DC2025-06-0009: One-Time GET Indexation Clarification (Amendment to DC2025-03-0004)

Full title: Amendment to Department Circular No. DC2025-03-0004 titled “Providing the Revised Guidelines for the Green Energy Auction Program in the Philippines” Issued: 9 June 2025 | Pages: 2 (image-based PDF; OCR via tesseract 5.3.4) Published: 23 June 2025 (BusinessWorld and Daily Tribune); submitted to UPLC-ONAR same date Effectivity: 15 days after complete publication (approximately 8 July 2025) Issuing authority: DOE Secretary Raphael P.M. Lotilla Amends: DC2025-03-0004 (which itself amended DC2021-11-0036 §16); inserts new §17 into DC2021-11-0036

This circular makes a critical clarification to the GET indexation introduced by DC2025-03-0004: the indexation is a one-time adjustment, not an annual recurring mechanism, and it applies between the Certificate of Award and commencement of commercial operations. It also restructures DC2021-11-0036 §16 to carve indexation into a dedicated new §17.

Background: The Ambiguity in DC2025-03-0004

DC2025-03-0004 (March 2025) amended §16 of DC2021-11-0036 to say the GET from GEA-4 onward is “subject to indexation as may be determined by the ERC in accordance with the FIT Rules.” The FIT Rules (ERC Resolution No. 16, Series of 2010) provide for annual indexation of FiT rates for local inflation and FOREX [DC2025-03-0004, §3, 2025-03-09].

The ambiguity: does “in accordance with the FIT Rules” mean the GET adjusts annually like FiT rates, or only once before operations begin? DC2025-03-0004 was silent on this. DC2025-06-0009 resolves it [DC2025-06-0009, §Whereas, 2025-06-09].

Section 1: §16 of DC2021-11-0036 Further Amended

The GEA adoption-of-FIT-Rules provision is revised to carve out indexation as its own governed section:

“16. Adoption of Certain Provisions in the FIT Rules. The GEA adopts the Regulatory Framework and Administration of FITs provided under Resolution No. 16, Series of 2010 (FIT Rules), issued by the ERC. However, the GEA pricing mechanism and indexation shall be governed by Sections 8 and 17, respectively, of this Circular. As such, other entities involved in the implementation of the FIT shall continue to discharge their responsibilities as set forth in the FIT Rules with respect to each auction round.” [DC2025-06-0009, §1, 2025-06-09]

The operative change: §16 now points to a new §17 (inserted by this circular) for indexation rules rather than leaving indexation governed by the FIT Rules directly. Pricing remains under §8 (the GEAR mechanism).

Section 2: New §17 — One-Time GET Adjustment

A new §17 is inserted into DC2021-11-0036:

“17. Adjustment to the GETs. The GET of a Winning Bidder resulting from an Auction Proper conducted after the effectivity of this amendment to the GEAP Guidelines shall include indexation. In such determination, the ERC shall employ a formula for indexation and a streamlined procedure for the implementation of such adjustment, as may be allowed under applicable laws, rules and regulations: Provided, That, notwithstanding the FIT Rules and other provisions of this Circular to the contrary, the GET of a Winning Bidder shall be adjusted for indexation only once, entitlement to which shall begin at any time between the issuance of the Certificate of Award and the commencement of commercial operations of the Winning Bidder’s RE Facility.” [DC2025-06-0009, §2, 2025-06-09]

Key provisions:

One-time only. The GET is adjusted once — the “notwithstanding the FIT Rules” proviso explicitly overrides FIT Rules provisions (which would otherwise imply annual adjustment). The adjustment is a single pre-COD correction [DC2025-06-0009, §2, 2025-06-09].

Window: Certificate of Award → Commercial Operations. The one-time entitlement begins any time after the Certificate of Award is issued and before the RE Facility commences commercial operations. This effectively locks in a real-terms adjustment before the project goes live — not after — and ends at COD [DC2025-06-0009, §2, 2025-06-09].

ERC sets the formula and procedure. The ERC is empowered to develop its own indexation formula and “streamlined procedure” within the bounds of applicable law [DC2025-06-0009, §2, 2025-06-09].

Policy Significance

One-time vs. annual — a fundamental difference. DC2025-03-0004 could have been read as granting GEA-4 winners perpetual annual inflation adjustments identical to FiT rates. DC2025-06-0009 limits this to a single pre-COD correction. For a developer, this means the GET is locked at the adjusted value from the time of commercial operations — there is no subsequent annual escalation of the contracted GET from the GEAP mechanism (though WESM market revenues may still vary).

Pre-COD timing protects development economics. The development period between award and COD can span several years (GEA-3 PSH delivery is 2028–2035). A one-time indexation during this window allows developers to adjust their awarded price for construction-period inflation and FOREX movements — capturing the major cost risk window — without creating an open-ended annual obligation for ratepayers post-COD.

GEA-4 applicability. DC2025-06-0009 applies only to auctions conducted after the circular’s effectivity (~8 July 2025). GEA-4’s NOA was posted March 12, 2025, before this circular’s effectivity. Whether GEA-4 winners fall under DC2025-03-0004’s broader indexation or DC2025-06-0009’s one-time clarification depends on whether the GEA-4 Auction Proper occurs after ~8 July 2025. If GEA-4’s actual bidding date is after effectivity, DC2025-06-0009 applies; if before, DC2025-03-0004’s formulation governs.

DC2023-09-0027 confirmed. The whereas clause explicitly names DC2023-09-0027 as a prior amendment to DC2021-11-0036, confirming the full amendment chain: DC2021-11-0036 → DC2023-09-0027 → DC2025-03-0004 → DC2025-06-0009.

See Digest: DC2025-03-0004: GET Indexation, COA Eligibility, and NOA Amendment to DC2021-11-0036 for the prior GET indexation amendment and Green Energy Tariff (GET) for the full GET framework.

Full text: Cleaned copy