Senate to update 80-year-old Public Service law, dismantle monopolies

The Senate is moving to update the Commonwealthera Public Service law enacted 80 years ago empowering Congress to review and grant franchises for public utilities.

In sponsoring the remedial legislation for plenary deliberation, Senator Grace Poe, who chairs the sponsoring Public Services Committee, said the panel was presenting “a measure that has been a long time coming.”

“In a nutshell, the proposed amendments to Commonwealth Act 146, more commonly known as the Public Service Act, seek to improve the quality of public services and goods and have it at a lower cost by encouraging more competition in its provision,” said Poe, adding, the move “seeks to finally amend an 85-year-old law which probably never envisioned a population of 110 million people all reliant on very few providers for its basic everyday needs.”

Poe pointed out that in order to achieve this goal, the remedial legislation is “finally clearing the ambiguity surrounding the interchangeably used terms public utility and public service.”

This, she added, is “in recognition of the much broader nature of the umbrella term, so to speak, ‘public service’ as against its subset term public utility.”

The term “public utility,” the senator added, will be limited to just three services, namely, distribution of electricity; transmission of electricity; and water pipeline distribution and sewerage pipeline systems.

She stressed that this distinction is “not trivial” and carries with it huge ramifications in terms of the constitutional restriction on foreign equity, asserting that “public utilities” are to be treated as natural monopolies, which must be restricted pursuant to Section 11, Article 12 of the Constitution.

All other “public services” that are not natural monopolies, the senator said, will be freed from such foreign equity restriction but not from any of their other responsibilities as public service providers.

“We are not redefining things,” Poe clarified. “We are declaring as public policy that the expansion of the investment base will benefit the public by allowing meaningful competition with more players, domestic and foreign, to slug it out to win the satisfaction of the Filipino people.”

This way, Poe projects that this will trigger competition in providing quality services and products at the least expense for consumers, airing hopes this will also put an end to “take it or leave it” attitude of monopolies that benefited in the past century.

The senator expects that as the realm of public services evolves, the bill gives the National economic and Development Authority, Philippine Competition Commission, and all concerned agencies, power to recommend to Congress to reclassify public services as public utilities based on the following criteria:

1. The service regularly supplies and directly transmits and distributes to the public through a network a commodity or service of public consequence;

2. The service is a natural monopoly;

3. The service is necessary for the maintenance of life and occupation of the public; and

4. The service is obligated to provide adequate service to the public on demand.

Second, she added, “it is about time that we see public service providers as partners and not enemies of the people just because they collect and we pay. The measure acknowledges the need for a flexible methodology for rate setting that will allow recovery of prudent and efficient costs and a reasonable rate of return.”

Third, Poe reminded “it is also time to amend the old fines of erring public service providers,” noting that “a measly P200 per day of violation isn’t enough disincentive to do right by the public.”

Moreover, Poe projected that once enacted into law, a violator will now be fined up to P2 million plus “disgorgement of profits” and additional “treble damages.” If public interest is not enough incentive, we certainly hope that these updated fines will,” she added.

Lastly, the senator assured that several “safeguards” were provided in the proposed legislation aimed at protecting the country’s interest as well as the public, and ensure that no monopoly will “lord over the public sector.”