# DC2022-05-0016 — Adopting and Integrating the Policies and Programs for the Graduation and Rationalization of the Universal Charge for Missionary Electrification Subsidy Pursuant to Department Circular No. DC2019-01-0001 **Department Circular No. DC2022-05-0016** Signed: 24 May 2022 | Secretary Alfonso G. Cusi Effectivity: 15 days after publication in at least two newspapers of general circulation; copies filed with UP Law Center-ONAR Legal basis: RA 9136 (EPIRA) §§2, 70; EPIRA-IRR Rules 13, 14, and 18; RA 10531 (NEA Reform Act of 2013) Chapter III §9; RA 11646 (Microgrid Systems Act of 2022); RA 7638 (DOE Act of 1992) §5(g); RA 11285 (EEC Act) Chapter VII §24; DC2018-08-0024 (RPS Off-Grid Rules); DC2019-01-0001 Rule 10 §2 (mandate to rationalize subsidies); DC2021-11-0039 (TRANSCO as Small Grid SO) Stakeholder consultations: December 2020, February 2021, October 2021 --- ## WHEREAS RECITALS 1. EPIRA §2 — State policy to: (i) ensure and accelerate total electrification; (ii) ensure quality, reliability, security, and affordability of supply; (iii) enhance private capital inflow; and (iv) encourage efficient energy use and DSM. 2. EPIRA §70 — NPC-SPUG responsible for providing power generation and delivery in areas not connected to the transmission system; funded from missionary area revenues and UC-ME collected from all electricity end-users. 3. EPIRA-IRR Rules 13 and 14 — encourage private sector participation in missionary electrification, especially through NPPs in missionary areas and QTPs in remote and unviable areas. 4. EPIRA-IRR Rule 13 §3(e) and Rule 18 §6(a) — PSALM as Universal Charge Administrator; NPC as petitioner of UC-ME. 5. RA 10531 (NEA Reform Act 2013) Chapter III §9 — mandates all ECs with off-grid areas to submit graduation programs from UC-ME subsidy related to acquisition of NPC-SPUG generation assets and full takeover of generation function. 6. RA 11646 (Microgrid Systems Act of 2022) — aims to accelerate total electrification and promote private sector participation in electrification of unserved and underserved areas. 7. RA 7638 §5(g) — DOE power and function to formulate and implement programs, including incentives and penalties, for the judicious and efficient use of energy. 8. RA 11285 (EEC Act) Chapter VII §24 — DOE with ERC and PEZA shall pursue DSM program for reduction of energy consumption through effective load management. 9. DC2018-08-0024 (RPS Off-Grid Rules) — rationalize efficient use of UC-ME and improve self-efficiency through RE integration in off-grid supply mix. 10. DC2019-01-0001 Rule 10 §2 — DOE shall formulate a new policy towards the rationalization of subsidies in off-grid areas towards the removal or significant reduction of UC-ME. 11. DOE advisories of 24 May 2019 and 8 October 2020 — explanation and updates on UC-ME graduation and rationalization program objectives and strategies. 12. DC2018-02-0003 (supplemented by DC2021-09-0030) — policy for conduct of CSP in power supply procurement of DUs with off-grid areas. 13. DC2021-11-0039 — mandated TRANSCO as Small Grid SO in specific off-grid areas; formulates grid interconnection development plans. 14. EU-funded Access for Sustainable Energy Programme study on demand-side aspects of UC-ME rationalization at customer level — completed 19 March 2021. --- ## RULE 1. POLICY OBJECTIVES AND SCOPE 1.1 Policy objectives of this Circular: - 1.1.1 Empower DUs in off-grid areas to formulate plans and programs for UC-ME rationalization in cooperation with stakeholders; - 1.1.2 Incorporate interconnection-to-Grid plans into the overall UC-ME rationalization plans and programs of DUs with off-grid areas; - 1.1.3 Institutionalize least-cost generation planning to enable entry of low-cost technologies in small grids, including RE, hybrid RE systems, advanced baseload technologies, and other emerging technologies, while ensuring provision of resilient, reliable, secure, affordable, and quality electricity services in off-grid areas; - 1.1.4 Encourage DUs to practice and promote energy efficiency programs and DSM measures (load aggregators, smart meters, load shedding, battery storage during off-peak hours) as options to reduce electricity bills; - 1.1.5 Optimize recovery of cost of electricity services through innovative tariff mechanisms that reflect the capacity to pay of electricity end-users; - 1.1.6 Set the timeline for reduction of UC-ME subsidy in consideration of actual and foreseen socio-economic conditions of consumers in missionary areas, and measures to mitigate adverse impacts of subsidy reduction; and - 1.1.7 Harmonize policies and regulations with respect to the setting of tariffs and subsidies in off-grid areas. 