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Republic of the Philippines

Department of Energy
(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. U02Ub-O2- 0ODL =f

POLICY ON ACCOUNTABILITY OF ENTITIES ENGAGED IN POWER
GENERATION TO ENSURE
SUFFICIENT, RELIABLE, AFFORDABLE, AND SECURE SUPPLY OF ENERGY
IN THE COUNTRY

WHEREAS, Republic Act (RA) No. 7638, otherwise known as the “Department of
Energy (DOE) Act of 1992,” as amended, declares it as a policy of the State to 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
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;

WHEREAS, RA No. 9136, otherwise known as the “Electric Power Industry Reform Act
of 2001” (EPIRA), states that it is the policy of the State to, among others: (i) ensure
the quality, reliability, security and affordability of the supply of electric power; (ii)
ensure fair and non-discriminatory treatment of public and private sector entities in the
process of restructuring the electric power industry; (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) 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;

WHEREAS, the EPIRA mandates the DOE to, among others: (i) promote a system of
incentives to encourage industry participants, including new generating companies and
end-users to provide adequate and reliable electric supply; (ii) develop policies and
procedures and, as appropriate, promote a system of energy development incentives
to enable and encourage electric power industry participants to provide adequate
capacity to meet demand including, among others, reserve requirements; and (iii)
monitor private sector activities relative to energy projects in order to attain the goals
of the restructuring, privatization, and modernization of the electric power sector as
provided for under existing laws, while providing for an environment conducive to free
and active private sector participation and investment in all energy activities;

WHEREAS, RA No. 11646, otherwise known as the “Microgrid Systems Act” (MGSA),
declares it as a policy of the State to, among others: (i) accelerate total electrification
and ensure the provision of quality, reliable, and secure electricity service at
reasonable rates in unserved and underserved areas; (ii) promote private sector
participation in the electrification of unserved and underserved areas; (iii) provide a
competitive environment for different kinds of energy sources while prioritizing low-
cost, indigenous, renewable, and environment-friendly sources of energy; and (iv)
ensure the adoption of a dynamic regulatory environment that does not impair nor
inhibit end-users from accessing or enjoying the benefits of technologies and
innovations in the electric power industry;
Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global City, Taguig City, Philippines 1632
Tel. No. (Trunkline) (632) 8479-2900
Website: http://www.doe.gov.ph; E-mail: infocenter@doe.gov.ph
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Department Circular on Power Generator Accountability
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WHEREAS, the MGSA mandates the DOE to, among others, monitor the operations
of all awarded Microgrid Service Providers (MGSPs) and their respective MGSP
Service Contracts (MSCs), and authorizes the DOE, motu proprio or upon complaint,
to conduct a review of an MGSP’s operations and its corresponding MSC should it find
reasonable grounds for noncompliance with the minimum technical and service
performance standards and other provisions of the MSC;

WHEREAS, the Supreme Court has declared that the generation and supply sectors,
while not considered public utilities, are not removed from the ambit of governmental
regulation (Fernando L. Hicap v. Energy Regulatory Commission (ERC), Manila
Electric Company (MERALCO), and the Office of the Executive Secretary, G.R. No.
210334, 01 August 2023), and that the EPIRA and its Implementing Rules and
Regulations (IRR) instituted adequate safeguards to curb and altogether suppress any
abuse or irregular activity by the generation and supply sectors.

NOW THEREFORE, in consideration of the foregoing premises, the DOE hereby
issues, adopts, and promulgates the policy for the accountability of entities engaged
in power generation pursuant to Section 6 (Generation Sector) or other relevant
provisions of the EPIRA:

RULE |
GENERAL PRINCIPLES

Section 1. Title. — This Circular shall be known and referred to as the “Power
Generator Accountability Policy.”

Section 2. Rationale. — This Policy is promulgated to uphold the highest standards of
electricity generation service delivery and ensure compliance and accountability of all
entities engaging in power generation business, including their strict adherence to
technical and operational standards, dispatch instructions, market rules, reportorial
and assessment requirements, and obligations under their pertinent agreements with
electric power industry participants and end-users.

Section 3. Scope and Coverage. — This Policy shall cover all entities owning and/or
operating generation facility/ies regardless of size, location, resource type, plant
technology, construction/completion status, and connection. This shall include the
following entities:

Generation Companies (GenCos);

Energy Regulatory Commission (ERC);

National Electrification Administration (NEA);

Power Sector Assets and Liabilities Management Corporation (PSALM);
National Power Corporation (NPC);

Microgrid Service Providers (MGSPs);

National Transmission Corporation (TransCo);

Distribution Utilities (DUs);

Market Operator (MO); and

System Operator (SO), Small Grid Operator (SGO), Small Grid System
Operator (SGSO), and other entities acting as such.

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Department Circular on Power Generator Accountability

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Section 4. Definition of Terms. — The following terms in this Policy shall be defined
as follows:

a. “Certificate of Compliance” or “COC” refers to a license issued by the ERC in

favor of a person or entity to operate a power plant or other facilities used in the
generation of electricity pursuant to Section 6 of RA No. 9136 and Section 4,
Rule 5 of its IRR.

. “Certificate of Endorsement” or “COE” refers to an issuance by the DOE

certifying that a generation facility is consistent with the Power Development
Plan (PDP) or with the Missionary Electrification Development Plan (MEDP), if
the generation facility is located in an Off-Grid Area. This endorsement is a
prerequisite for the facility to secure a Certificate of Compliance (COC) or
Provisional Authority to Operate (PAO) from the ERC;

“Committed Power Projects” refer to projects that have already secured its firm
financial closing, are already in the construction stage, or were awarded
through the Green Energy Auction Program (GEAP);

. DOE Electric Power Database Management System” or “DEPDMS” refers to

the online portal established for the electronic submission of reportorial
requirements by power industry stakeholders. It encompasses the platform and
mechanism used for the systematic and timely submission of power industry
data and information.

