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Ricpublic of the Peilippiacs
DEPARTMENT OF ENERGY
(Kagawaran ng Enerhiva)

DEPARTMENT CIRCULAR NO. OCZo23-a5- COE pe

PROMULGATING THE REVISED RULES AND GUIDELINES GOVERNING
THE OPERATIONALIZATION OF THE RENEWABLE PORTFOLIO
STANDARDS FOR OFF-GRID AREAS PURSUANT TO SECTION 12 OF THE
RENEWABLE ENERGY ACT OF 2008

WHEREAS, Republic Act (RA) No. 76368 or the Department of Energy (DOE) Act
of 1092 declares the policy of the State to, among others, ensure a continuous,
adequate and economic supply of energy thraugh the integrated and intensive
exploration, production, management and development of the country’s indigenaus
Bnergy MeSOournces:

WHEREAS. Section 4 of RA 7638 mandates the DOE to prepare, integrate,
coordinate, Supervise, and coniral all plans, programs, projects, and activities af
the Government relative to energy exploration, development. utilization.
distribution, and conservation,

WHEREAS, RA 9738 or the Electric Power Industry Reform Aci of 2007 (EPIRA)
declares the policy of the State to, among others: (a) ensure and accelerate the
total electrification of the country; (b) ensure the quality, reliability, security, and
alfordability of the supply of electric power; (ic) assure socially and environmentally
COMmpalne energy sources and infrastructure; and (d) promote the utilization of
Indigenous and new and renewable energy (RE) resources in power generation in
onder to reduce dependence on imported energy;

WHEREAS, Section 23 of the EPIRA and Sections 4(f) and 4(h) of its Implementing
Rules and Regulations (IRR) prescribe that the distribution utilities (DUs) have the
obligation to, among others; (a) supply eleciricity in the least cost manner to its
Captive Market, subject to the collection of retail rate duly approved by the Energy
Regulatory Commission (ERC): and (b) provide universal service within their
franchise, over a reasonable time from the requirement thereof, including unviable
Breas, 25 part of ther social obligations, in a manner that shall sustain the
economic viability of the utility, subject to the approval by the ERC in the case of
private or government-owned utilities:

WHEREAS, Section 37(a)(i) of the EPIRA and Section 1(e)(i) of iis IRF mandate
the DOE to encourage private sector investments in the electricity sector and
promote the development of indigenous and RE resources;

WHEREAS, Section $2 of the EPIRA and Section 1, Rule 14 of its IRR provide that
ihe provision of electric service in remote and unvisblé areas that the franchised
Willity & unable to service for any reason shall be opened to other qualified third
parties;

Energy Center, Rind Detee cor, 3408 Sweet, Renificig Oobel Cay, Taguig City, Philippines 1632
Tel. Mas. (TrunkGne) (652) 8479. 2500
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WHEREAS, Section 70 of the EPIRA and Sections 3a) and 4(a) of its IRR
prescnbe that the National Power Comeration (NPC) through its Small Power
Wtilties Group (SPUG) shall perform the missionary electrification to provide power
generation and its associated power delivery systems in areas that are not
connected to the iransmission systam which shall be funded from revenwes from
sales in messionary areas and from the Universal Charge for Missionary
Electrification (UC-ME};

WHEREAS, RA 9513 or the Renewable Energy Act of 2008 (RE Act) declares the
policy of the State to increase the utilization of RE by institutionalizing the
development of national and local capabilities in the use of RE systerns, and
promoting their efficient and cost-effective commercial application by providing
fiacal and nonfiscal incentives:

WHEREAS, Section 6 of the RE Act and Section 4 of its IRR define the "Renewable
Portfolio Standards (RPS)" as an obligation on electric power industry participants
such as generators, DUs, or suppliers, to contribute to the growth of tha renewable
energy industry of the country by sourcing or producing a specified fraction of their
electricity from eligible RE resources, as may be determined by the National
Renewable Energy Board (NREB):

WHEREAS, Section 12 of the RE Act and Section 12 of its IRR provide that the
NPG-SPUG or its successors-in-interest and/or qualified third parties in off-grid
areas shall, in the performance of its mandate to provide missionary electrification,
SOUrCE @ Minimum percentage of its total annual generation from RE resources
available in their respective areas, as may be determined by the DOE-

WHEREAS, the DOE developed the National Renewable Energy Program
(MREP} on 15 June 2014 which aimed to establish a comprehensive approach to
encourage greater privale sector participation, through invesiments, in RE
deavelooment

