DEPARTMENT CIRCULAR NO. DC2022-06-0026 ADOPTING AMENDMENTS TO THE RENEWABLE ENERGY MARKET (REM) RULES (Provisions for the Submission of Data by the National Transmission Corporation to the Renewable Energy (RE) Registrar, Obligations of the REM Governance Committee (RGC) and Renewable Energy Certificate (REC) Issuance, and Additional Seats in the RGC for the Retail Electricity Suppliers and for Small REM Generators) [Note: Issued June 20, 2022. Amends DC2019-12-0016 (REM Rules). Secretary Cusi (resigned June 30, 2022). Signature block garbled in OCR.] WHEREAS, Republic Act (RA) No. 9513, otherwise known as the "Renewable Energy Act of 2008" or the "RE Act," declares as a policy of the State to increase the utilization of RE by institutionalizing the development of national and local capabilities in the use of RE systems, and promoting their efficient and cost-effective commercial application by providing fiscal and non-fiscal incentives; WHEREAS, Section 6, Chapter III of the RE Act created the Renewable Portfolio Standards (RPS) which sets a minimum percentage of generation from eligible renewable energy (RE) resources and determines upon which sector the RPS shall be imposed on a per grid basis, within one (1) year from effectivity of the RE Act; WHEREAS, pursuant to Section 8 of the RE Act, the Renewable Energy Market (REM) shall be established by the DOE and shall direct PEMC to (i) implement changes to the Wholesale Electricity Spot Market (WESM) Rules in order to incorporate the rules specific to the operation of the REM under the WESM and (ii) under supervision of the DOE, shall also establish the Renewable Energy Registrar (RE Registrar); WHEREAS, Department Circular (DC) Nos. DC2017-12-0015 and DC2018-08-0024 were promulgated by the DOE, prescribing the rules and guidelines governing the establishment of the Renewable Portfolio Standards for On-Grid and Off-Grid Areas (RPS Rules), respectively; WHEREAS, on 04 December 2019, the DOE promulgated the REM Rules through DC No. DC2019-12-0016 to facilitate the compliance of the Mandated Participants with the RPS; WHEREAS, on 09 July 2021, the DOE promulgated further amendments to the WESM Rules for the operation of the REM through DC No. DC2021-07-0024 to harmonize the WESM Rules with the policies stipulated in Section 8 of the RE Act and the REM Rules; WHEREAS, on 04 October 2021, the DOE adopted the REM Manuals for Registration, RE Certificates Allocation, Investigation Procedures and Penalty, and Dispute Resolution through DC No. DC2021-10-0032 to operationalize the relevant provisions in the REM Rules; WHEREAS, the REM Governance Committee (RGC) shall approve or disapprove proposed amendments to the REM Rules and refer approved proposals to the Philippine Electricity Market (PEM) Board for endorsement to the DOE for the latter's final approval and promulgation pursuant to Clause 7.1.1.1(b) of the REM Rules; WHEREAS, on 19 April 2021, on 29 November 2021 and on 09 March 2022, the PEM Board formally endorsed for the DOE's final approval the following proposed amendments to the REM Rules: | Proposed Amendment | RGC Resolution | PEM Board Resolution | |---|---|---| | REM Rules on the Extension of Timeline of Data Provision by TransCo to the RE Registrar | No. 2021-01 | 2021-34-01 | | REM Rules on Obligations of the RGC and REC Issuance | No. 2021-03 | 2021-40-07 | | Proposed Amendment to the REM Rules on the Additional 6th Seat in the RGC for the Small REM Generators and the Additional 7th Seat for the Retail Electricity Supplier | No. 2022-01 | 2022-45-10 | WHEREAS, the RPS Composite Team (RPSCT) reviewed and assessed the Rule Change Proposals to be in line with the objectives of the RE Act and the REM Rules. Thus, on 11 March 2022, the RPSCT through its Resolution No. RPSCT2022-03-11-001, resolved to approve the conduct of public consultation on the proposed amendments to the REM Rules; WHEREAS, the DOE conducted a series of virtual public consultations on the proposed changes to the REM Rules on the following dates: | Date | Region | |---|---| | 18 March 2022 | Luzon | | 21 March 2022 | Visayas and Mindanao | NOW, THEREFORE, pursuant to its authority under the RE Act and the REM Rules, the DOE hereby adopts, issues, and promulgates the following amendments to the REM Rules: --- Section 1. Amendments to the REM Rules. 