# DC2022-05-0017 — IRR of Republic Act No. 11646 (Microgrid Systems Act) ## Department Circular No. DC2022-05-0017 **Rules and Regulations to Implement Republic Act No. 11646 (Microgrid Systems Act)** Signed: 21 May 2022 | Secretary Alfonso G. Cusi Effectivity: 15 days after complete publication in at least two newspapers of general circulation; copies filed with UP Law Center-ONAR Parent law: RA 11646 §26 (60-working-day mandate for IRR) --- ## WHEREAS RECITALS 1. 1987 Constitution §9 — State shall promote a just and dynamic social order ensuring prosperity and independence of the nation, freeing people from poverty through policies providing adequate social services, full employment, rising standard of living, and improved quality of life. 2. 1987 Constitution §20 — State recognizes the indispensable role of the private sector; encourages private enterprise; provides incentives to needed investments. 3. RA 9136 (EPIRA) §2(a) and (b) — policy to ensure and accelerate total electrification; ensure quality, reliability, security, and affordability of supply; transparent and reasonable electricity prices; enhance private capital inflow; protect public interest; encourage efficient energy use and DSM. 4. EPIRA §2(f) and (h) — protect public interest as affected by rates and services; promote utilization of indigenous and new and RE resources to reduce dependence on imported energy. 5. RA 11646 (Microgrid Systems Act, 21 January 2022) — approved to promote use of microgrid systems to accelerate total electrification of unserved and underserved areas nationwide. 6. RA 11646 §26 — DOE shall issue IRR within 60 working days of effectivity. 7. SO2022-02-0004 (21 February 2022) — created TWG composed of DOE, NPC, NEA, TransCo, and ERC to formulate the IRR. 8. Virtual public consultation with stakeholders conducted on 8 April 2022. --- ## PART I — GENERAL PROVISIONS ## SECTION 1. TITLE "Implementing Rules and Regulations (IRR) of Republic Act No. 11646, otherwise known as the 'Microgrid Systems Act'" — hereafter referred to as the "IRR." --- ## SECTION 2. DECLARATION OF POLICIES - 2.1 Pursue sustainable rural development and poverty reduction through energy access; - 2.2 Accelerate total electrification and ensure quality, reliable, secure, and affordable supply of electric power in unserved and underserved areas; - 2.3 Promote private sector participation in electrification of unserved and underserved areas; - 2.4 Provide a competitive environment and level playing field for different energy sources with preference for low-cost, indigenous, renewable, and environment-friendly sources; and - 2.5 Ensure adoption of a dynamic regulatory environment that allows end users to benefit from technologies and innovations in the electric power industry. --- ## SECTION 3. SCOPE Applies to the development of microgrid systems in unserved and underserved areas nationwide. --- ## SECTION 4. DEFINITION OF TERMS 4.1 **ATO (Authority to Operate)** — document issued by ERC to an MGSP constituting its license to provide integrated power generation and distribution services to unserved or underserved areas. 4.2 **COC (Certificate of Compliance)** — license issued by ERC to operate a power plant or other electricity generation facilities pursuant to RA 9136 §6 and EPIRA IRR §4. 4.3 **CSP for Microgrid System Provider** — procedure wherein an entity is awarded the contract to provide integrated power generation and distribution services to an unserved or underserved area through a transparent and competitive procedure (auction, unsolicited proposal, or Swiss challenge), consistent with the Act and other applicable laws. 4.4 **DPG (Decentralized Power Generation)** — small-scale power generation facilities operating locally and connected to the microgrid distribution system or end-user; may be aggregated to meet demand; includes mini-wind turbines, energy storage, and solar PV rooftop of an end-user. 4.5 **Distribution System** — system of wires and associated facilities extending between delivery points on the transmission, sub-transmission system, or power generation facility connection and the point of connection to end-user premises. 4.6 **DU (Distribution Utility)** — any electric cooperative, private corporation, government-owned utility, or existing LGU with a franchise to operate a distribution system, including those covering economic zones. 