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Republic of the Philippines
ae DEPARTMENT OF ENERGY

(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. _0CV01S-|0- 001% ye

PROMULGATING THE ENHANCED POLICY TO RATIONALIZE THE PROVISION
OF BENEFITS TO COMMUNITIES HOSTING ENERGY GENERATION AND
RESOURCE DEVELOPMENT FACILITIES, INCLUDING GENERATING
FACILITIES WITH INTEGRATED ENERGY STORAGE SYSTEM FACILITIES,
AMENDING RULE 29 (A) OF THE IMPLEMENTING RULES AND REGULATIONS
OF REPUBLIC ACT NO. 9136

WHEREAS, Republic Act No. 7638, otherwise known as the “Department of Energy
(DOE) Act of 1992”, declares it a policy of the State to: (i) ensure a continuous,
adequate, and economic supply of energy with the end in view of ultimately achieving
self-reliance in the country’s energy requirements through the integrated and intensive
exploration, production, management, and development of the country’s indigenous
energy resources, and through the judicious conservation, renewal and efficient
utilization of energy to keep pace with the country’s growth and economic development
and taking into consideration the active participation of the private sector in the various
areas of energy resource development; and (ii) rationalize, integrate, and coordinate
the various programs of the Government towards self-sufficiency and enhanced
productivity in power and energy without sacrificing ecological concerns;

WHEREAS, Republic Act No. 9136, otherwise known as the “Electric Power Industry
Reform Act of 2001” or EPIRA, states that it is the policy of the State to: (i) ensure the
quality, reliability, security, and affordability of the supply of electric power; (ii) ensure
transparent and reasonable prices of electricity in a regime of free and fair competition
and full public accountability to achieve greater operational and economic efficiency
and enhance the competitiveness of Philippine products in the global market; (iii)
protect the public interest as it is affected by the rates and services of electric utilities
and other providers of electric power; and (iv) assure socially and environmentally
compatible energy sources and infrastructure;

WHEREAS, the EPIRA mandates the DOE, among others, to: (i) supervise the
restructuring of the electric power industry; (ii) devise ways and means of giving direct
benefit to the province, city, or municipality, especially the community and people
affected, and equitable preferential benefit to the region that hosts the energy resource
and/or the energy generating facility: Provided, however, That the other provinces,
cities, municipalities, or regions shall not be deprived of their energy requirements; (iii)
formulate rules and regulations as may be necessary to implement the objectives of
the EPIRA; and, (iv) exercise such other powers as may be necessary or incidental to
attain the objectives of the EPIRA;

WHEREAS, Section 66 of the EPIRA states that the obligations of generation
companies and energy resource developers to communities hosting energy
generating facilities and/or energy resource development as defined under Chapter II,
Sections 289 to 294 of the Local Government Code and Section 5(i) of Republic Act
No. 7638 and their implementing rules and regulations and applicable orders and
circulars consistent with this Act shall continue: Provided, That the obligations
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mandated under Chapter Il, Section 291 of Republic Act No. 7160, shall apply to
privately-owned corporations or entities utilizing the national wealth of the locality;

WHEREAS, the DOE deems it necessary to provide a new regime for the benefits that
will have a direct and significant impact on all local government units and communities
and peoples hosting a facility for power generation, and/or energy resource
development, through a transparent, holistic, and collaborative framework for all
concerned energy stakeholders;

WHEREAS, on 20 April 2023, the DOE issued Department Circular (DC) No. DC2023-
04-0008, titled “Prescribing the Policy for Energy Storage System (ESS) in the Electric
Power Industry.” This directive acknowledged the significance of ESS in ensuring the
quality, reliability, security, sustainability, and affordability of electric power. It also
established general policies and delineated the responsibilities of all DOE-attached
agencies, industry participants and all other stakeholders concerning the
development, operation and integration of ESS into the Philippine Grid;

WHEREAS, on 19 August 2025 and 12 September 2025, the DOE conducted public
consultations, including online viewing through Microsoft Teams and Facebook Live,
on the proposed amendments to enhance the provision of benefits to the host
communities;

NOW, THEREFORE, in consideration of the foregoing, the DOE hereby issues this
enhanced policy for the benefits of communities hosting a power generation and/or
energy resource development facility:

RULE |
GENERAL PROVISIONS

Section 1. Title.

This Circular shall be known and referred to as the “Enhanced Energy Regulations for
the Benefits to Host Communities’.

Section 2. Purpose.

This Circular sets the general rules and guidelines for the appropriate, transparent,
efficient, and rationalized allocation, management, utilization and distribution of
Benefits to Local Government Units (LGUs), Regions and communities, i.e.,
Indigenous Cultural Communities/ Indigenous Peoples (ICCs/IPs) (collectively, “Host
Beneficiaries”), including the implementation, administration, and monitoring of
projects and programs funded by these Benefits.

Section 3. General Principles.

The following principles shall govern the interpretation and implementation of the
benefits to Host Beneficiaries:
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aod.

3.2.

3.3.

3.4.

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The process of providing Benefits to Host Beneficiaries shall be simple, direct,
transparent, and shall promote full accountability among all concerned
beneficiaries, generation companies, and energy resource developers;

The provision thereof shall contribute to the acceleration of total electrification
in the country, lowering of electricity rates, and upliftment of the social and
economic status of the Host Beneficiaries in accordance with the provisions of
this Circular;

The availment of Benefits by the Host Beneficiaries shall be consistent with and
contribute to the implementation of local plans and programs and the
development needs of the Host Beneficiaries; and

Inclusion of generation facilities, offshore energy facilities, and new
technologies, among others, in the provision of Benefits to Host Beneficiaries
shall be in accordance with the provisions of this Circular and as may be
prescribed in other issuances of the DOE.

Section 4. Definition of Terms.

4.1.

4.2.

4.3.

4.4.

4.5.

4.6.

47.

