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Ta Republic of the Philippines
- f ) DEPARTMENT OF ENERGY
ie (Kagawaran ng Enerhiya)

v3

DEPARTMENT CIRCULAR NO. DG2023- 07-0022 ,

IMPLEMENTING GUIDELINES ON THE DECOMMISSIONING AND
MOTHBALLING OF A GENERATING PLANT OR UNIT PURSUANT TO SECTION
2.8 OF DOE DEPARTMENT CIRCULAR (DC) NO. DC2010-03-0003

‘

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

WHEREAS, Section 2.8 of the Department of Energy (DOE) DC No. DC2010-03-
0003, titled “Directing All Power Generation Companies, the Transmission Service
Provider, and All Distribution Utilities to Ensure Adequate and Reliable Electric Power
Supply in the Country’, issued on 26 February 2010 states that Generation
Companies (GenCos) shall seek prior clearance from the DOE regarding any pians
for deactivation or mothballing of existing generating unit or facilities critical to the
reliable operation of the Grid;

WHEREAS, Section 3.1 of the DOE DC No. DC2020-02-0004, titled “Providing
Guidelines on the Planned Outage Schedules of Power Plants and Transmission
Facilities and the Public Posting of the Grid Operating and Maintenance Program”,
issued on 06 February 2020 prescribes the guidelines on the submission by fhe
GenCos of the three-year planned outage schedules for their power plants to the
Nationa! Grid Corporation of the Philippines (NGCP) for the Grid Operating Program
in accordance with the Philippine Grid Code;

WHEREAS, the GenCos, as part of their responsibilities on the application for
decommissioning or mothballing of their generating plant or unit, shall abide by the
mandates of RA 6969 or the Toxic Substances and Hazardous and Nuclear Wastes
Controlled, RA 8749 or the Philippine Clean Air Act of 1999, RA 9003 or the Ecological
Solid Waste Management Act of 2000, RA 9275 or the Phillppine Clean Water Act of
2004, and Department of Environment and Natural Resources (DENR) Administrative
Order No. DAO-2019-21 or the Guidelines Governing Waste-to-Eneray Facilities for
the Integrated Management of Municipal Solid Wastes;

WHEREAS, in the accordance with its mandate to ensure the security and reliability
of the supply of electric power, the DOE deems it necessary to promulgate the
guidelines on the decommissioning and mothballing of generating plant or unit to
properly account the available capacity through evaluation and confirmation, as
applicable, of generating plant or unit intended for decommissioning or mothballing,
as the case may be;

WHEREAS, the DOE drafted a Circular for the aforementioned purposes and, to
ensure transparency and consistency with the objectives of the EPIRA, posted the
same on the DOE website on 16 November 2022 to solicit comments and

Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global City, Taguig City, Philippines 1632
Tel. No. (Trunkline) (632) 8479-2900
Website: http:/Avww.doe.gov.ph; Email: info@doe.gov.ph

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recommendations from interested parties and conducted the following public
consultations:

Apo View Hotel, Davao Ci
The Marquis Events Place BGC, Taguig Ci

NOW THEREFORE, considering the foregoing premises, the DOE hereby adopts this
Circular on the decommissioning and mothballing of generating plant or unit.

Section 1. General Principles. This Circular on the decommissioning and
mothballing of a generating plant or unit shall be in accordance with the foilowing:

4.1. The reliability and security of the power supply shall be maintained at all
times such that the power system, wholly or partly, will not be compromised
by the decommissioning or mothballing of a generating plant or unit;

1.2 The guidelines shall strengthen and improve the DOE’s planning and
monitoring of power supply profile through proper evaluation and
confirmation of the generating plant or unit that will be disconnected from the
system due to decommissioning or mothballing;

1.3 The guidelines shall be without prejudice to the compliance by the GenCos
with their obligations under appurtenant permits, contracts, agreements, and
other responsibilities prior to decommissioning or mothballing, and define
the prescription period for such;

1.4 The DOE's confirmation of decommissioning or mothballing of a generating
plant or unit shall not in any way exempt or discharge the GenCo from any
pending obligations, liabiltties, and/or penalties that may be imposed by
other entities; and

1.5 The guidelines shall support the climate change goal through proper
disposal and dismantling of unserviceable generating plant or unit.

