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AA Republic of the Philippines
6 art DEPARTMENT OF ENERGY
= (Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. OC 2041- 04- al

PRESCRIBING THE POLICY AND GUIDELINES FOR THE FORMULATION OF
THE DISTRIBUTION UTILITIES DISTRIBUTION DEVELOPMENT PLAN
INTEGRATING THE RELEVANT LAWS, POLICY ISSUANCES, RULES AND

. REGULATIONS

WHEREAS, Section 5(a) of the Republic Act (RA) No. 7638, otherwise known as the
Department of Energy (DOE) Act of 1992, mandates the DOE to 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;

WHEREAS, Section 2(b) of RA No. 9136, otherwise known as the Electric Power
Industry Reform Act of 2001 (EPIRA), declares the policy of the State to ensure the
quality, reliability, security and affordability of the supply of electric power;

WHEREAS, under the EPIRA, the DOE in line with its mandate to supervise the
restructuring of the electric power industry, has the responsibility to prepare and
update annually a Power Development Plan (PDP) which shall consider and integrate
the individual or joint development plans of the transmission, generation and
distribution sectors of the electric power industry;

WHEREAS, Section 23 of the EPIRA, required Distribution Utilities (DUs) to prepare
and submit to the DOE their annual Distribution Development Plans (DDP) and in the
case of Electric Cooperatives (ECs), to submit such plans to the DOE through the
National Electrification Administration (NEA);

WHEREAS, pursuant to its mandate, the DOE issued Department Circular (DC) No.
DC2004-02-002, prescribing the guidelines for the formulation of a five-year DDP;

WHEREAS, DOE DC No. DC2010-03-0003 directs all DUs to regularly submit its DDP
for monitoring of the existing, available and future supply requirements and private
DUs’ Monthly Operations Report and Monthly Financial and Statistical Report for ECs;

WHEREAS, there is a necessity to enhance the current DDP format of mandated
entities to respond to the continuous evolution in the regulation of the energy sector,
and to integrate and consolidate the following relevant policies, laws, rules, and
regulations into a single, uniform, detailed and comprehensive DDP format:

Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, Philippines 1632
Trunkline (632) 479-2900
Website: www.doe.gov.ph E-mail: info@doe.gov.ph

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a) DC No. DC2018-02-0003 prescribing the policy for the Competitive Selection

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Process (CSP) in the procurement by the DUs of Power Supply Agreement
(PSA) for the captive market;

Section 4 of DC2018-02-0003 also mandates each DU to annually develop and
submit to the DOE its DDP which contains the Power Supply Procurement Plan
(PSPP);

DC No. DC2012-05-0005 prescribing the general policies for the
implementation of the Retail Competition and Open Access (RCOA) and
DC2015-06-0010 providing the policies to facilitate the full implementation of
RCOA in the Philippine electric power industry;

DC No, DC2017-12-0013 providing the policies for the voluntary participation
of contestable customers with average peak demand of 750 kW and 500 kW to
749 kW in the retail market, including voluntary demand aggregation:

DC No. DC2019-01-0001 prescribing the omnibus guidelines on enhancing off-
grid power development and operation to incorporate and interrelate all existing
and new policies and strategies for achieving quality, reliability, affordability,
security, stability, efficiency, and accountability of electric power services in off-
grid areas;

DC No. DC2019-11-0015 promulgating the guidelines and procedures for the
qualification and participation of Qualified Third Parties (QTP) in QTP Service
Areas;

DC No. DC2020-02-0003 mandating the DUs to comply with the levelling
structure, in accordance with the National Smart Distribution Utility Roadmap
(SDUR), provided that the DUs shall complete the initial levels first before
venturing into the succeeding levels;

Section 6.4.2 of DC No. DC2020-02-0003 also mandates the DUs to
incorporate all the proposed Smart Grid projects, in accordance with the SDUR,
in the annual update of their respective DDPs;