1.2 Scope and applicability (consistent with DC2019-01-0001): - 1.2.1 Distribution Utilities (DUs); - 1.2.2 National Power Corporation (NPC); - 1.2.3 National Transmission Corporation (TRANSCO); - 1.2.4 New Power Providers (NPPs); - 1.2.5 Renewable Energy Developers eligible for RE Developer's Cash Incentive under the RE Act of 2008; - 1.2.6 Microgrid System Providers (MGSPs); and - 1.2.7 All customers in off-grid areas currently receiving UC-ME subsidy. --- ## RULE 2. DEFINITION OF TERMS 2.1 **Commercially Viable** — area or electricity service where the resultant True Cost of Generation Rate is equal to or less than the Subsidized Approved Generation Rate. 2.3 **DDP (Distribution Development Plan)** — program for expansion, reinforcement, and rehabilitation of the distribution system; prepared by the DU and submitted to DOE for integration with the Power Development Plan and PEP. For this Circular, the DDP includes the Island Interconnection Development Plan as defined in DC2021-11-0039. 2.4 **DU (Distribution Utility)** — EC, private corporation, LGU, or multipurpose cooperative with an exclusive franchise to operate a Distribution System. 2.5 **DU-operated microgrid system** — microgrid system owned and operated by a DU in a DU-identified unserved area in its LTER. 2.7 **FCRR (Full Cost Recovery Rate)** — rate, expressed in Peso per kilowatt-hour, that recovers the full efficient costs of generating, distributing, and supplying electricity in unserved and underserved areas by MGSPs, as authorized by ERC. 2.8 **Graduation** — cessation of provision of UC-ME subsidy in an area, by reason that the area or electricity service is deemed commercially viable or when the area is interconnected into the Grid. 2.10 **Least-Cost Generation Planning** — power generation planning activity facilitating entry of low-cost and efficient generation technologies in replacement or hybridization of existing high-cost diesel and bunker fuel systems, in consideration of the timeline of interconnection of small grids to the grid. 2.11 **MGSP (Microgrid System Provider)** — also known as the QTP; natural or juridical person whose business includes installation, operation, and maintenance of microgrid systems in unserved or underserved areas nationwide. 2.12 **MSC (Microgrid System Provider Service Contract)** — contract between the MGSP and NPC whereby the MGSP performs the missionary electrification function on behalf of NPC and provides integrated power generation and distribution services in an unserved or underserved area; receives subsidy whenever applicable. 2.13 **Missionary Area** — off-grid area deemed eligible for UC-ME subsidy by DOE because provision of basic electricity services is not commercially viable. 2.14 **MEDP (Missionary Electrification Development Plan)** — annual DOE development plan detailing policies, strategies, plans, and programs for missionary electrification, including capital investment and operation in off-grid areas. 2.16 **NPC (National Power Corporation)** — government corporation performing missionary electrification through SPUG; responsible for providing power generation and delivery in areas not connected to the Grid. 2.17 **TRANSCO (National Transmission Corporation)** — corporation organized pursuant to EPIRA to acquire all transmission assets of NPC; mandated per DC2021-11-0039 to serve as Small Grid SO in specific off-grid areas. 2.18 **NPP (New Power Provider)** — private entity or GOCC deemed technically and financially capable to provide generation service in off-grid areas. 