Franchise for Solar Para sa Bayan Corp. DERs

Scope: franchise coverage and areas

Section 1 grants a nonexclusive franchise to the grantee (and its successors or assignees) to construct, install, establish, operate, and maintain DERs and microgrids using renewable energy technology, or a hybrid thereof, to provide electric power in the public interest and for commercial purposes.
The franchise covers DERs and microgrids in the barangays, municipalities, and cities of the provinces of Aklan, Aurora, Bohol, Cagayan, Camiguin, Capiz, Compostela Valley, Davao Oriental, Guiamras, Isabela, Masbate, Misamis Occidental, Occidental Mindoro, Oriental Mindoroa, Palawan and Tawi-Tawi.
The franchise covers the municipalities and cities of Agoncillo, Alitagtag, Balayan, Balete, Bauan, Calaca, Calatagan, Cuenca, Ibaan, Laurel, Lemery, Lian, Lipa, Lobo, Mabini, Malvar, Mataan na Kahoy, Nasugbu, Padre Garcia, Rosario, San Jose, San Juan, San Luis, SAn Nicolas, Santa Teresita, Taal, Talisay, Tanauan, Taysan, Tingloy, and Tuy in Batangas.
The franchise covers the municipalities and cities of Agdangan, Alabat, Atimonan, Buenavista, Burdeos, Calauag, Catanauan, Genral Luna, General Nakar, Guinayangan, Gumaca, Infanta, Jomalig, Lopez, Macalelon, Mulanay, Padre Burgos, Panukulan, Patnanungan, Perez, Pitogo, Plaridel, Polilio, Quezon, Real, San Andres, San Francisco, San Narciso, Tagkawayan, and Unisan in Quezon.
The specific areas of operation must fall within remote and unviable, unserved, or underserved areas as defined in Section 2.

Definitions: DERs, microgrids, area status

Section 2(a) defines Distributed Energy Resources or DERs as smaller power sources that could be aggregated to provide power necessary to meet regular demand, including demand-side and supply-side resources deployed throughout a network service provider’s system to meet energy and reliability needs.
Section 2(a) includes in DERs: renewable energy facilities, managed loads including electric vehicle charging, energy storage, and other measures necessary to incorporate renewable generation resources, including load management and ancillary services such as reserves, voltage control and reactive power, and black start capabilities.
Section 2(b) defines a microgrid as a group of interconnected loads and DERs within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid, capable of operating in grid-connected or island mode.
Section 2(c) defines Remote and Unviable Area as a geographical area within a distribution utility’s franchise area where immediate extension of distribution lines is not economically feasible due to distance from the nearest facilities.
Section 2(d) defines an Unserved Area as an area with no electricity access, no distribution system lines, no solar PV home systems, or no connection to any microgrid.
Section 2(e) defines Underserved Area as an area served by individual solar home systems, microgrids, or distribution utilities where electricity services are less than twenty-four (24) hours daily, or noncompliant with any Philippine Distribution Code service parameters, or where electricity services have been interrupted at least twelve (12) times in the twelve (12) months preceding determination; it also includes any other reason resulting in a failing mark based on the latest annual evaluation of actual performance of distribution systems compared to imposed targets of the Energy Regulatory Commission.

Regulatory authority and permits

Section 4 requires the Department of Energy (DOE) to determine remote and unviable, unserved, and underserved areas in accordance with Sections 1 and 2.
The grantee must secure a certificate of public convenience and necessity and other appropriate permits and licenses for construction and operation of DERs or microgrids from the Energy Regulatory Commission (ERC), the DOE, or any other government agency with jurisdiction, as applicable.
Section 4 provides a compliance condition: the grantee must comply with existing rules and regulations promulgated pursuant to Republic Act No. 9136 and Republic Act No. 9513.

