FREQUENTLY ASKED QUESTIONS ON ENERGY RELATED MATTERS

FREQUENTLY ASKED QUESTIONS ON ENERGY RELATED MATTERS

Generation Companies and Distribution Utilities

ZAMBRANO GRUBA CAGANDA & ADVINCULA

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Q: What must a Generation Company do in case of an unexpected shutdown or derating of generating facilities or deactivation of existing generating units?

A: As reiterated by the Department of Energy (“DOE”) Memorandum on ensuring adequate

and reliable electric power supply from all power plants in the country, in case of unexpected shutdown or derating of generating facilities or deactivation of existing generating units, Section 2 of DOE Department Circular No. 2010-03-0003 requires Generation Companies to comply with certain notification requirements, to wit:

a. All Generation Companies must notify and coordinate with the System Operator of

any planned activity such as shutdown of its equipment in accordance with the Philippine Grid ene; and

b. Immediately inform the DOE of any unexpected shutdown or derating of the generating facility or unit thereof. The report shall include a description of the causes of the unexpected shutdown and estimated resumption.

Power generators should ensure regular operation of their respective power generating facilities. However, in case of unexpected shutdown or derating of the generating facility or unit of respective generating facilities thereof, power generators shall within 24 hours from actual outage to submit report to the DOE containing the following information:

1. Cause/reason of the following outages:

a. Unplanned Outage; b. Forced Outage; c. Extended Planned Outage; and d. Other outages under the classification of Unplanned Outage.

2. Actions being undertaken to address them; and 3. Expected date and time of resumption of operation.

The report (with attachments) may be submitted to the following e-mail addresses and sent through the following mobile numbers via Viber application:


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Q: Shall the shares from electricity sales or the Energy Regulation No. 1-94 (“ER 1-94”) Funds be remitted by the DOE and the Generation Companies to the host beneficiaries?

A: Yes. DOE Advisory dated 18 March 2020 provides that the shares from electricity sales or the ER 1-94 Funds, especially the Reforestation, Watershed Management, Health, and/or Environment Enhancement Fund (“RWMHEEF”), shall immediately be remitted by the DOE and the Generation Companies to the host beneficiaries. During the effectivity of DOE Department Circular No. DC2020-04-0008 dated 06 April 2020 (“DC2020-04-0008”), all ER 1-94 Funds of both the DOE and Generation Companies shall follow the allocation guidelines provided under Section 6.2 of the DOE Department Circular No. DC2018-08-0021 (“DC2018-08-0021”). The application and implementation of eligible projects provided in Section 10.3 of DC2018-08-0021 is however suspended. Section 4 of DC2020-04-0008, provided the following guidelines for the remittance of the ER 1-94 Funds: 1. Development and Livelihood Fund (“DLF”) and RWMHEEF shall be remitted

accordingly to the Host LGUs pursuant to Section 7.2 of the DC2018-08-0021 and its supplemental advisory issuance.

2. Electrification Fund (“EF”) upon allocation and compliance of requirement, per Section 3 and 6.2 of this Circular, shall be remitted to the RWMHEEF Trust Account of the respective Host Local Government Units (“LGUs”) within the effectivity period provided in Section 10 of DC2020-04-0008.

3. Only host LGUs with submitted RWMHEEF Trust Account to the DOE and Generation Companies and have complied with the pertinent document required under Section 6.2 of DC2020-04-0008 shall be processed for the remittance of the EF.


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Host LGUs shall issue and official receipt in acknowledgment thereof of the remitted/deposited ER 1-94 Funds to its RWMHEEF trust account.

4. A Memorandum of Agreement (“MOA”) is not necessary for the release and remittance of ER 1-94 Funds to the concerned Host LGU, instead DC2020-04-0008 shall serve as basis thereof. However, within one (1) month after the effectivity period of DC2020-04-0008, the MOA between the Host LGUs and Generation Companies must be executed in accordance with DC2018-08-0021.

5. In the case of the Power Sector Assets and Liabilities Management Corporation (“PSALM”), it is authorized by DC2020-04-0008 to remit, for the duration of the effectivity of DC2020-04-0008, the ER 1-94 Funds to the concerned Independent Power Producers (“IPPs”) and National Power Corporation (“NPC”) without the need of a signed agreement. The concerned IPPs and NPC shall then allocate and remit the ER 1-94 Funds to the Host LGUs as provided for in DC2020-04-0008.

After the lifting of the State of Public Health Emergency, a MOA between PSALM and IPPs/NPC, as well as between IPPs/NPC and the Host LGUs must be executed in accordance with DC2018-08-0021.

6. All Generation Companies shall be required to submit a report of the remitted ER 1-94 Funds to the Host LGUs containing the following information:

a. Recipient Host LGUs’ b. LGU’s trust account; c. Type of ER 1-94 Funds; and d. Total Amount Remitted.

The report should be submitted, via email at [email protected], immediately upon Generation Companies remittance up until 15 calendar days upon lifting of the effectivity of DC2020-04-0008.

Q: What are the eligible projects for the ER 1-94 Funds?

