=== dc2020-09-0018-pages-1.ppm ===
ats Republic of the Philippines

ec 0 DEPARTMENT OF ENERGY
sZe

DEPARTMENT CIRCULAR NO. _)C 2020-09-00!"

GUIDELINES IN THE ADMINISTRATION, CLASSIFICATION AND CERTIFICATION
OF ENERGY SERVICE COMPANY (ESCO)

WHEREAS, Section 2 of Republic Act No. 7638 or the “Department of Energy (DOE) Act of
1992” states that it is the policy of the State to ensure a continuous, adequate, reliable. and
economic supply of energy through, among others, judicious conservation, renewal. and
efficient utilization of energy, to keep pace with the country’s growth and economic
development:

WHEREAS, Department Circular No. DC2008-09-0004 or the “Accreditation of ESCOs and
Energy Service Providers” requires all ESCOs to secure accreditation and submit reports to
the DOE on projects, and Department Order No. DO2019-07-0013 or “Constituting the
Committee on the Accreditation of ESCOs” facilitates the processing and accreditation of
ESCOs are now repealed by Republic Act No. 11285 or the “Energy Efficiency and
Conservation Act” (EEC Act) and Department Circular No. DC2019-11-0014 or the
implementing Rules and Regulations of the EEC Act (EEC IRR);

WHEREAS, Section 5 of EEC Act provides that the DOE shall be the lead agency and
responsible for the planning, formulation, development. implementation, enforcement, and
monitoring of energy management policies and other related energy efficiency and
conservation plans and programs;

WHEREAS. Section 13 of EEC Act mandates the DOE to strengthen the existing ESCO
certification system to develop this service sector and to provide the market with a source of
technically and financially capable entities that can assist in the delivery of energy efficiency-
related projects;

WHEREAS, Section 53 of EEC IRR directs the DOE to develop guidelines for ESCOs which
shall include among others, certification requirements, review and evaluation process. and the
classification of ESCOs, and states that ESCOs applying for certification must demonstrate
their technical and managerial competence to design and implement energy efficiency
projects, including energy audits, design engineering, providing or arranging project financing.
construction management, operations and maintenance of energy efficient technologies, and
verifying energy savings;

WHEREAS, a Call of Comments on the draft “Guidelines for the Administration, Classification
and Certification of Energy Service Company (ESCO)” was posted in the DOE Website on 21
April 2020 and comments were received until the conduct of the Virtual Public Consultations:
and

WHEREAS, the DOE conducted Virtual Public Consultation attended by various stakeholders
on 29 May and 09 July 2020 on the draft “Guidelines for the Administration, Classification and
Certification of ESCO”.

NOW THEREFORE, for and in consideration of the foregoing premises, the DOE hereby
issues the following:

DC on Guidelines in the Administration, Classification and Certification of ESCO Page 1 of 8

$
7
=== dc2020-09-0018-pages-2.ppm ===
Section 1. Title. This Department Circular shall be known as the “Guidelines in the
Administration. Classification and Certification of ESCOs.”

Section 2 Scope. This Department Circular shall establish the guidelines, rules and
procedures in the administration, classification and certification for ESCOs with the goal of
enhancing professionalism, credibility and quality of services.

Section 3. Definition of Terms. As used in this Department Circular, the following terms shai!
be understood to mean:

+

3.1

i
bo

3.3

3.8

“Energy Audit” refers to the evaluation of energy consumption and review of
current energy cost to determine appropriate intervention measures anc
efficiency projects in which energy can be judiciously and efficiently used to
achieve savings:

“Energy Conservation” refers to the reduction of losses or wastage in various
energy stages from energy production te energy consumption through the
adoption of appropriate measures which may, among others be.
technologically feasible, economically sound, environmentally-friendly, or
socially affordable:

“Energy Efficiency” refers to the way of managing or resiraining the growth in
energy consumption resulting in the delivery of more services for the same
énercy input or the seme services for less energy input:

“Energy Efficiency Projects” refer to projects designed to reduce energy
consumption or costs by any improvement. repair. alteration, or betterment of
any building or facility. or any equipment, fixture, or furnishing to be added to
or used in any building, facility, or vehicle including manufacturing and
provision of services related thereto;

“Energy Management’ refers to the process of designing and/or implementine
an optimal program of purchasing, generating, and consuming various types
of energy based on the end users overall short-term and long-term
management program, with due consideration of factors including costs
availability, economics. and environmental! impact:

“Energy Savings” refers to the result in the reduction of energy consumption
and/or costs to produce the same output, and/or to increase the productivity
with the same energy consumption:

“Energy Savings Performance Contract (ESPC)” ts an agreement between an
ESCO and an Eneray User, where the ESCO performs ali energy efficiency
services and receives periodic payments, based on a guaranteed enercy
savings performance:

