperatives to impose surcharges in addition to the value of electricity pilfered on bills of a consumer apprehended for tampering with the consumer’s electric meter/metering facility, and for other contract violations such as direct connection, use of jumper, and other illicit usage means installed on the consumer’s premises.
- Section 8 fixes surcharge amounts as follows:
- First apprehension: 25% of the current bill as surcharge.
- Second apprehension: 50% of the current bill as surcharge.
- Third and subsequent apprehension: 100% of the current bill as surcharge.
- The surcharge is collected from and paid by the consumer concerned, and Section 8 authorizes discontinuance of electric service if the consumer is in arrears in payment of the imposed surcharges.
- “Apprehension” in Section 8 means discovery of any circumstances enumerated in Section 4 in the consumer’s establishment or outfit.
- Section 9 restricts courts from issuing injunctions or restraining orders: no such writ may be issued against a private utility or rural electric cooperative exercising disconnection authority under the Act unless there is prima facie evidence that disconnection was made with evident bad faith or grave abuse of authority.
- If a court issues an injunction or restraining order notwithstanding Section 9, it becomes effective only upon filing a bond with the court in the form of cash or cashier’s check equivalent to differential billing, penalties, and other charges, or to the total value of the subject matter.
- Section 9 provides that the injunction/restraining order is automatically refused or dissolved upon filing by the public utility of a counterbond similar in form and amount.
- If an injunction is granted, the issuing court must, within ten (10) days, submit a report to the Supreme Court detailing grounds or reasons for the order.
Criminal penalties and corporate liability
- Section 7 penalizes violations of Section 2 and Section 3 as follows:
- For violation of Section 2: prision mayor or a fine ranging from PHP 10,000 to PHP 20,000, or both, at the discretion of the court.
- For violation of Section 3: reclusion temporal or a fine ranging from PHP 50,000 to PHP 100,000, or both, at the discretion of the court.
- Section 7 increases penalties by one degree if the offense is committed by, or in connivance with, an officer or employee of the power company, private electric utility, or rural electric cooperative concerned; upon conviction, the officer/employee is also dismissed and perpetually disqualified from employment in any public or private utility/service company and from holding any public office.
- Section 7 provides that if, in committing acts enumerated in Section 4, any other enumerated act is also committed, the penalty imposed is the penalty next higher in degree.
- Section 7 provides that if the offense is committed by, or in connivance with, an officer or employee of the electric utility concerned, the officer/employee is punished with a penalty one degree higher and is dismissed and perpetually disqualified; it also provides liability on the utility that knowingly permitted the offense, or had knowledge and failed to prevent it or was otherwise negligent in connection with the offense: the utility must pay a fine not exceeding triple the amount of the differential billing, subject to court discretion.
- Section 7 provides that if the offense is committed by a partnership, firm, corporation, association, or other legal entity, including a government-owned or controlled corporation, the penalty is imposed on the president, manager, and each of the officers who knowingly permitted, failed to prevent, or were otherwise responsible.
ERB system loss caps and recovery reporting
- Section 10 establishes caps on the recoverable rate of system losses for private electric utilities:
- 14 1/2% at the end of the first year following effectivity.
- 13 1/4% at the end of the second year.
- 11 3/4% at the end of the third year.
- 9 1/2% at the end of the fourth year.
- Section 10 authorizes the ERB to determine at the end of the fourth year following effectivity, and as often as necessary, whether caps shall be reduced further for viability and consumer interest; any further cap shall be not lower than nine percent (9%), and the ERB fixes the effectivity date of new caps.
- Section 10 provides a rule for system loss calculation: power sold by NPC or any other entity that supplies power directly to a consumer and not through the private electric utility’s distribution system shall not be counted, even if billed through the private electric utility.
- Section 10 deems power sold to be directly to the consumer if any of these conditions is met:
- The NPC/other entity’s metering point is less than one thousand (1,000) meters from the consumer; or
- The consumer’s electric consumption is three percent (3%) or more of total load consumption of all customers of the utility; or
- There is no other consumer connected to the distribution line that connects to the NPC/other entity metering point to the consumer meter.
- Section 10 establishes system loss caps for rural electric cooperatives:
- 22% at the end of the first year.
- 20% at the end of the second year.
- 18% at the end of the third year.
- 16% at the end of the fourth year.
- 14% at the end of the fifth year.
- Section 10 authorizes the ERB to determine at the end of the fifth year following effectivity, and as often as necessary, whether caps shall be reduced further; any further cap shall be not lower than nine percent (9%), and the ERB fixes the effectivity date of new caps.
- Section 10 provides that the Act does not impair ERB authority to reduce or phase out technical or design losses as a component of system losses.
- Section 11 applies the caps in Section 10 only to the area of coverage of private electric utilities and rural electric cooperatives as of the Act’s effectivity.
- Section 11 provides that permissible levels of system loss recovery in areas added after effectivity are determined by the ERB.
- Section 12 requires reporting of pilferage recoveries: any private electric utility or rural electric cooperative that recovers any amount of pilferage losses must, within thirty (30) days from recovery, report in writing and under oath to the ERB:
- (a) fact of recovery; (b) date; (c) name of consumer; (d) amount recovered; (e) amount of pilferage loss claimed; (f) explanation for failure to recover the whole claimed amount; and (g) other ERB-required particulars.
- Section 12 provides that if a case is pending in court for recovery of a pilferage loss, no private electric utility or rural electric cooperative shall accept payment from the consumer unless provided in a compromise agreement duly executed and approved by the court.
Dissemination, rules, and legal effect
- Section 13 requires private electric utilities, rural electric cooperatives, the NPC, and the National Electrification Administration (NEA) to conduct a vigorous consumer information campaign on the Act’s provisions, especially Sections 2, 3, 4, 5, 6, 7, and 8, within sixty (60) days from effectivity and at least once a year thereafter.
- Section 13 requires faithful condensation of the Act’s provisions in the contracts with new consumers.
- Section 14 requires the ERB to issue implementing rules within thirty (30) working days after due hearings that must commence within thirty (30) working days from the Act’s effectivity.
- Section 14 requires ERB rules to include methodologies for computing:
- The amount of electricity illegally used; and
- The amount of payment or deposit under Section 7 based on the presence of the prima facie evidence discovered.
- Section 14 requires ERB to issue rules on reporting under Section 12 and the procedure for distribution to or crediting of consumers for recovered pilferage losses.
- Section 15 establishes a separability clause: an unconstitutional/invalid portion does not nullify the other provisions.
- Section 16 expressly repeals Presidential Decree No. 401, as amended by Batas Pambansa Blg. 876, insofar as it penalizes unauthorized installation of electrical connections, tampering and/or knowing use of tampered electrical meters or other devices, and theft of electricity.
- Section 16 further repeals or modifies all inconsistent laws, ordinances, rules, regulations, and other issuances.
- Section 17 provides effectivity thirty (30) days after publication in the Official Gazette or in any two (2) national newspapers of general circulation.
- The Act is approved December 8, 1994.