1.1. RGC Composition — 7 Members (expanded from 5). Clause 1.3.2.1, Chapter 1 (Introduction) under Annex A of the REM Rules is amended to read as: "1.3.2.1 The RGC shall be made up of seven (7) members, consisting of: (a) One representative from the Registrar; (b) One independent member who shall be selected from the independent members of the PEM Board; (c) One representative from the Private Distribution Utilities; (d) One representative from the Electric Cooperatives; (e) One representative from the REM Generators with capacity of 5MW or greater; (f) One representative from REM Generators with capacity less than 5MW; and (g) One representative from the Retail Electricity Suppliers." In view of the amendment above, Clause 1.3.2.4 is hereby deleted. 1.2. RGC Liability Standard. Clause 1.3.4.6, Chapter 1 under Annex A of the REM Rules is amended to read as: "1.3.4.6 The PEM Board, RGC or their respective members shall not be liable for any damage or loss suffered by any REM Member, or any other entity or person, unless the same was due to bad faith, manifest partiality or gross negligence." 1.3. REM Members — Retail Electricity Suppliers included. Clause 2.5(a), Chapter 2 (Membership and Registration) under Annex A of the REM Rules is amended to add "Retail Electricity Supplier" to the standard of care applicable to each REM Member's duties and obligations. 1.4. GEOP REC Attribution. Clause 3.1.1.9, Chapter 3 (Market Operations) under Annex A of the REM Rules is amended to read as: "3.1.1.9 If the Renewable Electricity is generated by a REM Generator registered under the GEOP, then the Registrar shall issue any RECs created thereof to the host Distribution Utility that registered the REM Generator in the Registrar, in accordance with the GEOP Rules, provided, that the corresponding energy shall also be added into the net electricity sales of the host Distribution Utility for the calculation of its RPS requirements." 1.5. FIT Allocation Timeline Extended. Clauses 3.2.1.2 and 3.2.2.3, Chapter 3 under Annex A of the REM Rules are amended as follows: - Clause 3.2.1.2: FIT-All Fund Administrator shall submit data to the Registrar **no later than sixty-five (65) calendar days** after the end of the WESM Billing Period. - Clause 3.2.2.3: Registrar shall notify each On-Grid Mandated Participant of their Monthly FIT Generation Share and issue the corresponding RECs **no later than seventy-five (75) calendar days** after the end of the WESM Billing Period. 1.6. Excess RECs Credited Back. Clause 3.3.3, Chapter 3 under Annex A of the REM Rules is amended: "3.3.3.3 If a Mandated Participant surrenders RECs in excess of its Annual RPS Obligation in respect of an RPS Compliance Period, then the Registrar shall credit such RECs in favor of the concerned Mandated Participant for trading in the REM." 1.7. REC Term Tolled During Disputes. Clause 3.5.1.9, Chapter 3 under Annex A of the REM Rules is amended to read as: "3.5.1.9 If a REC is put on hold pursuant to Clause 3.5.1.8, its term shall be tolled from the time the Dispute was lodged with the Registrar and until the Dispute is finally resolved. The remaining term of the REC shall re-commence after the Dispute has been resolved." --- Section 2. Separability Clause. If any provision of this Circular is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting. Section 3. Repealing Clause. All previous issuances, rules and regulations inconsistent with this Circular are hereby repealed, amended or modified accordingly. Section 4. Effectivity. This Circular shall take effect fifteen (15) days after publication in at least two (2) newspapers of general circulation. Copies of this Circular shall be filed with the University of the Philippines Law Center — Office of the National Administrative Register. Issued on June 20, 2022, at Energy Center, Rizal Drive, Bonifacio Global City, Taguig City. Secretary