rules and regulations to implement the provisions of the Act. Click to View Complete PDF File of Implementing Rules and Regulation for Republic Act No. Proposed Amendments to the Implementing Rules and Regulations (IRR) of Republic Act , Otherwise known as the “Electric. RA EPIRA-IRR. February 27, Rules and Regulations to Implement Republic Act No. , entitled “Electric Power Industry Reform Act of “.
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In addition, the implementation of Republic Act No. Inthe Congress passed Republic Act No. Under the EPIRA, key government rpira and instrumentalities were either created or their powers and functions reorganised, with the aim of fulfilling the mandate of the law. The DOE is the primary policymaking and implementing body for the industry, 2 with a mandate to supervise and control all government activities pertaining to epkra projects.
The EPIRA also created the ERC in place of the Energy Regulatory Board as an independent, quasi-judicial regulatory body, that has original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties it imposes, and over all cases involving disputes between and among participants or players in the energy sector.
The EPIRA likewise mandated the ERC to promote competition, encourage market development, ensure consumer choice and penalise abuse of market power in the electricity industry. Also created under the EPIRA was the National Transmission Corporation TRANSCOa government-owned and controlled corporation that assumed the power transmission functions of the NPC, including the authority and responsibility for the planning, construction and centralised operation and maintenance of ancillary services.
Also worth noting are certain private entities that perform key functions for the Philippine power industry:.
Both the oil and natural gas industries are subject to regulation by the DOE. InRepublic Act No. Inthe regulation of the natural gas industry was entrusted by the President of the Republic to the DOE, 14 which promulgated Department Circular No.
This chapter focuses primarily on the electric power industry, which has seen more vigorous developments in recent years. Reference is made to the oil and natural gas industries where relevant. The electric power industry is segregated into four main sectors: The generation of electric power is recognised as a business affecting the public interest and is mandated to be both competitive and open.
In contrast, the transmission of electric power is considered a regulated common electricity carrier business, requiring a national franchise and subject to the rate-making powers of the ERC. The distribution of electricity to end-users is a regulated common electricity carrier business requiring a national franchise.
Distribution of electric power to end-users may be undertaken by private distribution utilities, cooperatives, local government units and other duly authorised entities, subject to regulation by the ERC. Finally, the supply sector is also regarded as a business affecting the public interest.
Implementing Rules and Regulations
A supplier is any person or entity authorised by the ERC to sell, broker, market or aggregate electricity to end-users. The law also allows for wholesale aggregators 23 — being any person or entity, other than a generation company — to be issued with a certificate of registration by the ERC to sell electricity to distribution utilities.
To protect against market abuse and anticompetitive behaviour, the EPIRA prohibits the following persons or entities from holding any interest, whether directly or indirectly, in any generation company: In addition, the PCA empowered the PCC to prohibit or issue orders to remedy mergers that will substantially prevent, restrict or lessen competition in the relevant market or in the market for goods and services, and therefore impose financial penalties, including the energy sector.
The EPIRA also states that ‘no company or related group can own, operate or control more than 30 per cent of the installed generating capacity of a grid or 25 per cent of the national installed generating capacity’. The business of power generation by itself is not subject to foreign ownership limitations; it is not considered a public utility operation and therefore is not considered a nationalised activity that requires a national franchise.
This may only be undertaken jointly with Filipino citizens or corporations or associations 60 per cent of whose capital is owned by Filipino citizens under co-production, joint venture or production sharing agreements.
Entities engaged in the transmission and distribution of electricity are required to secure a franchise and a certificate of public convenience and necessity prior to operation.
Parties to a merger including those in the energy sector that meet the threshold requirements under the PCA are required to notify the PCC within 30 days of the signing of definitive agreements relating to the merger. Apart from the foregoing competition-related approval, there are generally no restrictions or approvals necessary in the power industry for the transfer of assets, services or control, other than for those entities with legislative franchises, which usually include a clause providing that any change in ownership will require Congressional approval.
The distribution and transmission of electric power require a national franchise.