WHEREAS, COE Gapartment Circular (OC) Noe. OCP018-08-0024 or the RPS OR.
Grd Rules mandates electric power indusiry participants to source er produce a
specified partion of their electricity requirements from eligibla RE resources:

WHEREAS, RA 11646 or the Microgrid Systems Act declares the policy of the
State to, among others: (a) accelerate total electrification and ensure the provision
of quabty, reliable, and secure electricity service at reasonable rates in unserved
and underserved areas; and (b) provide a cornpetitive environment for different
kinds of energy sources while prioritizing low-cost, indigenous, renewable, and
anvironment-friendly sources of anergy:

WHEREAS, Section 6 of the Microgrid Systams Act states that qualified third
parties (QTPs) providing alternative electric service pursuant to Section $9 of
EPIRA were renamed as Microgrid System Providers (MGSPs};

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WHEREAS, Section 4.17 of DOE DO No. 2022-05-0017 or the Rules and
Regulations to implement RA 11646 defines MGSPs5 as natural of juridical parsons
whose business includes the installation, operation, and maintenance of micragrid
systema in ungerved and underserved areas;

WHEREAS, due to the Coronavirus (COVID-19) Pandemic, the rollout of the RPS
Off-Grid Rules was not conducted and the DOE was unable to undertake the

capacity bulldieg among Mandated Particinants and the Individual determination of
their RPS requirements:

WHEREAS, the DOE conducted public consultations on 7 March 2023 in lloilo City,

15 March 2023 in Davao City, and 23 March 2023 in Clark to operationalize the
RPS Off-Grid Rules;

WHEREAS, the DOE has issued DC No. DC2019-01-0004, titled “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, relability, affordability, security, stability, efficiency and
accountability of electric power services in off-gnid areas:

NOW, THEREFORE, in consideration of the foregoing, the DOE hereby Issues and

promulgates the following revised guidelines for the aperationalization of the RPS.
OF-Grd Rules pursuant to Secton 12 of the RE Act of 2008.

RULE 4
GENERAL PROVISIONS

Section 1. Tithe. This Circular shall be known as the “Revised Rules and
Guidelines Governing the Operationalization of the RPS Off-Grid Rules” and shall
hereinafter be referred to as the “Revised RPS Off-Grid Rules”.

Section 2. Purpose. This Circular is issued to achieve the following:

(a) Contribute to the growth of the RE industry in the Off-Grid and Missionary
Areas by mandating electric power |ndustry paricipants to source or produce
aspeciied portion of their electricity requiremenis from eligible RE resources:

(b) Improve efficiency in power supply through integration of RE in the power
ganerston aupoly mix ona peraf-grid area basis;

(c) Accelerate green energy transition by reducing use of fossil fuels through
hybridization of use of alternative technologies; and

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{¢)

Faciitate development of the respective RPS requirements and Compliance
Pian of Mandated Participants in he Off-Grid and Missionary Areas. In the
case of OUs, said plan must be consistent with its annual Distribution
Development Pian (DDFs) and Power Supply Procurament Plan (PSPP).

Section 3. Scope. This Circular sets cut the policies and guidelines for O-Grid
Areas on the following:

(a)
ib)
(2)
(qd)
{e)

ff

Attainment of Optimal Supply Mix;

Setting of the Minimum Annual RPS Requirements;
Determination of the Eligible RE Facilities:
Development of Despatch Protocols of RE Generafien;

Establshing the obligations of the Mandated Participants and other
siakeholders; and

Defining the Framework for Compliance,

Section 4. Definition of Terms. Unless otherwise stated, the following terms
shal be defrred as follows:

{a)

(b}

(e)

id)

(a)

“Distributed Energy Resources" or "DER" refers to power sources
connécted to the distribution system or elactrical system of the End-Users,
that could De aggregated to meet a demand;

“Eligible RE Facility” refers to a generating unit that utilizes RE resources
or RE technology fo generate electric power and started commercial
operations upon the effectivity of the RE Act

“Embedded Generation” referg to generating units thet are directly
connected to the distribution system of a DU or indirectly connected to the
fransmssion systenn,

“Force Majeure” refers to typhoons, storms, tropical depressions, flooding,
drought, volcanic eruptions, earthquakes, tidal waves or landslides, or acs
of a public enemy, wars (with or wahout Congressional declaration), ricts,
insurrections, revolutions, acts of sabotage. blockades or any violent and
threatening actions, as well as uncontroliable conditions that may result or
would likely lead to the extraordinary disruption of operations of the RE
Developer, Generation Company, or DU:

“Mandated Participant’ as used in the Circular, rafers to an éléciric power
industry participants mandated to contribute io the growth of the RE industry
and comply with the Minimum Anhual RE GeneratawRPS Off-Grid

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(9)

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Requirements pursuant to Section 12 of the RE Act and as enumerated under
Rule 4, Section 12 of this Circular:

“Minimum Renewable Energy Generation Requirement’ refers to the
amount or volume of RE generation needed to comply with by the RPS Of-
Grid Mandated Participants under Section 7 of this Circular

“Optimal Supply Mix” refers to the total generation mix in any Off-Grid and
Missionary Area derived from vanous fuel supply technologies that, when
integrated with electricity generated from RE generation, resulted in
adequacy of supply and the raliabiity of the grid in the least-cost manner,

"RE Developer" refers to individuals ov juridical entities created, registered
and/or aulhorized to operate in the Philippines in accordance with existing
Fhifippine laws and reguistions and is engaged in the exploration,
development or utilization of RE resources and actual operation of RE
systemsiaciihes pursuantta the RE Set

“Small Grid" refers ta the backbone system of the interconnected high-
voltage lines or medium-voltage lines, substations, and other related facilities
mot connected to the national transmission backbone grid in Luzon, Visayas
and Mndanac, Farthe purpose of this Circular, Small Grid shall include areas
serviced by MGSPs: and

“Small Grid System Operator” or "SGSO" refers to the party responsible
for generation dispaich and real-time control of the power system in off-grid
areas through the management of operating reserves reactive power support,
black star and other operating requirements to énguré safety, power quality,
stability, reliability, and the security of the small grid,

Further, this Ciecular hereby adopts by reference the terns defined in the RE Act,

EPIRA, and Microgrd Systems Act, and their respective IRRs insofar as they are
eonsiatent with this Circular.

RULE 2

RPS POLICY, OPTIMAL SUPPLY MIX AND MINIMUM RE REQUIREMENT

Section 5. The Off-Grid Renewable Energy Developmant Policy. Consistent
with Section 12 of the RE Act and Section 12 of its IRR, it is hereby reiterated the
responsibilities of the NPC-SPUG or its successore-in-intarest, in the perfarmanca
of its mandate to provide missionary electrification, and/or MGSPs in the Off-Grid
Areas tO source a percentage or all of their energy requirements or supply, as the
case may be, from eugible RE rsouroes.

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To ensure the efficient and successful implementation of the objectives of OF-Grid
RE Development, the following shall govem:

(a)

(b}

NPC-Small Power Utilities Group (NPC-SPUG) Served Off-Grid and
Missionary Areas. Consistent wih fs mandate under Section 12 of the RE
Act, ihe NPC-SPUG shall prepare its multi-year RPS Compliance Pian, whicn
shall include the specific plans and programs to minimize if not eliminate the
use of conventional fuels for its power generation facilities in the Off-Gnd and
Missionary Areas. Said RPS Compliance Plan shall form part of its
Missionary Electrification Plan (MEP) and shall be approved and endoraed
by the NPC Board to thea DOE for integration to the Missionary Electrification
Develooment Plan (MEDP) pursuant to OOF Circular Ne, OC2019-01-0004,

The NPC-SPUG RPS Compliance Plan may include any or all of the
following:

(i) Hybridization Program. Existing NPC-SPUG diesel power plants shall
be hybridized with RE system leading to the most optimal configuration
in the concerned Off-Grid and Missionary Areas. NPC-SPUG shall
formulate its Hybridization Program:

(i) Private Sector Participation (PSP) Program through New Private
Power Providers (NPPs). All NPC-SPUG areas shall be opened to the
private sector for the development, financing, construction, and
opetation of RE Projects based on compeiiive procurement process of
the concenned DU. To ensure efficient take over by the NPP of the
generation function of NPC-SPUG, the DU, NPP and NPG-SPUG shall
prepare and agree on a Take Over Program (TOP) defining the
transition to full service by NPP in the area. The TOP shall include plans
and programs covering the transition fram existing NPC-SPUG supply
io full aSsumption by the NPP of the power géneration business, and
the needed enhancement in tranamission andar distribution facilities:
and

{ii) RE Project Development NPC-SPUG may develoo its own RE
Facility, subject to existing laws and regulations, and shall secure RE
Contract fram the DOE. For clarity, mew RE Projecis may cover
rehabilitation of existing/inefficientinon-operational RE Projects.