2.19 **NPC Graduation Plan** — comprehensive and detailed strategy of NPC to attract private sector participation in areas served by NPC. 2.20 **Off-Grid Area** — area or system not connected to the Grid. 2.21 **PSA (Power Supply Agreement)** — agreement between a power producer and a DU for the supply of power. 2.22 **PSPP (Power Supply Procurement Plan)** — integral part of the DU's DDP for acquisition of demand-side and supply-side resources to cost-effectively meet electricity needs. 2.23 **PSALM (Power Sector Assets and Liabilities Management Corporation)** — GOCC created pursuant to EPIRA. 2.25 **QSC (QTP Service Contract)** — agreement between the DU or NPC and the QTP defining responsibilities, terms and conditions, and applicable performance and service standards (excluding the FCRR). 2.26 **RPS (Renewable Portfolio Standards)** — market-based policy requiring electric power industry participants to source an agreed portion of energy supply from eligible RE resources. 2.27 **SAGR (Subsidized Approved Generation Rate)** — rate, expressed in peso per kilowatt-hour, determined by ERC to be socially acceptable for a DU to pay for generation service; modified by this Circular as generation rates approved by ERC on a per area and customer class basis. SAGR + UC-ME subsidy = TCGR. 2.28 **SARR (Subsidized Approved Retail Rate)** — rate, expressed in peso per kilowatt-hour, determined by ERC to be the maximum cost that an end-user should pay for an integrated power generation and distribution service by an MGSP. SARR + UC-ME subsidy = FCRR. 2.29 **TCGR (True Cost of Generation Rate)** — full efficient cost of generating power in an area. 2.30 **Underserved area** — area currently served by home power systems, microgrid systems, or DUs whose electricity supply is less than 24 hours daily due to non-implementation of approved CAPEX projects, non-compliance with PDC service parameters, or any other reason resulting in an overall failing mark based on ERC's latest annual technical evaluation. 2.31 **UC-ME (Universal Charge for Missionary Electrification)** — portion of the Universal Charge designated for Missionary Electrification; portion of the non-bypassable charge collected from all end-users monthly by DUs pursuant to EPIRA; allocated for provision of integrated power generation and distribution services in unserved and underserved areas not connected to the grid or within a franchise area where the distribution system is not connected to the grid. 2.32 **Unserved area** — area with no electricity access, no distribution system lines, no home power systems, no connection to any microgrid system, or for which no distribution grid extension has been developed or implemented by the DU. --- ## RULE 3. INTERCONNECTION AND INTRA-CONNECTION PROJECTS 3.1 UC-ME subsidy shall **cease automatically** upon interconnection of an off-grid area to the Grid. 3.2 UC-ME subsidy to DU-operated microgrid systems and MGSP operations shall cease upon interconnection of the unserved/underserved area to the Grid-connected distribution system. 3.3 TRANSCO (its buyer, concessionaire, or successor-in-interest), in coordination with concerned DUs, LGUs, and off-grid stakeholders, shall prepare and submit to DOE (copy furnished ERC, NEA, and NPC) **not later than 60 days** from Circular effectivity, an updated **10-year Plan of Interconnection** containing: - 3.3.1 Brief technical description of each interconnection project; - 3.3.2 Ownership structure and sources of funding; - 3.3.3 Proposed Operations and Maintenance Plan; - 3.3.4 Proposed cost recovery scheme; - 3.3.5 Schedule of implementation, after considering alternatives such as micro-grid systems for off-grid electrification with the least cost; - 3.3.6 Status of the project; and - 3.3.7 Project risks and other relevant information. 3.4 DUs with potential interconnection projects (listed in Annex A) shall incorporate their interconnection development plan to the Grid as a component of their annual DDP and PSPP. Additional potential projects will be regularly updated and published on DOE, NEA, NPC, and TRANSCO websites. 