“Barangay” refers to the smallest LGU, in accordance with the definition in the
Local Government Code of 1991;

“Benefits” refer to the fiscal and non-fiscal assistance or services that can be
extended to the Host LGUs, Regions and ICCs/IPs;

“City” shall be defined in accordance with the Local Government Code of 1991;

“Cogeneration Facility’ refers to a facility which produces electricity or
mechanical energy and forms of useful thermal energy, such as heat or steam,
for industrial, commercial, heating, or cooling purposes through the sequential
use of energy and is accredited as a cogeneration facility by the DOE;

“Community and People Affected” refers to bona fide residents of a Host LGU
who were affected and/or relocated as a result of the development,
construction, and/or operation of an energy generating facility or the
development of an energy resource/facility project;

“Department of Environment and Natural Resources” or “DENR’” refers to the
department as reorganized by Executive Order No. 192, series of 1987, as
amended;

“Distribution System” refers to the system of wires and associated facilities
belonging to a franchised Distribution Utility extending between the delivery
points on the transmission or sub transmission System or generator connection
and the point of connection to the premises of the end-user;
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4.8.

4.9.

4.10.

4.11.

4.12.

4.13.

4.14.

4.15.

4.16.

4.17.

4.18.

4.19.

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“Distribution Utility" or "DU" refers to any electric cooperative, private
corporation, local government-owned utility, or existing LGU which has an
exclusive franchise to operate a distribution system in accordance with the
EPIRA;

“Department of Energy” or “DOE" refers to the department created pursuant to
Republic Act No. 7638, as amended;

“Electric Cooperative” or “EC” refers to a DU organized pursuant to Presidential
Decree No. 269, as amended, or as otherwise provided in the EPIRA:

“Electricity Sales” refers to the proceeds from the actual generation of the
energy facility and/or dispatch of energy when prompted net of station use and
other allowed deductions;

“Electrification” refers to the provision of dependable and adequate electricity
infrastructure and services;

“Energy Regulatory Commission” or “ERC" refers to the regulatory agency
created under the EPIRA;

“Energy Resource” refers to either integrated conventional or renewable
sources of energy used for the generation and/or storage of power and other
forms of energy;

“Energy Resource Developer’ or “ERD” refers to any person or entity, natural
or juridical, engaged or intends to engage in the exploration, exploitation,
extraction, and utilization of energy resources to generate and/or store power
and other forms of energy;

“Energy Resource Development Facilities” refers to the facilities used for the
exploration, exploitation, extraction, and utilization of energy resources to
generate and/or store power and other forms of energy;

“Financial Benefits” refers to the three centavos per kilowatt-hour (P0.03/kWh)
of Electricity Sales set aside by the GenCo, and/or ERD, in favor of the Host
LGUs, Region and ICCs/IPs;

“Generation Company” or “GenCo” refers to any person or entity, natural or
juridical, authorized by the ERC to operate facilities used in the generation of
electricity;

“Generation Facility” refers to any power plant producing electricity and other
forms of energy, such as steam or mechanical energy, authorized by the ERC.
Generation Facilities shall not include transmission lines and substations;
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4.20.

4.21.

4.22.

4.23.

4.24.

4.25.

4.26.

4.27.

4.28.

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“Host Beneficiaries" refers to the LGU, Regions, and ICCs/IPs entitled to the
Benefits as determined under Section 7; For this purpose, all legitimate and
bona fide ICCs/IPs, duly and formally recognized and accredited by the
National Commission on Indigenous Peoples (NCIP), through a resolution by
its Commissioners sitting en banc and/or by the concerned NCIP Regional
Office, that host the generating facilities, energy resources, and energy storage
system facilities shall be entitled to the benefits under this Circular.

“Host Local Government Unit” or “Host LGU” refers to the local government
unit, i.e., barangay, municipality, city, or Highly Urbanized City, or province,
where the energy resource and/or energy generation facility is located as
determined under Section 7, Rule || hereof;

“Host Region” refers to the region where the energy resource and/or energy
generating facility is located under Section 7, Rule || hereof:

“Indigenous Cultural Communities/Indigenous People” or “ICCs/IPs’ refers to a
group of people or homogenous societies identified by self-ascription and
ascription by others, who have continuously lived as organized community on
communally bounded and defined territory, and who have, under claims of
territory since time immemorial occupied, possessed and utilized such
territories, sharing common language, customs, traditions and other distinctive
Cultural traits, or who have through resistance to political, social and cultural
inroads of colonization, non-indigenous religions and cultures, became
historically differentiated from the majority of Filipinos. |CCs/IPs shall likewise
include people who are regarded as indigenous on the account of their descent
from the population which inhabited the country, at the time of conquest or
colonization, or at the time of inroads of non-indigenous religions and cultures
or the establishment of present state boundaries, who retain some or all of their
own social, economic, cultural and political institutions, but who may have been
displaced from their traditional domains or who may have resettled outside their
ancestral domains;

“Municipality” shall be defined in accordance with the Local Government Code
of 1991;

“Municipal Waters” refers to waters within 15 kilometers of the coastline of a
municipality which are not included within the protected areas as defined under
Republic Act No. 7586;

“National Commission on Indigenous People” or “NCIP” refers to the
government entity created pursuant to Republic Act No. 8371;

“National Electrification Administration” or “NEA" refers to the government entity
created pursuant to Presidential Decree No. 269, as amended;

“National Power Corporation” or “NPC” refers to the government entity created
pursuant to Republic Act No. 6935, as amended;
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4.29. "Offshore Energy Generating Facilities" refers to facilities for the exploration,
development, and/or utilization of energy resources in offshore areas, which
include estuaries and other bodies of water;

4.30. “Province” shall be as defined in accordance with the Local Government Code
of 1991:

4.31. “Reservoir”, for the purpose of this Circular, refers only to any of the following:

4.31.1. “Geothermal reservoir” refers to a subsurface geological environment
where geothermal fluids accumulate, circulate, and/or are reinjected to
produce geothermal steam for power generation;

4.31.2. “Hydropower reservoir’ refers to either a natural or an artificial lake
created by the impounding of stream flow, run-off, and subsurface
water, including but not limited to intakes, diversion weirs, and trans
basin underground tunnel which supplies water to a dam. It also refers
to where river or rivers supply or supplies water to a dam reservoir
through a trans basin underground tunnel to generate power;

4.32. “Sanggunian or Council Resolution” refers to an official act or expression of
sentiment, opinion, or policy issued by a Sanggunian Barangay, Bayan,
Sanggunian Panlungsod, Sanggunian Panlalawigan, ICCs/IPs or Regional
Development Council (RDC), which shall be consistent with the provisions of
Section 12 of this Circular; and

4.33. “Station Use” refers to the difference between the electric energy generated
and the electric energy sold by the Generation Facility.