RA No. 10531 or the NEA Reform Act of 2013 which promotes the sustainable
development in the rural areas through total electrification, empower and
strengthen NEA to pursue the electrification program, and empower and enable
ECs to cope with the changes brought about by the restructuring of the electric
power industry;

RA No. 10531 also mandates the NEA to require the submission of reportorial
requirements relative to the operations of ECs including, among others, the
annual DDP;

RA No. 9513 or the Renewable Energy (RE) Act of 2008 which aims to
accelerate the exploration and development of RE resources such as, but not
limited to, biomass, solar, wind, hydro, geothermal and ocean energy sources,
including hybrid systems, to achieve energy self-reliance, through the adoption
of sustainable energy development strategies to reduce the country's
dependence on fossil fuels and thereby minimize the country's exposure to
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price fluctuations in the international markets, the effects of which spiral down
to almost all sectors of the economy and that DUs, shall include the required
connection facilities for RE-based power facilities in their DDPs;

l) RA No. 9513 likewise aims to develop the Renewable Portfolio Standards
(RPS), both for grid and off-grid, Net Metering, and the Green Energy Option
Program (GEOP) all of which aim to increase the utilization of RE in the country;

m) DC No. DC2017-12-0015 which mandates the grid-connected electric power
industry participants, to source a specified portion of their electricity
requirement from eligible RE resources in order to develop indigenous and
environment friendly energy resources;

n) DC No. DC2018-07-0019 referred to as the GEOP Rules setting the general
rules and procedures to properly guide the End-Users, RE suppliers and
Network Service Providers, in facilitating the option taken by the End-Users to
choose RE Resources as sources of their energy;

0) DC No. DC2018-08-0024 which aims to contribute to the growth of the RE
industry in the off-grid and missionary areas and rationalize the efficient use of
Universal Charge on Missionary Electrification and improve self-efficiency in
power generation through integration of RE in the supply mix in off-grid area;

p) RA No. 11285 or the Energy Efficiency and Conservation Act which aims to
establish a framework for introducing and institutionalizing fundamental policies
on energy efficiency and conservation, including the promotion of efficient and
judicious utilization of energy efficient and RE technologies and the delineation
of responsibilities among various government agencies and private entities;

Section 24 of RA No. 11285 also provides the pursuance of a Demand Side
Management (DSM) program for the electric power industry for the reduction of
energy consumption through effective load management resulting to the
decrease of power demand and the migration of power demand from peak to
off-peak periods or such measures undertaken by DUs to encourage end-users
to properly manage their loads to achieve efficiency in the utilization of fixed
infrastructures in the systems;

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r) DC No. 2019-11-0014 adopting and promulgating the implementing rules and
regulations of RA No. 11285 recognizing DSM program or such measures
undertaken by DUs to encourage end-users to properly manage their loads to
achieve efficiency in the utilization of fixed infrastructures in the systems; and

s) The Department shall evaluate the mandated entities’ compliance and
submission of their respective DDPs, among others, to determine whether to
recommend before the Congress the renewal or the revocation of the franchise
or privilege granted to the DU, pursuant to Section 46 of the EPIRA.

NOW, THEREFORE, in consideration of the foregoing, the DOE hereby issues and
promulgates the following guidelines in the formulation of the DDP, to ensure that the
planning of DUs and other Mandated Entities is responsive to the developments in the
electric power industry:

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SECTION 1. Guiding Principles. In compliance with the relevant laws, policies, rules
and regulations, the DUs and other entities mandated to submit DDP shall prepare
their individual DDP with utmost diligence and accuracy, to the end of providing
secure, reliable and efficient power service delivery to their customers and end-users
at all times. The formulation, review, evaluation and finalization of the DDP shall be
governed by the following principles:

Tl

1.2

1.3

1.4

1.5

Enhancement in the annual updating of the consolidated DDP which is a critical
input in the overall economic and energy development planning at the national
and local levels, being integrated in the PDP, Philippine Energy Plan, and the
Philippine Economic Development Plan.

