Electric Power Industry Reform Act of 2001

Electric Power Industry Reform Act of 2001
11th Congress of the Philippines
  • An Act Ordaining Reforms in the Electric Power Industry, Amending for the Purpose Certain Laws and for Other Purposes
CitationRepublic Act No. 9136
Territorial extentPhilippines
Passed byHouse of Representatives of the Philippines
PassedMay 31, 2001
Passed bySenate of the Philippines
PassedJune 4, 2001
Signed byPresident Gloria Macapagal Arroyo
SignedJune 8, 2001
CommencedJune 26, 2001
Legislative history
Initiating chamber: House of Representatives of the Philippines
Bill titleHouse Bill No. 8457
Revising chamber: Senate of the Philippines
Bill titleSenate Bills Nos. 1712, 1621, 1943 and 2000
Amended by
Republic Act No. 10150 (2011)
Republic Act No. 11552 (2021)
Republic Act No. 12179 (2025)
Keywords
Electricity; privatization; competition; power-sector regulation
Text of statute as originally enacted
Status: In force

The Electric Power Industry Reform Act of 2001, officially designated as Republic Act No. 9136 and commonly abbreviated as EPIRA, is a Philippine law that restructured the country's electric power industry. It established a legal framework for separating the industry into generation, transmission, distribution, and supply sectors; privatizing most assets of the government-owned National Power Corporation (NPC); and introducing competition in the wholesale and retail electricity markets.[1]

The act was signed by President Gloria Macapagal Arroyo on June 8, 2001, and took effect on June 26, 2001.[2] It created the Energy Regulatory Commission (ERC), the National Transmission Corporation (TransCo), and the Power Sector Assets and Liabilities Management Corporation (PSALM). It also directed the establishment of the Wholesale Electricity Spot Market (WESM) and a system of retail competition and open access under which qualified consumers may select their electricity suppliers.[1]

EPIRA has remained the principal statutory framework governing the Philippine electricity industry. Studies have credited the reforms with expanding private participation, improving supply adequacy, and reducing the government's exposure to NPC's financial obligations. Other assessments have found that electricity prices remained high, retail competition developed slowly, and market concentration and regulatory capacity continued to present difficulties.[3][4]

Background

During the late 1980s and early 1990s, the Philippines experienced severe shortages in generating capacity and widespread power interruptions. The government responded by contracting with independent power producers, frequently through long-term agreements containing take-or-pay commitments. The 1997 Asian financial crisis increased the peso value of NPC's foreign-currency obligations and placed additional pressure on the corporation's finances.[5]

Before EPIRA, NPC owned most generating plants and operated the national transmission network. The sector was affected by heavy NPC indebtedness, over-contracted generating capacity, limited consumer choice, high retail prices, and uneven household access to electricity.[6] Proposals to restructure the industry had been considered before Arroyo assumed the presidency. A reform measure passed by both chambers during the administration of President Joseph Estrada remained unresolved in a bicameral conference committee. Arroyo subsequently made passage of the reform legislation part of her administration's economic programme.[7]

The enacted measure consolidated House Bill No. 8457 and Senate Bills Nos. 1712, 1621, 1943, and 2000. The House of Representatives passed the consolidated measure on May 31, 2001, followed by the Senate on June 4. Arroyo approved it on June 8.[1]

Provisions

Industry structure

EPIRA divided the electric power industry into four sectors:[1]

  • Generation – the production of electricity. The act declared generation a competitive and open business affected with public interest but not a public-utility operation. New generating companies must obtain certificates of compliance from the ERC and meet applicable technical, financial, environmental, health, and safety requirements.
  • Transmission – the conveyance of electricity through the high-voltage national grid. Transmission was designated a regulated common-carrier business subject to open and non-discriminatory access and ERC-approved rates.
  • Distribution – the conveyance of electricity through local distribution systems to end-users. Distribution remains a regulated public utility requiring a legislative franchise.
  • Supply – the sale of electricity to end-users in the contestable market. Suppliers must obtain licences from the ERC and demonstrate technical and financial capability.

The act required electric-power participants to separate their business functions and unbundle their rates. Retail electricity bills were consequently divided into components such as generation, transmission, distribution, supply, and other charges.[1]

EPIRA also imposed restrictions on cross-ownership and prohibited price manipulation, cross-subsidization, cartelization, and other anti-competitive conduct. A company or related group was generally prohibited from controlling more than 30 percent of the installed generating capacity of a grid or 25 percent of national installed generating capacity.[1]

Institutional restructuring and privatization

The act created TransCo to receive NPC's transmission and subtransmission assets and operate the national grid pending the privatization of its operation. EPIRA authorized PSALM to award transmission operations through an outright sale or concession, while requiring open and non-discriminatory access to the grid.[1] Following competitive bidding, TransCo transferred operation and management of the transmission system to the National Grid Corporation of the Philippines (NGCP) on January 15, 2009. Ownership of the transmission assets remained with TransCo.[8]

PSALM was created to take ownership of NPC's generating assets, liabilities, real estate, and contracts with independent power producers. It was directed to privatize disposable NPC assets and use the proceeds, together with other authorised revenues, to liquidate NPC's debts and stranded contract costs.[1]

