Title
Amended Guidelines for Electricity Rates in Missionary Areas
Law
Erc No. 21, S. 2011
Decision Date
Aug 22, 2011
ERC Resolution No. 21-11 sets and approves electricity generation rates and subsidies for Missionary Electrification areas in the Philippines, implementing the mandates of the Electric Power Industry Reform Act and the Renewable Energy Act, while providing cash incentives for Renewable Energy Developers and addressing the selection process for New Power Providers.
subsidies
cash incentives
reconciliation

Legal basis and related laws

  • The ERC acts under Section 43(t) of Republic Act No. 9136 (Electric Power Industry Reform Act of 2001 or EPIRA), authorizing regulatory functions to ensure successful restructuring and modernization of the electric power industry.
  • Section 70 of EPIRA provides that the missionary electrification function of NPC-SPUG is funded from missionary-area revenues and a Universal Charge collected from all electricity end-users as determined by the ERC.
  • Section 34 of EPIRA empowers the ERC to determine, fix, and approve a Universal Charge imposed on all electricity end-users.
  • Republic Act No. 9513 (Renewable Energy Act of 2008) is the framework for renewable-energy incentives and related missionary electrification requirements.
  • Section 15(h) of Republic Act No. 9513 grants renewable energy developers established after its effectivity a cash incentive equivalent to fifty percent (50%) of the Universal Charge for power needed to service missionary areas where they operate, chargeable against Universal Charge for Missionary Electrification (UC-ME).
  • Section 12 of Republic Act No. 9513 requires NPC-SPUG (or its successors-in-interest and/or qualified third parties in off-grid areas) to source a minimum percentage of total annual generation from available renewable energy resources in the area, upon recommendation of the National Renewable Energy Board (NREB), as determined by the Department of Energy (DOE).
  • Section 7 of Republic Act No. 9513 and Section 5 of its Implementing Rules and Regulations (IRR) mandate the ERC, in consultation with NREB, to formulate and promulgate the Feed-In Tariff System (FITS) Rules.
  • The ERC had previously adopted Resolution No. 16, Series of 2010, titled “Resolution Adopting the Feed-In Tariff (FIT) Rules,” establishing the FIT system and the method for determining and approving the Feed-In Tariff (FIT) and Feed-In Tariff Allowances (FIT-AII).

Policy purpose of the amended guidelines

  • The ERC adopts the amended guidelines to implement the Renewable Energy Act’s mandate, including the cash incentive for renewable energy developers.
  • The ERC amends the Subsidized Approved Generation Rate (SAGR) Guidelines to align the missionary electrification rate/subsidy setting with the FIT Rules.
  • The ERC requires procedural changes for UC-ME-related petitions and true-up petitions to support implementation.
  • The ERC formulates the amended guidelines through thorough and due deliberation before adoption.

Core operative adoption

  • The ERC adopts the Amended Guidelines for the Setting and Approval of Electricity Generation Rates and Subsidies for Missionary Electrification Areas, attached as Annex “A” and made an integral part of the Resolution.
  • The adoption is expressly stated as the ERC’s “RESOLVES” to adopt the amended guidelines as attached.

Petition and filing requirements (UC-ME)

  • The amended guidelines implement a requirement that NPC SPUG must file a petition to set the UC-ME on or before March 15 of every calendar year.

True-up petition changes

  • The amended guidelines dispense with the filing of quarterly true-up petition.

Conformity with FIT system

  • The amended guidelines conform the missionary electrification electricity generation rate and subsidy setting to the methodology under the ERC’s FIT Rules, including how FIT and FIT-AII are determined and approved.

Consultation and adoption process

  • The ERC issued a notice soliciting comments on the 1st draft of the proposed amended SAGR guidelines from interested parties not later than March 11, 2011.
  • The ERC issued another notice soliciting comments on the 2nd draft of the proposed amended SAGR guidelines from interested parties not later than April 25, 2011 and setting public consultation on May 5, 2011.
  • Public consultation on the 2nd draft was held on May 5, 2011.
  • Only Manila Electric Company (MERALCO) submitted comments on the 2nd draft by the stated deadline.

Practical targets and stakeholder coverage

  • The amended guidelines directly implement the UC-ME and missionary electrification framework involving NPC-SPUG and the funding mechanics tied to the Universal Charge.
  • The amended guidelines address participation by New Power Providers (NPPs) in Delegated NPC SPUG Areas.
  • The amended guidelines account for renewable energy developers operating for missionary electrification, including incentives chargeable to UC-ME.
  • The amended guidelines cover distribution utilities as recipients of the Resolution notice and guidance through furnished copies.

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