While the generation sector is not subject to the foregoing restriction, any change in ownership or control of assets and services of a generation company must comply with the ownership threshold on installed generating capacity, as previously discussed. The transmission sector in the Philippine power industry essentially remains a monopoly. The NGCP was also awarded the legislative franchise, with a term of 50 years to engage in the business of conveying or transmitting electricity through the high-voltage backbone system of interconnected transmission lines, substations and related facilities.
As discussed above, the distribution of electricity to end-users is undertaken by distribution utilities, which may be electric cooperatives, private corporations, government-owned utilities or existing local governments.
The supply of electricity to end-users may be undertaken by a retail electricity supplier RES or aggregator duly licensed by the ERC upon the implementation of the regime of open access. An RES is a person or entity authorised by the ERC to sell, broker, market or aggregate electricity to end-users forming part of the contestable market, 40 which initially consists of end-users with an average monthly peak demand of at least kW for the proceeding 12 months.
A retail aggregator is a person or entity licensed by the ERC to engage in consolidating the electric power demand of end-users qualified for contestability for the purpose of purchasing and reselling electricity on a group basis.
Consistent with the policy of ensuring transparent and reasonable pricing of electricity in a regime of free and fair competition, 44 the EPIRA mandates TRANSCO, the NGCP and the distribution utilities to provide open and non-discriminatory access to all electricity end-users to the transmission system and distribution systems.
Further, end-users within the franchise area of a distribution utility intending to connect directly to the transmission system need to secure the prior approval of the ERC. In seeking this approval, it must be shown that the distribution utility is unwilling or unable to adequately service the power requirements of such end user 46 in deference to the franchise held by the distribution utility covering such area.
The goal of retail competition and open access on distribution wires is to provide end-users forming part of the contestable market — ultimately at household level — with their choice of electricity service providers. In the exercise of its rate-setting functions, the ERC is mandated by the EPIRA to fix such rates such as to allow the recovery of just and reasonable costs and a reasonable return. The distribution wheeling rates and connection charges, which may be charged by distribution utilities to end users, are also subject to the approval of the ERC.
Under the RSEC-WR, electric cooperatives are classified into groups based on the number and consumption of their customers. On the other hand, the maximum distribution wheeling rates to be charged by private distribution utilities operating under performance-based regulations are governed by the Rules for Setting Distribution Wheeling Rates Revised RDWR.
The Revised RDWR provides the methodology and pricing principles to be adopted by the ERC; the annual rate verification and adjustment process to be undertaken; the regulatory processes and timelines; and performance indicators, performance targets and reporting arrangements required from the distribution utilities.
A performance incentive scheme is incorporated into the RDWR, whereby a qualified distribution utility is rewarded or penalised depending on its compliance with set performance targets and indices.
The EPIRA mandated the establishment of the WESM to provide a mechanism for identifying and setting the price of actual variations from the quantities transacted under contracts between sellers and purchasers of electricity.
The DOE plans to create a transition committee for the Mindanao WESM, 59 which is expected to be commercially operational by the second quarter of The Luzon-Visayas WESM operates on the basis of a gross pool whereby all transactions for the sale and purchase of electricity are channelled through the market.
The market network model is used for the purpose of central scheduling, dispatch, pricing and settlement. Generation companies submit generation offers, and customers their demand bids for each trading interval of each trading day of the week.
The dispatch targets set by the market operator are then implemented by the NGCP, as system operator, through dispatch instructions to the trading participants. Under the current legislation, provisions have been made for the establishment of a reserves market for ancillary services 66 and a renewable energy market REM for the trading of renewable energy certificates.
Electric power industry participants are generally free to enter into bilateral contracts for the supply of electric power, and utility purchases of power are customarily driven by commercial considerations. Certain limitations on the purchases of electric power through bilateral power supply contracts by distribution utilities are imposed under the EPIRA as a measure against market abuse and anticompetitive behaviour, and to encourage participation by distribution utilities in the WESM: The ERC has not yet prescribed a specific form of competitive selection process.