For DUs and Other Stakeholders. The National Electrification
Administration (NEA) and the National Transmission Corporation (TransCo)}

shall develop a syslem to Suppor, among others, the capacity building of the
Mandated Panicipants including but noi limited ta:

() Assessment cof RE resources in terms of availability and demand
compaiibilty in the Missionary and Off-Grid Areas, upon request of the
Mandated Participants;

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(a) Development or use of any intemationally acnepted optimization
sofware of @quivaleni locally developad simulation tool for the

determination of Optimal Supply Mix per Missionary and Off-Grid Areas:
and

fil) Conduct trainings on a regular basis and/or upon request and at no cost
fo Mandated Faricipants, which shall include but mot limited to the
following:

(1) Hosting Capacity Analysis:
(2) Distribution impact Study (015); and

(3) Documentary/permitiing requirements for the development and
commercial operations of an RE power project.

(c) Capacity Building on RE Development. The DOE shail provide trainings
and onentations on RE Development policies and guidelines, including
securing RE Contracts to interested RE Developers.

Section 6. Minimum Annual RE Generation/RPS Off-Grid Requiraments. tin
the case of the other Mandated Participants such as the NPPs, MGSPs and DUs
with Embedded Generators, they shall contribute to the generation, procurement
and/ar supply of RE in the area by meeting at last the minimum percentage of RE
Share needed to attain the Optimal Supply Mix in their energy supply portfolls and
Subsequently maintain the minimum annual RE requirements.

In calculating tha minimum RE percentage share, ihe Mandated Participants.
TransCo of DOE, shall consider the following:

(a) Generation of all existing identified RPS-eligible RE resources in the area;
and

(>) Adoption of hybrid of distributed RE generation systems, whenever feasible,

Section 7. Attainment of Optimal Supply Mix, All Mandated Participants shall
contribute to the attainment of an Optimal Supply Mix in their respective Missionary
and Off-Grid Areas, In the determination of the Optimal Supply Mix for each
Missionary and Off-Grid Areas, any internationally accepted optimization software
or equivalent locally developed simulation tool may be used, in consideration of
the following:

fa) Stable operation of existing generating unils and reliability of the grid with the
entry of an RE generation facdity consistent with existing and applicable
performance standards; and

(b) The capacity corresponding to ihe above minimum RE generation shall

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ensure optimal penetration of RE generation while maintaining stable,
reliable and adequate supply of electricity.

For purposes of clarity, a scenario may be considered optimal if the Savings or
reduction generated from the exercise yields to reduction/savings fom UC-ME
Subsidy of the particular off-grid area, as supported by the financial/simulation
results from. intemationally accepted optimization software or equivalent locally
developed simulation toi

Section 6. Review of RPS Off-Grid Rules. The DOE, in consultation with the
stakeholders, shall review the RPS Off-Grid Rules, on or before September 30 of
each year or as may be necessary, to ensure its alignment with the NREP and the
Philippine Energy Plan. Such review shall consider, among others, the emerging
RE technologies and resources, the existence of registered RE projects and
changes in the criteria of EXigible RIE Facilities.

Priority shall be given to awarded RE Contracts in the Off-Grid and Missionary
Areas towards the attainment of RPS generation targets.

RULE 3
ELIGIBLE RE FACILITIES AND DISPATCH PROTOCOLS

Section 9, Eligible RE Facilities. For the purpose of this Circular. the Eligible
RE Facilities utilizing the following technologies and resources shail be:

(a) Biomass:

(b} Waste-tc-Energy (WTE) Technology;

(ce) Wind Energy:

{d) Solar Eneray;

fe) Run-of-River (ROR) Hydroelectric Power Systems:

{ff = Impounding Hydroelectric Power Systems:

(9) Ocwan Energy;

{h) Geothernal Energy:

fi) Hine systems as defined in the RE Act with respect to the REconponent:

() Other RE technologies which may be tater identified by the DOE, after
endorsement of NREB and relevant government agencies.