4.7 **DU Operated Microgrid System** — microgrid system owned and operated by a DU in a DU-identified unserved area in its LTER. 4.8 **EC (Electric Cooperative)** — DU organized pursuant to PD 269 (as amended) or as otherwise provided in the Act. 4.9 **End-user** — any natural or juridical person requiring the supply and delivery of electricity for its own use. 4.10 **Grid** — high voltage backbone system of interconnected transmission lines, substations, and related facilities in each of Luzon, Visayas, and Mindanao. 4.11 **Grid-tied Microgrid System** — microgrid system electrically connected to the DU's distribution system; can operate in synchronized mode or island mode. 4.12 **Island Mode** — a grid-tied microgrid system operating as a stand-alone system supplying and delivering electric power to connected end-users. 4.13 **Isolated Microgrid System** — microgrid system not electrically connected to a DU's distribution system; operating as a stand-alone system. 4.14 **LTER (Local Total Electrification Roadmap)** — DU's comprehensive 10-year strategic plan with an annual work plan to accelerate total electrification in its franchise area; updated annually. 4.15 **Microgrid System** — group of interconnected loads and a generation facility or DPG with clearly defined electrical boundaries that acts as an integrated power generation and distribution system, whether or not connected to a distribution or transmission system. 4.16 **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. 4.17 **MGSP (Microgrid System Provider)** — natural or juridical person whose business includes the installation, operation, and maintenance of microgrid systems in unserved or underserved areas. 4.18 **MGSP Proponent** — any entity eligible to provide integrated power generation and distribution services in unserved and underserved areas. 4.19 **NTER (National Total Electrification Roadmap)** — comprehensive national strategic plan with a work plan to accelerate total electrification nationwide, taking into account various LTERs and DDPs; incorporated in the Philippine Energy Plan. 4.20 **NPC Graduation Plan** — comprehensive and detailed NPC strategy to attract private sector participation in areas purely served by NPC. 4.21 **PDC (Philippine Distribution Code)** — rules, requirements, procedures, and standards governing DUs and users of distribution systems in the operation, maintenance, and development of the Distribution System; also defines the relationship between the Distribution System and connected facilities. 4.22 **Philippine Small Grid Guidelines** — rules, procedures, and requirements for generation scheduling, dispatch, and control of active power in small grids, including ancillary service provisions. 4.23 **PIOU (Private Investor-Owned Utility)** — private business organization with an exclusive franchise to operate a distribution system. 4.24 **QTP (Qualified Third Party)** — alternative electric service provider duly qualified and authorized by ERC to serve Unviable Areas pursuant to EPIRA §59 and EPIRA IRR Rule 14. 4.25 **Swiss Challenge** — competitive procurement system for projects procured through unsolicited proposals from MGSP Proponents. 4.26 **Synchronized Mode** — operation of grid-tied microgrid systems whose generation facility or DPG operates at the same frequency as its connection point to the DU's distribution system; allows supply to or drawing power from the grid. 4.27 **Underserved Area** — currently served area with electricity supply of 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 of distribution system performance. 4.28 **UC-ME (Universal Charge for Missionary Electrification)** — portion of the non-bypassable charge collected from all end-users by DUs monthly per RA 9136; 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. 4.29 **Unserved Area** — area, upon effectivity of the Act, 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. 4.30 **USP (Unsolicited Proposal)** — proposal for the provision of electricity service in unserved and underserved areas, submitted by an MGSP Proponent to NPC, not in response to a solicitation or request issued by NPC. --- ## PART II — IDENTIFICATION AND DECLARATION OF UNSERVED AND UNDERSERVED AREAS ## SECTION 5. IDENTIFICATION OF UNSERVED AREAS AND UNDERSERVED AREAS 5.1 DUs shall submit to DOE and integrate into their annual DDP the LTER, including a detailed inventory of all unserved and underserved areas within their franchise. 5.2 NPC and NEA, in consultation with DUs, shall recommend to DOE the LTER template within **30 calendar days** of IRR effectivity; DOE shall issue the final template within **15 calendar days** upon receipt. The LTER shall contain: - 5.2.1 Validated detailed inventory of all areas the DU plans to electrify (with specific timeframes), including DU-identified unserved areas for electrification through DU-operated microgrid systems; - 5.2.2 Validated annual work plan for electrification; and - 5.2.3 Validated detailed inventory of all unserved and underserved areas within its franchise. 