Institutionalization of a consultative process between the DUs and other
Mandated Entities, the concerned Local Government Units (LGUs), relevant
government agencies and the business sector within the franchise area of such
DU and other Mandated Entity, the harmonization of their respective plans and
programs, and the integration of the local economic plans and investments into
the DDP which shall be crucial in the determination of power demand and energy
forecasts, and power distribution infrastructure expansion requirements.

Encouragement for the entry of investments in the economic and the energy
sectors of the concerned DU’s and other Mandated Entity’s franchise area.

Promotion of accountability of the DU and other Mandated Entity by ensuring that
the quality, accuracy, correctness and consistency of the DDPs submitted to the
DOE shall be reflective with the performance indicators and ratings of the DUs
and other Mandated Entities. The same principle shall be applied to the
concerned agencies responsible to review, evaluate and approve the plans,
programs and projects of the DUs and other Mandated Entities.

1.4.1. The correctness and accuracy of the DDP and its timely submission by
the ECs to NEA shall form part as a parameter on ECs’ Key Performance
Indicators; and

1.4.2 The quality of the DDP and the timely submission of National Electric
Cooperatives Distribution Development Plan (NECDDP) to DOE shall
form part of the NEA’s Corporate Governance Scorecard to be submitted
to the Governance Commission for Government Owned and Controlled
Corporations (GCG).

Responsiveness of the DDP to all policy developments and integration thereto of
all recent relevant laws, policies, rules and regulations governing the distribution
system.

SECTION 2. Scope of Application. This policy shall apply to any entity that owns,
operates, and/or controls one or more distribution systems, such as:

2:1
2.2
2.3
2.4
2.5

Electric Cooperatives;

Privately-Owned Distribution Utilities;

Local Government Unit Owned-and-Operated Distribution Systems;
Duly authorized entities to operate within the economic zones; and

All other duly authorized entities engaged in the distribution of electricity.
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Distribution Utility refers to any electric cooperative, private corporation, government-
owned utility or existing local government unit which has an exclusive franchise area
to operate a distribution system.

Item 2.5 above shall be referred to as “other Mandated Entities” in this Circular for
brevity.

As there is an intended policy to require QTPs to submit DDP, thus the inclusion of the
category on mandated participants. QTPs will be under Item 2.5.

SECTION 3. General Guidelines in the drafting of the DDP. The formulation of the
DDP shall take into account the following:

3.1. General profile and information of the entity;

3.2 Historical performance and forecasts of demand and energy requirement;

3.3. Power Supply Procurement Plan of DUs and other Mandated Entities on their
power supply requirements not covered by their existing PSAs;

3.4 Distribution facilities resilient to natural and man-made hazards therefore
ensuring continuous delivery of electric power to its captive customers;

3.5 Distribution facilities geared towards smart grid system to improve reliability,
efficiency and flexibility.

3.6 Distinctions between their captive and contestable customers, and its future
evolvement;

3.7 Provision of universal service within a DU’s and other Mandated Entity’s
franchise area over a reasonable time, including unviable areas, as part of their
social obligations;

3.8 Development of RE and other emerging technologies in the electric power
industry and relevant policy issuances on RE, including compliance to the RPS
Policies;

3.9 Provision for energy efficiency and conservation and the pursuance of a DSM;

3.10 Collaboration of DUs and other Mandated Entities in off-grid areas and National
Power Corporation (NPC) in harmonizing the DDP and Missionary Electrification
Plan, particularly in the provision of adequate power supply; and

3.11 Ensure consistency of the final DDP submission to DOE and Energy Regulatory
Commission (ERC).

SECTION 4. Contents of the DDP. All DUs and other Mandated Entities must
conform with the DDP Form, which contains different Modules, and the corresponding
Manual, as indicated, respectively, in Annexes “A” and “B” which shall form as
integral parts of this Circular. The DDP must manifest the following details and
information:

4.1 General Information. This section consists of the profile of the DU and other
Mandated Entity, and the general information on captive connections, including
the customers being served by the DU and other Mandated Entity outside its
franchise area and through Sale for Resale Agreements, GEOP, Net Metering
and contestable customers served by Retail Electricity Suppliers (RES).