. “Energy Virtual One-Stop Shop” or “EVOSS” refers to an online system that

provides a single decision-making portal for actions on applications for permits
and/or certifications necessary for, or related to, an application of a proponent
for new power generation, transmission, or distribution projects;

“Forced Outage” refers to an outage that results in emergency conditions
directly associated with a unit, requiring that it be taken out of service
immediately, either automatically or as soon as switching operations can be
performed. This may include outages due to human error, the improper
operation of equipment, or a reserve shutdown state.

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

“Grid’ refers to the high voltage backbone system of interconnected
transmission lines, substations and related facilities, located in Luzon, Visayas
and Mindanao;

“Grid Operating and Maintenance Program” or “GOMP” refers to the
consolidated three-year planned outage programs, prepared by the System
Operator, in consultation with the users, that contains the scheduled
maintenance of grid components and/or facilities, its duration, estimated date and
time of start and completion, to ensure the security and reliability of the Grid.

“Independent Power Producer’ or “/PP” refers to private entities that own and
operate power generation facilities, that are connected to the Grid, and sell
electricity through the Grid to DUs, end-users, or other buyers, that are not part
of the NPC or PSALM;
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Department Circular on Power Generator Accountability
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. “Indicative Power Projects” refer to projects that are in the pre-development
stage, have secured its Clearance to Undertake a System Impact Study with
the NGCP, and are compliant with reportorial requirements, including the
regular submission of its Monthly Accomplishment Report to the DOE;

“Maintenance Outage” refers to an outage that does not require immediate
removal from the in-service state but requires a unit to be removed from the
available state before the next Planned Outage. This is scheduled at least
seven (7) days in advance.

. “Maximum Load (Pmax)” refers to the maximum net output in MW that a
Generating Unit can reliably sustain based on the Generating Unit Capability
Tests.

. “Microgrid System Provider’ or “MGSP” refers to a natural or juridical person
whose business includes the installation, operation, and maintenance of
microgrid systems in unserved or underserved areas nationwide;

. “Microgrid System Provider Service Contract’ or “MSC” refers to the contract
between the MGSP and the NPC whereby the MGSP performs the missionary
electrification function on behalf of the NPC and provides integrated power
generation and distribution services in an unserved and underserved area, and
to receive subsidy whenever applicable Qualified Third Party Service and
Subsidy Contract (QSSC), which were executed prior to the effectivity of RA
No. 11646, shall be treated as an MSC;

. “Monthly Accomplishment Report" or “MAR” refers to the mandatory report
submitted by project proponents to the DOE for the monitoring of Committed
and Indicative Power Projects on a monthly basis. The MAR shall at all times
bear the actual development status of the project in accordance with its
approved workplan and Commercial Operations Date, as originally submitted
to the DOE. Failure to submit the MAR for three (3) consecutive months shall
be grounds for de-listing the project from the DOE's official database and non-
issuance of a COE;

. “New Power Provider’ or “NPP” refers to a private entity that owns and operates
a power generation facility in an Off-Grid Area and sells the electricity to a DU,
other similar service providers, or to electricity end-users;

“Off-Grid Area” refers to an area that is not connected to the Grid;

“Outside Management Control (OMC) Outage” refers to an outage wherein the
cause is beyond the control of the GenCo and has not resulted from planning
error or negligence. This includes: i) force majeure event; ii) grid connection or
substation failure due to problems with transmission lines, substation, and
switchyard equipment outside the responsibilities of the generating plant; iii)
lack of fuel (water from rivers or lakes, coal mines, gas lines, etc.) where the
GenCo is not in control of contracts, supply lines, or delivery of fuels; iv) special
environmental limitations that could not be prevented by operator action; and v)
labor strike;
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Department Circular on Power Generator Accountability
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“Planned Outage” refers to the state in which a component/unit is unavailable
due to inspection, testing, preventive maintenance or overhaul. This is
scheduled with a pre-determined duration and is coordinated with the System
Operator. The Planned Outage of a unit shall be reflected in the GOMP;

. “Philippine Distribution Code” or “PDC” refers to the set of rules, requirements,

procedures, and standards governing the operation, maintenance, and
development, connection and use of the distribution systems in the Philippines.
It also defines and establishes the relationship of the distribution systems with
the facilities or installations of the parties connected thereto.

“Philippine Electrical Code” or “PEC” refers to the electrical safety code that
establishes basic materials quality and electrical work standards for the safe
use of electricity for light, heat, power, communications, signaling, and for other
purposes.

. “Philippine Grid Code” or “PGC” refers to the set of rules, requirements,

procedures and standards to ensure the safe, reliable, secured and efficient
operation, maintenance, and development of the Grid and its related facilities.

“Philippine Small Grid Guidelines” or “PSGG’ refer to the rules, procedures, and
requirements for the generation scheduling, dispatch, and control of active
power, including provisions of ancillary service, if any, which are required to
ensure power quality, reliability, and security of the Small Grid.

“Power Supply Agreement’ or “PSA” refers to an agreement between a power
producer and a DU for supply of power;

“Provisional Authority to Operate” or “PAO” refers to the interim authority
granted by the ERC in favor of a person(s) or entity(ies) to operate generation
facilities used in the generation of electricity, pending the completion of
requirements for issuance of COC, and as the power demand and supply
situation warrants, provided the requirements for grant of PAO is complied with,
and that the government permits issued thereto are valid.

