BRINGING THE PUBLIC SERVICE ACT INTO THE 21 ST CENTURY

Transcription

1 BRINGING THE PUBLIC SERVICE ACT INTO THE 21 ST CENTURY

2 PRESENTATION OUTLINE 1. CURRENT SITUATION 2. ISSUE 3. MAIN REFORM 4. EXPECTED OUTCOMES 5. OTHER REFORMS 6. CALL TO ACTION

3 1. CURRENT SITUATION Every Philippine resident uses basic services to live and earn a living.

4 BASIC SERVICES These basic services include: ELECTRICITY TRANSPORTATION WATER TELECOMMUNICATIONS

5 DISSATISFACTION There is dissatisfaction with these services which are characterized by: ELECTRICITY TRANSPORTATION POOR QUALITY WATER TELECOMMUNICATIONS HIGH PRICES

6 LACK OF COMPETITION The main reason behind the dissatisfaction with these services is: Currently, there are only a few local players leading to a lack of competition in the market. LACK OF COMPETITION = LACK OF CHOICE OF CONSUMERS = MARKET POWER BY PROVIDERS = MARKET FAILURE

7 2. ISSUE The lack of competition is caused by: Ambiguity in the definition of public utility that is used interchangeably with public service under the Public Service Act. This serves as a major barrier to foreign entry and investment.

8 AMBIGUITY IN THE DEFINITION This ambiguity is caused by the following: 1987 Constitution restricts the operation of a public utility to Filipinos only (Sec. 11, Art. XII). HOWEVER There is NO STATUTORY DEFINITION of a public utility. There is the Public Service Act, but it only defines a public service (Section 13 (b), Commonwealth Act No. 146), and NOT a public utility. HENCE Public utilities and public services have often been used interchangeably. This means that all basic services with the semblance of public utilities or public services are instinctively subjected to the same restriction in the Constitution.

9 COMMONWEALTH ACT NO. 146 To this day, public services are still governed by an outdated law. The Public Service Act is a 1936 law enacted during the Commonwealth period. This 80-year old law, Commonwealth Act No. 146, has been amended several times already. Many of its sections have been expressly or impliedly repealed, including the Public Service Commission under Presidential Decree No. 1 in 1972.

10 PROPOSED AMENDMENTS It is NECESSARY to amend the Public Service Act in order to enable the law to reflect the current realities in the 21 st century by: 1. Recognizing the transfer of functions of the Public Service Commission to various administrative agencies; 2. Clarifying the definition of public services and public utilities; 3. Instituting an appropriate mechanism for fixing rates; and 4. Increasing the penalties for violations.

11 3. MAIN REFORM To develop a clear statutory definition of a public utility by amending the Public Service Act to make it current, responsive, and relevant to the 21 st century

12 PUBLIC SERVICE DEFINITION Section 13 (b) of The Public Service Act defines public service as follows: Every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railway, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services.

13 PUBLIC UTILITY DEFINITION Due to the absence of a statutory definition for public utilities, the Supreme Court put forward its own definition in JG Summit Holdings vs. Court of Appeals, G.R. No , September 24, 2003, as follows: a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service

14 PROPOSED STATUTORY DEFINITION (D) I. PUBLIC UTILITY DEFINITION. A PUBLIC UTILITY SHALL EXCLUSIVELY MEAN (1) TRANSMISSION OF ELECTRICITY AS DEFINED BY SECTION 4 (CCC) OF REPUBLIC ACT NO. 9136, (2) DISTRIBUTION OF ELECTRICITY AS DEFINED BY SECTION 4 (N) OF REPUBLIC ACT NO. 9136, AND (3) WATERWORKS AND SEWERAGE SYSTEMS AS DEFINED BY REPUBLIC ACT NO. 6234, AS AMENDED, AND PRESIDENTIAL DECREE NO. 198, AS AMENDED.

15 PROPOSED STATUTORY DEFINITION II. AMENDMENT OF PUBLIC UTILITY DEFINITION. NO OTHER BUSINESS OR SERVICE SHALL BE DEEMED A PUBLIC UTILITY UNDER SECTION 13 (D) (I) UNLESS OTHERWISE SUBSEQUENTLY PROVIDED BY LAW UPON RECOMMENDATION BY THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY (NEDA).

16 PROPOSED STATUTORY DEFINITION THE NEDA SHALL ONLY RECOMMEND INCLUSION OF THE BUSINESS OR SERVICE IF: (1) IT IS A PUBLIC SERVICE; (2) THAT REGULARLY SUPPLIES AND DIRECTLY TRANSMITS AND DISTRIBUTES TO THE PUBLIC THROUGH A NETWORK; (3) A COMMODITY OR SERVICE OF PUBLIC CONSEQUENCE; AND (4) IS A NATURAL MONOPOLY THAT MUST BE RESTRICTED IN ITS OPERATION WHEN THE PUBLIC INTEREST SO REQUIRES.

17 4. EXPECTED OUTCOMES The proposed statutory definition LIMITS THE SERVICES that are subjected to RESTRICTIONS THAT INHIBIT COMPETITION.

18 RESTRICTED AS PUBLIC UTILITIES BEFORE THE REFORM RESTRICTED AS PUBLIC UTILITIES AFTER THE REFORM ELECTRICITY (electric light, heat, and power) TRANSMISSION OF ELECTRICITY DISTRIBUTION OF ELECTRICITY WATER (water supply, and power) WATERWORKS AND SEWERAGE SYSTEMS TRANSPORTATION (any common carrier, etc.) TELECOMMUNICATIONS

19 5. OTHER REFORMS Recognizing the transfer the functions of the Public Service Commission to various administrative agencies Recognition of Administrative Agencies. All references to the Public Service Commission in Commonwealth Act No. 146, as amended, shall mean any administrative agencies to which the powers and duties of Public Service Commission were transferred in accordance with their respective charters and related statutes.

20 RATE OF RETURN Instituting an appropriate mechanism for fixing rates (c) To fix and determine, OR TO FIX MAXIMUM CEILINGS OF, individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and other special rates which shall be imposed, observed, and followed thereafter by any public service WHEN THE PUBLIC INTEREST SO REQUIRES

21 INCREASING PENALTIES Increasing the applicable penalties for violations From a fine not exceeding P200 per day to disgorgement of profits, treble damages, a fine of up to P5M subject to indexation, or all or any combination thereof

22 6. CALL TO ACTION The Public Service Act must be amended to define public utilities effectively allowing for greater competition in more areas of basic services for IMPROVED QUALITY OF SERVICES and LOWER PRICES to 1) make the Philippine economy competitive; and 2) improve the quality of life in the Philippines.

23 LEGISLATIVE AGENDA Philippine Development Plan Legislative Agenda: Public Service Act Amendments Bill Chapter 9: Industry Chapter 15: Sound Macroeconomic Policy Chapter 19: Infrastructure Development

24 LEGISLATIVE AGENDA

25 STATUS IN THE 17 TH CONGRESS Status in the 17 th Congress of the Republic of the Philippines House of Representatives 1. House Bill No by Rep. Gloria Macapagal-Arroyo 2. House Bill No by Rep. Joey Salceda 3. House Bill No by Rep. Arthur Yap 4. House Bill No by Rep. Feliciano Belmonte and Rep. Jose Christopher Belmonte Senate 1. Senate Bill No by Sen. Richard Gordon 2. Senate Bill No by Sen. Miguel Zubiri

26 THANK YOU.