3.5 Each DU with an off-grid area must ensure that new PSAs resulting from the conduct of CSP upon Circular effectivity that will claim UC-ME subsidy have a cooperation period that considers the schedule of implementation of the interconnection project as stated in the TDP as reviewed and endorsed by TRANSCO to DOE. 3.6 All transmission lines and associated facilities established from implementation of an interconnection project connecting an off-grid area to the Grid shall be deemed transmission assets. Funds obtained as grants from local or national government or other donors for such projects shall not form part of the cost recovery of the said assets. 3.7 NPC, through its Missionary Electrification Plan (MEP), shall estimate the corresponding UC-ME subsidy reduction of each interconnection project in the updating of total UC-ME subsidy requirements. --- ## RULE 4. SUPPLY-SIDE PLANNING FOR LOW-COST AND MODERN GENERATION TECHNOLOGIES 4.1 **Scope of Least-Cost Generation Planning** — This Circular amends DC2019-01-0001 §6.5 to require that the conduct of least-cost generation planning cover **all off-grid areas**, whenever applicable. 4.2 General Planning Process — Area-based, collaborative, and participatory process; planning tool and template to be established and periodically reviewed; methodology tailored to demand level and local conditions. 4.3 Planning parameters (including but not limited to): - 4.3.1 Scenarios of demand forecasts incorporating energy efficiency measures and local socio-economic development plans; - 4.3.2 Scenarios for interconnection of small grids to the Grid; - 4.3.3 Existing power supply contracts of concerned DU with off-grid areas; - 4.3.4 Available RE potentials in the area; - 4.3.5 Performance and cost profiles of candidate renewable and conventional power technologies, focusing on advanced and low-cost technologies to replace high-cost diesel power plants; - 4.3.6 Potential for RE-based hybrid micro-grid systems in small communities or islets; and - 4.3.7 Compliance with RA 9513 (RE Act), RA 11285 (EEC Act), and their IRRs, as well as environmental and other policy considerations. 4.4 Responsibilities for Least-Cost Generation Planning: - 4.4.1 Within **60 days** of Circular effectivity, DOE (in collaboration with NEA, NPC, TRANSCO, concerned DUs, and other service providers) shall set the general methodology and planning criteria; - 4.4.2 TRANSCO shall assist concerned DUs by taking the lead in the conduct of least-cost generation planning in SGSO-covered small grids; - 4.4.3 Within **180 days** of Circular effectivity, the following shall submit to DOE a report including assumptions and results: (4.4.3.1) TRANSCO (for all DUs as defined in DC2021-11-0039 Rule 3 §3.1); (4.4.3.2) Other DUs in DC2021-11-0039 Rule 3 §3.2 (for ECs with off-grid areas, through NEA); and (4.4.3.3) NPC, MGSP, or any entity operating in off-grid areas for areas under DC2021-11-0039 Rule 3 §3.3, indicating the optimal strategy for RE-based hybridization of each micro-grid; - 4.4.4 All DUs with off-grid areas shall incorporate least-cost generation planning results in their individual UC-ME Rationalization Plans and in the updating of DDP and PSPP; - 4.4.5 All Mandated Participants in Off-grid Areas shall source a percentage of energy requirements from eligible RE in compliance with RPS Off-Grid Rules; - 4.4.6 Within **6 months** of Circular effectivity, the National Renewable Energy Board shall study a new mechanism for provision of cash incentives to RE developers and propose recommendations to ERC and DOE; and - 4.4.7 **Not later than 15 June** of every year, NPC shall submit to DOE a specific program for key strategies towards efficiency improvement and fuel economy of all its power plants. (This amends DC2019-01-0001 Rule 8 §8.3.) 