“Significant Incident’ refers to a single or series of events that has a serious or
widespread effect on the Grid, a distribution system, or a user's system. This
includes events that impact the quality, reliability, and security of power supply.
This includes those mentioned in the Philippine Grid Code and Philippine
Distribution Code, as well as events that trigger alert states;

“Small Grid’ refers to the backbone system of interconnected high voltage lines
or medium voltage lines, substations and other related facilities not connected
to the Grid;

“System Operator’ or “SO” refers to the person or entity responsible for
generation dispatch, or the implementation of generation dispatch schedule
based on the nomination of the DU from its PSA with the generators, the
provision of ancillary services and operation to ensure safety, power quality,
stability, reliability and security of the Small Grid;

“Small Grid Owner’ or “SGO” refers to the party that owns the backbone
transmission or sub-transmission or distribution System, and is responsible for
planning, operations and maintaining adequate capacity in Small Grid Areas;
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Department Circular on Power Generator Accountability
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ee.“Small Grid System Operator’ or “SGSO” refers to the person or entity that is

responsible for generation dispatch and real-time control of the power system
in 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;

RULE Il
ACCOUNTABILITY OF THE GENERATION SECTOR

Section 5. General Accountability of the Generation Sector. — All GenCos shall
observe the following responsibilities:

a.

Operate their facilities with a valid COC or PAO and maintain all necessary
health, safety and environmental clearances, licenses, authorizations, and
other similar documents from the DOE, ERC, and other relevant government
agencies;

Comply with all the terms, conditions, and obligations set upon such certificates,
licenses, authorizations, and other similar documents;

Satisfactorily maintain their facilities within the standards set by the applicable
laws, rules, and regulations, including but not limited to the PGC, PEC, PDC,
and PSGG, and consistent with the industry's best practices. For purposes of
assessment and inspections, all GenCos shall ensure compliance with the
parameters listed in Annex A and maintain records thereof, which shall be made
available to the DOE and ERC or their duly authorized representatives as
necessary;

Comply with the conduct of periodic operational and technical assessment by
the DOE or its duly authorized representatives;

Timely submit accurate, complete, and transparent data, information, and
reports to the DOE, ERC, NPC and all concerned agencies and entities in
accordance with applicable laws, rules, regulations, and agreements; and

Promptly report any Significant Incident that may or has actually posed risk to
the security, reliability, and availability of power supply in any area. The report
shall include details of the event and the corresponding workplan of the GenCo
to restore the facility to its to its maximum available capacity.

Section 6. Safeguards of the GenCos. — Without prejudice to their responsibilities
under this Policy and other applicable laws, rules and regulations, all GenCos shall be
entitled to the following protections and assurances:

a.

Due process on the evaluation of its COC or PAO, and in the conduct of
assessments and inspections on its facilities by the DOE or its authorized
representative(s);

. The opportunity to submit and implement a compliance plan to address any

findings arising from the DOE or its authorized representative(s) and/or any
other relevant entities’ assessment;
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c. Confidentiality of their submissions consistent with the applicable rules and
regulations of the DOE, except as otherwise provided in this Policy;

d. Timely and efficient processing, including transparent and _ uniform
requirements for certificates, licenses, permits, authorizations and other
requirements of the DOE, ERC, NPC, MO, and SO for the timely commercial
operation of the GenCo’s facilities. Failure to approve within the applicable
timelines under RA No. 11234 or EVOSS Act shall deem such application as
approved by the relevant entity; and

e. Consulted, or at least given an opportunity to be consulted, in the development,
amendment or enhancement of various rules and policies of the DOE which
affects the viability and operation of the Generation Sector.

RULE Ill
ACCOUNTABILITY OF POWER GENERATION SECTOR
CONNECTED TO THE GRID

Section 7. Manner of Operation for GenCos Connected to the Grid. — All GenCos
connected to the Grid shall operate and maintain their facilities in accordance with the
following standards and responsibilities:

a. Grid Reliability. All GenCos connected to the Grid or distribution system shall
operate their facilities to ensure reliability and the continuous availability of
supply and reserves. They shall strictly adhere to the standards and limits set
by the DOE, ERC, MO, SO, and other relevant entities, including compliance
with the Reliability Indices and Performance Standards under the PGC, PDC,
PEC.

b. Maintenance Compliance. All GenCos connected to the Grid shall conduct
regular and preventive maintenance activities in accordance with manufacturer
recommendations and the reliability standards adopted by the ERC. All
maintenance schedules must be integrated in the GOMP, as approved by the
DOE.

c. Market and Dispatch Obligations. All GenCos connected to the Grid shall be
responsible to fulfill their obligations in the WESM and adhere to all WESM
Rules and Market Manuals. This shall include the Offered Capacity Compliance
Standards (Must-Offer Rule), Dispatch Conformance Standards, Reserve
Conformance Standards, Reserve Offer Capacity Compliance, and other
substantive, procedural, and technical requirements set or to be issued by the
MO or SO. Any violation or failure to comply with the foregoing shall, after due
process, subject the GenCo to the appropriate liabilities and penalties under the
WESM Penalty Manual.

d. Exhaustion of Economic Life. GenCos operating non-renewable energy (non-
RE) generating facilities shall be retired, replaced or repurposed upon the
exhaustion of the facility's economic life. The DOE shall require the GenCo to
submit a retirement, replacement or repurposing plan within a specified period
prior to the projected exhaustion of the facility's economic life. The plan shall
include the proposed course of action, technical assessment of the facility's
condition, compliance status, implementation schedule, and such other
information as the DOE may require.
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Department Circular on Power Generator Accountability
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The DOE shall direct the continued operation of a non-RE generating facility
beyond its economic life where it determines that such operation is necessary
to ensure energy security, system reliability, or adequacy of supply. Such
continued operations shall be for a specified period subject to compliance with
technical, environmental, safety, reliability, and other conditions as the DOE
may impose, including required upgrades, rehabilitation measures, periodic
inspections, and reporting obligations.