5.3 All annual work plan projects shall be completed **within 18 months** from submission to DOE or, for DU-identified unserved areas, from the lapse of the 30-day period for MGSPs to tender an all-in price offer under Section 14. DU-identified underserved area submissions shall include: (5.3.1) Technical and Financial Proposal; (5.3.2) Load profile; (5.3.3) Proposed Rate; (5.3.4) Demographic profile; and (5.3.5) Existing electricity provider. 5.4 All LTERs submitted to DOE **by 15 March** each year (for ECs, through NEA with NEA recommendations). 5.5 DOE shall receive and validate petitions from End-users (§6) and nominations from MGSP Proponents (§15) in consultation with NEA and NPC. 5.6 DOE shall prepare the NTER and publish on its website **no later than 30 September** each year. 5.7 Unserved and Underserved Areas with GAA appropriations at time of Act effectivity shall not be included in DOE-declared lists or DU-identified unserved areas. --- ## SECTION 6. END-USER PETITION OF UNSERVED AND UNDERSERVED AREAS 6.1 End-users in unserved or underserved areas not identified in the DU's LTER may petition DOE for declaration, including: full name; complete address; contact details; government-issued ID; and electricity service situation. 6.2 DOE, in coordination with NPC, NEA, franchised DU, and other agencies, shall verify the area within **30 calendar days** of petition receipt. 6.3 NEA/NPC shall submit to DOE its verification report including proposed action. --- ## SECTION 7. DECLARATION OF UNSERVED AND UNDERSERVED AREAS 7.1 DOE shall declare unserved and underserved areas from: - 7.1.1 All unserved and underserved areas in the DU's LTER not identified for DU-operated microgrid system; - 7.1.2 NPC-SPUG areas in their Graduation Plan (§16.3); - 7.1.3 Verified petitioned areas (§6); and - 7.1.4 Nominated areas (§15). 7.2 Declaration published on DOE website **by 30 September** each year. 7.3 Unserved areas identified for DU-operated microgrid systems in their LTER shall be published by DOE as "DU Identified Unserved Areas" and undergo CSP under §14. 7.4 DOE-declared or DU-identified unserved/underserved areas awarded to MGSPs are deemed waived by the DU insofar as its obligation to provide distribution services, connections, and supply to those areas. The waiver does not transfer, abandon, or modify the DU's franchise; the awarded MGSP has the exclusive right and obligation during the MSC term to provide integrated power generation and distribution services on behalf of NPC. DU and MGSP shall agree on use of existing facilities (by sale, lease, usufruct, or other means) for the MSC term without jeopardizing electricity rate affordability. --- ## PART III — QUALIFICATION OF MGSP ## SECTION 8. ELIGIBILITY REQUIREMENTS 8.1 MGSP participation is open to any party including private corporations, LGUs, cooperatives, NGOs, GenCos, and their subsidiaries, and DUs and their subsidiaries, with demonstrated capability and willingness to comply with technical, financial, and other requirements prescribed under the CSP for MGSP. 8.2 Ownership and operation of a microgrid system in unserved and underserved areas is **not a public utility operation**. MGSPs are **not required to secure a franchise from Congress** but shall secure an ATO and COC from ERC prior to operation. --- ## SECTION 9. GUIDELINES FOR DU'S JOINT VENTURE 9.1 A DU may enter into a joint venture for microgrid installation and operation, maintaining a separate account per ERC's business separation and unbundling rules. Only a joint venture where the DU with franchise in the operations area owns **at least 51%** of capital shall be considered a DU-operated microgrid system or DU's MGSP. 9.2 NEA shall issue EC joint venture guidelines within **60 calendar days** of IRR effectivity. 