Implementing Rules of RA 7832 on Electricity Theft

Policy and strict construction mandate

The Rules must be strictly construed to attain efficient and effective implementation of Republic Act No. 7832 (Section 2, Rule I).

Core definitions and key terms

ERB means the Energy Regulatory Board (Section 3, Rule I).
DOE means the Department of Energy (Section 3, Rule I).
NEA means the National Electrification Administration (Section 3, Rule I).
NPC means the National Power Corporation (Section 3, Rule I).
Utility means a Private or Investor-owned Electric Utility and that owned and/or operated by the Municipal, City, Provincial or National Government (Section 3, Rule I).
Cooperative means a Rural Electric Cooperative (Section 3, Rule I).
Electric Power Transmission Line/Material refers to electric transmission steel towers, wood-poles, cables, wires, insulators, line hardwares, electrical conductors and other related items with minimum voltage of sixty-nine kilovolts (69 kV), including specifically described tower, conductor, ground wire, insulator, and inter-connecting hardware/material categories (Section 3, Rule I).
Differential Billing is the amount to be charged to the person concerned for unbilled electricity illegally consumed, determined through the methodologies outlined in Section 6 of R.A. 7832 (Section 3, Rule I).
Apprehension is the discovery of circumstances enumerated in Section 4 of R.A. No. 7832, personally witnessed and attested to by the consumer concerned or a duly authorized ERB representative or any officer of the law, as the case may be (Section 3, Rule I).
Power Sold by NPC or any other entity that supplies power directly to the consumer is deemed sale directly to the consumer if any of these apply:
- the point of metering by NPC or any other utility is less than one thousand (1,000) meters from the consumer; or
- the consumer’s electric consumption is three (3%) or more of the total load consumption of all customers of the utility; or
- there is no other consumer connected to the distribution line of the utility which connects to the NPC or any other utility point of metering to the consumer meter (Section 3, Rule I).
Current Bill means the latest monthly bill served by the utility or cooperative that does not include any period before the time of apprehension (Section 3, Rule I).
Current Rate means the average rate of electricity per kilowatt-hour as reflected in the current bill (Section 3, Rule I).

Prohibited acts for electricity use

Illegal use of electricity is unlawful for any person, natural or juridical, private or public (Section 1, Rule II).
It is unlawful to tap, or make/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 (Section 1(a), Rule II).
It is unlawful to tap or connect to existing electric service facilities of a duly registered consumer without the consumer’s or the electric utility’s consent or authority (Section 1(b), Rule II).
It is unlawful to tamper with and/or install/use tampered metering devices and related connections that interfere with proper/accurate registration or metering, or that otherwise result in diversion in a manner whereby electricity is stolen or wasted—such as tampered electric meters, jumper, current reversing transformer, shorting/shunting wire, loop connection, or any other interfering device (Section 1(c), Rule II).
It is unlawful to damage or destroy an electric meter, equipment, wire or conduit or to allow such damage/destroying so it interferes with proper/accurate metering (Section 1(d), Rule II).
It is unlawful to knowingly use or receive the direct benefit of electric service obtained through any of the acts listed in Section 1(a)–(d), Rule II (Section 1(e), Rule II).

Theft of lines/materials covered

Theft of electric power transmission lines and materials is unlawful for any person, natural or juridical, public or private (Section 2, Rule II).
It is unlawful to cut, saw, slice, separate, split, sever, smelt, or remove any electric power transmission line/material or meter from any tower/pole/installation/location where it is lawfully stored or kept without the consent of the owner, whether or not done for profit or gain (Section 2(a), Rule II).
It is unlawful to take/carry away/remove/transfer any electric power transmission line/material or meter, with or without motor vehicle or other conveyance, from any lawful/unlawful storage/keeping location without the consent of the owner, whether or not done for profit or gain (Section 2(b), Rule II).
It is unlawful to store, possess, or otherwise keep in premises/custody/control any such line/material or meter without the consent of the owner, whether or not for profit or gain (Section 2(c), Rule II).
It is unlawful to load, carry, ship, or move such line/material from one place to another without first securing a clearance/permit from its owner or the NPC or its regional office concerned, as the case may be (Section 2(d), Rule II).

