Business Cost NewsLegislation NewsPart 4 News: General Business Environment

Public Service amendments approved on second reading

February 18, 2020 | 11:23 pm


The House of Representatives approved on second reading the bill seeking to amend Commonwealth Act No. 146 or the Public Service Act.

Under House Bill (HB) 78, the definition of a public utility has been limited to power distribution and transmission, and water distribution and sewer systems.

The bill also proposes the transfer of the functions of the Public Service Commission to various administrative agencies and update the applicable penalties and fees for public services.

“The bill also prescribes a 12% 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,” according to the bill’s explanatory note.

In the explanatory note, Rep. Jose Maria Clemente S. Salceda of Albay, the measure’s author, said, “Competition and foreign investment are inhibited because limitations that should only apply to the operation of a public utility are applied to all public services.”

“This situation is caused by the ambiguity in the definition of public utility that is often used interchangeably with public service under Commonwealth Act No. 146. The key to fixing this problem is to develop a clear statutory definition of public utility,” he said.

“This legislative reform will significantly contribute to increasing competition, as well as protecting the public interest. More competition among providers would result in lower prices and improved quality of basic services, creating a more competitive economy towards a better quality of life for all,” Mr. Salceda added. — Genshen L. Espedido