“Energy Service Company (ESCO)” refers to a juridical entity that offers multi-
technology services and goods towards developing and designing energy
efficiency projects, delivering and guaranteeing energy savings, and ensuring
cost-effective and optimal performance. Their services include energy supply
and management, energy financing, technical engineering expertise and
consultancy, equipment supply, installation, operation, maintenance and
upgrade, and monitoring and verification of performance and savings. Their

DC on Guicelines in the Administration, Classification and Certification of ESCO Page 2 of 8

ia
7
=== dc2020-09-0018-pages-3.ppm ===
goods include lighting, motors, drives, heating, ventilation, air conditioning
systems, building envelope improvements, and waste heat recovery. cooling,
heating, or other usable forms of energy contro! systems:

“Investment Grade Energy Audit” refers to a more detailed Energy Audit
containing one or more specific Energy Savings measures ready for
implementation with estimated capital costs and Energy Savings supported by
facility measurements, detailed calculations, assumptions, and measurement
and verification plan for transparent understanding by the facility owner and

“Measurement and Verification (M&V)" refers io the process of measuring the
Energy Savings realized from an Energy Efficiency Project by means of
comparing the amount of energy used before end after the commissioning of
an Energy Efficiency Project.

Section 4. Classification of ESCO. Businesses seeking to be classified as an ESCO,
whether fully Filipino-owned or up to fully foreign-owned, must be duly registered with the
Securities and Exchange Commission or the Department of Trade and Industry or licensed as
a branch office by the Securities and Exchange Commission, in compliance with the
applicable jaws of the Philippines, including Republic Act No. 11232 or the Revised
Corporation Code and Republic Act No. 7942 or the “Foreign investments Act’.

To contribute towards the pursuit of Energy Efficiency Projects and attainment of the goais
under the Nationa! Energy Efficiency and Conservation Plan. the following ESCO
classification is hereby introduced:

44

Registered ESCO refers to an ESCO seeking accreditation for professional
services to DOE for the first time that meets the minimum requirements on lega!
and technical capacity. The validity of the Certificate for Registered ESCO shall
be for three (S) years.

Certified ESCO refers to an ESCO which in addition to meeting the
requirements of a Registered ESCO also has preven performance or resuits-
based projects savings experience and with proven customer experiences. The
validity of the Certificate of Certified ESCO shail be valid for five (5) years.

Section 5. Application Requirements. The submission of the corresponding requirements
will be required for the issuance of the certificate for the ESCO classifications provided under
Section 4 of this Department Circular.

5.1 Registered ESCOs. Applicants for Certificate of Registered ESCO shall submit the
following:

a. Duly accomplished ESCO Application Assurances Form (Annex A)
b. Certified True Copies of the Documents on Corporate Personality
¢. For sole proprietorship entity. the following documents are required:

i. Business registration
ii. Business permits

d. For corporate, partnership and joint venture entities. the following
documents are required:

DC on Guidelines in the Administration, Ciassification and Certification of ESCO Page 3 of 8

A
=== dc2020-09-0018-pages-4.ppm ===
i. Business registration

ii. Business permits

ii. SEC registration

iv. Articles of incorporation

Company Profile/Background (Annex B)

Company Ownership/Management which inciudes fist of names of officers.

personne! and their position in the company including energy auditors, anc

the organizational structure (Annex C)

g. List of Energy Audit equipment and other similer testing instruments
including the date of its last calibration (Annex D)

h. Proof of payment of the Application Fee of Fifteen Thousand Pesos

(#4 5.000.00) for Certificate of Registered ESCO

“> OD

or
1)

Yenartment Circular. the applicants for Certificate of Certifiec =SCO shall submit

Certified ESCOs. In addition to the requirements under Section &.1 of this
-*
the foliowing:

&. List of Eneroy Efficiency Projects undertaken in the last three (3) years
(Annex E}

Audited financial statement in the last two (2) years

Proof of Payment of the Application Fee of Thirty Thousand Pesos
(30,900.00) for Certificate of Certified ESCOs.

ow

53 Applications shall be filed with the DOE Records Management Division which
shail in tum forwerd them to the Energy Utilization Management Bureau (EUMB)-
Office of the Director within one (1) working day from receipt

5.4 Applications will be returned to applicants when the epplicetion form hes not
been properly filled out and/or there are missing annexes without prejudice to
re2pplication.

5.2 EUMB — Office of the Director will forward all received appiications to the Energy
Efficiency and Conservation Technology Promotion and Program Management
Division EPMPD) which will conduct the technical evaluation and facilitate the
financial evaluation of the Financia! Services - Power Compliance Division (FS-
PCD) and legal evaluation of the Legal Services - General Lega! Services
Division (LS-GLSD).

