=== dc2013-10-0024-pages-1.ppm === Republic of the Philippines DEPARTMENT OF ENERGY DEPARTMENT CIRCULAR NO. D6 2013 -10- 0024 _ DIRECTING THE NATIONAL ELECTRIFICATION ADMINISTRATION TO ASSIST THE MINDANAO ELECTRIC COOPERATIVES IN ENSURING COMPLIANCE WITH THE PRUDENTIAL REQUIREMENTS IN THE INTERIM MINDANAO ELECTRICITY MARKET (IMEM) WHEREAS, Section 2 of Republic Act No, 9136, otherwise known as the “Electric Power Industry Retorm Act of 2001” (EPIRA), declares as a policy of the state to ensure the quality, reliability, security, and affordability of the supply of electric power; WHEREAS, Republic Act No. 7638 or the “Department of Energy Act of 1992", as amended by Section 37 of the EPIRA provides that the Department of Energy (DOE) exercises supervision and control over all government activities relative to energy projects and to formulate rules and regulations necessary to implement the objectives ot these laws; WHEREAS, Section 37 (i) of the EPIRA mandates the DOE to "develop policies and procedures and, as appropriate, promote a svstem of energy development incentives to enable and encourage electric power industry participants to provide adequate capacity to meet demand including, among others, reserve requirements"; WHEREAS, Section 4 (g) and (n) of Presidential Decree No. 269 as amended by Section 5 of the Republic Act No. 10531 or the “National Electrification Administration Reform Act of 2013,” respectively provide that the National Electrification Administration PATTD AY n il . ride Wer ty Cray ~4 - ye 1 tcyat: - fe (NEA) "will provide institutional, financial and technical assistance to electric: -— cooperatives upon the request of the electric cooperatives" and shall “serve as guarantor to qualified electric cooperatives in their transactions with various parties"; WHEREAS, on 28 June 2012, the DOE promulgated Department Circular No. DC2012- 06-0007 entitled, “Directing the National Electrification Administration to Develop a Mechanism for Ensuring the Adequacy of and Compliance by the Electric Cooperatives with the Prescribed Prudential Requirements in the Wholesale Electricity Spot Market and Spearhead the Collective Petition thereot”; Eneray Center, Rizal Drive., Fort Bonifacio, Taguig City, Metro Manila, Philippines Trunkline: 479-2900 Website: www.doe.gov.ph E-mail: info@doe.gov.ph o ce og lee, ian asain === dc2013-10-0024-pages-2.ppm === WHEREAS, due tia the power suppiy situation in Mindanaa, the DOE undertook public consultations oi the establishment of an electricity market to encourage the transparent and efficient utilization of all available resources as one measure to alleviate the supply deficit in the tid; WHEREAS, on 21 May 2013, the DOE issued Department Circular No. D0" 2073-05-0008, or the Interim Mindanau Electricity Market (MEM) Implementing Rules (the “IMEM Rules’), and directed, among others the NEA to ensure the financial and technical capability of tie electric cooperatives, including but not limited to, guaranteeing ther transactions in the IMEM; WHEREAS, on 24 September 2013, the DOF Department Circular No. 1C2073-09-000- W023, declared the launch and initial cormmercial operations of the IMEM on 26 September 2013; and WHEREAS, the clectric cooperatives mav not have the means at present to provide the prudential security requirements in the IMEM. NOW THEREFORE, premises considered, the DOE declares as fotlows: Section 1. NEA Guarantee. The NEA is hereby directed to provide the necessary guarantee or financial assistance to qualified grid connecied electric cooperatives in Mindanao on their purchases and transactions as required under the IMEM Rules, until such time that the regulator has considered the prudential requirements in the ECs rates. For this purpose, the NEA mav inypose the necessary fee or interest charges in the provision of such guarantee or financial assistance consistent with existing laws and regulations, SECTION 2. Obligation of Electric Cooperatives. All electric cooperatives are enjoined ta act in a judicious and prudent manner in procuring its power supply, including entering into the necessary power supply coniracts to ensure the adequacy and continuity of electricity services and stability of prices, consistent with the obligation uisler paragraph 3, Section 23 the EPIRA to "supply electricity in the least cost manner to ifs captive mar kot" ‘, All grid-connected electric cooperatives shail submit a monthly update of their monthly demand and hovel of contracted quantities 5 within ten ClO) days trom the end of each IMEM billing month, commencing 26 September 2013, Fn eed === dc2013-10-0024-pages-3.ppm === Section 3. Obligation of the IMEM Operator. Ten (10) davs from the erd of each MEM billing: month, PEMC as the IMEM Operator shall submit to the DOE a report on the declared bilateral contract quantitves of each electric cooperative. SECTION 4. Separability. Hf for any reason, any section or provisions of this Cireular aad its Annexes, are declared unconstitutional er invalid, such parts net affected shal! remain in full force and effect. SECTION 5. Effectivity. This Cocular shall take effect Hfteen (15) days after its publication in twa (2) newspapers of general circulation and fling with the University \ af the Philippines Law Center, OHice of the National Administrative Reyister. issued at Energy Center, Rizal Drive, Bonifacio Global City, Taguig Citv. ipo CARLOS LERICHO L. PETILLA becretary ip Republic of the Phili s DEPARTMENT OF ENERGY IW REPLYING PLS CITE: " SOE-JLP-13005524 VIA OCT 09 2013