To address the problems facing the Philippine power sector, the Government decided to
restructure and privatize the electric power industry. The centerpiece of the restructuring of the power industry was the passage of the Electric Power Industry Reform Act (EPIRA) in June 2001 and promulgation of the implementing rules and regulations in February 2002. The EPIRA established a new legal and regulatory framework for the power sector and enabled unbundling the power industry into generation, transmission, distribution, and supply sectors. The regulatory function will be performed by the newly established, independent Energy Regulatory Commission (ERC). The Department of Energy (DOE) will be responsible for the formulation of policies for the planning and implementation of a comprehensive program for efficient electricity supply. The EPIRA also created Government-owned corporations, i.e. the Power Sector Assets and Liabilities Management Corporation (PSALM) to manage the privatization of NPC, and the National Transmission Corporation (TRANSCO) to take possession of NPC’s transmission assets to be operated by a private sector concessionaire. The role of NPC will be reduced to the operation of the Small Power Utilities Group (SPUG) responsible for providing power generation and its associated power delivery systems in areas that are not connected to the national transmission system.
