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Republic of the Philippines
DEPARTMENT OF ENERGY

DEPARTMENT CIRCULAR NO. _ ft /4- 03-0006
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DIRECTING THE OPERATION OF ALL EXISTING GENERATION
CAPACITIES IN THE MINDANAO GRID

WHEREAS, Republic Act No. 9136 otherwise known as the “Electric Power
Industry Reform Act of 2001” (EPIRA) declares as policy of the State, among others,

to ensure the quality, reliability, security and affordability of the supply of electric
power;

WHEREAS, pursuant to Section 37 of the EPIRA, the Department of Energy (DOE)
is mandated to supervise the restructuring of the electric power industry as well as
among other things, to:

(a) Formulate policies for the planning and implementation of a comprehensive
program for the efficient supply and economical use of energy consistent
with the approved national economic plan and with the policies on
environmental protection and conservation and maintenance of ecological
balance, and provide a mechanism for the integration, rationalization, and
coordination of the various energy programs of the Government;

(b) Ensure the reliability, quality and security of supply of electric power;

(c) Develop policies and procedures and, as appropriate, promote a system of
energy development incentives to enable and encourage electric power
industry participants to provide adequate capacity to meet demand including,
among others, reserve requirements; and

(d) Exercise such other powers, Formulate rules and regulations as may be
necessary to implement and attain the objectives of the EPIRA.

WHEREAS, on 27 February 2014, a significant event triggered a total Mindanao
system collapse and thereafter resulted to a reduced power supply capability and

recorded on the average an aggregate outage of 2-8 hours for most of the DUs in the
region;

WHEREAS, in the coming summer months, it is expected that there will be tight
supply situation in the Mindanao Grid due to increase in the demand for electricity
along with lower generation output from hydroelectric power plants thus, the need
to bring out and make use of available generating units most particularly from the
embedded generators and/or standby facilities of large electricity end-users;

WHEREAS, based on previous coordination with electricity end-users owning and
operating standby generating facilities, concerns have been raised on the
applicability of the current Certificate of Compliances (COCs); and

Energy Center, Merritt Rd., Fort Bonifacio, Taguig, Metro Manila, Philippines
Tel. Nos.: (Trunking) 840-1401 to 21, Fax 640-1731, 640-2130, 640-2007 , (052) 640-1731; (632) 840-2138; Telefax (632) 840-2067
Website: www.doe.gov.ph, E-mail: info@doe.gov.ph
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WHEREAS, based on the survey of the DOE, and as reconciled with the records of
the Energy Regulatory Commission (ERC), there is approximately 400 MW of
generating capacities from embedded generators and standby generating units in
Mindanao, which may still be made available to address the supply deficit in the
grid.

NOW, THEREFORE, for and in consideration of the foregoing premises, the DOE,
consistent with its mandate under EPIRA, hereby declares as follows:

Section 1. Making All Generation Units Available for Use. Pursuant to the
provisions of the EPIRA to ensure adequate supply of electricity in the Mindanao
Grid, all existing generation companies including embedded generators and owners
and operators of standby generating facilities, shall make available their generating
units to augment the power supply in the Grid.

For this purpose, electricity end-users owning and operating standby generation
facilities, shall apply before the ERC for a change of the COC category to cover the
commercial and transactional requirements to trade available capacities for use of
the Grid: Provided, That these generation facilities may make their ca pacities
immediately available to the Grid upon the effectivity of this Circular: Provided
further, That in recognition of the need to provide reasonable cost recovery for the
operation of these generating units, in the interim the suggested provisional rate for
such capacities may be the latest ERC-approved rates for similarly situated
generation facilities such as those under the Interruptible Load Program (ILP) or the
Interim Mindanao Electricity Market (IMEM) Rules: Provided finally, That the final
compensation for the generated output and the final rates to be charged shall be
approved by the ERC.

Section 2. Additional Responsibilities of Relevant Agencies. To ensure efficient

implementation of this Circular, the following are hereby directed to undertake the
following:

(a) The National Grid Corporation of the Philippines (NGCP) shall coordinate
the efficient dispatch of capacities taking into consideration the additional
power generation from all sources.

(b) DUs shall ensure the integration and coordination of all available supply
options within their respective service areas through any or all of the
following initiatives:

i. Implement existing arrangements under the ILP;

ii. Encourage all electricity end-users with standby generating units to
implement provision of the Voluntary Load Curtailment, as prescribed
in the IMEM Rules.

iii. ‘Trigger the use of contracted embedded generation facilities.
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All DUs are encouraged to implement and intensify campaign on energy efficiency
and conservation measures to manage electricity demand particularly during peak
hours of the day.

Section 3. Regulatory Support. The ERC shall ensure the provision of support in
the regulatory requirements of this Circular as required under Section 1 of this
Circular. .

Section 4. Repealing Clause. Except insofar as may be manifestly inconsistent
herewith, nothing in this Circular shall be construed as to repeal any of the
mechanisms already existing or responsibilities already provided for under existing
rules.

Section 5. Separability Clause. If for any reason, any section or provision of this
Circular is declared unconstitutional or invalid, such parts not affected shall remain
in full force and effect.

Section 6. Effectivity. This Circular shall take effect immediately upon its
publication in at least two (2) newspaper of general circulation and shall remain in
effect until otherwise revoked.

Issued at Energy Center, Bonifacio Global City, Taguig City.

CARLQS JERICHO L. REUILEAY
Secretary

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PD cePariMenT OF ENERGY
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