Facility operation, public responsibility, and access rights

Section 3 requires DERs and microgrids owned, maintained, operated, or managed by the grantee (or its successors/assignees) to be operated and maintained at all times in a proper and suitable manner.
Section 3 authorizes the grantee, when practicable, to allow interested parties to use free spaces in its poles, facilities, or right-of-way for purposes of maintaining order, safety, and aesthetics along highways, roads, streets, alleys, or right-of-way, upon reasonable compensation considering the costs incurred to accommodate and administer the use.
Section 5 authorizes the grantee to make excavations or lay conduits in public places and infrastructure (roads, highways, streets, lanes, alleys, avenues, sidewalks, tunnels, bridges) for poles, DERs or microgrids, or supports for wires/conductors, subject to prior approval of the DPWH or the concerned LGU.
Section 5 requires approvals to be in accordance with either the Grid Code or the Distribution Code, as the case may be.
Section 5 mandates repair or replacement: any public place or infrastructure disturbed/altered/changed must be repaired or replaced at the expense of the grantee, in workmanlike manner, according to DPWH or LGU standards.
Section 5 imposes a penalty escalation: after a fifteen (15)-day notice, if the grantee fails to repair or replace, the DPWH or LGU may repair or replace at the grantee’s expense and charge double the costs and expenses for such repair or replacement.
Section 6 requires the grantee to operate DERs or microgrids in the least cost manner.
Section 6 requires the grantee, as far as feasible, to modify, improve, or change facilities/equipment to provide efficient and reliable service and reduced electricity costs.
Section 6 requires the grantee to charge reasonable and just power rates approved by the ERC so that business and industries can compete.
Section 6 makes the grantee subject to applicable regulatory rules governing private and public utilities promulgated by the DOE and ERC under Republic Act No. 9136 and Republic Act No. 9513.
Section 7 requires a consumer desk to handle consumer complaints and ensure adequate protection of consumer interests, and requires the grantee to act with dispatch on all complaints brought before it.

Electricity rates, transparency, and lifeline

Section 8 provides that the retail rate charged by the grantee to end users is the true cost and the grantee is not entitled to any government subsidy.
Section 8 makes the retail rate regulated and subject to ERC approval.
Section 8 requires that retail rates be made public and transparent.
Section 8 requires the grantee to identify and segregate in the electricity bill the components of the retail rate pursuant to Republic Act No. 9136, unless amended.
Section 8 requires the grantee to implement lifeline rates for marginalized end users as mandated under Republic Act No. 9136.

Government rights: takeover and eminent domain

Section 9 grants a special right to the President to temporarily take over and operate the grantee’s facilities, or authorize a government agency’s temporary use and operation, during war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, upon due compensation to the grantee for the use during the period of operation.
Section 10 authorizes the grantee, subject to legal limitations and procedures, to exercise the right of eminent domain insofar as it is reasonably necessary for constructing, installing, establishing, and efficiently operating and maintaining DERs or microgrids.
Section 10 allows installation and maintenance of poles, wires, and facilities over and across public property, including streets, highways, forest reserves, and other similar Government property of the Philippines and its instrumentalities.
Section 10 allows acquisition of private property needed for the franchise purposes, including property already devoted to public use or with public character.
Section 10 requires that condemnation proceedings be instituted and applicable rules be complied with, and conditions such exercise on the result providing greater benefit for the public.

Franchise term, continuity condition, and non-merger of rights

Section 11 sets the franchise term at twenty-five (25) years from the date of effectivity of Republic Act No. 11357, unless sooner cancelled or revoked.
Section 11 provides automatic revocation: the franchise is ipso facto revoked if the grantee fails to operate continuously for two (2) years.
Section 12 provides that existing franchises are not revoked by this franchise.
Section 12 states that no waiver of rights from franchised distribution utilities is necessary for operating DERs or microgrids in remote and unviable, unserved, or underserved areas determined by the DOE under Sections 1 and 2.
Section 13 provides that the franchise does not affect the DOE’s duty to promote private sector participation in electrification of remote and unviable, unserved, and underserved areas.
Section 13 allows other qualified third parties to continue participating in competitive selection to operate in such areas as determined by the DOE, even without a similar franchise from Congress.
Section 14 requires the grantee to aim to provide and ensure full electrification for all or a substantial portion of connected end users in specified localities classified as remote and unviable, unserved, or underserved, subject to interruptions from temporary system failures requiring prompt remedy or repairs where interruption is unavoidable.