RULE Il
SCOPE AND COVERAGE

Section 5. Scope and Coverage.
This Circular shall apply to the following entities:

5.1. _GenCos owning and/or operating generation facilities, including pump storage
hydro, and generation facilities with integrated ESS as defined under DC No.
DC2023-04-0008, unless otherwise amended or superseded;

5.2. ERDs;

5.3. DUs; and

5.4. Host LGUs, ICCs/IPs, Regions and Communities and People Affected.

Section 6. Obligations to Provide Financial Benefits.

All entities owning and/or operating Generation Facilities and/or Energy Resource
Development Facilities, including pump storage hydro, and generation facilities with
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integrated ESS as defined under DC No. DC2023-04-0008, except those operated by
Microgrid Systems Providers and NPC - Small Power Utilities Group in areas it serves
as both generator and distribution, shall provide Benefits to all Host Beneficiaries as
defined herein. For clarity, all entities shall refer to:

6.1. Power Sector Asset and Liabilities Management Corporation with respect to
generation facilities operated by NPC or other Independent Power Producers
(IPPs) under Build Operate and Transfer arrangement and other variants with
IPPs;

6.2. GenCos authorized by the ERC to operate Generation Facilities;
6.3. _DU-owned embedded generators;
6.4. Integrated energy resource development and/or Generating Facilities;

6.5. Generating Facilities operating in Economic Zones; and

6.6. Other emerging technologies for power generation, as may be declared in
future DOE policy issuances.

Section 7. Host Beneficiaries.

Benefits shall be provided to the Host Beneficiaries, comprising the Host LGUs,
Regions, the Communities and People Affected, and the Host ICCs/IPs, as determined
by the NCIP. For purposes of benefit allocation, the Host LGUs, Regions, and ICCs/IPs
shall be identified as follows:

7.1. With respect to Generation Facilities:

7.1.1. The Host LGU, Region and ICCs/IPs are those where the Generation
Facility is physically located. In the case of power barges, the Host
LGU, Region and ICCs/IPs are those where the power barge is
moored.

7.1.2. _ The determination of the franchised DU shall be based on the franchise
area where the Generation Facility or energy resource development
facility is located.

7.2. With respect to Energy Resources:

7.2.1. Integrated Geothermal. The Host LGU, Region, ICCs/IPs, and
franchised DU are those where the producing geothermal reservoir is
located, as delineated by geological, geochemical, geophysical, and
exploration surveys. A producing geothermal reservoir refers to the
subsurface geological environment where the geothermal fluids
accumulate and circulate, inclusive of the production and
reinjection/recharge zone.
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7.3.

22.

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Integrated Hydropower. The Host LGU, Region, ICCs/IPs, and
franchised DUs are those where the hydropower reservoir is located,
as delineated by detailed topographic, geological, and geotechnical
investigations, reservoir and dam height optimization studies, and as
delineated by detailed ground surveys.

In case of boundary dispute(s) which affects the determination of the Host LGU,
the latter shall submit to the GenCo or ERD pertinent documents and
information from relevant agencies or from decisions of courts of competent
jurisdiction to support the determination of the bonafide beneficiary and the
corresponding allocation of Financial Benefits pursuant to this Circular.

With respect to Offshore Energy Generating Facilities

The Host LGUs and Region are those where the Offshore Energy Generating Facility
is located as follows:

7.4.

eB

7.3.2.

Within Municipal Waters

The Host LGU and Region are those where the Generation Facilities
are located, as delineated by detailed topographic, geological, and
geotechnical investigations, and as delineated by the production area.

Outside Municipal Waters

The Host LGU and Region shall solely be the province nearest to the
Generation Facility. In the event that the Generation Facilities are
nearest to two (2) or more provinces, the benefits shall be equally
divided among the respective provinces and Region.

For all other emerging energy facilities, the Host LGU, Region and ICCs/IPs
shall be those where the Generation Facility is physically located, pursuant to
applicable DOE issuances.

RULE Ill
FINANCIAL BENEFITS

Section 8. Allocation of Financial Benefits.

The GenCo, and/or ERD shall set aside three centavos per kilowatt-hour (PhP
0.03/kWh) of the Electricity Sales as Financial Benefits to the franchised DU, Host
LGU, Region and ICCs/IPs, and Communities and People Affected.
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8.1.

8.2.

8.3.

8.4.

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The Financial Benefits shall be allocated in the following manner:

8.1.1.

Electrification Fund (EF)

Half of one centavo per kilowatt-hour (PhP 0.005/kWh) of Electricity
Sales.

Development and Livelihood Fund (DLF) and Reforestation Watershed
Management, Health, and/or Environment Enhancement Fund
(RWMHEEF)

Two and a half centavos per kilowatt-hour (PhP 0.025/kWh) of
Electricity Sales shall be equally divided between DLF and RWMHEEF,
resulting in PhP 0.0125/kWh for each fund.

A periodic review and adjustment of the rate, based on prevailing rates and
other relevant economic indicators, as determined by the DOE, shall be
conducted in consultation with appropriate government agencies. This
adjustment mechanism shall be institutionalized to safeguard host communities
from the long-term effects of the possible devaluation of the Financial Benefits.

The EF shall be allocated solely to the franchised DU.

The DLF and RWMHEEF shall be distributed based on the facility's location
following the radiating order of benefits:

8.4.1.

8.4.2.

8.4.3.