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Provided, That, for the RE facilities utilizing these technologias to be eligible for
RPS compliance and to be attributed the corresponding RE Certificates (RECs),
these RE facilities should have started commercial operations on or after the
effectivity of the RE Act

Section 10. Eligible Generation from RE Technologies for RPS Compliance.
Eligible RE generation for RPS compllance shall have at least one of the following
aliributes:

(a) RE installations whose commercial operations etarted on or after the
effectivity of the RE Act:

(>) Incremental RE capacity resulting fram any of the following:
{i} Expansion of an existing RE generation facility: and

(ii) Upgrading of an RE-based power generation facility: Provided, That the
commercial operations of such RE-based power generation facility
stared on or after the effectivity of tha RE Act. The Composite Team
shall determine the eligible component of such capacities:

(c) New capacities resulting from a change In the technology, i.e., from a non-
RE to an RE generation facility: Provided, That the commercial operation
of such RE generation facility started on or after the effectivity of the RE Act:

{¢) Mothballed RE generation facilities that are restored into operation: Provided,
That the commercial operation of such restored RE generation facility started
on or after the effectvity of the RE Act: and

(e) Other types of RE generation facilities as may be later identified by the DOE

Section 11. Dispatch of RE Generation under the RPS Rules. RE generation
facilities shall be given priority dispatch by the Small Grid System Operator (SGS0)
te the extent of the demand of the Missionary and Of-Gnd Areas.

With the exception of MGSPs, the RE Developer shail comply with the
requirements and follow the dispatch instructions of the SGSO in order to
effectively implement its priority dispatch without affecting grid reliability and
security.

The $650 shall be guided by the following:

(a) The dispatch of RE generation facility and other generation facilities shall
follow the dispatch protocols based on existing applicable mules and
regulations: and

(b) In the event that there is more than one (1) RE generation facility the area,
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priotity dispatch shall be given to the RE generation facility with the least-cost
True Gost of Generation Rate (TCGR), inclusive of cash generation-based
incentive, if availed of by the RE Developer.

RULE 4

MANDATED PARTICIPANTS AND FRAMEWORK FOR COMPLIANCE

Section 12, Mandated Participants. Unless otherwise provided, the following are
mandated to comply with the Minimum Annual RE GeneratiowRPS Off-Grid
Requirements as prescribed in this Circular

(a)
(b)

(¢)

Generation Companies including NPC-SPUG, NPPs, and MGSPs-

DUs and Local Government Unit's (LGU/s) operating electric systems in
off-grid areas; and

Olher entities which may later be identified by the DOE.

Section 13. Framework of RPS Compliance. All Mandated Participants, as

described below, shall comply with their cbligations under Section 12 of the RE Aci
and this Circular:

(a)

(b)

Case 7. A Missionary and Off-Grid Area with Single DU and Single
Generation Campany. The Generation Company, in coordination with the
host OU or LGU-operated electric systeme, ehall

(i) Deiermine the Optimal Supply Mix; and

(i) Prepare and implement the RPS Requirements and Compliance Plan.
The required volume or percentage of RE generation based on the Ootimal
Supply Mix, shall be the minimum annual RE Generation requirements of the
Generation Company.

The same shall be applicable to NPC-SPUG and MGSPs with respect to their
fespeciive service areas.

Case 2. A Missionary and Of-Grd Area wilh Single DU and Multiple
Generaiion Campanias. The host DU shall:

(i) Oetermine the Optimal Supply Mic; and
(ll) Prepare and implement the RPS Requirements and Compliance Plan,
The required volume or percentage of RE generation based on the Ontimal

Supply Mix shall be shared pro-rata to all Generation Companies, based on
the contracted energy (MiVvh) of each Generation Company, which shall

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(c)

seve as basis of the Generation Companies’ respective minimum annual RE
Generation requirements.

Case 3. A Missionary and OfGnd Area with Multiole OUs and Muitiole
Generation Companies. NEA and/or TransGo, in coordination with the
Mandated Participants, and in consideration of the total power supply
requirements of the concerned off-grid area, shall:

(i) Oeternmine ihe Optimal Supply Mure: ard

(i) Assist the preparation and implementation of tha RPS Requirements
and Campliance Plan.

The required volume or percentage of RE generation based on the Optima!
Supply Mix shall be shared pro-rata to all Generation Companies, based on
the contracted energy (MWh) of each Generation Company per DU, which
shall serve as basis of the Generation Companies’ respective minimum
annual RE Generation requiraments,

Section 14. Complianes Mechanisms. The Mandated Participants may use the
generated RECs from any of the following:

(a)

(b)

(ce)
id}
{8}

RE generation by NPC-SPUG from its own or contracted RPS Eligible RE
Fachibes:

RE generation supplied by MGSP or NPP from its own or contracted Efgible
RE Facilities;