9.3 A DU's MGSP may participate in a CSP in a DOE-declared unserved/underserved area; it has the right to tender a lower offer within the DU's franchise area, **except** in CSPs for expiring MSCs (§21), where the MGSP with the expiring MSC has the exclusive right to tender a lower offer. --- ## PART IV — PROCEDURE FOR ELECTRIFICATION OF UNSERVED AND UNDERSERVED AREAS THROUGH MICROGRID SYSTEM ## SECTION 10. AUTHORIZED ENTITY FOR THE CONDUCT OF CSP DOE shall conduct the CSP, unless it has authorized NPC or NEA to conduct it, for DOE-declared unserved and underserved areas and DU-identified unserved areas, pursuant to this IRR and subject to delegated authority given by DOE. --- ## SECTION 11. BIDS AND AWARDS COMMITTEE FOR MGSP 11.1 **MGSP BAC:** - 11.1.1 Independent MGSP BAC spearheads and manages the CSP for MGSP; - 11.1.2 Five (5) members; - 11.1.3 Chair and Vice-Chair selected by members; Chair votes only in case of tie; - 11.1.4 Quorum = simple majority of voting members; - 11.1.5 MGSP BAC posted on DOE, NEA, and NPC websites. 11.2 **MGSP BAC TWG and Secretariat:** Headed by a regular or permanent employee (preferably an officer). - 11.2.1 TWG composed of technical, legal, and financial personnel; - 11.2.2 TWG assists MGSP BAC in technical components: development of MSC, TOR, eligibility screening, bid evaluation, post-qualification; - 11.2.3 Secretariat provides administrative support and keeps all CSP records and documents; - 11.2.4 Secretariat fully documents each step and keeps written minutes and unedited video recordings of all MGSP BAC meetings and proceedings. 11.3 **Observers:** ERC, NPC, or NEA shall serve as observers in any CSP. - 11.3.2 Observers may not participate or vote; - 11.3.3 Written invitation transmitted at least **7 calendar days** before procurement stages; - 11.3.4 Invited to: Pre-bid Conferences, Submission and Opening of Bids, Bid Evaluation, Post-qualification, Awarding, and Contract Signing; - 11.3.5 Unrestricted access to: minutes, Abstract of Bids, post-qualification summary report, video recordings, opened proposals, draft MSC template, bid documents; - 11.3.6 May submit written comments within **7 calendar days** from end of CSP activity; - 11.3.7 Absence of observers does not nullify CSP proceedings. --- ## SECTION 12. PREPARATION OF BID DOCUMENTS FOR THE CSP FOR MGSP 12.1 Bid Documents shall include at minimum: - 12.1.1 Invitation to Bid; - 12.1.2 Bidding Schedule; - 12.1.3 TOR — including: load profile; proposed rate; demographic profile; potential RE resources; target commissioning date; plan for compliance with Philippine Small Grid Guidelines; and plan for compliance with RPS Off-Grid Guidelines; - 12.1.4 Draft MSC. 12.2 Bid Documents and TOR prepared within **45 calendar days** after publication of DOE-declared unserved/underserved areas and DU-identified unserved areas. If NPC/NEA authorized to conduct CSP, Bid Documents and TOR submitted to DOE for review; DOE recommends changes within **30 calendar days** of receipt. --- ## SECTION 13. CSP FOR MGSP IN DOE-DECLARED UNSERVED AND UNDERSERVED AREAS 13.1 **Publication and Posting of Invitation to Bid:** - 13.1.1 Issued within **20 calendar days** from finalization of bidding documents; - 13.1.2 Published in a newspaper of general circulation once weekly for **2 consecutive weeks**, plus at least once in a local newspaper in the province; - 13.1.3 Posted continuously on DOE, NPC, and NEA websites for **15 consecutive calendar days**; and - 13.1.4 Posted at conspicuous places in the DU's main office premises for **15 consecutive calendar days**. 13.2 **Pre-bid Conference** — addresses queries; discusses eligibility requirements, TOR, and technical/legal/financial components of the MSC. Supplemental/Bid Bulletins issued for clarifications and amendments (at least **7 calendar days** before bid submission deadline). 13.3 **Receipt and Opening of Bids:** - 13.3.1 Bid proposal submitted on or before the date specified in the Invitation to Bid, within **45 to 60 calendar days** from publication and posting; - 13.3.2 Opening of bids in presence of qualified bidders and MGSP BAC; - 13.3.3 MGSP BAC ensures integrity, security, and confidentiality of all proposals. 13.4 **Bid Evaluation:** - 13.4.1 MGSP BAC determines winning MGSP using prescribed evaluation criteria; - 13.4.2 Pass/fail on financial, technical, and legal qualifications (Part 1); lowest price (Part 2); - 13.4.3 Minimum evaluation criteria: (a) Qualification of Proponent; (b) Proposed Technology (least-cost, 24/7 service, 100% household electrification, PDC-compliant, RPS Off-Grid compliant); (c) Institutional Arrangements; (d) Financial Proposal; - 13.4.4 Upon MGSP BAC determination of winning MGSP, the **DU's MGSP has the right to tender a lower all-in price offer within 7 calendar days** after MGSP BAC publishes all price offers; if DU matches, award goes to DU's MGSP; otherwise award goes to winning MGSP; - 13.4.5 NPC and winning MGSP execute MSC within **15 calendar days** after successful CSP; - 13.4.6 Entire procedure from pre-qualification to ERC