OUTLINE OF PRESENTATION Legal Basis

Policy Objectives

Obligation of Energy Resource Developers

Beneficiaries, Host Communities

Allocation of 0.01 P/KwH

Application of Electrification Fund (EF), DLF & RWMHEEF

Fund Administration and Monitoring

E. R. 1-94 Trust Account/Advance Financial Assistance

Process Flow

Designation of Community Relations Officer

Criteria in Processing Project Proposals

Documentation Requirements

Examples of DL and RWMHEE Projects

Updates on Energy Regulations No. 1-94 program

LEGAL BASIS

DOE was mandated by RA 7638 (DOE Act of 1992) Section 5(i) to “devise ways and means of giving direct benefits… and equitable and preferential benefit to the region that hosts the energy resource and/or the energy-generating facility”

RA 9136 (EPIRA of 2001) mandated that “the obligations of generation companies and energy resource developers to communities hosting energy generating facilities and/or energy resource developers shall continue”

To recognize the contributions made by the communities and people affected;

To lessen conflict of rights; and

To promote harmony and cooperation among the LGUs/Region and the Energy Resource Developers and/or power producers.

POLICY OBJECTIVES

The Generation Company and/or energy resource developer should set aside one centavo per kilowatt hour (P0.01/kWh) of the total electricity sales as financial benefits to host communities of such generation facility

OBLIGATION OF ENERGY

RESOURCE DEVELOPERS

Host Communities - a local government unit (barangay, municipality, city or province)/region where the energy resource and/or energy generating facility is physically located.

Community/People Affected - these are the bona fide/legitimate residents of a host LGU and who were relocated, as a result of the construction, and/or operation of an energy generating facility or the development of an energy resource projects, to official resettlement site/s.

BENEFICIARIES

HOST COMMUNITIES PER ENERGY RESOURCE/FACILITY

A. Host LGUs/Region of Hydro Facilities : LGUs/Region hosting the energy-generating facilities LGUs/Region hosting the hydro reservoir

B. Host LGUs/Region of Geothermal Facilities : LGUs/Region – where the producing geothermal

reservoir is located, inclusive of the production and re-injection/recharge zone

C. Host LGUs/Region of Diesel, Thermal, Gas Turbine, Coal, Natural Gas, and other related Facilities: Where facility/ies is/are physically located

ALLOCATION OF 0.01 P/KWH

ELECTRIFICATION FUND (EF)

DEVELOPMENT & LIVELIHOOD FUND (DLF)

REFORESTATION, WATERSHED MANAGEMENT, HEALTH AND/OR ENVIRONMENT ENHANCEMENT FUND (RWMHEEF)

APPLICATION OF EF

Radiating order

Examples:

Extension of primary

and/or secondary

distribution lines

Upgrading of

existing lines

Solar home systems

Host Region

Host Province

Host Municipality/City

Host Barangay

Resettlement Areas

APPLICATION OF DLF AND RWMHEEF Allocated depending on area classification

Resettlement 10%

Host Barangay 30%

Host City 60%

Resettlement 5%

Host Barangay 20%

Host Municipality/City 35%

Host Province 30%

Host Region 10%

The administration of EF, DLF, and RWMHEEF shall be undertaken by the DOE.

Item 2.2.4 of the Joint DOF-DBM-COA Circular No. 1-97

Exempts from the coverage cash accounts owned by government-owned and/or controlled corporations and local government units.

COA Decision No. 2002-240

The DOE is only allowed directly to apply the Trust and its income for the purpose for which it was created.

FUND ADMINISTRATION

Trust accounts shall be established specific for EF, DLF, and RWMHEEF in the name of DOE and the Generation Company.

Sec. 5 of the EPIRA-IRR provides that:

The DOE shall establish trust accounts specific for EF, DLF and RWMHEEF in the name of DOE and the Generation Facilities or Generation Company and/or energy resource developer.

Sec. 8(a) of the EPIRA-IRR provides that:

The DOE shall review and audit the source of fund, particularly on the total electricity sales of the Generation Facility to determine the financial benefits due to the host LGUs and host Regions.