Generation from embedded RE generation facilities of the DUs;
Purchased of acquired RECs fram the RE Market; and
Such other mechanisms, including but not limited to distributed RE resources,

t0 be determined by the DOE upon recommendation of the RPS Composite
Team (RPSCT), and in consultation with the slakeholders,

Section 15. General Guidelines for the Operationalization of the RPS Off-Grid
Rules. To éngure the efficient and successful operationalization of the Revised
RPS OF-Grid Rules, ali Mandated Paricipants shall be guided by the following:

(a)

{b}

Mandated Participants shall ensure the compatibility of eligible RE Facilities
with existing plants and tranemission or distribution systems in the Missionary
and Off-Grid Areas, as well as determine the associated support and
protection requirements:

Mandated Participants, in coordination with their hest DUs. have the option
to contract ts minimum RPS requirements or construct their own RE Facilities
for its compliance. For clarity, the corresponding MW and MWh Guactities of
said RE Facilities shall be included in the PSPP of the concerned DU:

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(¢) For RE OevelopersiGeneration Companies:

1)

tii)

(iil

(lv)

(v)

(vi)

RE Developers which have acquired of are in possession af the
appropriate RE Contracts with the DOE are qualified to bid or participate
in the compeiltive procurement of any DU as they are considered as
Potential NPPs under DOE Circular No. 0C2019-01-0004 and other
subsequent issuances by the DOE:

RE Developers with the most advantageous RE subsidy offer that will
redound to a higher net reduction in the UC-ME requirement of ihe
Missionary and Off-Grid Areas, inclusive of the fash genération-based
incentive if availed, shall be awarded the pertinent PSA:

All PSAs and MGSP Service Contracts that have been procured and
execuied prior to the effectivity of DC No. OC2018-08-to24 shall be
recognized until their expiration while these that have been filed and
pending before the ERC before the effectivity of said OC shall be
recognized based on ERC's decision:

Any additional RE generation needed that are beyond the existing
contractual agreements shall comely with the CSP Policy:

Generation Companies may amend their existing contractual
agreements by displacing contracied BNelgy using fossil fuels with RE-
based generation: Provided, That the contemed Generation
Companylies shall forego their existing conventional generating plants:
Provided, further. That tre resulting electricity rates shall be duly
approved by the ERC. consistent with Section 2? of thie Circular, and

Generation Companies and/or NPPs that are curently operating
conventional and fossi-fired power plants May enter into back-te-back
contract with any RE Developer for purposes of complying with the
minimum Off-Grid RPS requirements: Provided. That the agreement
Shall comply with the regulatory framework to be issued by the ERG
under Section 22 of this Circular.

For DUS/LGU-Owned Electric Systems:

ti)

The host OU/LGU-Owned Electric Systams, in coordination with the
Generation Company/ies within its franchise srea. shall facilitate timely
conduct of the CSP consistent with the off-grid area's Optimal Supply
Mix and future PPSP of the concemed off-grid area:

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(li

ili

(iv)

ivi

(vip

OUs/LGU-Owned Electric Systems, with the assistance of the SGSO.,
shall conduct a system of distribution impect study for each proposed
RE generation facility, which shall comply with the applicable provisions
of the Philippine Small Grid Guidelines (PSGG) and Philippine
Distribution Code (PDC), to ensure stability and reliability of the grid:

DUs/LGU-Owned Electric System have the option to develop their own
RE generation facility: Provided, That the DU shall register as an RE
Developer with the DOE. in case ofa joint venture, the DU shall conduct
a CSP for the development and/or operation of its RE generation
project;

DUS/LGU-Owned Electric System may enter inte a joint venture for the
installation and operation of microgrid systems pursuant to, and subject

to the conditions under Section 15 of the Microgrid Systems Act and
NEA Guidelines:

The DWLGU-owned Electric System, as supported by results of
Sysiem/Distribution Impact Study to maintain reliability and security of
the grid, may apply for exemption under Section 2.2.1.3 of DC No,
DOC2021-03-0030 for embedded generation facility utilizing indigenous
resources with capacity of 10 MV for Luzon and 5 MW each for Visayas
and Mindanao: and

DUs/LGU-Owned Electric System shall injegrate in their DOF s the RPS
Requirements and Compliance Plan per Missionary and Off-Grid Areas,
which shall include, among others: Optimal Supply Mix; Minimum
Annual RPS Requirements; proposed/potential RE generation facility
procurement timeline; and estimated commertial operation of the
proposedpoteantial RE generaibon facility,