5.6 A copy of the flowchart showing the application processes for both Registered
and Certified ESCO is attached as Annex F.

5.7 When practicable, the submission of the application requirements through
electronic means may be permitted upon the issuance of EUMB of the guidelines
under Section 11 of this Department Circular.

Section 6. Constituting the ESCO Evaluation Committee. To facilitate the processing of
applications under this Department Circular, an ESCO Evaluation Committee is constituted
and shall be composed of the following DOE offices:

Assistant Director, EUMB Chairperson
Division Chief. LS-GLSD Member
DC on Guidelines in the Administration, Classification and Certification of ESCO Page 40f8

r
=== dc2020-09-0018-pages-5.ppm ===
Division Chief, FS-PCD Member
Division Chief, EUMB-EPMPD Member

Section 7. Processing of Certificate of Registered ESCOs. For the issuance of Certificate
of Registered ESCO, the following are the evaluation criteria and process:

7.1. Criteria. The criteria for evaluating an ESCO’s application for the issuance of a
Certificate of Registered ESCO shall be based on the completeness of its
documents submitted according to Section 5.1 of this Department Circular and
the Checklist (Annex G).

7.2 Process. The evaluation process shall involve the verification of the legality and
completeness of the ESCO’s submitted documents and shall be conducted
simultaneously and must be completed within seven (7) working days from
receipt of documents. Should there be a need for clarification on the submitted
documents, the same must be relayed to the applicant in writing within the
same period. The evaluation process period is stayed until the applicant's
compliance with the written letter.

Section 8. Processing of Certificate of Certified ESCOs. For the issuance of Certificate of
Certified ESCO, the following are the evaluation criteria and process:

8.1 Criteria. The criteria for evaluating an ESCO’s application for the issuance of a
Certificate of Certified ESCO shall be based on the following requirements:

i. Technical and Managerial Capabilities
ii. Performance-based Project Experience
iii. Project Savings Results
iv. Customer References
v. Financial capacity according to the documents submitted in Section
5.1 of this Department Circular and the Checklist (Annex G)

a. The criteria for evaluating the completed ESCO projects will be based on
the performance of the Energy Efficiency Project and accuracy of submitted
data to include but not be limited to the level of achieved savings versus
reported and targeted, customer satisfaction, delays in implementation,
M&V plan, etc.

b. The criteria for evaluating an ESCO’s financial capacity shall be based on
the submitted Financial Statements in the last two (2) years with regard to
the reasonableness of various items to include but not be limited to the
following financial parameters:

Net Worth

Working Capital = Current Assets — Current Liabilities
Debt-to-Equity Ratio

Current Ratio

Quick Ratio

Profitability

Cash Flow

ee el

DC on Guidelines in the Administration, Classification and Certification of ESCO Page 5 of 8

=== dc2020-09-0018-pages-6.ppm ===
c. In addition, the applicant must have completed a minimum of three (3)
Investment Grade Energy Audits and a minimum of three (3) projects
implemented within the past three (3) years.

8.2 Process. The technical evaluation process entails detailed review of the
technical documents comprises of projects undertaken, data and other
pertinent information therein, conduct of interviews with customers and the
ESCO and must be completed within twenty (20) working days from receipt of
all required documents. Should there be a need for clarification on the
submitted documents, the same must be relayed to the applicant in writing
within the same period. The evaluation process period is stayed until the
applicant's compliance with the written letter

Section 9. Issuance of Certificate of Registered ESCO. EPMPD shall prepare an
endorsement memorandum for the issuance of the certificate of Registered ESCO addressed
to the EUMB Director. The endorsement memorandum shall be supported by the
recommendation arising from the technical and legal evaluation. The EUMB Director shall
have two (2) working days to act on the endorsement memorandum and issue the Certificate
of Registered ESCO. EUMB shall provide a report on the Certificates of Registered ESCOs
issued every quarter to the DOE Secretary.

Section 10. Issuance of Certificate of Certified ESCO. EPMPD shall prepare an
endorsement memorandum for the issuance of the certificate of Certified ESCO through the
EUMB Director for consideration of the DOE Secretary. The endorsement memorandum shall
be supported by the recommendation arising from the technical, financial and legal evaluation

Section 11. Obligations under the ESCO Certificate. All ESCOs are required to comply
with the following obligations:

11.1 Submit an annual report of their projects whether on-going or completed in the
form prescribed by EUMB no later than 30 April of every year:

11.2 Provide support for coordination and monitoring by the EUMB for projects
undertaken. The value of such support shall in no case exceed the application
fee indicated in Section 5 of this Department Circular per annum;

11.3 Subject themselves and their projects to Independent Verification; and

11.4 Such other requirements as may be required by the DOE for the attainment of
the objectives of the EEC Act and EEC IRR.