4.2 Energy and Demand. Accurate forecasting of the energy and demand
requirement is vital for the procurement of power supply mix for the captive

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4.3

a8

4.5

4.6

4.7

customers and for the effective and correct identification of CAPEX projects that
need to be constructed in a timely manner. These activities require processing
and construction lead time, respectively, to meet the growing and dynamic needs
of captive customers.

Network and non-network Assets. This portion of the DDP shall present a
summary of the technical and economic analyses in the expansion, upgrading,
and rehabilitation of the distribution system including acquisition of assets to
address existing and potential deficiencies in the distribution system which are
necessary to ensure that distribution services are safely, continuously and
reliably provided to customers. This should include the identification and timing
of the following:

4.3.1 Acquisition and expansion of sub-transmission and distribution facilities;

4.3.2 Replacement and rehabilitation of sub-transmission and distribution
facilities;

4.3.3 Additional, uprating or retirement of distribution substation;

4.3.4 Substation and distribution Reactive Power Compensation Plan:

4.3.5 Electrification projects; and

4.3.6 Other network and non-network assets.

Power Supply Contracts. This portion shall consist of all the power supply
agreement/s entered into by the DUs and other Mandated Entities with
Generation Companies (GenCos).

Power Supply Procurement Plan. This portion refers to the plans for the
acquisition of a variety of demand-side and supply-side resources to cost-
effectively cover the electricity needs of its customers that are not covered by a
PSA procured through CSP. It shall also determine the CSP activities to be
undertaken by the DUs and other Mandated Entities to ensure continuous
provision of electricity supply to their consumers in the least-cost manner. As
such, to come-up with a sound PSPP, the DUs and other Mandated Entities shall
undertake a cost-benefit analysis of the power supply requirements taking into
consideration the prevailing cost or price in the market, energy demand
forecasting, power system, load matrix and energy mix, among others.

Electrification. This section requires the information on the current household
electrification situation and the information on all electrification activities planned
to be undertaken. It shall also contain information on all government-subsidized
projects with leading funding source and percent level of completion.

Strategies and/or approaches to comply with the RPS requirements and to
attain a resilient and smart distribution system. These components shall
identify and describe the strategies and/or approaches that will guide the DUs
and other Mandated Entities in their operation to achieve this objective.

The DOE may require other and/or further supporting information, as maybe required
in the existing and future laws, rules and regulations.
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SECTION 5. Procedures in the Preparation and Submission of the DDP. DUs and
other Mandated Entities shall comply with the following procedures in the preparation
and submission of the DDP:

5.1 Preparation of the DDP.

All DUs and other Mandated Entities shall adopt the following documents and
procedures:

5.1.1 The DU and other Mandated Entity must fill up the Distribution
Development Plan Form (DOE-EPIMB DDP Form 2021-01-001). See
Annex A attached in this Circular.

5.1.2 The instructions for filling-up the DOE-EPIMB DDP Form 2021-01-001, is
outlined in Annex B.

5.1.3 The crafting of the DDP must take into account all the applicable
provisions prescribed in the Philippine Distribution Code and other
appropriate laws, policies and regulations.

5.1.4 Planned developments shall include the entry of large loads,
electrification, technical upgrading and rehabilitation of distribution lines
availed under the Energy Regulations No. 1-94 or from other government
subsidies and grants, infrastructure facilities servicing the needs of the
public and other projected economic growth within the franchise area of
the DU and other Mandated Entity.

