Definition of Policy

Rule 2. Declaration Of Policy

• Ensure and accelerate the total electrification of the country
• Ensure the quality, reliability, security and affordability of electricity
• 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
  • promote consumer choice
  • enhance the competitiveness of Philippine products in the global market
• Enhance the inflow of private capital and participation in the attendant risks
  • Broaden the ownership base of the power generation, transmission and distribution sectors
• Ensure fair and non-discriminatory treatment of public and private sector entities while restructuring the power industry
• Protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power
• Assure socially and environmentally compatible energy sources and infrastructure
• Promote the utilization of indigenous, new, and renewable energy resources to reduce dependence on imported energy
• Provide for an orderly and transparent Privatization of NAPOCOR
• Establish a strong and purely independent regulatory body and system to:
  • ensure consumer protection
  • enhance the competitive operation of the electricity market
• Encourage the efficient use of energy and other modalities of Demand Side Management (DSM).

Rule 3: Responsibilities Of The Doe, Erc, Napocor, Nea And Psalm

Section 1. Responsibilities of the DOE.

In addition to its existing powers and functions,

The DOE shall supervise the Restructuring of the electricity industry and do the following:

• ^a Formulate policies for a comprehensive program for the efficient and economical energy supply consistent with:

  • the national economic plan
  • the policies on environmental protection and conservation of ecological balance
  • a mechanism for the integration, rationalization, and coordination of the various energy programs of the Government

• ^b Develop and update annually the existing Philippine Energy Plan (PEP)

The PEP:

• details the integrated and comprehensive exploration, development, utilization, distribution, and conservation of energy resources, with preferential bias for environment-friendly, indigenous, and low-cost sources of energy.

• includes a policy direction towards the Privatization of government agencies related to energy, deregulation of the power and energy industry, and reduction of dependency on oil-fired plants.

• shall be submitted to Congress not later than Sept 15 annually.

• ^c Prepare and update annually a Power Development Program (PDP) and integrate the same into the PEP.

The PDP shall consider and integrate the individual or joint development plans of the transmission, generation, and distribution sectors of the electric power industry which are submitted to the DOE: Provided, however, That the ERC shall have exclusive authority covering the Grid Code and the Distribution Code; and the pertinent rules and regulations it may issue.

The DOE, following its approval of the Transmission Development Plan (TDP) prepared by the National Transmission Corporation (TRANSCO) or its Buyer or Concessionaire, shall integrate the TDP with the annual development plans of DUs and NAPOCOR, and other relevant data as are available to DOE, which shall be incorporated in the PEP.

• ^d Ensure the reliability, quality and security of supply of electric power

• ^e Following the Restructuring of the electricity sector, the DOE shall:

  1. Encourage private sector investments in the electricity sector and promote development of indigenous and Renewable Energy Sources including small-scale renewable energy generating sources
  2. Facilitate and encourage reforms in the structure and operations of DUs for greater efficiency and lower costs
  3. In consultation with other government agencies, promote a system of incentives to encourage Electric Power Industry Participants, including new Generation Companies and End-users, to provide adequate and reliable electric supply
  4. Undertake, in coordination with the ERC, NAPOCOR, NEA and the Philippine Information Agency (PIA), information campaigns to educate the public on the Restructuring of the electricity sector and Privatization of NAPOCOR assets

• ^f Jointly with the Electric Power Industry Participants, establish the WESM and formulate the detailed rules governing the operations thereof

• ^g Establish and administer programs for the exploration, transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources of all forms, whether conventional or non-conventional

• h. Exercise supervision and control over all government activities relative to energy projects in order to attain the goals embodied in Section 2 of Republic Act No. 7638

• i. 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

• j. 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: Provided, That the DOE shall endeavor to provide for an environment conducive to free and active private sector participation and investment in all energy activities

• k. Assess the requirements of, determine priorities for, provide direction to, and disseminate information resulting from energy research and development programs for the optimal development of various forms of energy production and utilization technologies

• l. Formulate and implement programs, including a system of providing incentives and penalties, for the judicious and efficient use of energy in all energy-consuming sectors of the economy