submission: **not longer than 90 calendar days** after all published requirements completely submitted; - 13.4.7 Award + MSC execution + complete ERC application filing constitutes provisional authority for the MGSP/DU to start collection of specified rate upon commencement of operations. ERC schedules hearing within **30 calendar days** of complete application; final decision within **135 calendar days** of complete application; - 13.4.8 CSP is successful when at least one (1) qualified bid received. If CSP fails, NPC continues missionary electrification until next CSP. --- ## SECTION 14. CSP FOR MGSP IN DU-IDENTIFIED UNSERVED AREAS Follows same process as §13 with the following differences: 14.1 Invitation to Bid requirements same as §13.1. 14.2 Pre-bid Conference same as §13.2. 14.3 Receipt and Opening of Bids same as §13.3 (45 to 60 calendar days from publication). 14.4 **Bid Evaluation:** - 14.4.1 MGSP BAC publishes all price offers on its website; - 14.4.2 Pass/fail criteria and lowest price same as §13.4.2; - 14.4.3 **DU has the right to tender a lower all-in price offer within 7 calendar days** after MGSP BAC publishes all price offers; - 14.4.4 If DU tenders lower offer, award goes to DU; otherwise lowest-priced MGSP wins subject to post-qualification (same minimum evaluation criteria as §13.4.3); - 14.4.5 MSC executed within **15 calendar days** after successful CSP; - 14.4.6 Entire procedure: **not longer than 90 calendar days** after publication of DU-identified unserved areas; - 14.4.7 Award + MSC execution + complete ERC application = provisional authority. ERC hearing within **30 calendar days**; final decision within **135 calendar days**; - 14.4.8 CSP is successful when at least one (1) qualified bid received. If no offers for a DU-identified area, the **DU must electrify via DU-operated microgrid within 18 months** from lapse of the 30-day MGSP offer period. --- ## SECTION 15. NOMINATION OF AREAS BY MGSP PROPONENTS (SWISS CHALLENGE / UNSOLICITED PROPOSAL) Swiss Challenge for Unsolicited Proposal (USP) may be adopted as an alternative mode in selecting an MGSP. Applicable when the target area is currently assigned to or served by NPC, or when: (15.1.1) the area is unserved or underserved; and (15.1.2) the area is not yet published as DOE-declared or DU-identified in the NTER. 15.2–15.5: USP submission, receipt, acceptance (completeness check within **5 calendar days**), evaluation (qualified or not within **30 calendar days**); First-In-Time approach for multiple USPs on the same area; evaluation criteria same as §13.4.3. 15.6 **Swiss Challenge Process:** Original Proposal subjected to Swiss Challenge. - 15.6.1 Target area published on DOE website, included in DOE-declared list; publication also serves as Invitation to Bid; - 15.6.2 Pre-bid Conference within **14 calendar days** of publication; - 15.6.3 Comparative proposals submitted within **42 calendar days** from publication; two sealed envelopes (technical + financial); - 15.6.4 Bid Evaluation: MGSP BAC recommends lowest comparative proposal within **14 calendar days**; notifies Original Proponent immediately; Original Proponent has **15 calendar days** to match; if matched, Original Proponent wins; if not, comparative proponent/lowest calculated bidder wins; Original Proponent wins outright if no comparative bids received or comparative bids fail requirements; MGSP BAC concludes selection within **50 calendar days** of Comparative Bids opening; MSC executed within **15 calendar days** of successful bidding. --- ## SECTION 16. NPC MISSIONARY ELECTRIFICATION 16.1 If DOE-declared area CSP fails (no participants or no awarded MGSP), NPC shall continue missionary electrification function by energizing the area within **18 months** from availability of funding source (priority by NPC Board); NPC shall continue until an MGSP is awarded in the next CSP. 16.2 NPC shall source funding from national government or other identified fund sources and grants. 16.3 NPC shall prepare and submit to DOE a comprehensive and detailed **Graduation Plan within 180 calendar days** of IRR effectivity; updated annually. Shall include: (16.3.1) areas to be included in DOE-declared unserved/underserved lists; and (16.3.2) criteria for inclusion in DOE-declared lists. --- ## PART V — REGULATORY FRAMEWORK ## SECTION 17. PERMITTING PROCESS 17.1 Notice/Acknowledgement (provisional authority) issued by ERC within **75 calendar days** of DOE award + MSC execution + receipt of complete ERC application. 17.2 ERC hearing scheduled and conducted within **30 calendar days** of complete application. 