RULE §
COMPOSITE TEAM

Section 16. Creation of Camposite Team. For the purpose of overseeing the
implementation of this Circular, a Gomposite Team is hereby created. The
representatives from NEA and TransCo shall serve as resource persons andlor
observers ta the RPSOT

The DOE Legal Services shall provide legal assistance and support ta the RPSCT
in cases of disputes arising from compliance under this Circular or such other
legal iseues that may be referred to Legal Services in connectionwith the
imernretation of this Circular,

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The Technical Services Management Division of the REMB shall provide technical
and administrative support to the RPSCT,

Section 17. Responsibilities of the Composite Taam. The RPSCT shall:

(a) Evaluate and moniter the RPS Requirements and Compliance Plan per
Mandated Particisant:

(b) Validate the RPS Requirements and Compliames Plan consistent with the

minimum annual RPS requirements per Missionary and O#-Grid Areas
under Secon 13 of this Circular.

(c) Submit a Compliance Report of Mandated Participants to the DOE Secretary,
ERC and NREB, after the review and validation of the pertinent information
gathered fram the RE Registrar: and

(d) Perform such cther responsibilities and roles as directed by the DOE
Secretary through a separate svance.

RULE 6
TIMELINE OF IMPLEMENTATION AND CARRY-OVER OF RPS COMPLIANCE

Section 18. Implementation Period, The Compliance Year 1 per Missionary and
Of-Grd Areas shall ba based on the Mandated Participant's submitted RPS
Requirements and Compliance Plan, duly evaluated and validated by the DOE
through the RPSCT,

Section 19. Carry-Over of Compliance. The DOE may allow a Mandated
Participant to carry-over iis RPS compliance shortfall in any given year to [he next
Succeeding year only, In accordance with the procedure below.

The nequmst io carty-cver the RPS comoliance shall be addressed to the RPSCT
with the following supporting documents:

(a) Proof of over-contracting and/or existence of force majeure:

() If the request is based on over-contracting, the Mandated Participant's
Power Supply-Demand Outlook for the ten (10}-year planning pariod,
élatus of Power Supply Agreements (PSAs) filed before the Energy
Reguiatory Commission (ERG), and other relevent cate and information
which establish that the Mandated Participant's compliance with the
minimum annual RPS requirement will result in over-contraciing of
power supply contracts,

fii) lf the request is based om force majeure, a certification fram the RE
Registrar confirming that in the Compliance Year subject of the request,

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circumstance/s beyond the control of the Mandated Participant exist’s,
as follows:

(1) That the supply from Eligible RE Facilities are inadequate to meet
the Optimal Supply Mix:

(2) That the supply of RECs is inadequate to meet the RPS
requirement, and/or

(3) That there is unavailable capacity from the transmission and/or
reievent distribuben network to transport the Eligible RE Facilities
to the Missionary and Off-Grid Areas,

(ii) If the circumstances cited as force majaure are not among these
mantioned in the immediately preceding subsection, proof establishing
@ causal relation between circumstance, consideration, or condition,
economic or otherwise, and the Mandated Participants RPS
compliance shortfall, with a narrative ef the Mandated Participant's
efforis ta comaly with the RPS requirement:

(b) RPS Compliance Pian for the ome (1)-year carry-over period (ie. RPS
requirement for the year plus RPS compliance shortfall) duly adopted by the
Mandated Participant through Board Resolution or its equivalent, as certified
by its Corporate Secretary or its President, if unincorporated,

Upon recommendation of the RPSCT, the DOE may approva the requést and the
RPS Compliance Plan, The request to cary-over RPS compliance shall be
deemed approved by tha DOE after the lapse of sixty (60) days from submission
Of complete supporting documents: Provided, That from the date of the notles te
the Mandated Participant to rectify ts submission, the 60-day period shall be
paused and shall continue to run only on the date of submission of the rectified
documents,

RULE 7
REPORTORIAL REQUIREMENTS, PROHIBITED ACTS AND SANCTIONS

Section 20. Reportorial Requirements. The Mandated Participants shall subenit
compliance reports to the DOE ne later than 15 March of each year. In the case of
DUs, all data sets and information shall be consistent with thelr most recant ODP
submission. Pursuant io Section 35 of tha RE Act. the DOE shall impose
appropriate sanctions against any Mandated Pariicipant for nen-compliance or
vidlatian of this Circular, inctuding mon-submission of any of the following
documents par Missionary and O#F-(Grid Areas:

fa) 10-Year Power Suppiy-Demand Situation;
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(b)
(c)
(a)
()

Optimal Supply Mix Simulations:
RPS Requirements and Compliance Plan;
Power Supply Agreements and Details: and

Other data sets and information deemed necessary by the DOE to establish
and monitor € database required for the implementation of the Reviead RPS
O7-Grid Rules.