Allocation to Host LGUs and |IPs/ICCs

8.4.1.1. Community and People Affected — 5%;
8.4.1.2. Host Barangay/s — 20%;
8.4.1.3. Host Municipality/ies or City/ies — 35%;
8.4.1.4. Host Province/s — 30%;
8.4.1.5. Host Region — 5%;
8.4.1.6. Host ICCs/IPs — 5%.

In the event that the GenCo and/or ERD covers more than one host
LGUs and/or franchised DUs, the Financial Benefits shall be equally
allocated.

In cases where there is a conflict or dispute regarding the political
boundaries of the Host LGUs where the Generating Facility and/or
Energy Resource is located, the settlement of said dispute shall be
based on the following:

8.4.3.1. Population, based on the latest census - seventy percent
(70%);
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8.5.
8.5.1.
8.5.2.
Section 9.
9.1.

8.4.4.

8.4.5.

8.4.6.

8.4.7.

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8.4.3.2. Land area occupied by the said Genco and/or ERD which shall
be based on the delineated land surveys duly approved by the
DENR-Land Management Bureau- thirty percent (30%).

Pending resolution of boundary disputes between LGUs of the same
rank, Section 8.4.2 shall apply until decided by the competent court.
In the absence of the Community and People Affected, funds allocated
for the same shall form part of the allocation for the Host Barangay.

In the absence of the ICCs/IPs, funds allocated for the same shall form
part of the allocation for the Host Region.

Any additional Host LGUs and/or ICCs/IPs may be included in the list
of entitled Host Beneficiaries, upon joint endorsement by the
concerned GenCos and/or ERDs and the concerned LGUs and/or
ICCs/IPs, and upon approval of the DOE. The Financial Benefits shall
be provided prospectively, subject to compliance with this Circular.

The DLF, and RWMHEEF Provincial Share for Highly Urbanized Cities (HUCs)
shall be allocated in the following manner:

HUCs geographically located within a Province:

Community and People Affected —-5%
Host Barangay/s — 20%
Host Municipality/ies or City/ies — 35%
Host Province/s — 30%
Host Region -— 5%
Host ICCs/IPs -5%

HUCs located in the National Capital Region and in Zamboanga
Peninsula:

Host Barangay/s — 25%

Host Highly Urbanized City/ies — 35%

Host Region — 40%
RULE IV

ELIGIBLE PROJECTS

Eligible Projects for EF.

Electrification Projects to be implemented by the franchised DU/s, consistent
with the Local Total Electrification Roadmap (LTER) and/or Distribution
Development Plan (DDP) approved by the DOE and the NEA for the case of

ECs:
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9.2.

9.1.1.

9.1.4.

Page 11 of 21

Provision of electric service connections to marginalized unenergized
households through house wiring subsidy and kilowatt-hour meter
requirement or individual stand-alone home solar systems;

Extension of distribution line facilities to | unenergized
areas/households;

Alternative electrification solutions for unenergized areas where the
extension of distribution lines is not feasible, as assessed by the
franchised DU; and

Improvement, rehabilitation, or restoration of the distribution system,
including the incorporation of emerging technologies.

Should the franchised DU of the Host Beneficiaries have already achieved
100% electrification for a specific year, the EF shall be utilized to subsidize the
electricity rate of all customers, or a certain customer type, within its franchise

area.

Section 10. Eligible Projects for DLF and RWMHEEF.

For DLF and RWMHEEF, the following shall be qualified as projects for funding:

10.1.

10.2.

10.3.

Subsidy to reduce electricity rates for all customers, or a certain customer type,
within the jurisdiction of Host LGUs served by the franchised DU; and

Livelihood and Community Development, which shall include:

10:2-4,

10.2.2.
10.2.3.

10.2.4.
10.2.5.
10.2.6.
10.2.7.
10.2.8.
10.2.9.

Basic, Secondary and Tertiary education scholarships for courses or
vocations vital to the host community;

Training and upskilling;

Acquisition of books, educational materials, teaching equipment, and
other related to uplifting the education status in the community;
Improvement of feeder roads;

Farm-to-market arrangements or other mechanisms;

Construction of satellite market;

Construction/repair of barangay markets;

Deep wells;

Irrigation system;

10.2.10. Purchase of farming/fishery equipment and machineries;
10.2.11.Agricultural support services such as seed distribution, planting

materials and farm operation support:

10.2.12. Support, maintenance, and protection of livestock;
10.2.13. Promotion of culture and tourism; and
10.2.14. Other projects, programs, and assets connected with the above items.

10.3.1.

Watershed and Environmental Enhancement which shall include:

Flood control or mitigation infrastructure or measures;
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10.4.

10.5.

10.3.2.

10.3.3.

10.3.4.
10.3.5.

10.3.6.
10.3.7.
10.3.8.
10.3.9.

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Training and upskilling of talents related to the economic activities of
the community;

Disaster response and resiliency tools, infrastructures, equipment, and
other related assets;

Recovery assistance for disaster-stricken areas;

Infrastructures, equipment, and other essential assets for the
protection of protected areas;

Riprapping of canal/riverbanks;

Construction of water supply system;

Construction of structural measures against erosion;

Establishment of plant or tree nursery/ies;

10.3.10. Tree seedling dispersal initiatives;
10.3.11. Programs and tools for the equitable promotion of eco-tourism;
10.3.12. Information campaigns on various aspects of health, based on the

demography and needs of the community or LGU; and

10.3.13. Other projects, programs, and assets connected with the above items.

Health Service Enhancement, such as:

10.4.1.

10.4.2.
10.4.3.
10.4.4.
10.4.5.

10.4.6.

10.4.7.
10.4.8.

Establishment or improvement of hospitals, clinics, health centers, or
medical stations;

Construction of hygiene and sanitation facilities;

Construction of sports facilities;

Procurement of ambulances or other health service-related vehicles;
Secured and sustained provision of medicines and other medical
paraphernalia for the treatment of diseases;

Creation of measures and acquisition of health apparatus, equipment,
and tools for the mitigation and control of communicable illnesses, and
prevention and control of outbreaks;

Appropriate preparations for other related health emergencies; and
Other projects, programs, and assets connected with the above items.