Section 8. Responsibilities of GenCos Connected to the Grid. -
All GenCos connected to the Grid are accountable to maintain the validity of, and
strictly observe and comply with the requirements, procedures, terms, and conditions
of:

a. Certificates, licenses, authorizations, and similar consents or documents from
the DOE, ERC, MO, SO and other government agencies and entities;

Power supply contracts with DUs and other entities;

WESM Rules and ’Market Manuals;

Reliability Indices and Performance Standards under the PGC, PDC, PEC;
Dispatch instructions of the SO;

GOMP;

. Reportorial requirements;

. Other obligations under pertinent DOE and ERC issuances;

sampaog

Section 9. Monitoring of GenCos Connected to the Grid. — All GenCos shall
diligently and consistently comply with the Reportorial Requirements under
Department Circular (DC) No. DC2022-02-0001, otherwise known as “Providing
Policies for the Systematic Management of the DOE Reportorial Requirements for the
Electric Power Industry Participants,” and DC No. 2024-02-0008, otherwise known as
“Providing a Supplemental Policy for the Systematic Management of the DOE
Reportorial Requirements of Electric Power Industry Participants—-Generation
Companies,” unless otherwise amended or superseded.

The submitted reports and the gathering or processing of data from such reports may
be used as evidence in court and other administrative proceedings in the following
cases:

a. The reports submitted by the GenCo are found to contain material
misrepresentations or deviations from the actual data from other reliable
sources;

b. The DOE, motu proprio or upon complaint, finds it necessary to subdue any
anti-competitive behavior, unfair practices, market manipulation or market
power abuse by any electric power industry participant in any platform of the
DOE, MO or SO; or

c. The sufficiency of supply and reliability of the Grid or distribution network is in
peril due to the behavior of the GenCo, as determined by the DOE with the MO,
SO and concerned DU.

Further, non-submission of reports shall also be a ground for administrative penalties
and other applicable sanctions, including non-issuance of the COE to the ERC or
revocation of the COC.
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Department Circular on Power Generator Accountability
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Section 10. Assessment of GenCos Connected to the Grid. — The DOE shall
conduct periodic assessment of all GenCos and their facilities in line with DC No.
DC2017-12-0016, otherwise known as “Adopting Guidelines for the Performance
Assessment and Audit of All Power Generation, Transmission, and Distribution
Systems and Facilities,” and DC No. DC2017-05-0008, otherwise known as “Providing
for the Policies and Guidelines on the Conduct of Performance Assessment and Audit
for All Power Generation, Transmission, and Distribution Systems and Facilities,”
unless otherwise amended or superseded. The DOE may call upon other entities to
conduct the assessment.

The results of the assessment shall be referred to the ERC for the immediate
commencement of further investigations and imposition of appropriate penalties,
without prejudice to other legal remedies available to the DOE.

The DOE may likewise endorse its findings and recommendations to the Philippine
Competition Commission (PCC), the Department of Justice (DOJ), and other relevant
government agencies for the institution of appropriate administrative, civil or criminal
liabilities, in accordance with their respective mandates and jurisdictions.

In the implementation of this Policy, the GenCo shall undertake the following:

a. Continuous Compliance through Self-Assessment. The GenCo shall
ensure its continuous compliance with operational and technical standards. For
this purpose, the GenCo shall conduct annual self-assessment and submit the
completed assessment form in Annex “A” (Parameters of Generator
Compliances for On-Grid) of this Policy to the DOE, no later than March 31° of
every year. The declarations made in Annex “A” shall serve as the primary basis
for the DOE’s assessment and subsequent endorsement to the ERC for
appropriate action.

This notwithstanding, the DOE may conduct facility visitations and on-site
inspection to confirm the validity of the submission, subject to prior notification
to the concerned GenCo. The DOE shall periodically update the parameters
checklist to ensure consistency with new or amended DOE policies and/or ERC
rules and regulations. Such updates shall be issued through an Advisory, duly
published on the DOE website.

b. Report of Preventive Maintenance Findings. Within forty-five (45) calendar
days from the completion of its Preventive Maintenance Schedule (PMS)
pursuant to the GOMP, each GenCo shall submit a report which shall detail the
findings, recommendations, and the GenCo’s compliance plan to address the
same. The DOE shall monitor the compliance to ensure its timely completion
and may recommend necessary action in case of deviation in its
implementation.
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Department Circular on Power Generator Accountability
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c. Report of Outages. In case of Forced Outage, Maintenance Outage, OMC
Outage, or other unplanned or unexpected shutdown, or derating of the
generation facility or unit, the GenCo shall immediately inform the DOE of the
details, including the cause of the outage and estimated time of the return to
service of the facility. This information should be consistent with the report of
the GenCos submitted to the ERC pursuant to ERC Resolution No. 04, Series
of 2015 (“Adopting the Procedure in the Reporting Generation Companies of
Outage Events Affecting their Generating Facilities”), as may be amended or
superseded by a subsequent issuance.

d. Maintenance of Records. The GenCo shall maintain complete and accurate
compliance records, including the accomplished Checklist of Standards, PMS
implementation results, and corrective actions undertaken. The DOE and ERC
shall conduct validation activities every two (2) to three (3) years, on a risk-
based schedule, or as necessary, through document reviews, on-site
inspections, and performance assessments, including the Equivalent Forced
Outage Factor, Equivalent Maintenance Outage Factor, Equivalent Planned
Outage Factor, Equivalent Maintenance Outage Rate, Equivalent Force Outage
Rate, Force Outage Rate or any other relevant operational indicators as may
be prescribed by the DOE and the ERC.

The DOE, in coordination with the ERC, shall review and evaluate all submissions to
ensure completeness and consistency with requirements of this Policy. In case
deficiencies are found, the concerned generator shall be notified and required to
provide clarifications and corrective measures within the prescribed period.

Section 11. Additional Grounds for Incidental/Special Assessment. — |n addition
to the grounds set in DC No. DC2017-12-0016, the following circumstances shall
automatically trigger an Incidental/Special Assessment of Generation Facilities
connected to the Grid:

a. Facilities operating without a valid and subsisting certification, _ license,
authorization, or other similar government consent;

b. Generation facilities failing to provide the contracted capacity for the last three
(3) months;

c. GenCos which supply the contracted capacity solely via rental generation sets
or deviation to the actual technology or resource indicated in such
agreement, whichever applies, except in cases of force majeure or emergency
situations; or

d. Sustained derating of capacity not attributable to the availability of Renewable
Energy resource for the past three (3) month period.