Prima facie evidence and attestations

The presence of any listed circumstances constitutes prima facie evidence of illegal use of electricity by the person benefited (Section 1, Rule III).
Prima facie evidence exists when there is:
- a bored hole on the glass cover of the meter or at the back/any part;
- salt, sugar, and other elements inside the meter that could cause inaccurate registration by preventing accurate consumption registration;
- wiring connections affecting normal operation or registration;
- absence of an ERB/NEA seal or presence of tampered/broken/fake seal, or mutilated/altered/tampered meter recording chart/graph/log;
- a current reversing transformer, jumper, shorting/shunting wire, loop connection, or similar device in the building/premises under consumer control or on the meter;
- mutilation, alteration, reconnection/disconnection, bypassing, or tampering of instruments/transformers/accessories;
- destruction or attempt to destroy integral accessory of the metering device box encasing the meter/metering accessories; or
- acceptance of money or other valuable consideration by a utility officer/employee, or an offer to such officer/employee, for not reporting any of the enumerated circumstances (Section 1(a)–(h), Rule III).
If prima facie evidence is established, it becomes the basis for: (a) immediate disconnection by the utility/cooperative after due notice; (b) preliminary investigation by the prosecutor and filing in court; and (c) lifting any temporary restraining order or injunction that may have been issued against a utility/cooperative (Section 1, Rule III).
To constitute prima facie evidence, discovery must be personally witnessed and attested by the consumer concerned or a duly authorized ERB representative or any officer of the law, as the case may be (Section 1, Rule III).
An ERB authorized representative is assigned to conduct testing of electric meters or inspection of electric lines/facilities of any distribution entity, or is specially authorized by the head of the main regional ERB offices (Section 1, Rule III).
An officer of the law covers persons charged with public order and protection of life/property, including specified barangay officials and barangay community brigades, barangay policemen, PNP policemen, municipal councilors, municipal mayors, and provincial fiscals (Section 1, Rule III).
Possession, control, or custody of electric power transmission line/material by any person not engaged in transformation/transmission/distribution or in manufacturing such line/material creates prima facie evidence that the line/material is the fruit of the offense under Section 2, Rule II, and it may be confiscated from the possessor (Section 2, Rule III).

Incentives for reporting pilferage/theft

A monetary reward with a minimum amount of PHP 5,000 is given to any person who reports to NPC or police authorities any act that may constitute a violation of Section 2, Rule II (Section 1, Rule IV).
The DOE, in consultation with the NPC, must issue necessary guidelines for proper implementation of the incentive scheme within 30 days from the effectivity of R.A. 7832 (Section 1, Rule IV).

Immediate disconnection framework

The utility or cooperative has the authority to disconnect immediately and deny restoration without needing a court or administrative order in these situations (Section 1, Rule V).
Immediate disconnection is allowed when the owner/occupant (or one acting for him) is caught in flagrante delicto doing any act enumerated under Section 1, Rule III, provided written notice or warning is served prior to disconnection (Section 1(a), Rule V).
Immediate disconnection is allowed when circumstances under Section 1, Rule III are discovered for the second time, provided written notice or warning was issued upon the first discovery (Section 1(b), Rule V).
Written notice or warning must be served prior to disconnection and must indicate: name and address of consumer, consumer account number, date of apprehension, findings of fact, amount of energy pilfered (kWh), and the differential billing amount, including computation details: (a) computation of unbilled consumption (kWh), (b) period used for differential billing computation, and (c) latest inspection report prior to apprehension (Section 1, Rule V).
The utility or cooperative must not immediately disconnect or must immediately restore service upon the person denied service depositing with the utility/cooperative or with the competent court the amount representing the differential billing (Section 2, Rule V).

