Dagupan Electric Corp. franchise renewal

Coverage and franchise term

A franchise is granted to Dagupan Electric Corporation, its successors or assigns, to construct, operate, and maintain a distribution system for conveyance of electric power to end-users.
The distribution system covers the City of Dagupan, the municipalities of Calasiao, Sta. Barbara, San Fabian, San Jacinto and Manaoag, and barangays Bolingit and Cruz in the City of San Carlos, all in the Province of Pangasinan.
The franchise term is twenty-five (25) years from the date of effectivity of the Act.
The franchise is deemed ipso facto revoked if the grantee fails to operate continuously for two (2) years.

Definitions and franchise “distribution system”

“Distribution system” means the system of wires and associated facilities including subtransmission lines belonging to a franchised distribution utility, extending between the delivery point on the national transmission system or generating facility and the metering point/facility of the end-user.

Operation standards and facility management

The grantee must operate and maintain all electric distribution facilities, lines, and systems it owns, maintains, operates, or manages in a superior manner.
Upon requirement by the Energy Regulatory Commission (ERC) (or its legal successor), or the Department of Energy (DOE) (or its legal successor), or any other concerned government agency, the grantee must modify, improve, or change facilities and systems in a manner and extent that science and improvements in electric power services render reasonable and proper.
The grantee is authorized, where practicable, to accommodate interested parties along highways, roads, streets, alleys, or right-of-way upon reasonable compensation and for purposes of maintaining order, safety, and aesthetics; the ERC decides disputes between parties.

Permits, public works, and ingress/egress

The grantee must secure from the ERC (or any other government agency having jurisdiction over its operation) the necessary certificate of public convenience and necessity and other appropriate permits and licenses for construction and operation.
For erecting and maintaining poles and other supports, or laying and maintaining wires and conductors, the grantee may excavate or lay conduits in public places and public thoroughfares with prior approval of the DPWH or the concerned LGU.
Any public place, roadway, sidewalk, bridge, or similar area disturbed or altered must be immediately repaired and properly restored at the expense of the grantee, in accordance with DPWH and LGU standards.

Government authority during emergencies

The President of the Philippines has a special reserved right in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order to take over and operate the distribution system or authorize any government agency to temporarily operate it, with due compensation to the grantee for use during the period of operation.

Public service obligations and consumer access

The grantee must supply electricity to its captive market in the least-cost manner.
When required by the ERC and as far as feasible, the grantee must modify, improve, or change facilities, poles, lines, systems, and equipment to provide efficient and reliable service and reduced electricity costs.
The grantee must charge reasonable and just power rates to all types of consumers within the franchise areas to enable businesses and industries to compete.
The grantee must provide open and nondiscriminatory access to its 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).
The grantee is prohibited from engaging in activity that constitutes abuse of market power, including unfair trade practices, monopolistic schemes, or other activities that hinder competitiveness of businesses and industries.

Rates, transparency, and lifeline service

The retail rates to the captive market and charges for distribution to end-users are regulated and subject to the ERC approval (or its legal successor).
The grantee must identify and segregate in the electricity bill the components of the retail rate pursuant to Republic Act No. 9136, unless amended.
Rates charged must be made public and transparent.
The grantee must implement a lifeline rate to marginalized end-users as mandated under Republic Act No. 9136.

Consumer protection and complaint desk

The grantee must establish a consumer desk to handle consumer complaints and promote consumer interests.
The grantee must act with dispatch on all complaints brought before it.

Franchise tax and real property tax

In consideration of the franchise and rights, the grantee (and successors/assigns) must pay a franchise tax equal to fifty percent (50%) of one percent (1%) of all revenues derived from its distribution wheeling services and captive market supply, excluding generation charge, transmission charge, and system loss charge.
Nothing in the franchise tax provision repeals any existing tax exemptions, incentives, or privileges granted under relevant law.
The grantee must pay real property taxes only on their real estate and buildings, exclusive of the franchise, consistent with the tax rule applicable to other corporations.
The grantee must file the return with the city where its principal place of office is located and pay taxes due to the Commissioner of Internal Revenue or duly authorized representative, under the National Internal Revenue Code (NIRC); the return is subject to audit by the Bureau of Internal Revenue.

Eminent domain and facilities over public property

The grantee may exercise the right of eminent domain insofar as it is reasonably necessary for efficient maintenance and operation of services, subject to limitations and procedures prescribed by law.
The grantee may install and maintain poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and similar government property.
The grantee may acquire private property actually necessary for the franchise purposes, but only after proper condemnation proceedings and with just compensation paid.

Liability, safety, and government immunity

The grantee must hold national, provincial, and municipal governments harmless from claims and actions arising from accidents or injuries (to property or persons) caused by construction, installation, operation, or maintenance of the distribution system.
The grantee is liable for injury and damage arising from accidents caused by defective construction or by neglect or omission to keep its poles and wires in a safe condition.

Transfer restrictions and congressional approval

The grantee may not lease, transfer, grant usufruct of, or sell the franchise or the rights and privileges acquired under it to any person, firm, company, corporation, or other commercial or legal entity.
The grantee may not merge with any other corporation or legal entity, and may not transfer the controlling interest of the grantee, whether in whole or in part, and whether simultaneously or contemporaneously, to any such person or entity.
Any sale, transfer, or assignment of the franchise subjects the transferee to the same conditions, terms, restrictions, and limitations in the Act.
Any transaction violating the congressional approval requirement is barred absent the prior approval of the Congress of the Philippines.

Equality clause

If any competing individual, partnership, or corporation receives a similar permit or franchise with terms or provisions more favorable or that place the grantee at any disadvantage, those terms and/or provisions are deemed part of the franchise and operate equally in favor of the grantee.
Future franchise grantees enjoy any terms and provisions granted that are not found in other franchises that may later be granted.
The equality clause does not affect the provisions concerning territory covered by the franchise and the life span of the franchise.

Reporting and governing regulatory laws

The grantee must submit an annual report of finances and operations to the Congress of the Philippines.
The grantee must comply with and is subject to Commonwealth Act No. 146 (the Public Services Act, as amended) and Republic Act No. 9136 (Electric Power Industry Reform Act of 2001).

Acceptance, repeal, and separability

Acceptance of the amendment and extension/renewal must be given in writing within sixty (60) days from the date of effectivity of the Act.
Laws, decrees, orders, resolutions, instructions, rules, regulations, or parts inconsistent with the Act are repealed or modified accordingly.
If any section or provision is declared unconstitutional or invalid, the remaining unaffected sections and provisions continue in full force and effect.

Relationship to amendment rules

The franchise amendment updates Republic Act No. 3221 by providing updated operative provisions on franchise nature and scope, operations, regulatory compliance, public works requirements, consumer protections, rate regulation, taxes, eminent domain, liability, transfer restrictions, equality treatment, reporting, and applicability to the Public Services Act and electric power industry reforms.