Public Service Facility/ies, which may include:

10.5.1.
10.5.2.
10.5.3.

10.5.4.
10.5.5.
10.5.6.
10.5.7.

Expansion or improvement of road network;

Promotion of public order and safety;

Construction or improvement of communal facilities based on the
needs of the community;

Tools and equipment for the maintenance of peace and order;
Acquisition of closed-circuit television (CCTV);

Programs and projects for crime prevention and mitigation; and

Other projects, programs, and assets connected with the above items.

RULE V

PROCEDURE FOR THE REMITTANCE, UTILIZATION AND AUDIT OF FINANCIAL

BENEFITS
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Section 11. Establishment of Trust Accounts.

11.1. The Host LGUs and ICCs/IPs shall establish an Interest-Bearing Current
Account (IBCA) with the Land Bank of the Philippines (LBP) or any authorized
government depository bank, specifically for DLF and RWMHEEF.

In case the LGUs and ICCs/IPs encounter difficulties beyond their control in
opening an LBP account or in any authorized government depository bank, they
may nominate an existing depository account where the funds shall be remitted,
provided that the Host LGUs and ICCs/IPs shall maintain a subsidiary ledger to
monitor the remittance and disbursement of the said funds. The Host LGUs and
ICCs/IPs shall provide justification through an official letter addressed to
GenCos and/or ERDs.

11.2. The franchised DU shall establish an IBCA specific for the EF.

Section 12. Issuance of Sanggunian or Council Resolution for the Availment of
DLF and RWMHEEF.

The Host Beneficiaries shall prepare and issue a Sanggunian or Council Resolution
for the remittance and availment of the Financial Benefits under this Circular. The
Sanggunian or Council Resolution shall be submitted to the GenCos and/or ERDs
before commencement of the project implementation. The Sanggunian or Council
Resolution shall contain the following:

12.1. The priority projects pursuant to Section 10, hereof, for funding subject to the
availability of the accrued Financial Benefits, as confirmed by the GenCos
and/or ERD;

12.2. Brief description of the project/s and implementation timelines;

12.3. Copy of certification of the established trust accounts from the authorized
government depository bank, pursuant to Section 11 hereof and

12.4. The manner of remittance of the financial benefits. In accordance with its
Sanggunian or Council Resolution, for the implementation of identified lowering
of electricity rate pursuant to Section 10.1, hereof, the Host Beneficiaries may
allow the Genco and/or ERD to directly remit the DLF and RWMHEEF to the
franchised DU. The Host Beneficiaries shall maintain oversight on the
remittance of DLF and RWMHEEF by the GenCos and/or ERD to the franchised
DU.

Asample Sanggunian or Council Resolution template is attached herein as Annex “A”,
containing the above-mentioned minimum provisions. This is without prejudice to the
modifications and additional provisions that the Host LGU may deem appropriate and
necessary for the implementation of projects consistent with this Circular. Any changes
in the template in this Annex shall be posted by the DOE through an Advisory.
=== dc2025-10-0023-pages-14.ppm ===
Enhanced Energy Regulations for the Benefits to Host Communities

Page 14 of 21

The Host Beneficiaries shall ensure the proper dissemination of the adopted
Sanggunian or Council Resolution for the availment and utilization of the Financial
Benefits.

Section 13. Remittance of the Financial Benefits.

13.1.

13.2.

13.3.

For EF

The franchised DU beneficiary of the EF shall nominate its IBCA to GenCo
and/or ERD for the remittance of the EF. For the allocation and utilization of the
EF, the franchised DU shall prepare its proposed project and workplan,
consistent with the DDP and LTER, approved by the DOE or NEA, in the case
of the ECs, and submit the same to the GenCo and/or ERD before the latter
remit the EF to the franchised DU nominated IBCA. The remittance shall be
made by GenCo and/or ERD within sixty (60) days upon receipt of the required
documents from the DU.

For DLF and RWMHEEF.

The GenCo and/or ERD shall commence remittance of the Financial Benefits
within sixty (60) days upon receipt of the Sanggunian or Council Resolution by
the Host Beneficiaries, except in cases provided in Section 15 under this
Circular.

The GenCo and/or ERD shall continuously remit the Financial Benefits, subject
to Section 13.2, except when the Commission on Audit (COA) orders the
suspension of such remittance and the franchised DU and Host Beneficiaries
are required to take action relative to any audit findings. Upon COA's issuance
of a resolution that the findings have been addressed, GenCo and/or ERD shall
continue to remit the allocation to the franchised DU and Host Beneficiaries.

Section 14. Audit and Project Monitoring.

14.1.

14.2.

Electricity Sales Audit

The DOE, through its Power Compliance Division-Financial Services (FS-
PCD), shall conduct post audit and periodic review of reported electricity sales,
fund allocation, and remittances of Financial Benefits of the GenCos and/or
ERDs to the franchised DUs and Host Beneficiaries. The DOE shall maintain a
database of the reported/validated Electricity Sales and remitted Financial
Benefits.

Monitoring of Benefits to Host Communities

For policy formulation and development purposes, the GenCo and/or ERD shall
submit to the DOE, through the DOE Electric Power Data Management System
(DEPDMS), the list of priority projects submitted and availed by the Host
Beneficiaries, in accordance with its Sanggunian or Council Resolution or, for
the case of EF, the proposed project and work plan submitted by the DU.
=== dc2025-10-0023-pages-15.ppm ===
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14.3. Project Implementation Audit by the COA

14.3.1.

14.3.2.

Audit of DLF and RWMHEEF

The report/s and other documentary requirements in support of the
utilization and liquidation of the Financial Benefits shall be audited by
the Local COA of the Host LGU. All disbursements must observe
government accounting and auditing rules and regulations.

The audit of the ICCs/IPs' compliance with the provisions of this
Circular shall be conducted by the COA-Special Audit Office through a
special audit engagement in accordance with the Sanggunian or
Council Resolution. The Host ICC/IP Accounting Officer or its duly
franchised Accountant shall prepare and sign the Fund Utilization
Report (FUR), duly approved by the ICC/IP Chieftain/Leader, along
with fully accomplished supporting documents.