17.3 Final ATO decision issued within **135 calendar days** of complete application. 17.4 COC secured from ERC prior to commercial operation. 17.5 EVOSS Act (RA 11234) applies to MGSP permitting; **RA 11234 §§13, 14, 15, and 16 timeframes are halved** for MGSPs unless specific timeframes are otherwise provided in the Act or this IRR. --- ## SECTION 18. ISSUANCE OF RATES 18.1 ERC evaluates and determines an MGSP's or DU-operated microgrid system's full cost, approved subsidy (if applicable), and retail rate imposed on end-users. 18.2 ERC shall issue rules on UC-ME availment in accordance with DOE's existing policy on subsidy rationalization within **120 calendar days** of IRR effectivity. --- ## SECTION 19. TECHNICAL AND SERVICES PERFORMANCE STANDARDS ERC shall develop, establish, and promulgate (in consultation with DOE, NPC, NEA, and other relevant agencies and private stakeholders) the minimum technical and service performance standards for microgrid systems within **120 calendar days** from effectivity of the Act. Standards shall be compliant with PDC, Philippine Small Grid Guidelines, Philippine Grid Code, and other relevant rules and regulations. --- ## PART VI — ADMINISTRATION OF UC-ME SUBSIDY ## SECTION 20. COLLECTION AND DISBURSEMENT PROCEDURE 20.1 ERC shall issue a resolution on recovery, collection, and availment of UC-ME by NPC for the microgrid within **90 calendar days** of IRR effectivity. 20.2 NPC shall submit to ERC the guidelines for disbursement of UC-ME to MGSPs within **60 calendar days** of IRR effectivity. 20.3 UC-ME subsidy shall be released within **45 calendar days** from submission to NPC of the UC-ME subsidy claim with complete documentary requirements. --- ## PART VII — PROCEDURE FOR THE TRANSITION OF SERVICE ## SECTION 21. EXPIRATION OF MSC Upon expiration of an MSC where distribution grid extension occurs: DU has the option to acquire the microgrid system and resume its obligation to provide distribution services, subject to ERC approval and §22. If no distribution grid extension upon MSC expiration: a CSP shall be conducted per §13 or §14 (whichever applicable); Provided, the MGSP with the expiring MSC in the area that participates in the CSP has the **exclusive right to tender a lower offer within 7 calendar days** from announcement of the winning MGSP. --- ## SECTION 22. DETAILED TRANSITION OF SERVICE PROCEDURE DOE together with NPC shall issue, within **180 calendar days** of IRR effectivity, a detailed procedure for the transition of service from NPC or a DU to an MGSP, or from an existing MGSP to a DU or another MGSP. Transition shall not exceed **90 calendar days** from completion of the CSP. --- ## PART VIII — FUNCTIONS AND RESPONSIBILITIES ## SECTION 23. DOE 23.1 Prepare and publish annually the NTER on its website, after public/private stakeholder consultation; 23.2 Determine (in consultation with DUs) the timeframe for LTER/DDP compliance; 23.3 Receive and verify petitions from end-users for area declaration; 23.4 Identify and declare unserved and underserved areas regularly; 23.5 Conduct all CSPs for DOE-declared and DU-identified unserved areas, with NPC and NEA assistance; 23.6 Monitor operations of all awarded MGSPs and their MSCs; may conduct motu proprio review upon reasonable grounds for noncompliance; 23.7 Determine a detailed procedure for the transition of service; 23.8 Provide support to ERC in developing minimum technical and service performance standards per §19; 23.9 Modify timelines regarding document submissions in consultation with concerned stakeholders; and 23.10 Perform all other powers and functions necessary to attain the objectives of the Act. --- ## SECTION 24. ERC 24.1 Simplified and streamlined permitting for MGSPs and DU-operated microgrid systems; issue ATO and COC; 24.2 Develop, establish, and promulgate minimum technical and service performance standards for microgrid systems within **120 calendar days** from Act effectivity; 24.3 Review and act on all MSCs within timeframes consistent with §17; 24.4 Exercise rate-making power: - 24.4.1 Determine MGSP or DU-operated system's full cost, approved subsidy, and retail rate; - 24.4.2 Determine equitable recovery mechanism for MGSP assets at MSC expiration; - 24.4.3 Upon distribution grid extension and DU decision to acquire microgrid system: review DU's ERC application; any connection resulting in rate increase requires ERC approval; 24.5 Monitor compliance of all MGSPs with their ATOs and COCs; 24.6 Issue rules for UC-ME availment of MGSPs per DOE Rationalization