Section 12. Non-Compliant GenCos; Sanctions. — GenCos found non-compliant
with any accountability requirement or performance standard, or that are otherwise
found in violation of this Policy based on the results of an inspection or assessment,
or due to recurring Forced Outages, valid complaints concerning the GenCo's
performance, falsification or non-submission of reportorial requirements, and other
acts or omissions contrary to this Policy, shall be subject to appropriate sanction(s):
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Department Circular on Power Generator Accountability
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The DOE and/or ERC, within their respective statutory mandates, may impose any of
the following sanction(s), singly or in combination, as applicable:

a. Corrective Action Plan. Direction to submit, implement, and/or periodically
report on a Corrective Action Plan (CAP), including specific milestones, subject
to verification by the DOE and/or ERC. Failure of the GenCo to submit and
implement the CAP within the prescribed period shall likewise be subject to
appropriate sanction(s);

b. Administrative Fines and/or Penalties. Imposition of administrative fines
and/or penalties in accordance with the EPIRA and prevailing ERC rules;

c. Regulatory Action on Permits or Authorizations. Suspension, cancellation,
withdrawal or revocation of the COE, COC, or any other permit, license,
approval, or other authorization, in accordance with the EPIRA and prevailing
rules and regulations issued by the DOE and ERC;

d. Blacklisting or Disqualification. The blacklisting or disqualification of a
GenCo shall result in its exclusion, for a specified period, from participation in
any DOE-administered or DOE-authorized competitive selection, auction, or
other award mechanisms, including capacity auctions or programs, subject to
the applicable program rules. During such period, the DOE and/or ERC shall
not issue, renew, or maintain any permits, licenses, approvals, or other
authorizations necessary for the GenCo’s conduct of business.

e. Cease and Desist Order. Issuance of Cease and Desist Orders by the ERC
after due notice and hearing, in accordance with the EPIRA and prevailing ERC
rules; and

f. Other Remedial Measures. The DOE and/or ERC may impose such other
measures consistent with the law as may be necessary to stop and redress the
GenCo’s non-compliance and to improve the overall reliability of the facility.

RULE IV
ACCOUNTABILITY OF POWER GENERATION SECTOR
IN OFF-GRID AREAS

Section 13. Manner of Operation in Off-Grid Areas. — All NPPs, MGSPs, DUs, LGUs
or any stakeholder operating a generation facility/ies in Off-Grid Areas for purposes of
supplying electricity to end-users shall operate their facilities in a way that will not affect
the availability of supply and reserves, and the reliability of the transmission and
distribution network in Off-Grid Areas. They shall operate in close coordination with
the NPC and/or the concerned DU, and TransCo in areas where it is the SO.

They shall observe all their obligations under applicable agreements with the NPC,
TransCo and the respective DUs/counterparties, operate within the standards and
limits set by the policies of the DOE and ERC, and ensure full synchronization of their
facilities with the transmission and distribution network, as applicable. They shall always
fulfill the full contracted supply and ensure provisions for reserves and support services
in any contingent event in such area.
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Section 7 (d) of this Circular shall also apply to GenCos operating non-RE generating
facilities in Off-Grid Areas.

Section 14. Responsibilities of GenCos in Off-Grid Areas. — All GenCos in Off-Grid
Areas are accountable to observe and comply with the requirements, procedures,
terms, and conditions of:

a.

b.

Cc.

d.

f.

g.
h.

Certificates, licenses, authorizations, and similar consents or documents from
the DOE, ERC, NPC, TransCo, and other government agencies and entities;
All PSAs (including emergency and interim) with DUs and/or LGUs;

MGSP notice of awards and any agreements with the DOE, NPC or the
concerned DU, as applicable;

Universal Charge for Missionary Electrification (UCME) Subsidy Agreement with
the NPC, if applicable;

Reliability Indices and Performance Standards under the Philippine Small Grid
Guidelines and pertinent issuances of the DOE and ERC;

Dispatch instructions of SGO or SGSO;

Reportorial Requirements; and

Other obligations under pertinent DOE and ERC issuances.

Section 15. NPC Accountability as Generator. — When NPC-Small Power Utilities
Group (NPC-SPUG) performs generation functions in Off-Grid Areas, whether as
default supplier, interim provider, or Supplier of Last Resort, it shall be accountable for
meeting the same operational, technical, reporting, and coordination requirements
imposed on all GenCos under this Policy. Accordingly, NPC-SPUG shall:

a.

Operate and maintain its generating facilities in accordance with DOE and ERC
prescribed reliability, availability, and performance standards applicable to off-
grid systems;

. Integrate the DOE accepted Distribution Development Plan, which includes the

Power Supply Procurement Plan (PSPP), of its offtaker DUs, including capacity
requirements, RE and hybridization deployment schedules aligned with the SO
and DU on its MEDP;

. Coordinate continuously with the concerned DUs, TransCo, and NEA to ensure

proper measures necessary to maintain uninterrupted service;

. Submit periodic operational reports, including generation levels, outages,

derations, fuel status (where applicable), and any Significant Incidents, together
with corrective action plans, to the DOE and relevant agencies for monitoring
and enforcement;

. Implement timely corrective actions addressing deficiencies identified by DOE,

NEA and TransCo, and participate fully in assessments, audits, and monitoring
activities required under this Policy; and

. Fulfill all contractual obligations with DUs and/or LGUs.
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Section 16. Monitoring of GenCos in Off-Grid Areas. — All GenCos in Off-Grid
Areas and the NPC SPUG shall ensure transparent, complete and timely compliance
with the Reportorial Requirements under DC No. DC2022-02-0001, and DC No.
DC2024-02-0008, unless otherwise amended or superseded.