FUND MONITORING

ER 1-94 TRUST ACCOUNT

All interest earnings from EF, DLF, RWMHEEF are set aside into one trust account utilized for electrification projects

Areas with no ER 1-94 benefits may avail “as maybe prioritized/ determined by DOE”

DOE CONDUCTS FINANCIAL &TECHNICAL AUDIT

DU IMPLEMENTS PROJECT

DOE EVALUATES, APPROVES, ISSUES NTP, MOA, & FACILITATES

FUND RELEASE

DU ASSESS THE AREA/S , SUBMIT REQ DOCS & ENDORSES TO DOE

LGU SUBMITS LIST OF AREA/S FOR EF PROPOSAL TO DU’s/EC’s

DOE CONDUCTS FINANCIAL &TECHNICAL AUDIT

LGU IMPLEMENTS PROJECT

DOE EVALUATES, APPROVES, ISSUES NTP, MOA, & FACILITATES

FUND RELEASE UPON LGUs SUB. OF COMPLETE BID DOCS

PP CONDUCTS INITIAL EVALUATION & ENDORSES TO DOE

LGU SUBMITS DLF & RWMHEEF PROPOSAL thru a RESOLUTION

PROCESS FLOW ELECTRIFICATION FUND DLF & RWMHEEF

The energy resource developer and/or power producer is required to designate one Community Relation (COMREL) Officer for each power plant tasked to:

Coordinate with the LGU on annual work program;

Assist in the preparation of all project proposals prior to DOE’s release of fund;

Monitor the implementation of all DOE approved work programs/projects proposal;

Shall provide the LGUs/Region updated status of accrued financial benefits;

Act as liaison officer to all concerned government agencies relative to the implementation of ER 1-94.

DESIGNATION OF COMMUNITY RELATIONS OFFICER

SEC. 6a, RULE 29 (A) EPIRA-IRR

Availability of Funds Has the capacity to increase income levels and generate employment opportunities Uplift the living condition of the beneficiaries No adverse environmental effects Promotes equitable share of benefits Demonstrate the capacity for effective and successful implementation No outstanding unliquidated project fund/s

CRITERIA ON PROJECTS TO BE FUNDED UNDER DLF & RWMHEEF

Project Proposals Bid Documents prior to release of project fund Liquidation Documents

DOCUMENTATION REQUIREMENTS:

Staking Sheets Bill of Materials Cost Estimates Potential Household Connection For NRE’s - project proposals, plans, designs & specifications

REQUIRED DOCUMENTS FOR ELECTRIFICATION PROJECT PROPOSALS

REQUIRED DOCUMENTS FOR DL & RWMHEE PROJECT PROPOSALS 1. LGU/RDC Resolution 2. Endorsement of project proposal by the concerned power plant 3. Project proposal 4. Sketch/Location Map of the Project Site 5. Duly approved detailed cost estimate/bill of materials 6. Duly approved project plan/specifications 7. Duly approved Program of Works/Schedule of Activities 8. Abstract of canvass/quotation from three (3) suppliers – to establish the prevailing cost of

equipment/materials/supplies within the area 9. Certification from appropriate agency on the implementation of project/s – to eliminate the possibility of double funding on the same nature of request 10. List of beneficiaries 11. On project site – copy of notarized “Deed of Donation”/Proof of Transfer of Private Property/Cert. of Title justifying public ownership w/ date of transfer/classification of the lot 12. Three to five years projected income statement – when applicable (for income generated

funding like: farm inputs) 13. For projects to be implemented by COOP: CDA Certification of the Cooperative’s good standing

(dated), Business Permit (dated), SEC/CDA/DOLE accreditation/registration 14. On Road Improvements/Construction (Relevant permit from concerned agencies &

Certification of Road Classification from the Municipal/Provincial Engineering Office 15. On Acquisition of Service Vehicle/Dump Truck/Mini-DT/Multi-purpose Vehicle (Inventory of Vehicles ) 16. Other requirements which maybe required to effect approval of the project

INFRASTRUCTURE PROJECTS: 1. LGU/RDC Resolution 2. Endorsement of project proposal by the concerned power plant 3. Project proposal (Objectives, Project Profile, Rationale/Justification, Target Beneficiaries,) 4. Sketch/Location Map of the Project Site 5. Duly approved detailed cost estimate/bill of materials, plans, drawings, specifications, 6. Duly approved Program of Works/Schedule of Activities 8. On Road Improvement/ConstructionRelevant permit from concerned agencies & Certification of Road Classification from the Municipal/Provincial Engineering Office)