Section 21. Penalties for Non-Compliance. Consistent with Section 35 of tha RE
Act and Section 35 of its IRR and this Circular, the following administrative and
criminal sanctions may be imposed:

(a)

(b)

Administrative Liability. in accordance with Section 36 of the RE Act and
Section 36 of fs IRR, the DOE may impose a penalty ranging from a minimum
of One Hundred Thousand Pesos (P'100,000 00) to FiveHundred Thousand
Pesos (P500,000.00) or, upon its discretion, may recommend to the
appropnale government agency the revocation of the Mandated
Participant's license, franchise, or authority to operate.

Coming! Liabiify. In accordance with Section 36 of the RE Act and Section
36 of its IRR, any person who fails to comply with or violates the RPS OF-
Grid Rules shall be imposed the penalties provided under the RE Act Any
person who wilfully aids orabets the commission of such violation or failure
or who causes the commissbon of any such act by another shall be liable in
ihe same manner as the principal,

In the case of associations, parinerships, or corporations, the penalty shall
be imposed on the partners, president, chief operating officer, chief
éxecutive officer, directors or officers responsible for the violation.

The failure of such person/s to comply with the RPS O#-Grid Rules, upon
conviction thereaf, shall be meted the penalty of imprisonment of one (1) year
to five (5) years, or 4 fine ranging from a minimum of One Hundred
Thousand Pesos (PhP100,000.00) ta One Hundred Million Pesos
[PhP 100.000,000.00), or twice the amount of damages caused or costs
avoided for non-compliance. whicheveris higher, or bath upon the discretion
of the court.

This is without prejudice to the penalties provided for under existing environmental
regulations prescribed by the DENR or any other concerned government agency,

The DOE Rules of Practice and Procedure shall be applicable to cases for the
impasition of the foragoing penalties until such time that the OOE issues rules and

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regulations on administrative actions for violations of the RPS Rules.

Inno case shall a fine or penalty imposed on a Mandated Participant be charged
to any of its customers or be considered a substitute for compliance.

RULE 8
FINAL PROVISIONS

Section 22. Regulatory Support. The ERC shall, within sixty (60) calendar days
from the effectivity of this Circular, develop a regulatory framework for [he Revised
RPS Off-Grid Rules in consideration of the following, among others:

(a) Impact of the RPS Off-Grid compliance with the existing contractual
agreements such as displacement of fossil fuets with RE-based generation,

rationalization of WC-ME subsidy, potential stranded assets and stranded
contract costs;

(b) Potential impacts and corresponding attendant! costs arising from a Mandated
Participant's compliance with its minimum annual RPS requirements
consistent with the Optimal Supply Mix of the concemed Missionary and/or
Off-Grid Area: and

(c) Cost recovery mechaniems, when applicable

To ensure that the objectives of this Circular are met, the DOE and ERC shall

Conduct regular coordination meetings, to be called by either of the two (2)
agencies.

Section 23. Information, Education and Communication (IEC) Activities.
Pursuant to Section 31 of the IRR of the RE Act, the DOE shall developa
comprehensive IEC campalgn that is designed to increase the public awareness
and appreciation of the Revised RPS Off-Grid Rules and the RE industry, in
general,

Section 24. Non-Diminution of Vested Rights. No provision of this Circular shall
be construed as diminishing or impairing any night vested by virtue of existing laws,
contracts, of agreements.

Section 25. Separability Clause. !f any provision of this Circular is declared
invalid of unconstitutional, the other provisions not affected thereby shall remain
valid and subsisting.

Section 26. Repealing Clause, This Circular repeals DC No. DC2078-0840024,
Moreover, all previous issuances, rules and regulations inconsistent with this
Circular are hereby fephaled, amended oc modified accordingly.

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Section 27. Effectivity. Ths Circular shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation. A copy of this
Circular shall be filed with the University of the Philippines Law Center — Office of
the National Administrative Register.

Issued this ___s day of May 2023 at the DOE, Energy Center, Rizal Drive cor, 34"
SL, Bonifacio Global City, Taguig City,

RAPHAEL P.M. LOTILLA y

hu DCA imiutiniig ihe Riese) Ry fl Side