A: Section 5 of DC2020-04-0008 provides that all available ER 1-94 Funds shall be utilized

and disbursed by the Host LGUs for the management of the effects of COVID-19 public health crisis in their respective jurisdictions. The deadline of the submission of the respective Annual Work Program (“AWP”) of the LGUs shall be extended for a period of 30 days from 14 April 2020 to provide the Host LGUs ample time to prepare.

Q: Is there a procedure for the allocation and remittance of the ER 1-94 Funds?

A: Yes. Section 6 of DC2020-04-0008 provides as follows:

a. The DOE and/or Generation Companies shall remit the allocated ER 1-94 Funds to the concerned Host LGU upon submission by the latter of a Letter of Intent (“LOI”)


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addressed to the DOE Secretary, copy furnished the concerned Generation Companies by the Local Chief Executive, for the utilization of their administered ER 1-94 Fund to combat the spread of the COVID-19 pandemic and to mitigate the socio-economic impact of this crisis. For the DOE, said LOI of the Host LGUs may be submitted to the DOE via email at [email protected]. The DOE shall then instruct the relevant Generation Companies to immediately remit the approved amount to the Host LGUs.

b. Within a period of 15 days from compliance by the Host LGUs of the procedure as

stated above, the DOE and the Generation Companies shall ensure the allocation of the available ER 1-94 Funds to the identified Host LGUs pursuant to Section 3 of DC2020-04-0008.

c. The proper documentation on the utilization of the ER 1-94 Funds for COVID-19 management shall be strictly observed by the Host LGUs. Liquidation shall be completed within 3 months after the utilization of ER 1-94 Funds. The Host LGUs shall submit the same to the DOE and the concerned Generation Companies from whom the ER 1-94 Funds were sourced.

d. The Host LGUs shall revert within 30 days after the termination of effectivity of DC2020-

04-0008 all unutilized EF to the DOE and/or Generation Companies for the latter to facilitate the transfer of the same to the Distribution Utilities (“DUs”) pursuant to DC2018-08-0021.

However, according to Section 10 of DC2020-04-0008, the provisions under DC2020-04-0008 shall be in force and in effect only for the entire duration of the State of Public Health Emergency pursuant to Proclamation No. 922, and may be extended subject to the DOE’s determination of the aftermath of the COVID-19 crisis. After the lifting of the State of Public Health Emergency and/or extension period provided by the DOE, the utilization and application of the ER 1-94 Funds shall be that as provided under DC 2018-08-0021. Pending and on-going projects and programs after the lifting of the State of Public Health Emergency shall be implemented and will be applied for residual measures, unless it is patently unnecessary to be determined by the DOE.

Q: Are the provisions of the Distribution Services and Open Access Rules (“DSOAR”) and Magna Carta for Residential Electricity Consumers (“MREC”) for the adjustment of bill deposits suspended?

A: Yes. According to Energy Regulatory Commission (“ERC”) Advisory dated 15 April 2020,

the provisions of the DSOAR and MREC for the adjustment of bill deposits are suspended until further notice.


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Q: May Section 3.5.4 of the DSOAR on the utilization of estimated billing be applied?

A: Yes. According to ERC Advisory dated 15 April 2020, for the safety of the meter readers

and to comply with the physical distancing directive for the containment of COVID-19, Section 3.5.4 of the DSOAR on the utilization of estimated billing maybe applied, provided that the word “ESTIMATE” be clearly written on the consumer bill and that corresponding adjustments be made as soon as practicable.

ERC Advisory dated 05 May 2020 reiterated the use of estimated billing pursuant to Section 3.5.4 of the DSOAR. The bill estimate should be based on the average of the consumers’ billing of 3 months immediately preceding the ECQ.

Q: Has implementation of the ERC Order dated 05 December 2019 relating to

confirmation of the pass-through charges of certain DUs been deferred until 31 July 2020?

A: Yes. Under ERC Advisory dated 15 April 2020, the implementation of the ERC Order dated

05 December 2019 relating to confirmation of the pass-through charges of certain DUs may be deferred until 31 July 2020.

Q: What other reports must DUs submit due to the Enhanced Community

Quarantine (“ECQ”)? A: Under ERC Advisory dated 05 May 2020, the DUs’ submission of the power supply contract

utilization report, record of payments received from customers, and record of payments made to suppliers, covering the period 16 March to 15 May 2020 shall be not later than 15 June 2020 to be emailed to [email protected].

Q: When shall the DUs submit their 2020-2029 Distribution Development Plan (“DDP”)?

A: According to DOE Memorandum dated April 14, the 2020-2029 DDP shall be submitted to

the DOE, through the Electric Power Industry Management Bureau, on or before 30 May 2020. All DUs shall use the new DDP Form. All DDP submissions shall contain the following attachments, including but not limited to:

a. 2020 Power Supply Procurement Plan; b. Board Resolution/Secretary’s Certificate approving the 2020-2029 DDP; c. Power Supply Agreements, including attachments, if any; and d. Other documents as may be required by the DOE.


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All DDP submission shall be sent through electronic mail to [email protected].

Disclaimer: The information in this article is for general information only and is not intended nor should be construed as a substitute for legal advice on any specific matter. A professional legal advice is still advisable and necessary.

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FREQUENTLY ASKED QUESTIONS ON ENERGY RELATED MATTERS