LIVELIHOOD PROJECTS: 1. LGU/RDC Resolution 2. Endorsement of project proposal by the concerned power plant 3. Project proposal (w/ list of beneficiaries, project profile, rationale/justification) 4. Sketch/Location Map of the Project Site 5. Three to five years projected income statement – when applicable (for income generated

funding like: farm inputs) 6. For projects to be implemented by COOP: CDA Certification of the Cooperative’s good

standing (dated), Business Permit (dated), SEC/CDA/DOLE accreditation/ registration

1. Invitation to Apply for Eligibility and To Bid, Notice of Bidding

2. Copy of News Clipping with project cost of 500 thousand and above

3. Evaluation Result /Evaluation Report of Bidders/Suppliers (Pre-Qualification & Post Qualification)

4. Instruction to Bidders

5. Bidder’s Bond

6. Performance Bond

7. Minutes of BAC Meeting/Minutes of Bidding

8. Attendance Sheet

9. BAC Resolutions duly signed by BAC: a) Recommending Mode of Procurement;

b) Resolution of Award ; c) Declaring LCRB and Recommending Approval

10. Bid Form including the following: a) Detailed Estimate; b) Bid Price in the Bill of Quantities;

c) Bid Evaluation Report; d) Bid Schedule; e) Cash Flow/Payment Schedule

11. Abstract of Bids to be signed by Bids and Awards Committee (As Read & As Calculated)

12. Contract/Memorandum of Agreement among LGU and winning Public Bidder

13. Notice of Award

14. Notice to Proceed duly acknowledge by Contractor indicating actual date of receipt

15. Recent Land Bank Certificate

16. Sangguniang Resolution re: Project Proposal

17. Sangguniang Resolution authorizing the concerned Government Officials to enter into and

sign all contracts/agreements concerning ER 1-94 projects

18. DOE Notice to Proceed, MOA among DOE, LGU and Power Plant

BID DOCUMENTS FOR ER NO. 1-94 PROJECTS

ADDITIONAL REQUIREMENTS FOR SUCCEEDING PROJECTS:

Technical Inspection, and

Financial Audit : 1. Report of Disbursements duly signed by the following: a. For Electrification * certified by EC Accountant, * noted by EC General Manager, and * verified by EC Internal Auditor b. For DL / RWMHEE * certified by the Provincial/Municipal Accountant, * noted by Municipal/Provincial Governor, and * verified by the Resident COA Auditor 2. Certificate of Completion and Acceptance 3. Certificate of Joint and Final Inspection signed by DOE, NPC / IPP / EC / LGU 4. Project photos showing the installed permanent marker

EXAMPLES OF PROJECTS: DEVELOPMENT & LIVELIHOOD (DL) PROJECTS REFORESTATION, WATERSHED MANAGEMENT,

HEALTH AND/OR ENVIRONMENT ENHANCEMENT (RWMHEE) PROJECTS

DEVELOPMENT PROJECTS • Street lighting • Farm to Market Road • Multi-Purpose Pavement • Farm produce collection & buying station • Rice/Corn Milling • Communal Irrigation System • Small water impounding projects • Zip Line

• Fish ports • Seawalls • Day Care Center • School Building • Public market • Slaughter house • Bridge • Flood control measures • Public drainage/ sewerage system • Showcase Center

Funding for the projects shall include costing of materials, equipment and labor, exclusive of payment for salaries, wages, honoraria, allowances, administrative expenses, transportation, and travel expenses, and other similar expenses that may be incurred in the processing and release of funds, and implementation

LIVELIHOOD PROJECTS • Food production/processing • Ice Plant • Livestock and poultry

production • Handicraft production • Aquaculture • Skills training for LGU administered livelihood

projects • Vegetable seed farm

Small scale services livelihood projects such as:

• Corn/Rice Milling • Carpentry / Furniture Shop • Radio, Refrigerator and

TV servicing • Garment Weaving • Engine mechanic services • Electrical wiring and design • Dressmaking • Gold and silver trading and

jewelry making • Blacksmith shop • Welding shop

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Health Related Projects: Water supply system Municipal Hospital Health Center Medical equipment/ facilities Medicinal plant gardens Ambulance

Environment Enhancement Projects: Fire Truck Garbage/Dump Truck Materials Recovery