The DOE, through EUMB, shall issue guidelines for the effective administration of the
obligations of ESCOs including the procedure for the monitoring, verification and enforcement:
Provided, That the guidelines shall only be issued after public consultation: Provided further
That the effectivity and timelines of any issued guidelines will be mutually agreed upon by the
DOE and ESCOs.

Section 12. Administration of Certificates of Registered and Certified ESCOs. EUMB
shall maintain and publish the registry of all issued Certificates of Registered and Certified
ESCOs. The registry shall contain such pertinent information on the ESCO and its projects so
as to apprise and guide the general public on their services.

DC on Guidelines in the Administration, Ciassification and Certification of ESCO Page 6 of 8

oe

/

=== dc2020-09-0018-pages-7.ppm ===
Section 13. Prohibited Acts. Pursuant to Section 30 of the EEC Act, ESCOs or their
responsible officers shall be subject to penalties provided under Section 14 of this Department
Circular for:

13.1. Failing to comply with the obligations under Section 11 of this Department
Circular;

13.2 Failing to provide accurate, information or the provision of false or misleading
energy information as required under this Department Circular, and

13,

©)

Failing to comply with issued orders of the DOE.

Section 14. Fines and Penalties. The DOE may consider the following measures prior to the
imposition of fines, penalties and administrative liabilities for the responsible officers of
ESCOs:

144 Require an explanation supported by reports, returns and other documents to
rebut the alleged commission of the prohibited act.

44.2 In cases where an explenation has been issued but the DOE fincs a vioiation
because of materially insufficient reports. false retums, non-submission of
required documents. provide a recommendation to the said person or entity.

14.3 Disclose the name of the person or entity after it has received 4
recommendation and comply with such recommendation.

14.4 I[ssue an order in cases where the said person or entity fails to follow or comply
with the recommendation of the DOE. The failure on the part of the person or
entity to comply with the order shall be a valid ground for the imposition of the
administrative fines and penalties in accordance with Schedule of Penaities
and Fines (Annex &).

14.5 In cases of association. partnership or corporation. the penalty snail be
imposed on the partner, president, chief operating officer, chief executive
officer, director, or officer responsible for the violation.

145 After due process, the certificate issued to the Registered or Certified ESCO
may be revoked with the blacklisting of the responsible officers of said ESCO
for future application.

Section 15. Criminal Liability. Pursuant to Section 30 of the EEC Act, notwithstanding the
fines and penalties provided under Section 14 of this Department Circular, the responsible
officers and employees of any ESCO who willfully commits any of the prohibited acts shall
upon conviction, suffer the penalty of one (1) year to five (5) years imprisonment or a fine
ranging from a minimum of One hundred thousand pesos (100,000.00) to One hundred
million pesos (100,000.000.00) or twice the amount of costs avoided for non-compliance.
whichever is higher, or both. upon the discretion of the court.

Any person who willfully aids or abets the commission of the prohibited acts under Section 13

of this Department Circular or who causes the commission of such acts by another, shall be
liable in the same manner as the principal.

sss ss
DC on Guidelines in the Administration, Ciassification and Certification of ESCO Page 7 of 8
=== dc2020-09-0018-pages-8.ppm ===
In cases of association, partnership or corporation, the penalty shall be imposed on the
partner, president, chief operating officer, chief executive officer, director, or officer
responsible for the violation.

Section 16. Transitory Clause. Ali pending applications at the time of the effectivity of this
Department Circular shall be governed by the same. All existing ESCO Certificate of
Accreditation shall remain valid until the expiration indicated with the additional obligation to
comply with the obligations indicated in Section 11 of this Department Circular.

Section 17. Information, Education and Communication Activities. Pursuant to Section
85 of the EEC IRR, the DOE shall develop and undertake a national awareness and advocacy
program covering energy efficiency and conservation and pursue partnerships with relevant
stakeholders for the appreciation of this Department Circular.

Section 18. Repealing Clause. The provisions of other circulars, orders, issuances, rules
and regulations, which are inconsistent with the provisions of this Department Circular are
hereby repealed, amended, modified or superseded accordingly.

Section 19. Separability Clause. If for any reason, any section or provision of this
Department Circular is declared unconstitutional or invalid, such parts not affected shall
remain in full force and effect.

Section 20. Effectivity. This Department Circular shall take effect fifteen (15) days following
its publication in at least two (2) newspapers of general circulation. A copy of this Department
Circular shall be filed with the University of the Philippines Law Center - Office of the Nationa!
Administrative Register.

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

FONSOG. CUSI
Secretary e

ets Reputy of me Pig gene:
€: DEPARTMENT OF ENERGY

ey aE PS OL OOD
| DOE-AGC-20004750
PS I

SEP CS 2020

SSD
DC on Guidelines in the Administration, Classification and Certification of ESCO Page 8 of