Section 2. Scope. This Circular shall apply to all generating plant or unit intending to
conduct decommissioning or mothballing, including embedded generating facilities,
regardless of their technology and mode of connection.

This Circular shall not apply to Self-Generation Facilities, Qualified End-users, and
Distributed Energy Resources. The decommissioning and mothbailing of a nuclear
power plant is excluded from the scope of this Circular and shall be covered by a
separate issuance.

Section 3. Definition of Terms.

3.1 “Connection Assets” refer to assets that are put in place primarily to
connect a customer/s to the Grid or Distribution System and used for
purposes of transmission or distribution connection services for the
conveyance of electricity which if taken out of the system, will only affect the

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MOTHBALLING OF A GENERATING PLANT OR UNIT PURSUANT TO SECTION 28 OF DOE
DEPARTMENT CIRCULAR (DC) NO. DC2010-03-0003
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customer connected to it and will have minimal effect on the Grid, or other
connected customers. These also refer to any component of a transmission
system or distribution system which, in the reasonable opinion of the Market
Operator (MO), is associated with a connection point, including metering
installations.

3.2 “Decommissioning” refers to the permanent retirement of a generating
plant or unit from operation upon reaching its maximum economic life and
the generation of electricity is no longer technically viable, subject to the
confirmation of the DOE under this Circular.

3.3 “Distributed Energy Resources” refer to power sources connected to the
distribution system or electrical system of the End-users, which could be
aggregated to meet a demand.

3.4 “Embedded Generators/Embedded Generating Facilities” refer to
generating unit that are indirectly connected to the Grid through the
distribution system that supplies power to its host distribution utilities (DU)
or to the Grid.

3.5 “Generating Plant’ refers to one or more generating unit, where electric
energy is produced from some other form of energy by means of a suitable
apparatus.

3.6 “Generating Unit” refers to a unit conversion apparatus including
auxiliaries and associated equipment, functioning as a single unit, which is
used to produce electric energy from some other form of energy.

3.7 “Mothballing” refers to the temporary deactivation or removal from service
of a generating plant or unit, within the specified period provided by the
applicant and to be restarted and used to supply power at a future date. For
purposes of this Circular, the period within the applicable outage allowance
pursuant to the issuances of the Energy Regulatory Commission (ERC)
shall not be considered as mothballing activity.

3.8 “Network Service Provider (NSP)” refers to a person who engages in the

activity of owning, controlling, or operating a transmission or distribution
system.

3.9 “Qualified End-users” refer to entities that generate electric power from an
eligible on-site renewable energy (RE) generating facility, such as, but not
limited to, house or office building with photovoltaic system that can be
connected to the Grid, for the purpose of entering into a Net-Metering
Agreement.

3.10 “Self-Generating Facilities” refer to power Generation Facilities owned
and constructed by an End-user for its own consumption or internal use

excluding Generation Facilities for use by households, clinics, hospitals and
other medica! facilities.

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MOTHBALLING OF A GENERATING PLANT OR UNIT PURSUANT TO SECTION 2.8 OF DOE
DEPARTMENT CIRCULAR (DC) NO. DC2010-03-0003
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3.11 “Small Grid System Operator (SGSO)” refers to the party responsible for

generation dispatch and real-time control of the power system in the Off-grid
Areas through the management of operating reserves, reactive power
support, black start, and other operating requirements to ensure safety,
power quality, stability, reliability, and security of the Small Grid.

All other terms not defined in this Circular shall follow their definitions under existing
laws, rules, and regulations.

Section 4. Procedures for the Decommissioning and Mothballing

The applicant shall comply with the standard procedures and documentary
requirements as provided in this Circular.

A. Decommissioning

4.1

4.2

The GenCos intending to decommission their generating plant or unit which
have reached their maximum economic life and are no longer viable to
operate shall submit a Letter of intent (LO!) to the DOE.