4.5 Promotion of Renewable-based Hybrid Micro-Grid Systems: - 4.5.1 DOE and NEA shall jointly or separately formulate and implement capacity building activities to enhance DU technical capability for embedded RE-based generation projects; - 4.5.2 DOE (through REMB), in coordination with NEA, may provide technical assistance to DUs in RE resource assessment in off-grid areas, including pre-feasibility studies for RE-based Hybrid Micro-Grid Systems; - 4.5.3 DOE (through REMB) shall provide technical assistance to Mandated Participants under RPS Off-Grid Rules in simulating typical off-grid power supply configurations and techno-economic comparisons; - 4.5.4 NEA shall provide specific financial and technical assistance to ECs with off-grid areas in development and implementation of RE-based generation projects (pre-feasibility, feasibility and pre-investment studies, site-specific resource assessments, etc.); - 4.5.5 NEA shall also assist ECs in financing RE-based generation projects (loans, loan guarantees, access to commercial funding); and - 4.5.6 NPC, in coordination with concerned DUs, shall **fast-track the conversion and modernization** of all diesel-based generator sets in pocket islets into RE-based micro-grid systems offering optimal hours of services based on electricity needs. 4.6 New Business Models: - 4.6.1 Within **60 days** of Circular effectivity, NEA shall issue a policy instrument for new modalities or variants of cooperation between ECs with off-grid areas and the business sector, civil society, LGUs, or mandated GOCCs, in consideration of whether the EC should remain as a non-stock electric cooperative or convert to a stock-cooperative or stock corporation. --- ## RULE 5. DEMAND-SIDE MANAGEMENT (DSM) AND ENERGY EFFICIENCY MEASURES FOR CUSTOMERS IN OFF-GRID AREAS 5.1 Guiding Principles: - 5.1.1 Customer-level implementation of energy efficiency programs is the main strategy of this Circular to mitigate the impacts of current high cost of generation in off-grid areas and the implementation of UC-ME subsidy rationalization; - 5.1.2 Priority energy efficiency measures shall be those with greatest net economic benefits to customers in off-grid areas. 5.2 Responsibilities: - 5.2.1 DOE shall identify DSM programs geared towards: (a) reduction of electricity consumption through effective load management and energy efficient equipment; (b) promotion of energy efficiency and conservation and applicable RE technologies; (c) prevention of power outages by increasing system reliability and resiliency; and (d) encouragement of behavior change for effective and cost-competitive energy management; - 5.2.2 All DUs with off-grid areas and MGSPs shall formulate and implement their respective energy efficiency programs to reduce cost of electricity tariffs for captive customers; - 5.2.3 NEA shall formulate guidelines and procedures to assist ECs with off-grid areas in implementing DSM strategies and energy efficiency measures; NEA shall also undertake capacity building of ECs; - 5.2.4 NEA shall provide financial assistance to ECs and their customers (grants or concessional financing) to implement DSM and energy efficiency measures; and - 5.2.5 All customers in off-grid areas are enjoined to implement energy efficiency measures and participate in DSM programs of their respective DUs or MGSPs. --- ## RULE 6. CUSTOMER-LEVEL RATIONALIZATION OF SUBSIDIES 6.1 General Policies: - 6.1.1 ERC shall pursue a more appropriate tariff mechanism in off-grid areas that optimizes cost recovery from consumers while considering the socio-economic condition in said areas; - 6.1.2 ERC shall have the **sole authority** to develop and set a new rate structure that is more appropriate in off-grid areas and enables efficient allocation per customer class; - 6.1.3 Customers with significant contribution to demand requirements shall pay more than marginal customers; - 6.1.4 To enable its eligible customers to avail of any subsidy, a DU with an off-grid area or MGSP shall submit its ERC-approved SAGR or SARR to NPC for allocation of subsidies; - 6.1.5 The DU with an off-grid area or MGSP shall assess the capacity to pay of their respective customers and apply to ERC for the approval of the corresponding SAGR or SARR per level of consumption in accordance with the DOE-accepted Subsidy Rationalization Plan (§7.2); and - 6.1.6 All government funds (including GAA funds and grants from donor institutions received for electrification and provision of reliable electricity services in off-grid areas) shall not be recovered through tariffs charged to electricity consumers in off-grid areas. 