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Senate panel OKs Public Service Act amendments

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By Vanne Elaine Terrazola

A Senate panel has moved for the approval of the measure that would amend an 82-year-old law and open up competition on public services.

Senator Grace Poe (Senate of the Philippines official Facebook page / MANILA BULLETIN)

Senator Grace Poe (Senate of the Philippines official Facebook page / MANILA BULLETIN)

The Senate Committee on Public Services has endorsed for plenary deliberations the Senate Bill 1754, or the proposed “Act Amending Commonwealth Act No.146, Otherwise Known as ‘The Public Service Act’, as Amended, and For Other Purposes”, which was a consolidation of five bills.

Senator Grace Poe, committee chairman, sponsored the committee report recommending the approval of the measure before the Senate went on recess.

Poe said the SB 1754 would provide for the amendment of the Public Services Act which governs public services such as water and power utilities, transportation, telecommunication, and mass media. The said law was enacted in 1936.

Poe said the bill seeks to “improve the quality of goods and services of public service providers amd lower the costs of the said goods and services at the same time.”

Among the salient points of the measure that will achive such objective, is the provision of the statutory definition of “public utility” which, she said, should be different from the term “public services.”

The bill recognizes that “public service” is the umbrella term under which “public utility” falls.

“The distinction between the two carries with it some huge ramification in terms of Constitutional restrictions such as foreign equity and meaningful competition, among others,” Poe said.

The measure defines public utility as “the direct transmission or distribution, and delivery through a network, of a commodity or service of public consequence.”

It limits public utilities to three: the transmission of electricity; distribution of electricity; and water works and sewerage systems.

Poe said only public utilities are to be treated as “natural monopolies” whose ownership should be restricted to the Section 11, Article 12 of the Constitution, which limits foreign ownership of companies to 40 percent.

The new definition, Poe said, would result in the “freedom” of industries not listed as public utilities from constitutional restrictions on foreign ownership, equity and operation, and thus pave the way for more competition.

In particular, she said the entry of a third player in the telecommunication industry will be “more viable” with the proposed amendment.

“A meaningful competition will allow more players, domestic and foreign, to slug it out to win the satisfaction of the consuming Filipino people. This way, they would have to compete in providing quality services and goods at the lowest cost. We are expecting to erase the ‘take it or leave it’ attitude of companies that have enjoyed monopoly for decades,” she said.

Poe, on the other hand, allayed fears that regulations and restrictions will be too lax.

The measure, she quoted, “does not have any effect on the existing regulations of public services and do not, in any way, diminish the constitutional restrictions.”

Poe also assured that public service and public utility providers “will have a reasonable rate of return.”

SB 1754 suggests a formula which will involve real time fluctuations, inflation, and other factors that shall be considered in computing for the “reasonable rate of return” for public services, rather than relying on a fixed and rate of return set by the Supreme Court at 12 percent.

The proposed law, likewise, would set higher penalties for public service providers that fail to comply with the terms and conditions of any certificate, order, decision or regulation of the regulating agencies.

Under the 82-year old Public Service Act, violators are only meted with a fine of P200 per day of violation until they comply.

SB 1754, if enacted into law, would impose a penalty of up to P5,000,000 per day of violation, plus “disgorgement of profits” and additional “treble damages.”

Poe said she expects “immediate Senate action” on the measure when sessions resume in May. Its counterpart House Bill No. 5828 was approved on third and final reading by the Lower Chamber in September last year.

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