QuestionsQuestions (DOE Department Circular No. DC2015-06-0008)
Its stated basis is the policy and mandates of EPIRA, particularly: (1) ensuring reliable, secure, and affordable power supply; (2) promoting transparent and reasonable electricity pricing in a regime of competition; (3) encouraging private capital and broader ownership in the power sector; and (4) protecting public interest. It also cites EPIRA’s supervisory role over the restructuring of the electric power industry and DOE’s rule-making functions.
Section 23 of EPIRA requires all DUs to supply electricity to their captive market in the least-cost manner, subject to collection of retail rate duty approved by the ERC. The Circular uses this to justify why DUs must contract power supply properly and least-costly to serve captive demand.
The Circular aims to ensure security and certainty of electricity prices for end-users in the long-term by making procurement transparent, competitive, and least-cost—while protecting the general public and reducing exposure of end-users to spot price volatility.
They are: (a) increase transparency to reduce risks; (b) promote and instill competition; (c) ascertain least-cost outcomes likely to withstand future challenges; and (d) protect the interest of the general public.
It applies to entities that own, operate, or control distribution systems in main grid and off-grid areas, including Electric Cooperatives (ECs), Private Investor-Owned Distribution Utilities (PlOUs), LGU-owned and operated distribution utilities (LGUOUs), Multi-Purpose Cooperatives authorized to operate electric systems, entities authorized within economic zones, and other duly authorized distribution entities.
After effectivity, all DUs must procure PSAs only through a CSP conducted by a Third Party duly recognized by the ERC and DOE. For ECs, the Third Party must also be duly recognized by NEA.
It emphasizes aggregation to achieve greater efficiencies and transparency by pooling un-contracted demand among DUs. In the Circular, “aggregation” refers to wholesale demand and energy requirements of DUs, not contestable markets under RCOA.
They refer to energy and demand not yet procured individually or collectively by DUs, excluding energy and capacity already covered by PSAs that have been filed for approval before the ERC.
Section 4 provides that ERC, upon determination and in coordination with DOE, will issue supplemental guidelines to guide DUs and the Third Party. Section 6 states DOE (through EPIMB) together with ERC will monitor compliance with CSP conditions and compliance with provisions of PSAs.
The Circular has prospective application only. It will not apply to PSAs with tariff rates already approved and/or already filed for approval by the ERC before the Circular’s effectivity.
It mandates that the PSA terms and conditions used in CSP outcomes must follow a uniform template issued by the ERC in coordination with DOE, to standardize PSA provisions and support transparency and consistency.
All DUs must use a Third Party recognized by ERC and DOE. For ECs specifically, the Third Party must also be recognized by NEA—reflecting EC governance under NEA.
Section 7 states ERC, under EPIRA powers, will establish and impose existing fines and/or penalties for non-compliance by electric power industry participants to support enforcement of the Circular. Section 6 also provides monitoring by DOE (EPIMB) with ERC.
No. Section 8 clarifies that nothing in the Circular is construed to amend, supersede, or repeal existing mechanisms, institutions, or responsibilities under existing law, rules, or contracts.
It provides that if any provision is declared unconstitutional or invalid, the remaining provisions not affected remain in force—preserving the rest of the Circular’s validity and operation.
It takes effect immediately upon publication in two newspapers of general circulation. It remains in effect until otherwise revoked.