Title
ERC Guidelines on Administrative Sanctions under RA 9136
Law
Erc Guidelines Re Republict Act No. 9136, May 17, 2002
Decision Date
May 17, 2002
The Guidelines to Govern the Imposition of Administrative Sanctions in the Form of Fines and Penalties outlines the duties and responsibilities of the Energy Regulatory Commission (ERC) in enforcing the Implementing Rules and Regulations of Republic Act No. 9136, including the power to impose fines and penalties for non-compliance with the Act and its regulations.
guidelines
administrative sanctions
fines

Legal basis and covered framework

  • The guidelines govern the imposition of administrative sanctions in the form of fines and penalties pursuant to Section 46 of Republic Act No. 9136.
  • Republic Act No. 9136 takes effect on June 26, 2001.
  • The guidelines apply to violations of Republic Act No. 9136 and its Implementing Rules and Regulations (IRR), as well as the Philippine Grid and Distribution Codes, and ERC-assigned laws, rules, regulations, orders, resolutions, and other enforceable issuances.

Scope and defined terms

  • The guidelines apply to all persons violating or failing to comply with Republic Act No. 9136, its IRR, and the Philippine Grid and Distribution Codes and rules, regulations, orders, resolutions, and other laws whose enforcement is assigned to the ERC.
  • “Act” refers to Republic Act No. 9136.
  • “Distribution Code” is the compilation of rules governing electric utilities’ operation and maintenance of distribution systems, including standards for service and performance and the relationship of distribution systems with connected parties.
  • “Distribution Utility” is any electric cooperative, private corporation, government-owned entity, or existing local government unit with an exclusive franchise to operate a distribution system under its franchise and the Act.
  • “Grid Code” is the set of rules governing safe and reliable operation, maintenance, and development of the high voltage backbone transmission system and related facilities.
  • “Energy Regulatory Commission” or “ERC” is the agency created pursuant to Section 38 of the Act.
  • “Implementing Rules and Regulations” or “IRR” are the rules for Republic Act No. 9136 (Electric Power Industry Reform Act of 2001) promulgated by the Department of Energy (DOE) and approved on February 27, 2002 by the Joint Congressional Power Commission (Power Commission).
  • “Person” covers both natural and juridical persons.

Administrative sanctions for violations

  • Non-submission of documents triggers a penalty of PHP 50,000 plus PHP 100 a day for every day of violation when a person fails, without any justifiable reason, to submit required documents.
  • The required documents include Annual Reports, Monthly Financial and Statistical Reports, computations of Purchased Power Adjustment, Mandated Rate Reduction, Wage Adjustment Clause, Fuel and Purchased Power Cost Adjustment and FOREX, Financial Statements, sample bills, and other documents required and deemed material and pertinent by the ERC.
  • Non-compliance with the Act and its IRR, Grid and Distribution Codes, and ERC laws/rules/issuances triggers a fine of PHP 100,000 plus PHP 100 a day for every day of violation when a person is found to have violated any covered provision.
  • Violations expressly include (among others):
    • Operating as a Generation Company/Facility without a valid Certificate of Compliance (COC) and appropriate clearances.
    • Failing to provide open and non-discriminatory access to the Transmission and Distribution System when prescribed/required.
    • Non-compliance with prescribed technical specifications and performance standards.
    • Non-submission of a plan to comply with technical specifications prescribed by the Grid or Distribution Codes and/or failure to implement said plan within three (3) years from the effectivity of the codes.
    • Operating as an Electricity Supplier without a valid license or permit.
    • Failure to file an application for unbundling of rates.
    • Operating as a Transmission or Distribution Utility without a valid Certificate of Public Convenience and Necessity (CPCN).
    • Failure to file duly negotiated Transition Supply Contracts within the time prescribed by law.
    • Failure to implement the mandated rate reduction.
    • Failure of a Distribution Utility to adopt and implement a lifeline rate.

Notice, warning, and interplay with criminal action

  • The ERC imposes the penalties under the preceding sections only after the offender is duly informed in writing of the violation.
  • The ERC must give the offender an opportunity to present an explanation before imposing the administrative sanction.
  • The ERC must duly warn the offender of the consequences of the violation before imposing the administrative sanction.
  • Administrative sanctions are imposed without prejudice to any criminal action that may be filed if warranted under existing laws, rules, and regulations.

Anti-competitive acts, fraud, and revocation recommendation

  • Anti-competitive acts (including but not limited to cross-ownership, cross-subsidization, price or market manipulation, or other unfair trade practices) are penalized with not lower than PHP 50,000 but not exceeding PHP 50,000,000, at the discretion of the ERC.
  • Anti-competitive penalties apply only after due notice and hearing, and the ERC considers the act’s effect on the electric industry and its participants.
  • Anti-competitive sanctions are imposed without prejudice to price controls, injunctions, divestment or disgorgement of excess profits, and any criminal action that may be filed if warranted.
  • Fraud or misrepresentation by a Distribution Utility in connection with failure to mitigate potential stranded costs triggers a penalty of not lower than PHP 50,000 but not exceeding PHP 50,000,000, at the discretion of the ERC.
  • Fraud/misrepresentation penalties apply only after due notice and hearing, and specifically relate to obligations under Section 33 of the Act and Rule 17 of the IRR.
  • Repeated commission of violations under Sections 5, 7, and 8 operates as a ground for the ERC to recommend to Congress the revocation of the franchise or privilege granted to the offender.

Contempt sanctions

  • A fine not exceeding PHP 50,000, at the discretion of the ERC, may be imposed for misconduct that seriously interrupts an ERC hearing or session or proceedings.
  • The ERC may fine a person who willfully fails or refuses, without just cause, to comply with a subpoena ad testificandum and subpoena duces tecum legally issued or promulgated by the ERC.
  • The ERC may fine a person who, while present at the hearing, session, or investigation, refuses to be sworn as a witness or refuses to answer questions when lawfully required, or refuses to furnish information required by the ERC.

Compromise settlement rules

  • Parties to an administrative proceeding may make an offer of settlement to the ERC at any time before a decision is rendered for a consented decree, voluntary compliance, desistance, and other settlement terms.
  • Settlement offers and the facts supporting them are considered for settlement purposes only and are not used as evidence against any party for any other purpose.
  • A settlement offer does not constitute an admission of any violation by the party making the offer and does not waive the right to file warranted criminal actions.
  • The ERC shall not accept a settlement offer amount lower than 50% of the computed penalty.
  • In exceptional cases, the ERC may accept an amount lower than 50% at the full discretion of the Commission, considering:
    • good faith of the offender;
    • gravity of the violation;
    • first-time commission of the offense; and
    • other meritorious reasons the Commission en banc considers.
  • No compromise settlement is allowed after the case has been finally decided by the ERC.

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