Policy; 24.7 Issue resolution on UC-ME recovery, collection, and availment by NPC for microgrid; 24.8 Exercise original and exclusive jurisdiction over all cases involving exercise of the above powers and all cases involving disputes under the Act, except competition cases under RA 10667 (Philippine Competition Act); and 24.9 Process DU's application for renewal of Certificate of Public Convenience and Necessity even with presence of an MGSP in its franchise area (per RA 11646 §18). --- ## SECTION 25. NEA 25.1 Assist ECs in preparing their LTERs; 25.2 Evaluate and verify EC unserved/underserved areas; submit recommendations to DOE **by 15 March** each year; 25.3 If authorized by DOE to conduct CSPs, comply with CSP procedure, guidelines, and timeframes (§§11–15); 25.4 Provide support to ERC in developing minimum technical and service performance standards per §19; 25.5 Provide support in DOE's issuance of MGSP technical, financial, and other requirements guidelines in coordination with NPC and TransCo; and 25.6 Issue guidelines for EC joint venture engagement. --- ## SECTION 26. NPC 26.1 Prepare and execute annually the NPC Graduation Plan per §16.2; 26.2 Continue performing missionary electrification in areas with no participating or awarded MGSP per §16.1; 26.3 If authorized by DOE to conduct CSPs, comply with CSP procedure, guidelines, and timeframes (§§11–15); 26.4 Execute MSC with awarded MGSP/DU per template; 26.5 Exclusively collect from DUs, administer, and apply UC-ME; 26.6 Provide simplified and streamlined UC-ME subsidy claim processing procedures; 26.7 Release UC-ME subsidy within **45 calendar days** from submission of complete documentary requirements; 26.8 Provide support in DOE's issuance of MGSP guidelines in coordination with NEA and TransCo; 26.9 Provide support to ERC in developing minimum technical and service performance standards per §19; and 26.10 Provide support in the determination of a detailed procedure for transition of service. --- ## SECTION 27. DU 27.1 Develop the LTER and submit annually to DOE (through NEA for ECs); 27.2 Integrate LTER in its DDP; and 27.3 DU may enter into a joint venture for microgrid installation and operation consistent with RA 11646 §15. --- ## SECTION 28. MGSP PROPONENT 28.1 Secure necessary permits and licenses from relevant government agencies; and 28.2 Comply with all provisions including financial, technical, environmental, and other performance standards for the MGSP, including MSC provisions with NPC. --- ## SECTION 29. MGSP AND DU'S MGSP 29.1 Build, operate, maintain, and control microgrid system in accordance with MSC, the Act, and other applicable laws, rules, and regulations; 29.2 Supply load requirements of its area of operation; faithfully implement electrification work program; comply with all MSC obligations; 29.3 Prepare and submit any report required by ERC and DOE per their powers under RA 11646 §§11–12; 29.4 Ensure end-user safety and protection at all times; 29.5 **MGSP exemptions:** - 29.5.1 Public listing requirement under RA 9136 §28; and - 29.5.2 Market share limitation under RA 9136 §45(a). 29.6 **End-user exemptions** (in off-grid unserved/underserved areas): - 29.6.1 Payment of FIT allowance under RA 9513 §7; and - 29.6.2 Payment of universal charges under RA 9136 §34. --- ## SECTION 30. STRENGTHENING AND EXPANSION OF EPIMB IN THE DOE DOE Secretary shall submit organizational structure and staffing complement to DBM within **180 calendar days** of IRR effectivity, consistent with civil service rules. Pending DBM approval, DOE Secretary may designate EPIMB personnel to perform duties under the Act and IRR. --- ## SECTION 31. CREATION OF A SPECIAL DIVISION IN THE ERC A special Division attached to the appropriate ERC Service Department is created for effective Act implementation. Organizational structure and staffing complement determined by ERC Commission and approved by the Office of the President per existing laws. Budget taken from current ERC appropriations; thereafter included in GAA. --- ## SECTION 32. NPC'S AUTHORITY TO SECURE REQUIRED RESOURCES NPC authorized to secure all resources (financial, human, logistics) necessary to fully comply with its duties under this IRR. --- ## SECTION 33. TRANSITION FROM REVISED QTP GUIDELINES Ongoing QTP selections pursuant to DC2004-06-006, DC2005-12-011, and DC2019-11-0015 shall only proceed when the DOE or DU conducted its bid opening and a qualified QTP was selected **on or before** the effectivity of this IRR. --- ## PART IX — PROHIBITED ACTS AND CRIMINAL AND ADMINISTRATIVE PENALTIES ## SECTION 34. PROHIBITED ACTS Any person, natural or juridical, is prohibited from: - 34.1 Refusal to allow the installation of any microgrid system by an MGSP (provided requirements under RA 11646 §§5–9 are complied with); - 34.2 Refusal to turn over the provision of integrated power generation and distribution services to an MGSP, or distribution services and electricity supply to a DU; - 34.3 Refusal to allow a DU to acquire a microgrid system per RA 11646 §17; - 34.4 Imposition of new contractual terms and charges on end-users not part of the MSC or not approved by ERC; and - 34.5 Failure to comply with functions, responsibilities, and timeframes in RA 11646 §§5–19. --- ## SECTION 35. CRIMINAL AND ADMINISTRATIVE PENALTIES 35.1 **Criminal penalties** (upon conviction, imposed on responsible officers and employees of any private corporation or government agency): - 35.1.1 Violation of prohibited acts 34.1, 34.2, 34.3 — imprisonment of **6 to 8 years** or fine of **PHP 75,000,000 to PHP 100,000,000**; - 35.1.2 Violation of prohibited act 34.4 — imprisonment of **4 to 6 years** or fine of **PHP 50,000,000 to PHP 75,000,000**; - 35.1.3 Violation of prohibited act 34.5 — imprisonment of **2 to 4 years** or fine of **PHP 25,000,000 to PHP 50,000,000**. Aiding, abetting, or causing commission by another incurs same liability as the principal. 35.2 **Administrative penalties** (government officers/employees violating §34.5 of the Act): - 35.2.1 First offense — 30 calendar days suspension without pay + mandatory Values Orientation Program; - 35.2.2 Second offense — 3 months suspension without pay; - 35.2.3 Third offense — Dismissal, perpetual disqualification from public service, and forfeiture of retirement benefits. --- ## PART X — FINAL PROVISIONS ## SECTION 36. AMENDATORY CLAUSE This IRR explicitly amends: - CA 146 §16(c) (Public Service Act); - EO 172, Series of 1987 §8 (ERB creation); - RA 9136 §§28, 43, 45(a), 51(l), 59, and 70; - RA 11234 §§13, 14, 15, and 16; and - Any other law, presidential decree or issuance, executive order, letter of instruction, rules, and regulations inconsistent with the provisions of this IRR. --- ## SECTION 37. SEPARABILITY CLAUSE --- ## SECTION 38. REPEALING CLAUSE Any law, presidential decree or issuance, executive order, letter of instruction, rules, and regulations, and legislative or administrative franchises inconsistent with the provisions of this IRR is hereby repealed or modified accordingly. --- ## SECTION 39. EFFECTIVITY Takes effect 15 calendar days following complete publication in at least two (2) newspapers of general circulation. Copies filed with UP Law Center-ONAR. Issued on 21 May 2022 at Energy Center, Bonifacio Global City, Taguig City. Secretary Alfonso G. Cusi --- ## ANNEX A — CHECKLIST OF REQUIREMENTS FOR MICROGRID SYSTEM PROVIDERS **A. Legal Requirements:** - Individual/Proprietorship: Birth Certificate (PSA), current Business Permit, DTI Registration (if applicable), Special Power of Attorney to negotiate and enter into MGSP Service Contract with EC. - Corporation/JV/Consortium/Cooperative: By-Laws and AOI (including corporate stockholders' BL and AOI), Board Resolution authorizing representative to negotiate and enter into MSC with DU/NPC, latest GIS (and corporate stockholders' GIS), current Business Permit, Organizational Chart, government-issued ID of authorized representatives. **B. Technical Requirements:** - Full details of technical skills and experience of key management team; - Proposed arrangements for acquisition, training, and contracting of necessary expertise; - Statement certifying intent to design, construct, operate, and maintain generation and distribution systems in full compliance with applicable laws including EPIRA and attendant rules. **C. Financial Requirements:** - Latest Annual Report and/or Audited Financial Statements (last 2 years + latest Unaudited FS signed by President/CFO if Audited FS is more than 6 months old); - Bank certification of cash balance; - Projected Cash Flow Statement for 2 years (or 5 years for geothermal and large hydro), showing fund sources and uses for the offered area, other applied RE areas, and existing service/operating contracts; - Supporting: Sworn Letter of Commitment from stockholders for additional equity/cash infusion, or bank-approved loan/credit line earmarked for proposed operations. - Special provisions for newly organized corporations (≤2 years old) and subsidiary corporations (>2 years old) with insufficient funds: parent company financial documents and Letter of Guaranty required.