5.1.5 The generated output of the DOE-EPIMB DDP Form 2021-01-001 shall
be supplemented by a narrative report containing a brief evaluation and
analysis on the implementation or accomplishments relative to the targets
as stipulated in the DDP submitted in the previous year. The report shall
include the following data:

5.1.5.1 Demand and energy forecasts vis-a-vis actual demand and
energy levels;

5.1.5.2 CAPEX Program targets vis-a-vis actual accomplishments or
implementation;

5.1.5.3 Details of PSAs, highlighting the cooperation period, including the
amendments thereto, if any;

5.1.5.4 Updates or results of the capacity and energy proposed for CSP
or of the CSP proceedings, if any;

5.1.5.5 Updates or accomplishments on total electrification; and

5.1.5.6 Other information pertinent to this enumeration.

5.1.6 DUs and other Mandated Entities shall submit an electronic copy of their
respective final DDPs to the DOE and NEA, in the case of ECs.
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5.2 Timeline of Submission of the DOE-EPIMB DDP Form 2021-01-001.

Pursuant to the purpose of assisting the DUs and other Mandated Entities in preparing
and ensuring that DDP submissions is in accordance with the timelines set forth in the
EPIRA, the following schedules shall be observed:

5.2.1 Every twenty-fifth (25) of January of each year, the DUs and other
Mandated Entities, except ECs, shall submit the electronic copy of the
DDP to the DOE. In the case of ECs, these shall be submitted to the NEA,
copy furnished the DOE.

Within twenty (20) days period upon receipt of the DDPs of the DUs and
other Mandated Entities, the DOE, or the NEA in the case of ECs, shall
notify the reporting DU and other Mandated Entity if the submitted DDP is
in compliance with this Circular.

5.2.2 The DUs and other Mandated Entities shall submit an electronic copy of
the final annual ten-year DDP, reflecting the changes based on the
comments and recommendations of the DOE and the NEA in case of ECs,
not later than the fifteenth (15"") of March of each year to the DOE.

5.2.3 In the case of ECs, the NEA shall submit the NECDDP to the DOE every
fifteenth (15) of March of each year.

SECTION 6. Responsibilities of the Department of Energy.

The DOE shall have the following responsibilities:

6.1 Oversee the compliance of the DUs and other Mandated Entities in the
preparation and submission of their respective annual DDPs;

6.2 Integrate the submitted DDPs and determine the quality, correctness, accuracy
and consistency of the information and data contained in the DDP;

6.3 Endorse for ERC’s appropriate action the non-submission of the final DDP on
the timelines set in this Circular; and

6.4 Recommend to the Congress and other relevant authorities for appropriate

action the entities non-complying with their mandates and responsibilities
pursuant to this Circular.

SECTION 7. Responsibilities of the National Electrification Administration.
Pursuant to its mandate under the EPIRA, the NEA shall assist all ECs in the
preparation and ensure submission of respective annual DDPs. Specifically, the NEA
shall have the following responsibilities:

7.1 Ensure the complete and timely submission of DDPs of all ECs.

7.2 Evaluate the DDPs submitted and shall ensure the good quality of the information
and data contained in the DDPs.
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7.3 Submit a consolidated report of the respective DDPs of ECs, to be incorporated
as the NECDDP, every fifteenth (15th) of March of every year as mandated by
Section 4(p) Rule 7 of the EPIRA-Implementing Rules and Regulations.

The NEA shall comply with the provisions of this Circular in its preparation and
submission of the NECDDP to the DOE, together with a consolidated analysis of
ECs’ DDP.

SECTION 8. Responsibilities of the DUs and other Mandated Entities. All entities
engaged in the distribution of electric power shall have the following responsibilities:

8.1 Submit an annual DDP in accordance to the provisions of this Circular.

8.2 Assign a focal person and an alternate focal person/s to ensure that the DDP
submitted is consistent, accurate and complete as prescribed in this Circular.
The focal person and its alternate shall be responsible to respond to the queries
of DOE and NEA on the DDP submissions.

