AN ACT CREATING THE DEPARTMENT OF ENERGY

Case Overview and Summary

Summary of Republic Act No. 7638 (Department of Energy Act of 1992)

Declaration of Policy (Section 2):
- Ensure continuous, adequate, and economic energy supply to achieve self-reliance in the country's energy requirements.
- Promote integrated and intensive exploration, production, management, and development of indigenous energy resources.
- Promote judicious conservation, renewal, and efficient utilization of energy.
- Rationalize, integrate, and coordinate government programs towards energy self-sufficiency and productivity without sacrificing ecological concerns.

Definition of Terms (Section 3):
- "Energy projects" refer to activities related to exploration, extraction, production, importation-exportation, processing, transportation, marketing, distribution, utilization, conservation, stockpiling, or storage of energy products and resources.
- "Board" refers to the Energy Regulatory Board.

Creation of the Department of Energy (Section 4):
- The Department of Energy is created to prepare, integrate, coordinate, supervise, and control all government plans, programs, projects, and activities related to energy exploration, development, utilization, distribution, and conservation.

Powers and Functions of the Department (Section 5):
- Formulate policies for planning and implementation of a comprehensive energy program consistent with national economic plan, environmental protection, and ecological balance. (Section 5a)
- Develop and update the Philippine energy program, including policy direction towards privatization, deregulation, and reduction of dependency on oil-fired plants. The program should be updated annually by September 15. (Section 5b)
- Establish and administer programs for exploration, transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources. (Section 5c)
- Exercise supervision and control over government activities related to energy projects. (Section 5d)
- Regulate private sector activities related to energy, while providing an environment conducive to private sector participation and investment. Institute deregulation programs for appropriate energy projects and activities within 4 years. (Section 5e)
- Assess requirements, determine priorities, provide direction, and disseminate information for energy research and development programs. (Section 5f)
- Formulate and implement programs, including incentives and penalties, for judicious and efficient energy use in all energy-consuming sectors. (Section 5g)
- Formulate and implement programs for accelerated development of non-conventional energy systems and promotion of their applications. (Section 5h)
- Devise ways to provide direct benefits to host provinces, cities, or municipalities of energy resources and generating facilities, without depriving other areas of energy requirements. (Section 5i)
- Encourage private enterprises engaged in energy projects to broaden public ownership. (Section 5j)
- Formulate rules and regulations to implement the objectives of the Act. (Section 5k)
- Exercise other necessary powers to attain the objectives of the Act. (Section 5l)

Composition of the Department (Sections 6-12):
- The Department Proper consists of the Office of the Secretary, Undersecretaries, Assistant Secretaries, and bureaus and services.
- The Secretary is appointed by the President and confirmed by the Commission on Appointments. The Secretary establishes policies, exercises supervision and control, creates regional offices and service units, and performs other necessary functions.
- The Secretary is assisted by three Undersecretaries and three Assistant Secretaries (for operations, policy and programs, and administrative services).
- The bureaus and services include: Energy Resource Development Bureau, Energy Utilization Management Bureau, Energy Industry Administration Bureau, Energy Planning and Monitoring Bureau, and Administrative Support Services.

Attached Agencies and Corporations (Sections 13-14):
- The Philippine National Oil Company (PNOC), National Power Corporation (NPC), and National Electrification Administration (NEA) are placed under the supervision of the Department but continue to perform their functions insofar as not inconsistent with the Act. The Secretary is the ex officio chairman of their respective boards.
- A Council of Energy Advisers consisting of five members from industry, labor, and consumer sectors shall advise the President on the overall energy program.

Transitory Provisions (Sections 15-20):
- The Office of Energy Affairs and the Energy Coordinating Council are abolished. Their powers, functions, funds, records, equipment, property, and personnel are transferred to the Department. (Sections 15-17)
- The non-price regulatory jurisdiction, power, and functions of the Energy Regulatory Board are transferred to the Department. The power to determine rates charged by NPC and electric cooperatives is transferred to the Energy Regulatory Board. (Section 18)
- The organizational framework and staffing pattern of the Department shall be prescribed by the Secretary within 60 days. Preference in filling positions shall be given to personnel from abolished agencies. (Section 19)
- Employees separated from service due to reorganization shall receive retirement benefits within 6 months. (Section 20)

Appropriations (Section 21):
- Funds for implementation shall be taken from current fiscal year appropriations of the Office of Energy Affairs, its special fund, and other resources allocated by the President, not exceeding ₱300,000,000. Subsequent funding shall be included in the annual General Appropriations Act.
- Funds collected by the Department from fees, surcharges, fines, and penalties, as well as 20% of the outstanding balance of the special fund, shall be disbursed for expenses necessary for the Department's operations.

Miscellaneous Provisions (Sections 22-28):
- The Secretary, Undersecretaries, and Assistant Secretaries shall disclose and divest financial interests in companies under the Department's jurisdiction within 30 days of appointment. (Section 22)
- The Department and its priority projects shall enjoy preferential treatment in exploration, development, exploitation, and extraction of energy resources, and in providing technical support for power-generating plants. Government agencies shall act on the Department's requests within 10 calendar days. (Section 23)
- The Secretary has visitorial and examining authority over non-government entities with energy contracts to determine the government's share of revenue or product. Refusal to allow examination is a breach of contract. (Section 24)
- In times of critically low energy supply, the President may issue a declaration and authorize the Secretary to implement fuel and energy allocation plans, conservation measures, power or fuel rationing, load curtailments, and restrictions on government vehicle use. (Section 25)
- Repealing and separability clauses are included. (Sections 26-27)
- The Act takes effect after publication in at least two national newspapers. (Section 28)