The law abolished the Energy Regulatory Board and replaced it with the ERC, an independent quasi-judicial regulatory body. The ERC retained rate-setting and service-regulation functions and received additional authority over competition, electricity-market rules, consumer complaints, market-power abuse, and the technical and financial performance of industry participants.[2]

Wholesale and retail markets

EPIRA directed the Department of Energy (DOE), in cooperation with industry participants, to establish WESM. The market provides a venue for trading electricity that is not covered by bilateral supply contracts. Its pricing methodology and market rules are subject to ERC approval.[1]

The act also provided for Retail Competition and Open Access (RCOA). Under RCOA, qualified end-users form part of the contestable market and may contract with a licensed retail electricity supplier instead of purchasing all their electricity from the distribution utility serving their area. Initial implementation was conditioned on the establishment of WESM, the unbundling of transmission and distribution charges, the initial removal of cross-subsidies, and specified levels of privatization of NPC generating assets and independent-power-producer contracts.[1]

Consumer charges and protections

Section 34 established a non-bypassable universal charge collected from electricity end-users. The charge may be used for authorised purposes including the recovery of approved stranded debts and contract costs, missionary electrification, equalization of taxes and royalties on indigenous and renewable energy, watershed rehabilitation, and the phase-out of cross-subsidies.[1]

The act also created a lifeline rate, a socialized pricing mechanism for marginalized electricity consumers. The ERC was tasked with setting the applicable consumption level and rate. Subsequent laws extended and revised the lifeline-rate programme.

Implementation

The implementing rules and regulations of EPIRA were approved on February 27, 2002. WESM began commercial operation in Luzon on June 26, 2006, and the Visayas was integrated into the market on December 26, 2010. RCOA commenced commercial operation on June 26, 2013.[9]

Implementation took longer than the original statutory schedules. A 2019 World Bank case study characterized the reform as substantial and largely complete by 2013, when retail competition became available to large consumers in Luzon and the Visayas, but noted that several parts of the programme had been delayed.[5] In September 2018, the Independent Electricity Market Operator of the Philippines assumed the market-operator functions of WESM.[10]

Assessments and criticism

A 2018 Philippine Institute for Development Studies policy note found that electricity supply had generally been adequate after EPIRA and that real electricity prices had shown a broadly declining trend over part of the post-reform period. It nevertheless identified unfinished reforms, including incomplete removal of cross-subsidies and the limited development of a competitive retail market.[3]

An earlier PIDS study found that real electricity prices increased during the 2001–2005 transition and declined slightly following the introduction of spot-market trading, but remained above pre-EPIRA levels. The study argued for improved implementation rather than repeal, including stronger regulation, better energy planning, and an independent market operator.[4]

A 2015 study of WESM prices from 2006 to 2010 found no statistically significant relationship between changes in measured market concentration and electricity prices during the period examined. It found, however, that tight electricity supply could permit substantial increases in spot-market prices.[11]

Other researchers have questioned whether liberalization created sufficient competition. A 2020 political-economy study argued that privatization replaced a government monopoly with a private oligopolistic structure and contributed to increased investment in coal-fired generation.[12] A 2023 Ateneo de Manila University working paper similarly observed that, two decades after restructuring, Philippine electricity rates remained among the highest in the region and attributed the result to several factors in the industry's structure and electricity-tariff composition.[13]

A 2025 policy brief from the University of the Philippines Center for Integrative and Development Studies attributed continuing barriers to competition to the high capital requirements of power projects, limited transmission access, and regulatory complexity. It recommended amendments intended to lower barriers to entry and strengthen competition.[14]

In Gerochi v. Department of Energy (2007), electricity consumers challenged the universal charge under Section 34 as an unconstitutional tax and an improper delegation of legislative authority to the ERC. The Supreme Court upheld the provision, ruling that the charge was a regulatory exaction imposed through the state's police power rather than a tax and that EPIRA supplied sufficient standards to guide the ERC.[15]

In Kapisanan ng mga Kawani ng Energy Regulatory Board v. Barin (2007), former Energy Regulatory Board employees challenged the abolition of their agency and its replacement by the ERC. The Supreme Court dismissed the petition, finding that the ERC had substantially new and expanded functions and that the abolition of the former board was valid.[2]

In a ruling publicized in January 2025, the Supreme Court upheld Sections 6 and 29, which declare electricity generation and supply to the contestable market to be non-public-utility operations. The Court clarified that generation and supply companies remained businesses affected with public interest and were still subject to ERC regulation under EPIRA.[16]

Amendments and proposed revisions

Republic Act No. 10150, approved on June 21, 2011, amended Section 73 by extending the lifeline rate for marginalized end-users to a total period of 20 years.[17] Republic Act No. 11552, approved on May 27, 2021, further extended the programme for 50 years and revised the eligibility and validation requirements for qualified marginalized end-users.[18]