Pending issuance by the ERC of a wpira competitive selection process, distribution utilities may adopt any accepted form of CSP. Direct negotiation may only be undertaken in the case of two failed competitive selection processes in which the following circumstances exist:. Power supply contracts that have not yet been filed for the approval of the ERC epkra the effectivity of the CSP Resolution must first undergo a competitive selection process before they can be accepted by the ERC.
Open access and retail competition for the contestable market of 1MW minimum users have been implemented since June Persons intending to supply electricity to end-users reaching the prescribed minimum threshold of monthly average peak demand are required to secure a licence from the ERC.
Distribution utilities are required to submit accurate information on contestable customers that have accounts with the distribution utilities to the ERC and the Central Registration Body on a monthly basis. On the basis of the data submitted by the distribution utilities, the ERC shall issue the Certificates of Contestability.
Rpira DOE and ERC have filed a motion for reconsideration and an Omnibus Motion to seek clarification on scope and coverage of the temporary restraining order, including whether the threshold for contestability may be lowered to kW on a voluntary basis. However, these motions remain unresolved as of the time of writing.
Energy dep’t seeking stakeholder comment on draft EPIRA IRR amendments
DC providing for voluntary participation of end-users with an average monthly peak demand of at least kW in the competitive retail electricity market.
Inthe RE Act, was passed into law to establish a framework to accelerate the development and advancement of renewable energy resources, and the development epirq a strategic programme to increase its utilisation. The installation targets for biomass epir hydro have not been fully subscribed upon their expiration on 31 Decemberbut the DOE is expected to extend them for two more years.
The RE Act also mandates the NREB to set the minimum percentage of generation from eligible renewable energy resources and determine on which sector the renewable energy portfolio standards RPS will be imposed on a per-grid basis. On 22 Decemberthe DOE adopted the Rules and Guidelines Governing the Establishment of the RPS for On-Grid Areas, 90 which prescribes that the share of electricity coming from renewable energy resources shall be based on the aspirational target of 35 per cent in the generation mix by The minimum annual RPS requirement per mandated participant shall eppira computed by a team in coordination with NREB, 91 subject to an initial minimum annual increment of 1 per cent to be applied to the net electricity sales of the mandated participant for the previous year.
There is no special legislation that promotes or advances particular technological developments in the RE sector. However, some of the incentives provided above that are available to RE developers are also available to manufacturers, fabricators, and suppliers of locally produced renewable energy equipment and components.
The continued growth of the renewable energy sector and introduction of new technology characterises the past years for the Philippine energy industry. As of The development of significant solar power projects has substantially contributed to the growth of the renewable energy sector.
Although there are currently no plans to have another round of FIT for solar, development of solar power project continues in the form of distributed energy resources DERs. Notwithstanding growth in the renewable energy sector, coal-fired power plants continue to account for a substantial share of the country’s energy mix. As ofcoal-fired power plants account for The energy industry has also met challenges recently, with the suspension of four ERC Commissioners for extending the implementation of the CSP Resolution to 30 April The suspension of the Commissioners has halted the operations of the ERC because, as a collegial body, it can only act after due deliberation and it requires the presence of at least three Commissioners to constitute a quorum.
The Court of Appeals has issued a day temporary restraining order against the suspension of the Commissioners. However, the motion for reconsideration against the suspension order remains unresolved. Based on the power capacity, However, the Malampaya natural gas field, which supplies 50 per cent of the epirw requirements for Luzon, is expected to run out of reserves in — In view of this, the Department of Finance is pushing ire new energy sources.
The project shall include a regasification terminal, storage, power plant and other related infrastructure.
To provide for rules and regulation governing the downstream natural gas industry, the DOE has issued Department Circular No. The President has issued Executive Order No. Renewable energy certificates are certificates issued by the Renewable Energy Registrar to an electric power industry participant indicating the energy sources produced, sold or used Rule 1, Section 3 tt of the RE Act IRR. The Banking Regulation Review. The Employment Law Review. The Intellectual Property Review.
The International Arbitration Review. The Islamic Finance and Markets Review. The Private Competition Enforcement Review. The Shipping Law Review. Editor Karen B Wong.