• m. Formulate and implement a program for the accelerated development of non-conventional energy systems and the promotion and commercialization of its applications

• n. Devise ways and means of giving direct benefit to the province, city, or municipality, especially the community and people affected, and equitable preferential benefit to the region that hosts the energy resource and/or the energy-generating facility: Provided, however, That the other provinces, cities, municipalities, or regions shall not be deprived of their energy requirements

• o. Encourage private enterprises engaged in energy projects, including corporations, cooperatives, and similar collective organizations, to broaden the base of their ownership and thereby encourage the widest public ownership of energy-oriented corporations

• p. Formulate such rules and regulations as may be necessary to implement the objectives

• q. As part of the reportorial requirements , the DOE shall prepare and submit to the Power Commission a semi-annual report on the status of the implementation on or before the last week of April and October of each year. Towards this end, the DOE may require reports or documents from the Electric Power Industry Participants as necessary to facilitate compliance with this mandate and subject to appropriate measures to preserve the confidentiality of proprietary or commercially sensitive information; Exercise such other powers as may be necessary or incidental to attain the objectives .

Section 2. Responsibilities of the NAPOCOR

• ^a Based on Section 70, notwithstanding the divestment and/or Privatization of NAPOCOR assets, IPP contracts and spun-off corporations, NAPOCOR shall remain as a National Government-owned and –controlled corporation to perform the missionary electrification function through the Small Power Utilities Group (SPUG) and shall be responsible for providing power generation and its associated power delivery systems in areas that are not connected to the transmission system. The missionary electrification function shall be funded from the revenues from sales in missionary areas and from the Universal Charge to be collected from all electricity End-users as determined by the ERC.

• ^b Consistent with Section 34(d), NAPOCOR shall manage under existing arrangements, an environmental charge equivalent to P0.0025 per kilowatt-hour (kWh) sales, intended solely for the rehabilitation and management of watersheds nationwide.

• ^c As per Section 47(f) , NAPOCOR shall continue to operate Agus and Pulangui complexes, which shall be owned by PSALM.

• ^d As per Section 47(j) , NAPOCOR/PSALM may continue to generate and sell electricity only from the undisposed generating assets and IPP contracts of PSALM. NAPOCOR/PSALM shall not incur any new obligations to purchase power through bilateral contracts with Generation Companies or other Suppliers.

Section 3. Responsibilities of the NEA.

• ^a NEA shall continue to be under the supervision of the DOE and shall exercise its functions under Presidential Decree No. 269, as amended by Presidential Decree No. 1645 insofar as they are consistent with the Act.

To this end, NEA shall develop and implement programs:

1. To prepare Electric Cooperatives (ECs) in operating and competing under the deregulated electricity market within 5 years from the effectivity , specifically in an environment of Open Access and retail wheeling and Retail Competition
2. To strengthen the technical capability and financial viability of ECs, through the following activities: (1) NEA may offer services to the ECs other than those related to its lending functions, for a fee duly approved by the NEA Board of Administrators; and (2) NEA may consider hiring qualified external industry management experts and shall provide their services to Page 5 of 100the ECs: Provided, That such services will not increase Retail Rates.

(iii) To review and upgrade regulatory policies with a view to enhancing the viability of the ECs as electric utilities. (b) NEA may, in exchange for adequate security and a guarantee fee, act as a guarantor for purchases of electricity in the WESM by any EC or small Distribution Utility to support their credit standing consistent with the provisions . For this purpose, the authorized capital stock of NEA is hereby increased to Fifteen Billion Pesos (P15,000,000,000.00). (c) NEA shall submit the report of ECs on their outstanding uncollected billings due from any local government unit (LGU) to the Department of Budget and Management (DBM) pursuant to Executive Order (E.O.) No. 190 issued on 21 December 1999. The DBM shall effect withholding from the Internal Revenue Allotment (IRA) of the concerned LGU: Provided, That there is a Memorandum of Agreement (MOA) executed between the LGU and NEA: Provided, further, That the uncollected billings are supported by a certification issued by the Municipality/City or Provincial Treasurer.