The House of Representatives approved on Tuesday House Bill 5828, which legally redefines public utilities in clear terms and amends the 80-year-old Public Service Act.
Albay Rep. Joey Sarte Salceda, senior vice chairman of the House committee on economic affairs and one of the bill’s principal authors, said the measure is a vital requirement for the country’s robust economic development.
It redefines the concept of public utility, the vagueness of which, he said, has led to business uncertainty, fewer investments and limited consumer choices.
The approved bill aims to ensure the proper implementation of Section 11, Article XII of the Philippine Constitution, which states that only companies which are 60-percent owned by Filipinos may operate public utilities.
HB 5828 redefines public utility to refer to a person, business or service that operates, manages and controls the distribution and transmission of electricity for public use, as provided in Republic Act 9136, or the Electric Power Industry Reform Act of 2001, and water pipeline and distribution system as defined under RA 6234, and PD 198, also known as the Provincial Water Utilities Act of 1973.
It also stipulates that a public utility business or service “needs to be regulated when the common good so requires.” Public service, on the other hand, was amended to refer to “canal, public market, irrigation system” and the like.
Its ultimate objective, Salceda explained, is “to promote consumer welfare and international competitiveness, since with more players in the industry, there will be greater competition, which will lead to better quality services, greater access to services for far-flung areas, and lower rates.”
“Are you satisfied with the quality and cost of the basic services you get from transportation and telecommunication these days? We need to protect consumers from companies that violate the law by making sure the penalties will deter or punish them for violating the rights of consumers,” Salceda stressed.
The measure, which consolidated six bills filed by Salceda and Reps. Gloria Macapagal-Arroyo, Arthur Yap, Feliciano Belmonte, Jr., Jose Christopher Y. Belmonte, and Monsour T. del Rosario III, also increases the penalties for violators of its provisions, from the current P200 a day to a maximum of P5 million a day to “give teeth to the law.”
HB 5828, Salceda said, would attract more foreign investments the country badly needs, and address the “changes in the economic framework brought about by globalization and rapid advances in technology and the law to fulfill its purpose of truly serving the public.”
Economic analysts said the Philippines’ woes over its poor telecommunications, transport and power service quality have been debilitating and have stalled economic growth for so long.
These woes, Salceda pointed out, stem from the “ambiguities” in the statutory definition of public service and public utility, “which have allowed oligarchs to monopolize the three vital industries for decades to the detriment of consumers and progress.”
He said the approved measure clarifies and resolves such ambiguities.
The measure also provides that “maximum rate of return (for public utility businesses) shall be equal to the post-tax weighted average cost of capital for the same or comparable business, computed using established methodologies such as the capital asset pricing model.”
Salceda pointed out that “consumers often experience high prices and poor quality of basic services 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 also applied to all public services.”
The 80-year-old law, he said, is outmoded 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 in reference to the 1987 Constitution; and 3) the applicable penalties and fees for public services.
Under the new measure, violators “shall be subject to disgorgement of profits, treble damages, a daily fine of up to P5 million per day during which such default or violation continues, and divestment, or all or any combination thereof.” The maximum daily fine shall also be increased every five years.
Salceda stressed the proposed amendments “enhance the old Public Service Act’s relevance to contemporary concerns, in the interest of providing the general public with more choices, better services, and lower prices.”