Utility/court liabilities and penalties

If a court finds by final judgment that the person did not commit illegal use of electricity, the deposited amount is credited against future billings with legal interest chargeable against the utility or cooperative (Section 1, Rule VI).
If the person is exonerated by final judgment, the utility or cooperative must immediately pay the person double the value of the payment/deposit with legal interest, creditable against immediate future billings (Section 1, Rule VI).
These remedies are without prejudice to criminal, civil, or administrative actions under existing laws/rules/regulations (Section 1, Rule VI).
If a person is found by final judgment to have violated Section 1, Rule II, he must pay the utility/cooperative double the value of the estimated illegally used electricity referred to as differential billing, plus either prision mayor or a fine of PHP 10,000.00 to PHP 20,000.00, or both, at the court’s discretion (Section 2(a), Rule VI).
If the offense under Section 1, Rule II is committed by, or in connivance with, an officer or employee of the power company/utility/cooperative, the officer/employee is punished with a penalty one (1) degree higher and is forthwith dismissed and perpetually disqualified from employment in any public/private utility or service company and from holding any public office (Section 2(a), Rule VI).
If multiple acts under Section 1, Rule II are also committed, the penalty next higher in degree is imposed (Section 2(b), Rule VI).
If any acts under Section 1, Rule II are committed by, or in connivance with, a utility officer/employee, the officer/employee receives the penalty one (1) degree higher, is forthwith dismissed, and is perpetually disqualified; the utility that knowingly permitted/had knowledge and failed to prevent or was negligent must pay a fine not exceeding triple the amount of the “differential billing” subject to court discretion (Section 2(c), Rule VI).
If committed by a partnership/firm/corporation/association/any 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 was otherwise responsible (Section 2(d), Rule VI).
If a person is found by final judgment to have violated Section 2, Rule II, he is punished with reclusion temporal or a fine ranging from PHP 50,000.00 to PHP 100,000.00, or both, at the court’s discretion (Section 3(a), Rule VI).
If committed by, or in connivance with, an officer or employee of the power company/utility/cooperative, that officer/employee is punished with a penalty one (1) degree higher and is forthwith dismissed and perpetually disqualified (Section 3(a), Rule VI).
If other acts under Section 2, Rule II are also committed, the penalty next higher in degree is imposed (Section 3(b), Rule VI).
If acts under Section 2, Rule II are committed by, or in connivance with, a utility officer/employee, the officer/employee is punished one (1) degree higher, dismissed, and perpetually disqualified; the utility with knowing permission/failure/negligence must pay a fine not exceeding triple the amount of the “differential billing” subject to court discretion (Section 3(c), Rule VI).
If committed by a partnership/firm/corporation/association/other legal entity (including 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 was otherwise responsible (Section 3(d), Rule VI).

