Operation obligations and facility improvements
- Section 2 requires all electric distribution facilities, lines, and systems owned, maintained, operated, or managed by the grantee (or successors/assignees) to be operated and maintained at all times in a superior manner.
- Section 2 imposes on the grantee a duty, whenever required by the Energy Regulatory Commission (ERC) or its legal successor, the Department of Energy (DOE) or its legal successor, or any other concerned government agency, to modify, improve, and change its facilities or systems to such extent as progress in science and improvements in electric power services may render reasonable and proper.
- Section 2 allows, whenever practicable, use of free spaces in its poles, facilities, or right-of-way by interested parties upon reasonable compensation to the grantee, considering the cost incurred to accommodate and administer the use.
- Section 2 directs that the ERC decides any dispute or disagreement between parties regarding such use.
Regulatory approvals required
- Section 3 requires the grantee to secure from the ERC/DOE or any other government agency with jurisdiction the necessary certificate of public convenience and necessity and other appropriate permits and licenses for the construction and operation of the electric distribution system.
Excavation, construction in public places, and restoration
- Section 4 authorizes the grantee, its successors, or assignees, for erecting and maintaining poles, pipes and other supports or for laying and maintaining facilities, wires, cables, pipes, or other conductors, to make excavations or lay conduits in public places and public ways within the province, city, and municipality.
- Section 4 requires prior approval of the Department of Public Works and Highways (DPWH) or the local government unit concerned, as may be appropriate.
- Section 4 requires disturbed public places, highways, streets, lanes, alleys, avenues, sidewalks, or bridges to be repaired and replaced in workmanlike manner at the expense of the grantee, in accordance with DPWH or local government unit standards.
- Section 4 provides that after a ten (10)-day notice from the authority, if the grantee fails or neglects to repair or replace, the DPWH or local government unit may cause repairs and charge the grantee at double expense.
Public service duties and market conduct
- Section 5 requires the grantee to supply electricity to its captive market in the least costly manner.
- Section 5 requires the grantee, in the interest of the public good and as far as feasible, and whenever required by the ERC, to modify, improve, or change facilities, poles, lines, systems, and equipment to provide efficient and reliable service and reduced electricity costs.
- Section 5 requires the grantee to charge reasonable and just power rates to all types of consumers within its franchise areas so that businesses and industries can compete.
- Section 5 mandates open and nondiscriminatory access to the distribution system and services for any end user within its franchise area, consistent with Republic Act No. 9136 (Electric Power Industry Reform Act of 2001).
- Section 5 prohibits the grantee from engaging in activities constituting abuse of market power, including unfair trade practices, monopolistic schemes, and other activities that hinder competitiveness.
Rates, billing transparency, lifeline service
- Section 6 states that the grantee’s retail rates and charges for distribution of electric power to end users are regulated by and subject to the approval of the ERC or its legal successor.
- Section 6 requires the grantee to identify and segregate in the electricity bill the components of the retail rate pursuant to Republic Act No. 9136, unless amended.
- Section 6 requires rates charged to end users to be made public and transparent.
- Section 6 requires the grantee to implement lifeline rate to marginalized end users as mandated under Republic Act No. 9136.
Consumer interest promotion and complaints
- Section 7 requires the grantee to establish a consumer desk to handle consumer complaints and promote consumer interests.
- Section 7 requires the grantee to act with dispatch on all complaints brought before it.
Special presidential and government takeover powers
- Section 8 reserves to the President of the Philippines, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, the right to temporarily take over and operate the grantee’s stations or facilities.
- Section 8 reserves the President’s right to temporarily suspend operation of any station or facility for public safety, security and public welfare.
- Section 8 allows the President to authorize temporary use and operation by any government agency upon due compensation to the grantee for the period of such operation.
Eminent domain and installation over public property
- Section 9 authorizes the grantee, subject to legal limitations and procedures, to exercise eminent domain to the extent reasonably necessary for efficient maintenance and operation of services.
- Section 9 authorizes installation and maintenance of poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar government property.
- Section 9 authorizes acquisition of private property actually necessary for the purposes of the franchise.
- Section 9 conditions expropriation on proper expropriation proceedings being instituted and just compensation being paid.
Franchise duration, continuous operation condition
- Section 10 grants a franchise term of twenty-five (25) years from the date of effectivity of the Act unless sooner cancelled.
- Section 10 provides that the franchise is ipso facto revoked if the grantee fails to operate continuously for two (2) years.
Acceptance, compliance, and voidness
- Section 11 requires acceptance of the franchise to be given in writing to the Congress of the Philippines, through:
- the Committee on Legislative Franchises of the House of Representatives, and
- the Committee on Public Services of the Senate,
within sixty (60) days from the Act’s effectivity.