Audit of EF

The audit of EF shall be conducted by the COA Special Audit Team
through a special audit engagement.

All tangible EF pursuant to Section 9.1 which are implemented and
completed consistent with the DDP and the LTER shall be reported to
the COA Special Audit Team by the franchised DU within six (6) months
from the end of each fiscal year, copy furnished the DOE and the NEA
in the case of ECs. All electrification projects funded by the EF shall
not form part of the cost to be recovered by the franchised DU from its
customers, except for those components and operation and
maintenance funded through the franchised DUs’ internally generated
fund.

In the event that the EF was utilized for electricity tariff subsidy, the
franchised DU shall submit to the ERC supporting documents
reflecting the utilization of the EF allocated for electricity rate reduction.
Similarly, the ERC shall exercise its regulatory functions to ensure the
proper inclusion and accounting of the subsidy in accordance with the
ERC regulation. The same will apply in the implementation of a subsidy
scheme using DLF and RWMHEF.

In view of the cyclical audit by the COA Special Audit Team, the repository
and/or custodian of liquidation reports and other supporting documents
submitted by the Host ICCs/IPs, and franchised DUs shall be the authorized
Officials of their respective units for the duration of five (5) years. They shall
ensure that all records and documents are properly labeled, including the
disbursement vouchers relative to the utilization of funds, to facilitate easy
access and retrieval during the audit of COA Special Audit Team.
=== dc2025-10-0023-pages-16.ppm ===
Enhanced Energy Regulations for the Benefits to Host Communities

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Section 15. Automatic Allocation to Electricity Subsidy.

15.1.

18.2.

Accrued Financial Benefits set aside by the GenCo and/or ERD shall be utilized
to reduce the electricity rate of the franchised DU serving the Host Beneficiaries
in the following cases:

15.1.1. Voluntary allocation by the Host Beneficiary/ies of its accrued Financial
Benefits to subsidize electricity rates in its area pursuant to its
Sanggunian or Council Resolution submitted to the GenCo and/or
ERD;

15.1.2. Failure of the franchise DU and Host Beneficiaries to utilize the
Financial Benefits pursuant to Sections 9 and 10, hereof, for two (2)
consecutive years from the date of the last remittance made by the
GenCo and/or ERD: Provided, That the franchised DU and Host
Beneficiaries may notify the GenCo and/or DU that it intends to utilize
the Financial Benefits within six (6) months from the lapse of the two
(2) year period. This notification must be submitted to the GenCo
and/or ERD prior to the expiration of the said two (2) year period.

15.1.3. In the event that the Host Beneficiaries failed to notify and/or utilize the
Financial Benefits within the timeline stated above, the GenCo
and/ERD shall inform the ERC of the accrued Financial Benefits. The
ERC shall issue an order for the immediate implementation of the rate
reduction scheme to the franchised DU, copy furnished the GenCo
and/or ERD. Upon receipt of such order, the GenCo and/or ERD shall
cause the remittance of the accrued financial benefits to the franchised
DU nominated IBCA which shall correspondingly be used by the latter
to reduce electricity rates of all its customers.

Within three (3) months from the occurrence of any of these events, the GenCo
and/or ERD shall notify the franchised DU/s on the subsidy scheme plan,
provided under Sanggunian or Council Resolution under Section 15.1.1. In
case Section 15.1.2. applies, the GenCo and /or ERD shall notify the franchised
DU of the available accrued DLF and RMWHEED of the Host Beneficiaries that
can be utilized to subsidize electricity rates, copy furnished the DOE and the
ERC. For the unutilized EF, the franchised DU shall immediately reflect the
prorated subsidy to all costumers within its franchise area, unless otherwise
provided in subsequent policy.

For the DLF and RWMHEEF, the franchised DU shall immediately reflect in its
next immediate billing cycle and statement the corresponding reduction in the
electricity rates following the remittance by the GenCo and/or ERD of the
accrued Financial Benefits.

No later than two (2) weeks from the implementation of the subsidy scheme,
the franchised DU shall submit to the ERC a report on the subsidy allocated to
all of its customers.
=== dc2025-10-0023-pages-17.ppm ===
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RULE VI

NON-FISCAL BENEFITS AND CORPORATE SOCIAL RESPONSIBILITY

Section 16. Non-fiscal Benefits.

16.1.

16.2.

16.3.

In addition to the eligible projects funded through the Financial Benefits, Host
Beneficiaries shall be granted preferential entitlement to the following non-fiscal
benefits:

16.1.1. Skills Development

16.1.1.1. For the community and people affected, as well as bona fide
residents of the host barangay, and the host community or
city, the GenCo, ERD and/or power producer shail establish
relevant skills development programs, which may include
the development of skills pertinent to the business of energy
generation or electrification, environmental protection,
reforestation, agroforestry, and relevant technical-vocational
skills, upon consultation with the appropriate government
agencies.

16.1.1.2. Toward this end, a Memorandum of Understanding (MOU)
may be entered into by the host barangay, the host city or
municipality, and the GenCos and/or ERD. For monitoring
purposes, a copy of such MOU or any other such
instrumentality shall be submitted to the DOE.

Preference in Employment

Qualified members of the community and people affected, as well as qualified
bona fide residents of the host barangay and the host municipality or city, shall
be given preference in employment by the GenCo and ERD their contractors
pursuant to applicable laws, rules, and regulations.

Preference in Procurement of Local Supplies and Services

Where practicable, all GenCos and/or ERD are encouraged to source at least
fifty percent (50%) of their supplies and service requirements from within the
Host LGUs, provided such supplies and services are available therein at a
competitive price, delivery/service schedule, quantity, and quality.

The costs incurred in the implementation of these non-fiscal benefits for host LGUs
and communities shall not be charged against electricity rates.

Section 17. Corporate Social Responsibility Activities.