The submitted reports and the gathering or processing of data from such reports may
be used as evidence in court and other administrative proceedings in the following
cases:

a. The reports submitted by the Off-Grid GenCo are found to contain material
misrepresentations or deviations from the actual data from other reliable
sources;

b. The DOE, motu proprio or upon complaint, finds it necessary to subdue any
anti- competitive behavior or unfair practices, market manipulation or market
power abuse by any electric power industry participant in any Off-Grid Area; or

c. The sufficiency of supply and reliability of the distribution system are in peril due
to the behavior of the GenCos NPP(s) or MGSP(s), as determined by the DOE
with the NEA, NPC and TransCo.

Further, non-submission of reports shall also be a ground for administrative penalties
and other applicable sanctions, including non-issuance of the COE to ERC, or
revocation of the COC.

Section 17. Assessment of GenCos and NPC SPUG in Off-Grid Areas. — The DOE,
in collaboration with NEA, NPC, and TransCo shall conduct the monitoring and
assessment of all GenCos and their facilities in line with DC No. DC2017-12- 0016 and
DC No. DC2017-05-0008, unless otherwise amended or superseded. The DOE may
engage other recognized entities to assist in the conduct of such assessment.

The results of the assessment shall be referred to the ERC for the commencement of
further investigations, revocation of relevant permits, and imposition of appropriate
penalties.

The DOE may likewise endorse its findings and recommendations to the PCC, the
DOJ, and other relevant government agencies for the institution of appropriate
administrative, civil or criminal liabilities, in accordance with their respective mandates
and jurisdictions.

In the implementation of this Policy, the GenCo and NPC SPUG shall ensure its
continuous compliance with operational and technical standards. For this purpose,
they shall conduct annual self-assessment and submit the completed assessment
form in Annex “B” of this Policy to the DOE, no later than March 31* of every year.
The declarations made in Annex “B” shall serve as the primary basis for the DOE's
assessment and subsequent endorsement to the ERC for appropriate action.

The DOE may conduct visitation and inspection to confirm the validity of the
submission, subject to due notification to the concerned GenCo and NPC SPUG. This
notwithstanding, the DOE may conduct facility visitations and on-site inspection to
confirm the validity of the submission, subject to prior notification to the concerned
GenCo. The DOE shall periodically update the parameters checklist to ensure
consistency with new or amended DOE policies and/or ERC rules and regulations.
=== dc2026-02-0006-pages-14.ppm ===
Department Circular on Power Generator Accountability
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Such updates shall be issued through an Advisory, duly published on the DOE
website.

Section 18. Additional Grounds for Incidental/Special Assessment. — |n addition
to the grounds set in DC No. DC2017-12-0016, the following circumstances shall
automatically trigger an Incidental/Special Assessment of Generation Facilities in Off-
Grid Areas:

a. Facilities operating without a valid and subsisting certification, license,
authorization, or other similar government consent;

b. Generation facilities failing to provide the contracted capacity based on its PSA;

c. GenCos and NPC-SPUG which supply the contracted capacity via rental
generation sets or in deviation to the actual technology or resource indicated in
the PSA or MSC, whichever applies, except in cases of force majeure or
emergency situations; and

d. Presence of potential or actual stranded generation in an Off-Grid Area.

RULE V
ACCOUNTABILITIES OF GENERATION COMPANIES
ISSUED WITH CERTIFICATE OF ENDORSEMENT/S
FOR THE DEVELOPMENT OF NEW POWER PROJECTS

Section 19. Application. — This Rule shall apply to the accountabilities of GenCos
with ongoing power project developments with duly issued COEs by the DOE, for the
GenCo’s application for a COC with the ERC.

Section 20. Term of the COE. — The COE issued by the DOE shall have a term of
three (3) years, or until the issuance of the COC by the ERC, whichever comes first.

Section 21. Grounds for Evaluation of the COE. — The DOE shall check the
contribution, connection or consistency of the project with the Philippine Energy Plan,
PDP, and MEDP, whichever is applicable.

In addition thereto, the DOE shall assess the COE application on the following criteria:

a. Compliance with the reportorial requirements of the DOE for planned generation
projects through the MAR, as indicated in Annex “C”. The MAR shall be
submitted to the DOE on a monthly basis starting from the DOE’s endorsement
to the relevant Network Service Provider of the project's assessment for
System Impact Study or Distribution Impact Study, as applicable.

b. Performance of responsibilities under existing service contracts with the DOE,
if applicable;

c. Submission of PMS for the first two years of commercial operation which shall
be considered as committed under the GOMP; and

d. Other compliances as may be mandated under pertinent rules and
regulations of the DOE.
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Department Circular on Power Generator Accountability
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Section 22. Process of COE Applications. — For COE applications of greenfield
power plants, or of first instance or any amendment to the issued COE, the
requirements and process, as indicated in Annexes “D” and “E”, respectively, shall
be observed. Further, a request for COE issuance must be lodged as a new application
in cases where the PAO issued by the ERC has already expired.

Section 23. COE is Not Evidence. — The COE shall be inadmissible as evidence of a
GenCo's compliance with the requirements, conditions, terms and commitments under
pertinent laws, rules and regulations, except for matters relating to the COC. The COE
shall not be construed, implied or expressly, as a waiver for the DOE or any concerned
agency or entity to pursue any case, remedy or claim against the GenCo.