The applicant shail notify the DOE in writing of its intent to decommission its
generating plant or unit at least 365 calendar days prior to the target
decommissioning date, copy furnished the ERC, DENR, Board of
Investments (BOI), National Transmission Corporation (TransCo) and its
concessionaire or successor-in-interest as the System Operator (SO) and
Transmission Network Provider (TNP), or local DUs (for embedded
generating facilities) as NSP, SGSO for Off-grid Areas, the Wholesale
Electricity Soot Market (WESM) Governance Arm, MO, and Off-taker, of the
LOI and ensure the receipt of the same by the mentioned entities.

The applicant shail indicate in the LO! the reasons for the decommissioning
of the generating plant or unit.

The LOI shall be supported by the following documents:

4.2.1 A fact sheet on the generating plant or unit, attached as Annex “A’,
which shall contain the following information:

4.2.1.1 Company Name;
4.2.1.2 Name of generating plant/unit;

4.2.1.3 Nameplate and dependable capacity of the generating plant
or unit to be decommissioned, whichever is applicable;

4.2.1.4 Location of the generating plant or unit to be
decommissioned;

4.2.1.5 Initial commercial operation date of the generating plant or
unit:

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4.2.1.6 Off-taker (if any);
4.2.1.7 Target date of decommissioning;

4.2.1.8 Reasons and/or justification for decommissioning of
generating plant or unit;

4.2.1.9 Current status of generating plant or unit subject to
decommissioning (operational or non-operational); and

4.2.1.10 Date of non-operation of generating plant or unit subject for
decommissioning, if applicable.

4.2.2 Copy of the Latest Certificate of Compliance (COC) issued by the
ERC;

4.2.3. Notarized Board Resolution or any equivalent document supporting
the request for decommissioning; and

4.2.4 Proof of receipt of the applicant's LO! from the various agencies such
as the ERC, DENR, BOI, TransCo and its concessionaire or
successor-in-interest as the SO and TNP, or local DUs (for embedded
generating facilities) as NSP, SGSO for Off-grid Areas, WESM
Governance Arm, MO, and Off-taker (if any).

4.3 Within five (5) working days from receipt of the LOI and supporting
documents, the DOE shall check the completeness of the submitted
requirements by the applicant and shall notify the applicant of the status of
its application to decommission a genérating plant or unit.

4.4 The DOE shall evaluate the application for the decommissioning of the
generating plant or unit being applied for, in consideration of the validity
and/or appropriateness of the reason for the decommissioning, and may
seek the assistance of the ERC, TransCo and its concessionaire or
successor-in-interest, on the evaluation of the impact on the power system,
without prejudice to other actions or Initiatives that may be undertaken.

4.5 Within sixty (60) calendar days, upon receipt and evaluation of the complete
documentary requirements as provided in Section 4.2 of this Circular, the
DOE shall issue the Letter of Confirmation (LOC) to the applicant. The
issuance of the LOC shall not preclude the ERC and other government
agencies or instrumentalities from exercising their authority and mandate
over the GenCo, It shall also not absolve the GenCo from any claims of any
entity.

4.6 For any change in decommissioning timeline against the date indicated in
the LOC, the applicant shall notify the DOE, copy furnished the ERC, DENR,
BOI, TransCo and its concessionaire or successor-in-interest as the SO and
TNP, or local DUs (for embedded generating facilities) as NSP, SGSO for

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MOTHBALLING OF A GENERATING PLANT OR UNIT PURSUANT TO SECTION 2.8 OF DOE
DEPARTMENT CIRCULAR (DC) NO. DG2010-03-0003
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Off-grid Areas, WESM Governance Am, MO, and Off-taker, of such change,
no later than seven (7) calendar days before the new decommissioning date.

The notification shall include the following information:
4. New schedule of decommissioning;
2. Reason for the change in the timeline; and
3. Notarized Board Resolution or any equivalent proof of such decision.

The DOE shall issue a revised LOC after the evaluation pursuant to Section
4.4 of this Circular.

B. Mothbalting

4.7

4.8

The GenCos intending to mothball its generating plant or unit shall submit
an LOI to the DOE, copy furnished the ERC, DENR, BO!, TransCo and its
concessionaire or successor-in-interest as the SO and TNP, or local DUs
(for embedded generating facilities) as NSP, SGSO for Off-grid Areas,
WESM Governance Arm, MO, and Off-taker, and ensure receipt of the same
by the mentioned entities. The LOI shall be submitted to the DOE at least
180 calendar days prior to the target mothballing date.