The GenCos and/or ERD are encouraged to voluntarily contribute to the development
of their host communities as part of their Corporate Social Responsibility. Such
participation must align with the principles of corporate social responsibility and foster
=== dc2025-10-0023-pages-18.ppm ===
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Page 18 of 21

goodwill while also supporting the DOE’s mission of equitable energy development

across the country. Provided, however, that the cost for such activities shall not be
included in the rates that will be passed on to consumers.

RULE VII
RESPONSIBILITIES

Section 18. Responsibilities of the Franchised DU.
The franchised DU shall have the following responsibilities:

18.1. Open the EF IBCAin any Authorized Government Depository Bank (AGDB) and
maintain the required balance in the EF IBCA.

The fees and charges relative to the maintenance of such IBCA shall be
considered as an administrative expense and shall be deducted from the EF
account;

18.2. Accept all remittances made by the GenCo and/or ERD or the Host
Beneficiaries in case of subsidy scheme, subject to post-audit rules and
regulations;

18.3. Issue official/acknowledgment receipts to the GenCo and/or ERD or the Host
Beneficiaries;

18.4. Prepare the LTER and DDP, which shall reflect the priority project using EF;
18.5. Ensure timely implementation of projects in accordance with its LTER and DDP:

18.6. Comply with all accounting and auditing rules and requirements as may be
imposed by the COA; and

18.7. Other acts necessary for the efficient and transparent implementation and
utilization of EF, including the implementation of subsidy as may endorsed by
the Host Beneficiaries.

Section 19. Responsibilities of the Host Beneficiaries

The Host Beneficiaries shall have the following responsibilities:

19.1. Open and maintain the separate DLF, and RWMHEEF IBCA, except for the
RDC-nominated LGU beneficiary, which shall only use its General Fund

account to maintain the regional share of Financial Benefits.

19.2. Maintain the required balance in the DLF, and RWMHEEF IBCA, which shall
not be withdrawn by the Host Beneficiaries.
=== dc2025-10-0023-pages-19.ppm ===
Enhanced Energy Regulations for the Benefits to Host Communities

19.3.

19.4.

19.5.

19.6.

19.7.

19.8.

Page 19 of 21

The fees and charges relative to the administration of such trust account shall
be considered as an administrative expense and shall be deducted from the
relevant IBCA.

Accept all remittances made by the Genco and/or ERD in consonance with the
Sanggunian or Council Resolution, subject to post-audit rules and regulations;

Issue official and/or acknowledgement receipts to the GenCo and/or ERD;

Coordinate with the franchised DU for the implementation of the subsidy
scheme;

Ensure timely implementation of projects consistent with the specifications and
timeline provided under the issued Sanggunian or Council Resolution;

Comply with all accounting and auditing rules and requirements as may be
imposed by the COA;

Furnish a copy to the GenCos and/or ERDs of any COA audit findings, orders
on suspension and/or resolution, relative to the utilization of the Financial
Benefits to Host communities.

Section 20. Responsibilities of the GenCo and/or ERD.

The GenCo and/or ERD shall have the following responsibilities:

20.1.

20.2.

20.3.

20.4.

20.5.

20.6.

20.7.

Identify the franchised DU and Host Beneficiaries and inform in writing the
establishments/nomination of trust account;

Establish a dedicated IBCA covering EF, DLF, and RWMHEEF, including
preparation of a subsidiary ledger for franchised DU and Host Beneficiaries;

Report to the DOE, through the DEPDMS Portal, the Electricity Sales,
allocation, utilization of Financial Benefits, and status implementation of
Enhanced ER Projects;

Furnish the Host Beneficiaries on their allocation of Financial Benefits to guide
them in their planning function on the utilization of Enhanced ER funds;

Report to the DOE the non-fiscal Benefits implemented in favor of the Host
Barangay, City, |CCs/IPs, and Community and People Affected:

Designate Community Relations Officer/s that shall assist the Host
Beneficiaries in the implementation of this Circular; and

Conduct the Information Education and Communication Campaign in support
of the effective implementation of this Circular.
=== dc2025-10-0023-pages-20.ppm ===
Enhanced Energy Regulations for the Benefits to Host Communities
Page 20 of 21

RULE VIII
REGULATION AND TRANSITORY PROVISIONS

Section 21. Regulatory Support.

The ERC shall provide the necessary regulatory support, including the issuance of
necessary policies and regulations or the amendments to existing guidelines, including
administrative penalties, for the implementation of this Circular.

The requirement for the Memoranda of Agreement for the Establishment of Trust
Account (MOA-ETA) will no longer apply in the ERC’s issuance of COC, as such the
ERC shall amend its rules accordingly.

The ERC shall issue rules on the implementation of subsidy scheme, use of EF for the
upgrading and enhancement of DU system and other projects subsidized by the EF
and as such shall not be recovered from the franchised DUs’ customers. Further, the
implementation of subsidy scheme shall be reflected as a separate component of the
franchised DUs'’ rate in its electricity bills.

Section 22. Transitory Provision.

In consideration of the existing Financial Benefits, processes, and documents that will
be affected by this Circular, the following activities will be observed during the transition
period:

22.1. All Annual Work Plans approved and being implemented upon the effectivity of
this Circular shall be recognized until the completion of the project(s) contained
therein or for a period of one (1) year, whichever comes first;

22.2. All MOA-ETA executed and implemented prior to this Circular shall be
recognized and remain effective for a period of one (1) year or until the adoption
of the Sanggunian or Council Resolution pursuant to this Circular, whichever is
earlier:

22.3. All GenCos and/or ERD by the Host Beneficiaries, and franchised DUs are
enjoined to revisit their programs, projects, activities, and internal processes
under the prevailing DOE policies and issuances and perform all necessary
actions for the smooth transition to this Circular;

22.4. The adoption by the Host Beneficiaries of the Sanggunian or Council Resolution
pursuant to this Circular and duly submitted to the GenCos and /or ERDs shall
not affect all pending and ongoing projects prior to the effectivity of this Circular:

22.5. Any Financial Benefits, obligations, or entitlements that have accrued or
become due from GenCos and/or ERDs prior to the effectivity of this Circular
shall remain enforceable and shall be settled in accordance with applicable
laws, rules, and previously existing agreements or regulations; and
=== dc2025-10-0023-pages-21.ppm ===
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Page 21 of 21

22.6. All GenCos and/or ERDs shall start to allocate the P 0.03/kWh Financial
Benefits under this Circular commencing in January of Calendar Year 2026. For
the remaining months of Calendar Year 2025, the allocation under ER 1-94 and

remittance of Financial Benefits pursuant to DC2024-09-0029 and DC2018-08-
0021 shall be observed in the interim.