RULE VI
ROLES AND RESPONSIBILITIES OF GOVERNMENT AGENCIES AND
INSTRUMENTALITIES AND ELECTRIC POWER INDUSTRY STAKEHOLDERS

Section 24. Responsibilities of the DOE. — The DOE shall have the following
responsibilities:

a. Proactively monitor and supervise all activities of the Generation Sector;

b. Assist and provide the necessary interventions for GenCos to other government
agencies and entities relative to the permits, licenses, certifications and other
government authorizations and consents necessary to ensure availability of
supply of electric power;

c. Validate submitted monthly reports with reference to other reliable sources to
ensure the integrity, veracity, and accuracy of data and information. The
conduct of validation shall include table-top review, on-site inspection and other
modes as may be approved by the Secretary;

d. Perform inspection of facilities and validation of submissions of the GenCos
during the middle of the term of the COE and prior to the succeeding issuances
of the COE, in cases of re-applications. The inspection and validation shall be
performed by the bureau(s) or other related office(s) of the DOE with respect to
the resource or technology of such generation facility;

e. Immediately notify the GenCos which failed to submit the mandatory reportorial
requirements for at least two (2) consecutive months. A patterned or erratic
submission and non-submission of reports within a six (6)-month period shall
likewise be a basis to notify the concerned GenCo;

f. Coordinate with the NEA, NPC, TransCo, MO, SO, DUs and other relevant
agencies, entities and stakeholders for the appropriate enforcement of this
Policy and other relevant DOE and ERC issuances on the Generation Sector;

g. Monitor the adequacy and enforcement, if triggered, of the Contingency Plan of
the NPC and concerned DUs in Off-Grid Areas;
=== dc2026-02-0006-pages-16.ppm ===
j.

k.

Department Circular on Power Generator Accountability
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Refer to the ERC and other related agencies all possible violations and non-
compliance of erring GenCos for the institution of appropriate investigations or
cases and imposition of appropriate penalties;

Exercise supervision and, if necessary, assistance to the MO, SO and DUs in
supervision and monitoring of GenCos;

Issue the pertinent advisories in the implementation of this Policy; and

Perform all other acts to achieve the objectives of this Policy.

Section 25. Regulatory Support from ERC. — The ERC shall have the following
responsibilities:

a.

e.

Promulgate the necessary guidelines and amendments to its existing policies
to implement the provisions of this Policy, in accordance with its powers and
functions under the EPIRA;

Pursue investigations, initiate the necessary cases and impose appropriate
sanctions and penalties against erring GenCos;

Consider the enhancements introduced by the MO, SO, and SGSO in their
respective systems or platforms pursuant to this Policy, and the reasonable
allocation and/or recovery of costs and expenditures appurtenant thereto;

. Determine the economic life of each plant technology, with particular emphasis

on non-renewable energy facilities that will be subject to retirement,
replacement, or repurposing; and

Perform all other acts to achieve the objectives of this Policy.

Section 26. Responsibilities of the NEA. — The NEA shall assist the DOE in the
implementation and enforcement of this Policy. In this regard, NEA shall have the
following responsibilities:

a.

Assist Electric Cooperatives (ECs) in ensuring the compliance GenCos to the
terms of their PSAs;

. Provide the DOE with a monthly verified report and analysis on electricity

service concerns and issues attributed to the performance and operation of
GenCos in their respective areas;

Provide technical, legal, and institutional guidance to ECs in the implementation
and enforcement of their rights, privileges, and remedies under applicable PSAs
and related agreements with regard to the GenCo(s) in their franchise; and

. Perform all other activities consistent with this Policy, as may be delegated by

the DOE.
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Department Circular on Power Generator Accountability
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Section 27. Responsibilities of the NPC. —\n accordance with its mandate under the
EPIRA, MGSA, and other relevant laws, rules, regulations and agreements, the NPC
shall have the following responsibilities:

a.

Ensure reliable, efficient, and affordable supply of electricity to all areas purely
served by its SPUG;

Exercise administrative supervision of GenCos in all Off-Grid Areas to ensure
their compliance to their UCME agreements with NPC and to power supply
contractual obligations with the concerned DUs;

Study the necessary private sector participation in Off-Grid Areas, implement
measures to encourage additional generation facilities from the private sector
to participate, and ensure their efficient and smooth integration in Off-Grid
Areas, in accordance with its UCME Graduation Plan under DC No. DC2019-
01-0001, otherwise known as “Prescribing the Omnibus Guidelines on
Enhancing Off-Grid Power Development and Operation”,

. Maintain close coordination with DUs in the monitoring of GenCos and the

enforcement of this Policy and other relevant laws, rules and regulations;

Ensure that the NPC transmission system is planned, operated, and maintained
in a manner that supports the efficient, reliable, and secure conveyance of
power supply from GenCos to the concerned DUs and system operations of the
TransCo;

Act as the Supplier of Last Resort for generation in Off-Grid Areas, in the event
of GenCo’s failure to operate reliably and sufficiently, wnerein the DU cannot
take over due to technical, financial, or institutional limitations;

. Implement mechanisms for the equitable and efficient allocation of the UCME,

consistent with its responsibility under DC No. DC2019-01-0001, with due
regard to the performance and compliance of GenCos in Off-Grid Areas;

To this effect, the NPC may institute remedies that:

i. Disqualify an Off-Grid GenCo to UCME, in case of substantial breach
in its obligations and responsibilities, even if operating in such Off-Grid
Area;

ii. Withhold UCME entitlements in case of failure to rectify errors cited by
the NPC and technical improvements as prescribed by TransCo as
SGSO or to implement the activities in an action plan. In such case, the
end-users shall still enjoy the Subsidized Approved Generation Rate or
Subsidized Approved Retail Rates, whichever applies in the area; and

iii. Recommend blacklisting a specific GenCo, for a certain period,
operating in Off-Grid Areas;

. Institutionalize a Contingency Plan, as part of its Missionary Electrification Plan,

to ensure sufficient, reliable, and secure supply of electricity in Off-Grid Areas,
in cases of force majeure, or failure of GenCos to provide the contracted
capacity;
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i. Act as Lead Entity, if designated as such by the DOE, or extend full assistance
and participation in the audit of GenCos, once called upon by the DOE; and

j. Perform all other activities consistent with this Policy, as may be delegated by
the DOE.