The LOI shall provide the reasons for mothballing the generating plant or
unit.

The LO! shall be supported by the following documents:

4.8.1 A fact sheet on the generating plant or unit, attached as Annex “B’,
which shall contain the following information:

4.8.1.1 Company Name;
4.8.1.2 Name of generating planiv/unit;

4.8.1.3 Nameplate and dependable capacity of the generating plant
or unit to be mothbailled, whichever is applicable;

4.8.1.4 Location of the generating plant or unit to be mothballed;

4.8.1.5 Initial commercial operation date of the generating plant or
unit:

4.8.1.6 Off-taker (if any);
4.8.1.7 Target date of mothballing;

4.8.1.8 Reasons and/or justification for mothballing of generating
plant or unit;

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4.8.1.9 Current Status of generating plant or unit subject to
mothballing (operational or non-operatlonal);

4,8.1.10 Date of non-operaiion of generating plant or unit subject for
mothballing, if applicable; and

4.8.1.11 Target date of return to service.

4.8.2 Copy of the latest COC issued by the ERC;

4.8.3 Notarized Board Resolution or any equivalent document supporting
the request for mothballing;

4.8.4 Proof of receipt of the applicant's LOI from the various agencies such
as the ERC, DENR, BO!, TransCo and its concessionaire or
successor-in-interest as the SO and TNP, or local DUs (for embedded
generating facilities) as NSP, SGSO for Off-grid Areas, WESM
Governance Arm, MO, and Offttaker; and

4.8.5 Mothballing Plan which shall include the major milestones of
mothballing activities.

4.9 Within five (5) working days from receipt of the LO! and supporting
documents, the DOE shall check the completeness of the submitted
requirements by the applicant and shall notify the applicant of the status of
jts application to mothball a generating plant or unit.

4.10 The DOE shail evaluate the application for mothballing of the generating
plant or unit being applied for, in consideration of the validity and/or
appropriateness of the reason for mothbailing, and may seek the assistance
of the ERC, TransCo and its concessionaire or Successor-in-interest, on the
evaluation of the impact on the power system, without prejudice to other
actions or initiatives that may be undertaken.

4.1

—

Within sixty (60) calendar days from receipt and evaluation of the complete
documentary requirements as provided in Section 4.8 of this Circular, the
DOE shall issue the LOC to the applicant. The issuance of the LOC shall not
prectude the ERC and other government agencies or instrumentalities from
‘exercising their authority and mandate over the GenCo. It shall also nat
absolve the GenCo from any claims of any entity.

4.12 Upon the effective date of the mothballing period, the following COC terms
and WESM deregisiration shall apply:

4.12.1 Automatic termination of the COC and outright deregistration from
the WESM for Total Generating Plant Mothballing; or

4.12.2 For Partial Generating Unit Mothballing, the GenCo shal! apply for
the amendment of the COC with the ERC and the corresponding
changes to its WESM registration with the MO.

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MOTHBALLING OF A GENERATING PLANT OR UNIT PURSUANT TO SECTION 2.8 OF DOE
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4.13 In case of change in the mothballing date indicated in the LOC, the applicant
shall notify the DOE, copy furnished the ERC, DENR, BOI, TransCo and its
concessionaire or successor-in-interest as the SO and TNP, or local DUs
(for embedded generating facilities) as NSP, SGSO for Off-grid Areas,
\WESM Governance Arm, MO, and Off-taker, of such change, no later than
seven (7) calendar days before the new mothballing date.

Any deviation from the plan or extension of the mothballing period that are
not applied to the DOE shall be credited against applicable unplanned
outages.
The notification shall include the following information:

1. New schedule of mothballing;

2. Reason for the change in the timeline; and

3. Notarized Board Resolution or any equivalent proof of such decision.

The DOE shall issue a revised LOC after evaluation pursuant to Section 4.10
of this Circular.

4.14 Incase of a buy-out or acquisition within the mothballing period, the previous
and the new owners shall comply with the applicable ERC rules on the
change in ownership.

Section 5. Responsibilities of the GenCos. !|n addition to the above processes, the
owner shall also be responsible for the following:

5.1. The Genco shall ensure the delivery of service prior to the effective date of
the decommissioning or mothballing of its generating plant or unit.