RULE IX

MISCELLANEOUS PROVISIONS
Section 23. Separability.
If, for any reason, any section or provision of this Circular is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and
subsisting.
Section 24. Repealing Clause.
Energy Regulations No. 1-94, Department Circular Nos. DC2018-08-0021 and
DC2024-09-0029, and all other related Department Orders and Advisories are hereby

repealed.

Pertinent provisions of DC2019-06-0010 inconsistent with this Circular are likewise
repealed or modified accordingly. Otherwise, those parts shall remain effective.

All other previous issuances, rules, and regulations that are inconsistent with the
provisions of this Circular are likewise repealed or amended accordingly.

Section 25. Effectivity.

This Circular shall take effect fifteen (15) days after its publication in two (2)
newspapers of general circulation.

Acopy of this Circular shall be furnished to the University of the Philippines Law Center
- Office of National Administrative Register (UPLC-ONAR).

Issued at Energy Center, Rizal Drive, Bonifacio Global City, Taguig City on

OCT 1-4 2n2go26.
Fg)
SHARGQN S. GARIN
Secretary

=== dc2025-10-0023-pages-22.ppm ===
ANNEX A - Sample Sanggunian or Council Resolution template

Republic of the Philippines
Province of
Municipality/City of
Office of the Sangguniang <Bayan/Panlungsod>

Excerpts from the Minutes of the _ " Regular Session of the Sanggunian
<Bayan/Lungsod/Lalawigan, held on the __™ day of ,20_, at
the Sangguniang <Bayan/Lungsod/Lalawigan> Session Hall.

Present:

Excused:

RESOLUTION NO.
Series of 20 __

Authored by:

A RESOLUTION ADOPTING GUIDELINES FOR THE UTILIZATION OF
FINANCIAL BENEFITS FOR THE PROMOTION OF RURAL DEVELOPMENT,
SOCIO-ECONOMIC UPLIFTMENT, AND ENVIRONMENTAL PROTECTION,
CONSISTENT WITH NATIONAL AND LOCAL DEVELOPMENT PLANS

WHEREAS, Section 16 of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, empowers local government units (LGUs) to exercise
such powers as are necessary and appropriate for the promotion of the general
welfare;

WHEREAS, relevant policies of the Department of Energy (DOE) provide for the
allocation and utilization of financial benefits derived from energy resource
development projects to host communities, to be used for sustainable and inclusive
local development;

WHEREAS, it is imperative to ensure that the use of such financial benefits is
aligned with applicable national and local development plans, and _ that
implementation is transparent, accountable, and responsive to the needs of the
local community;

WHEREAS, pursuant to Department of Energy (DOE) Department Circular (DC)
No. DC2025-__- , entitled “Promulgating the Enhanced Policy to Rationalized
Benefits To Communities Hosting Energy Generation and Resource Development
Facilities, And Integrated Energy Storage Systems Facilities, Amending Rule 29

=== dc2025-10-0023-pages-23.ppm ===
(A) of the Implementing Rules And Regulations Of Republic Act No. 9136”, there
is a need to adopt a clear framework for the:

a

~—

Promotion of rural development, upliftment of socio-economic conditions,

and addressing environmental concerns;

Coordination and consultation with various stakeholders and key entities

under the said DOE Department Circular;

Identification of target beneficiaries;

Specification of eligible projects with corresponding implementation plans

and timelines;

e) Allocation and proper utilization of funds;

f) Monitoring of liquidation and audit of project funds;

g) Compliance with DOE rules on frequency of remittance of financial benefits;
and

h) Establishment and certification of trust accounts with authorized

government depository banks;

b

~—

(ome)
tl

WHEREAS, the <Municipal/City/Provincial> Government of ;
have initiated coordination and consultations with , and other
relevant stakeholders and entities, for the issuance of this Resolution consistent
with the above DOE DC and other related national and local rules, regulations,
policies, plans and programs,

WHEREFORE, on motion of Hon. , duly seconded
by Hon. , be it

RESOLVED, AS IT IS HEREBY RESOLVED, to issue this Sanggunian Resolution
for the transparent, efficient and streamlined implementation of projects funded by
Financial Benefits under DOE Department Circular No. DDC2025-__- and
other relevant provisions thereto consistent with the <City/Municipality/Province>’s
plans, programs and projects;

RESOLVED, FURTHER, that the Sanggunian adopts the guidelines, attached
herein as Annex “A” including the schedules annexed thereto, pursuant to the
above DOE Department Circular for observance the <Municipality/City/Province>
and of all responsible entities;

RESOLVED, FINALLY, this Resolution and all its attachments shall be posted in
the <Municipality/City/Province>’s websites or, in the absence thereof, in two (2)
conspicuous places within the <Municipality/City/Province>’s offices. This
Resolution and all its attachments, including amendments or supplements, if any,
shall likewise be sent in print and in electronic copy to the Genco and/or ERD.

UNANIMOUSLY ADOPTED this __‘” day of 20__
=== dc2025-10-0023-pages-24.ppm ===
We hereby certify the correctness of the above Resolution which was adopted by

the Sangguniang <Bayan/Panlungsod/Panlalawigan> of

,onits__" Regular Session, held onthe ___ "day
of , 20__, at the Sangguniang <Bayan/Lungsod/Lalawigan>
Session Hall.

Certified Correct:

<Secretary of the Sanggunian>

Attested By:

<Presiding Officer>

Approved By:

<Local Chief Executive>