Section 28. Responsibilities of the TransCo. — |n addition to its functions under the
EPIRA and DC No. DC2019-01-0001, the TransCo shall have the following
responsibilities:

a. Fulfill its mandate as the SGO and SGSO in Off-Grid Areas, in accordance with
DC Nos. DC2019-01-0001 and DC2021-11-0039, otherwise known as the
“Mandating the National Transmission Corporation as Small Grid System
Operator in Specific Off-Grid Areas’;

b. Assist the SGO in Off-Grid Areas, upon request or directive of the DOE, in the
appropriate dispatch of GenCo(s) in such areas and other measures to ensure
reliable and quality conveyance of generated power in the distribution systems
therein;

c. Collaborate with the NPC, upon request or directive of the DOE, in the
performance of SO functions in other Off-Grid Areas;

d. Submit to the ERC the appropriate and financial requirements relative to its
operation as SGSO and other relevant documents as may be required by the
Commission;

e. Extend full assistance and participation in the audit of GenCos, once called
upon by the DOE; and

f. Perform all other activities consistent with this Policy, as may be delegated by
the DOE.

Section 29. Responsibilities of the System Operator. — The SO shall have the following
responsibilities:

a. Establish all necessary safeguards for the transparent, efficient, complete, and
strict enforcement of schedules of GenCos indicated in the GOMP with due
consideration on the reliability of the system and sufficiency of supply in the
Grid;

b. Timely issue clear dispatch or redispatch instructions, as may be necessary, to
maintain grid security and reliability, and maintain open communications with
GenCos for the strict compliance with such instructions;

c. Establish a platform or mechanism with the MO for the validation of the energy
transfers of GenCos vis-a-vis actually delivered from the plant to the Grid or
traded in the WESM;

d. Closely coordinate with the DUs in the monitoring of GenCos and the
enforcement of this Policy and other relevant laws, rules and regulations;

e. Provide recommendations in the audit of GenCos, once called upon by the
DOE; and
=== dc2026-02-0006-pages-19.ppm ===
f.

Department Circular on Power Generator Accountability
Page 19 of 20

Perform all other activities consistent with this Policy, as may be delegated by
the DOE.

Section 30. Responsibilities of the Market Operator. - The MO shall have the
following responsibilities:

a.

Establish a platform or mechanism with the SO for the validation of the energy
transfers of GenCos vis-a-vis actually delivered from the plant to the Grid or
traded in the WESM;

. Further introduce enhancements in the WESM to maintain the transparency

and accountability of GenCos, and appropriately penalize any act of supply
and/or price rigging, market manipulation and other anti-competitive behavior
and unfair practices, either committed by a single GenCo or in collusion with
other GenCo(s);

. Periodically review and revise, if necessary, the Penalty Manual, to trigger motu

proprio investigations and imposition of penalties to uphold GenCo
accountability in the WESM;

. Participate and provide recommendations in the audit of GenCos, once called

upon by the DOE; and

. Perform all other activities consistent with this Policy, as may be delegated by

the DOE.

Section 31. Responsibilities of DUs. — All DUs, either connected to the Grid or in
Off-Grid Areas, shall have the following responsibilities:

a.

Actively supervise and monitor all GenCo activities in their respective franchise
areas;

Closely coordinate with their contracted GenCos and strictly enforce all
provisions of their respective PSAs, particularly those that pertain to the delivery
of contracted capacity and related to the pass-on rates to consumers;

For Off-Grid Areas with a single GenCo, establish clear protocols to ensure
reliable and sufficient supply in their franchise area.

To this effect, Off-Grid DUs shall prepare a Contingency Plan, as part of their
Power Supply Procurement Plan to ensure reliable and sufficient supply of
electricity during force majeure or failure of the GenCo(s) therein to supply the
contracted capacity. In case of the ECs, the Contingency Plan shall undergo a
review and approval of the NEA to ensure the provision of the necessary
resources to implement the Plan;

For DUs with areas operated by MGSP(s), such Contingency Plan shall provide
takeover provisions, among others, in MGSP areas before NPC acts as
Supplier of Last Resort;

Participate and provide recommendations in the audit of GenCos, once called
upon by the DOE; and
=== dc2026-02-0006-pages-20.ppm ===
Department Circular on Power Generator Accountability

Page 20 of 20
e. Perform all other activities consistent with this Policy, as may be delegated by
the DOE.
RULE VI
MISCELLANEOUS PROVISIONS

Section 32. Recognition of Vested Rights and Non-absolution of Pre-Existing
Offenses. — Nothing in this Policy shall be construed to affect any vested rights that
have appropriately accrued to any person under valid mechanisms prior to the
commencement of this Policy.

This Policy shall likewise not absolve, condone, or exempt any non-compliances or
violations committed by GenCos under applicable laws, rules, regulations, and
agreements prior to the issuance of this Circular. Pre-existing offenses shall remain
punishable under the laws, rules and regulations in force at the time of their
commission.

Section 33. Exclusions. — The COE issued by DOE for the Authority to Operate of
MGSPs shall be governed by the applicable rules and regulations pursuant to RA No.
11646.

Likewise excluded from this Policy are the monitoring and audit of the GenCos’
responsibility to provide financial benefits to host communities. The rules and
regulations, including its successor policies or amendments, shall continue to apply.

Section 34. Separability. — \f 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 35. Repealing Clause. — Pertinent provisions of DC Nos. DC2022-02-0001,
DC2024- 02-0008, and DC2017-12-0016 are hereby amended by this Policy.

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

Section 36. Effectivity. - This Circular shall take effect immediately upon its
publication in two (2) newspapers of general circulation or in the Official Gazette. A
copy of this Circular shall be furnished to the University of the Philippines Law Center-
Office of National Administrative Register (UPLC-ONAR).

Issued this 16 February 2026 at the DOE, Energy Center, Rizal Drive cor. 34" Street,
Bonifacio Global City, Taguig City.

SH ~ GARIN
retary