Liability, employment, and governmental protections

Section 15 requires the grantee to hold the national, provincial, city, and municipal governments free from claims, liabilities, demands, or actions arising from accidents causing injury to persons and damage to properties during construction, installation, operation, and maintenance of the grantee’s electric service lines.
Section 16 makes the grantee liable for injury to persons and damage to property arising from or caused by accidents to persons due to defective construction under the franchise or neglect/omission to keep its poles and wires in safe condition.
Section 17 requires the grantee to create employment opportunities and allow on-the-job training.
Section 17 grants priority to residents in the areas where the grantee’s principal office is located.
Section 17 requires compliance with applicable labor standards and entitlements under existing labor laws and similar issuances, considering the nature and peculiarities of the electric power industry; employment/job creation must be reflected in the General Information Sheet submitted to the Securities and Exchange Commission (SEC) annually.

Transfers, reporting, and operationalization

Section 18 prohibits the grantee from selling, leasing, transferring, granting the usufruct of, or assigning the franchise or its rights/privileges, nor merging with another corporation or entity, nor transferring controlling interest of the grantee to another entity, without prior approval of Congress.
Section 18 requires Congress to be informed within sixty (60) days after completion of any permitted change of ownership or merger (sale, lease, transfer, grant of usufruct, assignment, or transfer of controlling interest).
Section 18 provides that failure to report such change of ownership renders the franchise ipso facto revoked.
Section 18 provides that any person or entity to which the franchise is sold, transferred, or assigned is subject to the same conditions, terms, restrictions, and limitations of the Act.
Section 19 requires compliance by the grantee (and successors/assignees) with applicable labor standards under existing labor laws and any other issuances promulgated by the Department of Labor and Employment.
Section 20 requires annual reporting to the ERC, DOE, and Congress (through the House committees on Legislative Franchises and Energy; and the Senate committees on Public Services and Energy) on or before April 30 of the succeeding year, covering compliance with franchise terms and franchise operations.
Section 20 requires the annual report to include: an update on rollout/development/operation/expansion; audited financial statements; the latest General Information Sheet officially submitted to the SEC if applicable; DOE certification on the status of permits and operations; and an update on dispersal of ownership undertaking if applicable.
Section 21 requires the DOE, in consultation with the ERC and other stakeholders, to promulgate rules and regulations to operationalize the franchise without compromising grid stability, the rate effect on consumers, and the continued viability and sustainability of the grantee’s operations, within Republic Act No. 9136’s framework.
Section 21 authorizes the grantee to continue operating in provinces where it had existing operations prior to promulgation of the operationalization rules and regulations.
Section 21 requires a reportorial compliance certificate issued by Congress before any application for permit or certificate is accepted by the DOE.

Penal provisions and enforcement consequences

Section 22(a)(1) imposes a fine of PHP 5,000.00 per working day of noncompliance if the grantee fails to submit the requisite annual report to Congress.
Section 22(a)(1) provides that the fine is collected by the DOE from the delinquent franchise grantee, separate from reportorial penalties imposed by the DOE.
Section 22(a)(2) requires the ERC to allow sufficient time to remedy any interruption, but in no case exceed thirty (30) days from issuance of a written notice.
Section 22(a)(2) provides that failure to meet any service obligation continuing for more than thirty (30) days after written notice from the ERC constitutes a basis to assess financial penalties.
Section 22(a)(2) requires the ERC to determine financial penalties in accordance with Republic Act No. 9136, its implementing rules and regulations, or any ERC circular/order/resolution.
Section 22(a)(2) provides that penalties assessed must be paid to the ERC within sixty (60) days after receipt of a demand, and such penalties are not regarded as an expenditure of the grantee.

Equality, applicable laws, and final clauses

Section 23 provides an equality clause: if a competing individual/partnership/corporation receives a similar permit or franchise with terms and/or provisions more favorable than those granted here, or those tending to place the grantee at a disadvantage, such terms/provisions become part of this franchise and operate equally in favor of the grantee.
Section 23 further provides that any term/provision granted in future franchises not contained in this Act is likewise enjoyed by future grantees.
Section 24 subjects the grantee to Commonwealth Act No. 146 (Public Service Act), as amended; Republic Act No. 9513; and Republic Act No. 9136.
Section 25 provides separability: if any section or provision is held invalid, the remaining provisions not affected remain valid.
Section 26 provides that the franchise is subject to amendment, alteration, or repeal by Congress when public interest so requires and is not an exclusive grant of the privileges provided.
Section 1 through Section 27 implement the franchise under a framework of DOE determinations of qualified service areas, ERC regulation of rates and enforcement of service obligations, and Congress-facing reporting and operational compliance requirements.