Billings, differential computation, surcharges

Utilities/cooperatives and specified entities must submit working watt-hour meter standard equipment used for testing customers’ watt-hour meters to the ERB for testing and sealing within 30 days following publication of the Rules, and every year thereafter (Section 1, Rule VII).
The NEA must furnish ERB within the same period copies of test reports on calibration of cooperatives’ watt-hour meter standard equipment (Section 1, Rule VII).
Utilities and cooperatives must calibrate customers’ meters at least once every two (2) years (Section 2(a), Rule VII).
Utilities/cooperatives must furnish ERB copies of test reports within 30 days after each calibration (Section 2(a), Rule VII).
Differential billing is computed by multiplying: (1) unbilled consumption (kWh), (2) the period covered by differential billing, and (3) the current rate of electricity at the time of apprehension (Section 3, Rule VII).
Unbilled consumption in kWh is computed using the following methodologies based on the type of prima facie circumstance:
- For cases under paragraphs (a), (e), (f) and (g), Section 1, Rule III:
  - estimated monthly consumption per load/inspection report at discovery;
  - highest recorded monthly consumption within the five-year period preceding discovery;
  - the higher consumption between average consumptions before or after the highest drastic drop within the five-year billing period preceding discovery; or
  - highest recorded monthly consumption within four (4) months after discovery (Section 4.1, Rule VII).
- For cases under paragraphs (b), (c) and (d), Section 1, Rule III:
  - ERB test result at discovery;
  - higher consumption between average consumptions before or after the highest drastic drop within the five-year billing period preceding discovery;
  - estimated monthly consumption per load/inspection report at discovery;
  - highest recorded monthly consumption within four (4) months after discovery; or
  - highest recorded monthly consumption within the five-year period preceding discovery (Section 4.2, Rule VII).
- For cases under paragraph (h), Section 1, Rule III: any methodology listed for Section 4.1 or Section 4.2 applies whichever is applicable (Section 4.3, Rule VII).
In determining the period to be recovered:
- If there was a change in service connection (change of meter, change of seal, reconnection, or replacement of parts), the period to be recovered is reckoned from the time of the last inspection (Section 5(a), Rule VII).
- Otherwise, the period starts from the time electric service recorded an abrupt or abnormal drop in consumption (Section 5(b), Rule VII).
- If neither exists, the basis may be up to a maximum of sixty (60) billing months up to the time of discovery, provided that if adequate and indubitable proof shows the period is less than sixty (60) billing months, the utility/cooperative may recompute the differential billing using the established period (Section 5(b), Rule VII).
- The period to be used must, in no case, be less than one (1) year preceding the date of discovery (Section 5(c), Rule VII).
- If the affected period is less than one (1) year, the utility/cooperative may compute using one (1) year as the minimum basis (Section 5(d), Rule VII).
When the utility/cooperative discovers any circumstance under Rule III, it must notify in writing the owner/occupant (or suitable age and discretion person residing there acting in behalf of the owner/occupant) of the incident (Section 6(a), Rule VII).
If apprehension is witnessed by an officer of the law and not by an ERB authorized representative, the tampered meter must be placed in a suitable container, properly identified and sealed, and opened only for testing in the ERB meter laboratory by the duly authorized ERB representative (Section 6(b), Rule VII).
After every inspection/monitoring of meter installation or apprehension, the utility/cooperative must accomplish an Inspection Report showing: date/time; condition of meters/instrument transformers/metering installations; changes made with connections; replacements made; inspector signature/name; and consumer signature/name or authorized representative (Section 7(a), Rule VII).
The Inspection Report must be attested by an authorized ERB representative or by an officer of the law, as the case may be (Section 7(b), Rule VII).
The original Inspection Report must be kept by the utility/cooperative and cannot be destroyed without prior ERB authority; a duplicate must be furnished to the owner/occupant or suitable age/discretion person acting for the owner/occupant (Section 7(c), Rule VII).
A utility or rural electric cooperative may impose surcharges in addition to the value of electricity pilfered on bills of consumers apprehended for tampering with meter/metering facility or for other contract violations like direct connection, use of jumper, and other illicit usage means found installed in premises (Section 8(a), Rule VII).
The surcharge for contract-violation surcharges is collected and paid as follows:
- first apprehension: 25% of the current bill;
- second apprehension: 50% of the current bill;
- third and subsequent apprehensions: 100% of the current bill (Section 8(a), Rule VII).
The utility/cooperative is authorized to discontinue electric service if the consumer is in arrears in paying the imposed surcharges (Section 8(a), Rule VII).

Restraining orders and injunction limits

No court issues a writ of injunction or restraining order against any utility/cooperative exercising the right and authority to disconnect electric service unless there is prima facie evidence that the disconnection was made with evident bad faith or grave abuse of authority (Section 1, Rule VIII).
A writ of injunction or restraining order issued despite the absence of evident bad faith or grave abuse of authority is effective only when the affected person/customer files a bond in cash or cashiers check equivalent to the differential billing, penalties and other charges in illegal use cases (Section 2, Rule VIII).
The court injunction/restraining order is refused or dissolved if the utility/cooperative files a counterbond of similar form and amount (Section 2, Rule VIII).
When a writ of injunction or restraining order is granted, the issuing court must submit to the Supreme Court within 10 days from issuance a report stating in detail the grounds/reasons (Section 3, Rule VIII).