Republic Act No. 12179 lapsed into law on April 18, 2025. It amended Section 50 to extend PSALM's corporate existence for ten years beyond the expiration of its original term on June 26, 2026. During the extension, PSALM is generally prohibited from collecting stranded costs and stranded debts from consumers, except for charges already approved by the ERC before the amendment's enactment.[19]

Broader proposals to revise EPIRA have continued. In July 2026, President Bongbong Marcos called on Congress to amend the law and prohibit distribution utilities from passing system-loss charges, including the associated value-added tax, to electricity consumers.[20] Members of the Senate subsequently expressed support for reviewing EPIRA and considering measures involving system-loss charges, regulatory oversight, and electricity costs.[21]

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 11 "Republic Act No. 9136". Supreme Court E-Library. Supreme Court of the Philippines. June 8, 2001. Retrieved August 8, 2026.
  2. 1 2 3 Kapisanan ng mga Kawani ng Energy Regulatory Board v. Commissioner Fe B. Barin, No. 150974 G.R. (Supreme Court of the Philippines June 29, 2007).
  3. 1 2 Brucal, Arlan Z. I.; Ancheta, Jenica (December 27, 2018). The Philippine Electric Power Industry Under EPIRA (Report). Policy Notes. Philippine Institute for Development Studies. doi:10.62986/pn2018.19. Retrieved August 8, 2026.
  4. 1 2 Navarro, Adoracion M.; Detros, Keith C.; dela Cruz, Kirsten J. (May 10, 2016). Post-EPIRA Impacts of Electric Power Industry Competition Policies (Report). Discussion Paper Series. Philippine Institute for Development Studies. doi:10.62986/dp2016.15. Retrieved August 8, 2026.
  5. 1 2 Bacon, Robert W. (May 2019). Learning from Power Sector Reform: The Case of the Philippines (PDF) (Report). Policy Research Working Paper. World Bank. doi:10.1596/1813-9450-8853. Retrieved August 8, 2026.
  6. ↑ Villamejor-Mendoza, Maria Fe (December 2008). "Bringing Electricity Reform to the Philippines". The Electricity Journal. 21 (10): 42–58. Bibcode:2008ElecJ..21j..42F. doi:10.1016/j.tej.2008.11.003.
  7. ↑ Lotilla, Raphael P. M. (2017). "A Concert of Institutions: Challenges for Power Sector Governance" (PDF). Public Policy. 16–17. University of the Philippines Center for Integrative and Development Studies: 176–189. Retrieved August 8, 2026.
  8. ↑ "About Us". National Transmission Corporation. Government of the Philippines. Retrieved August 8, 2026.
  9. ↑ "About the Philippine Electricity Market". Independent Electricity Market Operator of the Philippines. Retrieved August 8, 2026.
  10. ↑ "IEMOP celebrates seven years of powering a competitive, efficient, transparent and inclusive electricity market". Independent Electricity Market Operator of the Philippines. September 26, 2025. Retrieved August 8, 2026.
  11. ↑ Poquiz, John Lourenze S. (2015). "A Decade of Reforms in the Philippine Power Sector: A Price-Concentration Analysis on the Whole Sale Electricity Spot Market". DLSU Business & Economics Review. 25 (1). doi:10.59588/2243-786X.1610. Retrieved August 8, 2026.
  12. ↑ Saculsan, Phoebe Grace; Mori, Akihisa (February 11, 2020). "Why Developing Countries Go through an Unsustainable Energy Transition Pathway? The Case of the Philippines from a Political Economic Perspective". Journal of Sustainability Research. 2 (2) e200012. doi:10.20900/jsr20200012. Retrieved August 8, 2026.
  13. ↑ Ravago, Majah-Leah V. (2023). The Nature and Causes of High Philippine Electricity Price and Potential Remedies (PDF) (Report). Working Paper Series. Ateneo de Manila University Department of Economics. Retrieved August 8, 2026.
  14. ↑ Tabbada, Jose (2025). Barriers to Entry and the High Cost of Electricity in the Philippines (Report). University of the Philippines Center for Integrative and Development Studies. Retrieved August 8, 2026.
  15. ↑ Gerochi v. Department of Energy, No. 159796 G.R. (Supreme Court of the Philippines July 17, 2007).
  16. ↑ "SC: Electricity Generation and Supply Not Public Utility Operations, but Still Subject to ERC Regulation". Supreme Court of the Philippines. January 7, 2025. Retrieved August 8, 2026.
  17. ↑ "Republic Act No. 10150". The Lawphil Project. Arellano Law Foundation. June 21, 2011. Retrieved August 8, 2026.
  18. ↑ "Republic Act No. 11552". Supreme Court E-Library. Supreme Court of the Philippines. May 27, 2021. Retrieved August 8, 2026.
  19. ↑ "Republic Act No. 12179". The Lawphil Project. Arellano Law Foundation. April 18, 2025. Retrieved August 8, 2026.
  20. ↑ "PBBM urges Congress to amend EPIRA, end systems loss charges". Philippine News Agency. July 27, 2026. Retrieved August 8, 2026.
  21. ↑ "Senators back changes to EPIRA, vow to prioritize power cost measures". BusinessWorld. July 28, 2026. Retrieved August 8, 2026.
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