6.2 **Eligibility for UC-ME Subsidy** — Four categories: - 6.2.1 All NPC activities related to missionary electrification per EPIRA §70, approved by the National Power Board; - 6.2.2 Subsidy approved by ERC as payment to any NPP for recovery of its TCGR while maintaining the SAGR charged to the DU and its customers, per ERC-approved PSA or equivalent; - 6.2.3 Subsidy approved by ERC as payment to any MGSP with an ERC-approved MSC and any DU-operated microgrid system; and - 6.2.4 Cash generation-based incentive approved by ERC paid to any qualified registered RE developers. 6.3 DC2019-01-0001 is hereby further qualified to mean that **non-technical system losses including pilferage shall not be entitled for cost recovery through UC-ME subsidy**. --- ## RULE 7. UC-ME RATIONALIZATION PLAN 7.1 General Principles and Strategies: - 7.1.1 Graduation of an off-grid area from UC-ME will be readily realized through its interconnection to the Grid; - 7.1.2 DU with off-grid areas shall design all procurement activities to ensure entry of low-cost and efficient generation technologies, including renewables and baseload technologies as alternatives to existing diesel and bunker fuel systems; - 7.1.3 This Circular pursues a new regulatory mechanism allowing differentiation of SAGR collected from various customers according to demand, level of consumption, customer classification, and socio-economic conditions; and - 7.1.4 DU with off-grid areas and MGSP shall ensure that any subsidy reduction scheme is supported by energy efficiency programs and mitigating measures. 7.2 **Formulation of UC-ME Rationalization and Graduation Plan** — NEA (in coordination with any association of DUs and ECs with off-grid areas, NPC, and TRANSCO) shall enjoin each EC with an off-grid area receiving UC-ME subsidy to prepare its own **10-year Graduation and Rationalization Plan** indicating the socially-acceptable reduction and/or phase out of UC-ME subsidy; **fully reviewed and updated every 3 years** (optional annual update may be advised). The Plan shall form part of the DDP and PSPP submitted to DOE. The Plan shall specify: - 7.2.1 Schedule of Interconnection Plan (if any), to indicate full graduation from UC-ME subsidy; - 7.2.2 10-year Optimal Power Supply Outlook, indicating gradual reduction of TCGR through procurement of low-cost and advanced technologies; - 7.2.3 DSM and Energy Efficiency Program, outlining potential electricity bill reduction per customer type; - 7.2.4 Customer-level subsidy reduction or phase-out in accordance with Rule 6; - 7.2.5 Projected Rate Adjustments and UC-ME subsidy reduction per area; and - 7.2.6 Compliance and Impact Mitigation Plans. 7.3 DUs with off-grid areas and MGSPs (in coordination with LGUs) shall develop their Rationalization Plan indicating energy efficiency strategies and activities to reduce UC-ME subsidy; submitted to DOE (for ECs, through NEA). 7.4 NEA shall collaborate with TRANSCO and NPC to review individual UC-ME Graduation and Rationalization Plans; NEA shall consolidate individual plans and submit the Integrated UC-ME Graduation and Rationalization Plan to DOE for updating the MEDP. 7.5 NEA shall endorse to DOE (both individual and integrated Plans of all ECs with off-grid areas) in time with the annual DDP and PSPP submission. NEA shall evaluate and recommend timelines for: - 7.5.1 Most feasible schedule of interconnection of off-grid area to the Grid; - 7.5.2 Recommended period for attainment of parity between TCGR and effective SAGR of each off-grid area; and - 7.5.3 Most feasible schedule for providing least-cost electricity services in off-grid areas. 7.6 DOE shall provide the Integrated UC-ME Rationalization and Development Plan to ERC and NPC. 7.7 In accordance with RA 11646 (Microgrid Systems Act) §14(a), **NPC shall prepare and execute an NPC Graduation Plan**. 