Facility

RWMHEE PROJECTS

Reforestation & Watershed Management Projects: Improvement of forest cover Community-based forestry management Agro-forestry Conservation/Rehabilitation of Mangroves Seedling nursery Fire truck Waste Management Equipment Construction of Concrete Sanitary Waste Water Collection Facility Sanitary Landfill Development with Materials

Recovery Facility (MRF) Development of Waste Recovery Warehouse

RWMHEE PROJECTS

TRUST ACCOUNTS ESTABLISHED (As of March 14, 2014)

TOTAL 694

DOE Administered Trust Accounts

(Land Bank of the Phils.) 627

(Dev’t. Bank of the Phils.) 67

UPDATE ON

ENERGY REGULATIONS 1-94

GENERATING FACILITIES NATIONWIDE

INCORPORATED IN E.R. 1-94 PROGRAM (As of March 14, 2014)

TOTAL 238

National Power Corp. (NPC) 7

Independent Power Producers (IPPs) 231

Luzon 119

Visayas 44

Mindanao 75

Total 238

HOST COMMUNITIES

INCORPORATED IN E.R. 1-94 PROGRAM (As of March 14, 2014)

TOTAL 1,260

NPC Owned Facilities

AGUS 1, 2, 4, 5, 6, 7 HEPs 300 *

PULANGI HEP 15

IPP Facilities 945

AGUS 1, 2, 4, 5, 6, 7 HEPs Facilities Resources

Barangays 30 242

Municipalities/Cities 5 19

Provinces 2

Regions 2

Total * 300

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SUMMARY OF FINANCIAL BENEFITS

(IN BILLION PESOS)

26 June 1994 – 25 December 2013 (Validated Electricity Sales)

Total EF DLF RWMHEEF

Accrued Financial

Benefit 9.03 3.72 2.49 2.82

Approved 6.05 3.26 1.25 1.54

Available/Collectible

Balance 2.98 0.46 1.24 1.28

SUMMARY OF APPROVED PROJECTS (March 14, 2014)

# Type of Project (PhP)

Billion

3,604 Electrification* 3.26

1,221 Development and Livelihood 1.25

1,071 Reforestation, Watershed

Management, Health and/or

Environment Enhancement

1.54

Note: * Excluding MIRANT, SARO, KEPHILCO & PNOC-EDC Projects and

among other advanced financial assistance

COMPARISON OF BENEFITS TO LGUS/RDCS

ER 1-94 ROYALTY TAX (or NWT) GOVERNMENT SHARE

Legal Basis Sec. 5i of RA 7638; Rule 29 (a) EPIRA-IRR, Sec. 66 of R. A. No. 9136 (EPIRA Law of 2001)

Secs. 289-294 of RA7160 (Local Govt Code of 991); Rule 29 (b) EPIRA-IRR, Sec. 66 of R. A. No. 9136 (EPIRA Law of 2001)

Sec. 20, Rule 7 of RE-IRR; Rule 29 (b) EPIRA-IRR, Sec. 13, Chapter V of R. A. No. 9513 (RE Act of 2008)

Nature of Benefits

P0.01/kWh of the total electricity sales

(total generation – own use, system loss)

1% of Gross Receipts or

40% of the Nat’l Wealth Taxes, royalty fees, or charges derived by the government agency of the preceding calendar year whichever is beneficial to the LGUs

1% of Gross Income (GS-CGS) of RE Developers and 1.5% of Gross Income for Indigenous GEDs of the preceding fiscal year

If hosting a Private Company:

Nat’l Govt gets 60%, and

Local Govt gets 40%

Beneficiaries Resettlement Area, Barangay, Municipality/City, Province and Region

Barangay, Municipality/City and Province

Barangay, Component City/Municipality and Province

Nature of Fund Utilization

Electrification, Development & Livelihood, and RWHEE Projects

80% be applied to lower the cost of electricity

20% for development and livelihood projects

80% be applied to RE projects & activities to subsidize end-users of RE whose consumption does not exceed 100kWh

20% for development and livelihood projects

Fund Availment

Directly remitted to LGU/RDC/DU/EC based on approved projects

Directly remitted to the host LGU for GOCC and for LGUs hosting IPP with Service Contract to DOE thru DBM

IPP with Service Contract to DOE thru DBM