5.2 Prepare and submit a quarterly progress report to the DOE based on the
Mothballing Plan pursuant to Section 4.8.5 of this Circular.

5.3 Submit a copy of the LOC to the MO, SGSO, and ERC not later than seven
(7) calendar days from receipt of the LOC.

Section 6. Responsibilities of the DOE. Pursuant to its mandate under the EPIRA
and this Circular, the DOE shall ensure the compliance of ali GenCos and monitor the
status of the mothballing activities to ensure security of the power supply.

Section 7. Responsibilities of the MO. The MO shall:

7.1 Prepare and submit to the Rules Change Committee (RCC) the proposed
changes fo the WESM Rules and relevant Market Manuals, as may be
necessary, for the effective implementation of the policies provided herein.

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MOTHBALLING OF A GENERATING PLANT OR UNIT PURSUANT TO SECTION 2.8 OF DOE
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7.2 Ensure the timely processing of applications for deregistration and issuance
of necessary documenis in relation to decommissioning or mothballing of a
generating plant or unit.

7.3 Provide an update to the DOE, ERC, SO, and WESM Governance Arm on
the status of registration of a generating plant or unit intending to
decommission or mothball.

7.4 Conduct and submit to the DOE, upon instruction, studies and simulations
showing the effect of decommissioning and/or mothballing on spot market
prices.

Section 8. Responsibility of the WESM Governance Arm. The WESM Governance
Arm shall:

8.1 Evaluate and take the appropriate action on the proposed changes in the
WESM Rules and relevant Market Manuals in accordance with the
enforcement and compliance with the policy provided herein as necessary.

8.2 Ensure adherence of the GenCo fo the WESM Rules and Manuals until its
application for deregistration is decided.

Section 9. Responsibility of the SC and SGSO. The SO and SGSO shall be
responsible for the following:

8.1 Formulate and/or amend, as necessary, the connection and disconnection
procedures in consideration of this Circular.

9.2 Facilitate and assist the generating plant or unit owner relative to the
decommissioning or mothballing and other activities relevant thereto.

9.3 Facilitate the immediate connection of generating facilities returning to
service after mothballing of the generating plant or unit.

Section 10. Responsibility of the National Power Corporation (NPC). Consistent
with this Circular, NPC shall issue a separate guideline to facilitate the
decommissioning and mothballing of its generating plant or unit, within sixty (60)
calendar days from the effectivity of this Circular.

Section 11. Regulatory Support. The ERC shall be responsible for the following:

11.1 Review, update, and harmonize, as necessary, all resolutions and
regulations relevant to the implementation of the policies stated under this
Circular and promulgate guidelines on the same, including the appropriate
action on COC as applicable to the decommissioning and mothbailing.

11.2 Implement ihe enforcement and penalty mechanisms in cases of non-
compliance with this Circular by any electric power industry participant
identified herein after due process.

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41.3 Monitor and take measures in accordance with its function to penalize any
abuse of market power and anti-competitive behavior by any eleciric power
industry participant.

Section 12. Repealing Clause. All rules and regulations, or any portion thereof, that
are inconsistent with this Circular are hereby repealed or modified accordingly.

Section 13. Separability Clause. If for any reason, any section or provision of this
Circular is declared unconstitutional or invalid, the other parts or provisions hereof that
are not affected shall continue to be in full force and effect.

Section 14. Effectivity. This DC shall take effect fifteen (15) calendar days after its
publication in fwo (2) newspapers of general circulation. A copy of this Circular shall
be filed with the University of the Philippines Law Center-Office of the Nationa!
Administrative Register.

issued this _—s day of July 2023 at the DOE, Energy Center, Rizal Drive cor. 34" St,
Bonifacio Global City, Taguig City.

RAPHAEL P.M. LOTILLA
Secrétary

SUL 17 2023

DC2023-__- IMPLEMENTING GUIDELINES ON THE DEGOMMISSIONING AND
MOTHBALLING OF A GENERATING PLANT OR UNIT PURSUANT TO SECTION 2.8 OF DOE
DEPARTMENT CIRCULAR (DC) NO. DG2010-03-0003