Question & AnswerQ&A (OEA)
These rules are known and cited as the rules and regulations governing the construction and operation of mini-hydro-electric (mini-hydro) power plants.
A mini-hydroelectric power plant is an electric-power-generating plant which (a) utilizes kinetic energy of falling or running water to turn a turbine generator producing electricity; and (b) has an installed capacity of not less than 101 kilowatts nor more than 10,000 kilowatts.
Any person, including individuals, cooperatives, corporations, or associations duly registered in the Philippines, not disqualified by law, may apply for such authority.
The applicant must have a minimum working capital of at least Thirty-Five Thousand Pesos (P35,000) per kilowatt for the first two years, a current ratio of 1.5:1, and a debt-equity ratio not exceeding 3:1, among other indicators proving financial capability.
Documents include a Certificate of Registration, proposed Memorandum of Agreement with power purchasers, a comprehensive feasibility study, processing fee, and other required papers as determined by the Office of Energy Affairs (OEA).
Rights include full exemption from income taxes for seven years from commercial operation, exemption from tariff duties and VAT on importations for seven years, special realty tax rates, exemption from VAT on power sales, and tax credits for purchasing domestic equipment, among others.
Obligations include commencing construction within 12 months, complying with legal and environmental requirements, maintaining detailed records, providing quarterly reports, safeguarding the watershed, allowing OEA inspections, employing Filipino personnel, posting bonds for faithful performance, and promoting maximum efficiency and safety.
The operating contract is for 25 years and is renewable for another 25 years, unless sooner revoked for cause.
Revocation can occur due to failure to comply with conditions and requirements under the license or operating contract, and violation of provisions in the operating contract or Republic Act No. 7156.
NAPOCOR shall purchase the maximum electricity generated if the plant cannot connect with other utilities or end-users. It must also allow developers to deliver power through its existing lines under mutually agreed or regulator-set terms.
Avoided cost refers to the costs the affected electrical grids would have incurred if NAPOCOR generated the equivalent electric power itself before selling power to third parties.
The OEA must notify the applicant within two days, and the applicant has 15 working days to correct the defects. Failure to comply leads to abandonment and return of the application.
'Nonexclusive development' means development of less than fifty percent (50%) of the mini-hydropower potential of the proposed site, where more than one developer may be authorized to develop the site.
The developer must restore or re-engineer such water outlets or conduits at its own expense to ensure existing users are not permanently deprived of their use.
Construction must commence within twelve (12) months from the awarding of the contract, with a possible extension of another twelve (12) months for justifiable reasons.