Question & AnswerQ&A (Republic Act No. 11646)
Republic Act No. 11646 is titled the "Microgrid Systems Act."
The main policy objectives include accelerating total electrification of unserved and underserved areas, promoting private sector participation, providing reliable and affordable electricity, and prioritizing low-cost, indigenous, renewable, and environment-friendly energy sources.
A microgrid system is a group of interconnected loads and a generation facility or decentralized power generation 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.
An MGSP is a natural or juridical person whose business includes the installation, operation, and maintenance of microgrid systems in unserved or underserved areas nationwide, excluding the need for a congressional franchise but requiring an Authority to Operate from the ERC.
The Act applies to the development of microgrid systems in unserved and underserved areas nationwide.
An MGSP must secure an Authority to Operate (ATO) issued by the Energy Regulatory Commission prior to operation.
CSP is a transparent and competitive procedure such as auction, unsolicited proposal, or Swiss challenge used to award contracts for integrated power generation and distribution services in declared unserved and underserved areas.
Penalties range from imprisonment of 2 to 8 years and/or fines from P25 million to P100 million depending on the violation, with administrative sanctions such as suspension or dismissal for government officers and employees.
UCME is a non-bypassable charge collected from all end-users and used to subsidize integrated power generation and distribution services in unserved and underserved areas not connected to the grid.
Yes, DUs can operate microgrid systems either independently or through joint ventures where the DU owns at least 51% of capital, and such systems are termed DU operated microgrid systems.
No, ownership and operation of microgrid systems by MGSPs in unserved and underserved areas are not considered as public utility operations, thus they are exempt from the franchise requirement by Congress.
The DOE is responsible for declaring unserved and underserved areas, conducting CSPs, publishing the National Total Electrification Roadmap, simplifying permitting processes, and coordinating with other agencies to implement the Act.
The Distribution Utility may acquire the microgrid system upon ERC approval and resume service, or if the DU declines, a new CSP is conducted, with the expiring MGSP having the exclusive right to tender a lower offer.
DUs may tender a lower all-in price offer within 7 days after DOE publishes all offers; if DU tenders lowest, it will electrify the area within 18 months; if not, award goes to the lowest MGSP offer with a signed MSC.
The ERC issues the Authority to Operate, develops technical standards, reviews and acts on MSCs and rate-making, monitors compliance, and exercises exclusive jurisdiction over disputes arising from the Act.