- Section 11 provides that upon giving acceptance, the grantee shall exercise the privileges granted under the Act.
- Section 11 states that nonacceptance renders the franchise void.
Government warranty against claims
- Section 12 requires the grantee to hold the national, provincial, city, and municipal governments free from all claims, accounts, demands, or actions arising out of accidents or injuries (to property or persons) caused by construction, installation, operation, and maintenance of the distribution system.
Liability for injury and damage
- Section 13 makes the grantee liable for any injury and damage arising from or caused by accidents to persons and property due to defective construction or neglect or omission to keep poles and wires in safe condition.
Transfer restrictions and reporting to Congress
- Section 14 prohibits the grantee from selling, leasing, transferring, granting the usufruct of, or assigning the franchise or rights and privileges acquired thereunder, merging with another corporation/entity, or transferring controlling interest (whole or in parts), whether simultaneously or contemporaneously, without prior approval of Congress.
- Section 14 requires that Congress be informed of any lease, transfer, grant of usufruct, sale or assignment of franchise rights/privileges, or merger or sale of controlling interest within sixty (60) days after completion.
- Section 14 conditions that transfers must be in accordance with constitutional limitations.
- Section 14 states that failure to report the change of ownership to Congress renders the franchise ipso facto revoked.
- Section 14 provides that the transferee is subject to the same conditions, terms, restrictions, and limitations of the Act.
Public ownership and dispersal requirement
- Section 15 requires the grantee, in accordance with constitutional requirements encouraging public participation, to offer to Filipino citizens at least thirty percent (30%) of its outstanding capital stock (or a higher percentage if later required by law) in any securities exchange in the Philippines within five (5) years from commencement of operations.
- Section 15 requires alternative public participation methods when public offer of shares is not applicable, including establishment of cooperatives and other methods encouraging public participation by citizens and corporations operating public utilities.
- Section 15 provides that noncompliance renders the franchise ipso facto revoked.
Annual report and ERC permit condition
- Section 16 requires the grantee to submit an annual report to Congress through:
- the Committee on Legislative Franchises of the House of Representatives, and
- the Committee on Public Services of the Senate,
on compliance with franchise terms and on operations on or before April 30 of every year during the franchise term.
- Section 16 requires a reportorial compliance certificate issued by Congress before any application for permit or certificate is accepted by the ERC.
Penalty for failure to report
- Section 17 penalizes failure to submit the requisite annual report by a fine of five hundred pesos (P500.00) per working day of noncompliance.
- Section 17 requires the fine to be collected by the ERC from the delinquent franchise grantee separate from other reportorial penalties imposed by the ERC.
- Section 17 provides that proceeds from such fines or penalties accrue to the monitoring fund of the ERC in line with its supervisory and regulatory functions.
Equality clause for franchise benefits
- Section 18 requires that any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or granted in the future upon prior review and approval of Congress, becomes part of this franchise and is accorded to the grantee immediately and unconditionally.
- Section 18 limits the equality clause by excluding effects concerning:
- territory covered by the franchise,
- the life span of the franchise, or
- the type of service authorized by the franchise.
- Section 18 further excludes sale, lease, transfer, grant of usufruct, or assignment of legislative franchises with prior congressional approval from the equality clause’s coverage.
Applicable governing laws
- Section 19 requires compliance with and subjection to:
- Commonwealth Act No. 146, as amended (the Public Service Act), and
- Republic Act No. 9136 (the Electric Power Industry Reform Act of 2001).
Separability
- Section 20 provides that if any section or provision is held invalid, other provisions not affected remain valid.
Amendability, repeal, and nonexclusivity
- Section 21 provides that the franchise is subject to amendment, alteration, or repeal by Congress when public interest so requires.
- Section 21 provides that the franchise is not interpreted as an exclusive grant of the privileges provided.
Effectivity and publication rule
- Section 22 states that the Act takes effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.
Issuance, approval, and legislative dates
- The Act is Republic Act No. 10890, titled “AN ACT GRANTING THE MACTAN ELECTRIC COMPANY, INC. (MECO) A FRANCHISE TO CONSTRUCT INSTALL, ESTABLISH, OPERATE AND MAINTAIN A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END USERS IN THE CITY OF LAPU-LAPU AND THE MUNICIPALITY OF CORDOVA PROVINCE OF CEBU.”
- The Act is dated July 17, 2016 and signed by the President of the Senate and the Speaker of the House; it lapsed into law on JUL 17 2016 without the signature of the President in accordance with Article VI, Section 27 (1) of the Constitution.
- The legislative process reflects: passed by the House on May 19, 2015, amended by the Senate on February 1, 2016, and House concurrence on May 23, 2016.