System loss caps and cost adjustment rules

Private electric utilities may pass on system loss to customers capped as follows:
- 14 1/2% effective on February 1996 billings;
- 13 1/4% effective on February 1997 billings;
- 11 3/4% effective on February 1998 billings;
- 9 1/2% effective on February 1999 billings (Section 1, Rule IX).
Each utility must file with the ERB on or before September 30, 1995 an application for approval of an amended Generation Charge or Power Cost Adjustment formula reflecting the new system loss cap in its rate schedule (Section 2, Rule IX).
Utilities’ automatic cost adjustment generation charge must follow the formula set out in Section 2, Rule IX, where the variables define cost of electricity purchased/generated, total kWh purchased/generated, actual system loss not to exceed maximum recoverable plus actual company use not to exceed 1% of total kWh purchased/generated, kWh consumed by subsidized consumers, applicable base cost, and the franchise tax rate (Section 2, Rule IX).
Each utility must file with the ERB before the end of the fourth year following the effectivity of these Rules an application to determine whether caps will be reduced further (which shall in no case be lower than 9%), the date of effectivity of new caps, and permissible recovery levels for system loss in newly added franchise areas after the effectivity of R.A. No. 7832 (Section 3, Rule IX).
Rural electric cooperatives’ system loss caps are as follows:
- 22% effective on February 1996 billings;
- 20% effective on February 1997 billings;
- 18% effective on February 1998 billings;
- 16% effective on February 1999 billings;
- 14% effective on February 2000 billings (Section 4, Rule IX).
Each cooperative must file with the ERB on or before September 30, 1995 an application for approval of an amended Purchased Power Adjustment Clause (PPA) reflecting the new system loss cap in its schedule of rates (Section 5, Rule IX).
Cooperatives’ automatic cost adjustment PPA must follow the formula in Section 5, Rule IX and defines variables for cost of power purchased/generated, total kWh purchased/generated, actual system loss limited by the maximum recoverable plus actual company use limited to 1% of total kWh purchased/generated, kWh consumed by subsidized consumers, and applicable base cost (Section 5, Rule IX).
Each cooperative must file an application with the ERB before the end of the fifth year following the effectivity of these Rules to determine whether caps will be reduced further (which shall in no case be lower than 9%), the date fixed for effectivity of new caps, and permissible system loss recovery levels in areas added after the effectivity of R.A. No. 7832 (Section 6, Rule IX).
The ERB’s authority is preserved to reduce or phase out technical or design losses as a component of system losses (Section 7, Rule IX).

Reporting and effect of pilferage recovery

If a utility/cooperative recovers any pilferage losses, it must submit to the ERB within 30 days from recovery a written report under oath containing: fact of recovery; date of recovery; name of consumer; amounts recovered including those resulting from compromise agreements and surcharges (if any); amount of pilferage loss claimed; explanation for failure to recover whole amount claimed; itemized expenses (if any); and amount passed on to the consumer (Section 1, Rule X).
A utility/cooperative must not accept payment from the consumer during the pendency of the case for recovery of pilferage loss unless a compromise agreement duly executed by the parties and approved by the court provides otherwise (Section 1, Rule X).
The full amount recovered must be reflected as a reduction in the consumer’s electric bill through the applicable automatic cost adjustment formula, and the Board verifies and confirms it through an Order (Section 2, Rule X).

Consumer information and contracts

Private electric utilities, rural electric cooperatives, NPC, and NEA must conduct a vigorous consumer information campaign to inform consumers of the Rules’ provisions within 60 days from effectivity and at least once a year thereafter, and must incorporate a faithful condensation of the provisions in the contract with new consumers (Rule XI, Section 1).

Repeal, separability, and effectivity

All existing inconsistent rules, regulations, orders, or parts are repealed, amended, or modified accordingly (Section 1, Rule XII).
If any part or provision is declared unconstitutional or illegal, the remaining parts or provisions remain valid (Section 1, Rule XII).
These Rules take effect 15 days after publication in two newspapers of general circulation (Section 1, Rule XIII).