The House Committee on Economic Affairs has approved a substitute measure to a bill filed by Albay Rep. Joey Sarte Salceda, seeking to amend the statutory definitions of Public Service and Public Utility under the 80-year-old Philippine Public Service Act or Commonwealth Act No. 146.
Salceda’s House Bill 446, titled “An Act Further Amending Commonwealth Act No. 146, or the Public Service Act” is deemed an urgent legislative measure since it will break monopolies and liberalize the entry of telecoms, transport and power industries into the country to 100 percent foreign capitalization, the lawmaker said.
The measure seeks to solve the country’s debilitating woes over these three vital industries “which have stalled economic growth for so long,” said Salceda, senior vice chairman of the House Committee on Economic Affairs.
It has gained popular support from both private and government sectors, including the Philippine Competition Commission, which asserts that one way of “promoting a competitive environment is to open fully the market to foreign players.”
Salceda said the proposed amendments will clarify the “ambiguities” in the statutory definition of Public Service and Public Utility, which have paved the way for oligarchs to monopolize telecoms, transport and power industries, among others, for decades “to the detriment of consumers and the country.” The Duterte administration has vowed to break oligarchy in the country.
The bill, Salceda added, also seeks to address the “changes in the economic framework brought about by globalization and rapid technological innovations by adjusting the provisions of the law… and enable it to fulfill its purpose of truly serving the public.”
“Consumers often experience high prices and poor quality of basic services in the Philippines, because only a few local players and oligarchs effectively control the market. Competition and foreign investments are inhibited, because limitations that should only apply to the operation of a public utility are usually also applied to all public services,” he pointed out.
The situation, Salceda said, is primarily caused “by ambiguities in the definition of Public Utility that is often used interchangeably with Public Service under Commonwealth Act No. 146, and the key to fixing the problem is to develop a clear statutory definition of a public utility by amending the Public Service Act.”
The bill redefines Public Utility as “public service that regularly supplies the public and directly transmits and distributes … through a network, its commodity or service of public consequence.”
It also states that a public utility is “necessary to the public and a natural monopoly that needs to be regulated when the public interest so requires as determined by Congress.”
Categorized as public utilities under existing laws are electric power transmission, electric power distribution, water pipeline distribution, sewerage pipeline system, and such similar services.
Commonwealth Act No. 146, which has already gone through several amendments, is considered “still a good law in terms of protecting public interest, albeit outdated in certain aspects.”
Salceda said the 80-year-old law is outmoded, most particularly, in 1) the transfer of functions of the Public Service Commission to various administrative agencies; 2) the definition of public service, which is often used as a proxy for public utility according to the 1987 Constitution; and 3) the applicable penalties and fees for public services.
“The proposed amendments increase the old Public Service Act’s relevance to contemporary concerns, in the interest of providing the public with more choices, better services, and lower prices,” he noted.
The bill “prescribes a 12 percent cap on rate of return and prohibits income tax as operating expense for rate-determination purposes for public services, including public utilities, consistent with administrative and judicial pronouncements.”
The legislative reform will significantly contribute to increasing competition, as well as protecting the public interest, he said.
The Albay lawmakers explained that “more competition among providers would result in lower prices and improved quality of basic services in the Philippines, and help create a more competitive economy towards a better quality of life for all.”
The amendments include the transfer of certain functions, powers and duties of the Public Service Commission to various administrative agencies of the government, according to their respective jurisdictions.
These agencies include the Department of Transportation, Land Transportation Franchising and Regulatory Board, Land Transportation Office, Civil Aeronautics Board, Civil Aviation Authority of the Philippines, Philippine Ports Authority, Maritime Industry Authority, Philippine Coast Guard, Department of Information and Communications Technology, National Telecommunications Commission, Department of Energy, Energy Regulatory Commission, Department of Environment and Natural Resources, National Water Resources Board, Local Water Utilities Administration, Philippine Competition Commission, and others.