Each DU or other Mandated Entity shall institutionalize a succession program of
the focal persons that will ensure the continuity of the preparation of its DDP.

8.3 For the purpose of posting in the DOE CSP E-based Portal, the DUs and other
Mandated Entities shall ensure that the PSPP is consistent with the DDP.

8.4 In support of the DDP, the DU and other Mandated Entity shall likewise include
in their annual submission the following documentary requirements:

8.4.1 Board Resolution or Secretary's Certificate or any equivalent approving
the DDP;

8.4.2 System Map which contains among others, primary lines, power
transformers, substations, embedded generators, and connection points
to the grid (for grid connected DUs), with proper legend;

8.4.3 Single Line Diagram;

8.4.4 Electrification Plans and Programs;

8.4.5 Updates on SDUR;

8.4.6 PSA/s, including amendments, if any;

8.4.7 Certificate of Franchise or its equivalent;

8.4.8 Certificate of Public Convenience and Necessity;

8.4.9 Net-metering Contracts; and

8.4.10 Other documents as maybe required by the DOE.

Items 8.4.1 to 8.4.5 will be submitted annually together with the updated DDP while
items 8.4.6 to 8.4.9 shall only be submitted once, or when there are changes or
developments relative to these matters.

SECTION 9. Responsibilities of Other Electric Power Industry Participants and
Stakeholders. All GenCos, RES and other electric power stakeholders, including
other National Government Agencies, LGUs, private developers, businesses and
other stakeholders, are encouraged to provide the DUs and other Mandated Entities
any information requested and involvement in the local development planning which
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are necessary for the preparation of the DDP to ensure continuous and reliable power
supply in the franchised area.

SECTION 10. Monitoring, Enforcement and Compliance. The DOE shall monitor
the compliance of all DUs and other Mandated Entities, and shall recommend to the
ERC of any entity which fails to comply with the provisions of this Circular, in substance
and form, for appropriate sanctions, penalties, and fines, among others, pursuant to
Section 46 of the EPIRA. The DOE shall likewise report to GCG the NEA’s non-
compliance with the timely submission of correct and accurate NECDDP to DOE.

Non-compliance by the DUs and other Mandated Entities with the provisions of this
Circular shall serve as a basis, among others, for the DOE’s review and
recommendation for the renewal or revocation of the DU's and other Mandated Entity’s
franchise or privilege.

SECTION 11. Regulatory Support. The ERC and GCG shall support the enforcement
of this Circular, and shall impose the appropriate sanctions, penalties, and fines when
found guilty of any violation after the conduct of proper proceedings. Likewise, the
ERC, in the exercise of its functions under the EPIRA, shall use the DDP as reference
for the review and approval of the PSAs and Capital Expenditures application of DUs
and other Mandated Entities.

The DOE shall recommend to the ERC the issuance of a possible show-cause order
to DUs and other Mandated Entities for non-compliance of the provision of this
Circular.

SECTION 12. Repealing Clause. Upon the effectivity of this Circular, DOE DC No.
DC2004-02-002 is repealed. All other issuances inconsistent with this Circular are
hereby amended, modified or repealed accordingly.

SECTION 13. Separability Clause. If for any reason any section of this Circular is
declared unconstitutional or invalid, such parts not affected shall remain in full force
and effect.

SECTION 14. Effectivity. This Circular shall take effect fifteen (15) days upon its
complete publication in at least two (2) newspapers of general circulation. Copies
thereof shall be filed with the University of the Philippines Law Center — Office of
National Administrative Register (UPLC-ONAR).

Signed this day of 2020 at DOE, Energy Center, Rizal
Drive, Bonifacio Global City, Taguig City, Metro Manila.

ONStYG-CUSI

Secretary

Y MARO2 2021

ets Republic of the Philippines
CSG] DEPARTMENT OF ENERGY
ee

cd IW REPLYING PLS. CITE.

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