7.8 Implementation Procedure: - 7.8.1 Consistent with the DOE-accepted Subsidy Rationalization Plan, DU with off-grid areas shall petition ERC for approval of its SAGR adjustments; - 7.8.2 DU with off-grid areas shall provide NPC a copy of its approved SAGR for UC-ME subsidy determination; - 7.8.3 MGSPs and DU-operated microgrid systems with ERC approval to receive UC-ME subsidy shall also prepare their respective Rationalization Plans, incorporated by the concerned DU into its overall Rationalization Plan; - 7.8.4 DU with off-grid areas (with NEA, NPC, and TRANSCO assistance) shall conduct an IEC Program to educate electricity end-users of its UC-ME Graduation and Rationalization Plan; and - 7.8.5 NEA (in coordination with ECs with off-grid areas) shall submit to DOE (copy furnished ERC) an end-year assessment report on the status and results of implementation of the UC-ME Graduation and Rationalization Plan. --- ## RULE 8. MONITORING OF UC-ME SUBSIDY 8.1 Reporting of rates and subsidies: - 8.1.1 Each NPP shall submit a **monthly report** to NPC and its off-taker DU containing the monthly computation of its TCGR based on the ERC-approved PSA; - 8.1.2 MGSPs shall submit a **monthly report** to NPC of its UC-ME requirements; - 8.1.3 NPC shall submit a **semi-annual report** to PSALM detailing the utilization of UC-ME subsidy and disbursement to eligible areas and entities in the last six (6) months and projected estimates for the next six (6) months (per EPIRA-IRR Rule 13 §3(f)); - 8.1.4 Copies of above reports shall be provided to DOE, DOF, ERC, and NEA; and - 8.1.5 PSALM shall submit to DOE, DOF, and ERC the status of remittances and disbursement of UC-ME subsidy on a **quarterly** basis. --- ## RULE 9. REGULATORY SUPPORT AND OTHER PROVISIONS 9.1 ERC shall issue appropriate Rules governing the procedure for filing and evaluation of applications for approval of SAGR or SARR, to be undertaken by DUs with off-grid areas in accordance with §6.1.5 and the DOE-accepted Subsidy Rationalization Plan, and the UC-ME subsidy petitioned by NPC per §6.2. 9.2 ERC shall be responsible for setting SAGR or SARR adjustments. ERC shall also hear, review, and decide applications for approval of proposed interconnection projects of off-grid areas to the Grid in accordance with the individual UC-ME Rationalization and Graduation Plan of the DU. 9.3 ERC may issue other appropriate regulatory rules, guidelines, or measures to implement the policies and programs stated in this Circular. --- ## RULE 10. TRANSITORY PROVISION 10.1 All PSAs and QTP Service Contracts that have been procured and executed, including those filed and pending before ERC, prior to this Circular shall be honored and recognized until their expiration. --- ## RULE 11. SEPARABILITY CLAUSE --- ## RULE 12. REPEALING CLAUSE 12.1 Any Department Circular or issuance contrary or inconsistent with this Circular is hereby repealed, modified, or amended accordingly. 12.2 Nothing in this Circular shall be construed to affect any vested rights acquired from institutions or mechanisms existing prior to this Circular. --- ## RULE 13. EFFECTIVITY 13.1 This Circular shall take effect 15 days after publication in at least two (2) newspapers of general circulation. Copies filed with UP Law Center-ONAR. Signed: 24 May 2022 at the Department of Energy, Energy Center, Bonifacio Global City, Taguig City, Metro Manila. Secretary Alfonso G. Cusi --- ## ANNEX A — INDICATIVE AND POTENTIAL INTERCONNECTION PROJECTS (from TDP 2022-2040, Chapter 11) Note: Annex A table OCR rendered with partial column data. Full 18-project list (4 filed to ERC, 14 for further study) is available in the source summary. **Filed to ERC (4 projects):** 1. Batangas–Mindoro Interconnection — ORMECO and OMECO — February 2026 2. Palawan–Mindoro Interconnection — ORMECO, OMECO, and PALECO 3. Quezon–Marinduque 69kV Interconnection — MARELCO — December 2025 4. Zamboanga–Basilan 69kV Interconnection — BASELCO **For Further Study (14 projects):** 5. Camarines Sur–Catanduanes 69kV Interconnection — FICELCO — December 2025 6. Ticao Island — TISELCO 7. Masbate Island Interconnection — MASELCO 8. Tablas Island Interconnection — TIELCO 9. Busuanga Island Interconnection — BISELCO (Busuanga) 10. Bantayan Island Interconnection — BISELCO (Bantayan) 11. Siquijor Interconnection — PROSIELCO 12. Camotes Island Interconnection — CELCO 13. Antique–Cebu Interconnection — ANTECO 14. Dinagat Island Interconnection — DIELCO 15. Siasi Island Interconnection — SIASELCO 16. Sulu Island Interconnection — SULECO 17. Tawi-Tawi Interconnection — TAWELCO 18. Lubang Island Interconnection — LUBELCO Reference: TDP 2022-2040, Chapter 11 — Island Interconnection, pp. 143-158.