Defined terms for service areas
- Distributed Energy Resources (DERs) are smaller power sources that can be aggregated to meet regular demand, including 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, reactive power, and black start capabilities.
- A microgrid is 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.
- A remote and unviable area is a geographical area within the franchise area of a distribution utility where immediate extension of distribution lines is not economically feasible because of distance from the nearest facilities.
- An unserved area is an area with no electricity access, no distribution system lines, no solar PV home systems, or no connection to any microgrid.
- An underserved area is 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 service parameters of the Philippine Distribution Code, or where electricity services have been interrupted at least twelve (12) times in the twelve (12) months preceding the determination; or 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.
Facility operation and access rights
- All electric facilities, lines, and systems owned, maintained, operated, or managed by the grantee (or successors/assignees) must be operated and maintained at all times in a proper and suitable manner.
- When practicable, the grantee may allow use of free spaces in its poles, facilities, or right-of-way by interested parties for order, safety and aesthetics along highways and related public ways.
- Space use must be under reasonable compensation considering the costs incurred to accommodate and administer the use of the grantee’s facilities.
DOE area determination and ERC permits
- The Department of Energy (DOE) determines the remote and unviable, unserved, and underserved areas in accordance with Sections 1 and 2.
- The grantee must secure from the Energy Regulatory Commission (ERC), DOE, or any other government agency with jurisdiction, the necessary certificate of public convenience and necessity and other appropriate permits and licenses for the construction and operation of its DERs or microgrids, as applicable.
- The grantee must comply with existing rules and regulations promulgated pursuant to Republic Act No. 9136 and Republic Act No. 9513.
Infrastructure ingress and repair liabilities
- For constructing, installing, establishing, operating, maintaining poles, DERs or microgrids (or any part thereof), and supports for wires or other conductors (including laying and maintaining underground wires, cables, pipes, or other conductors), the grantee is authorized to make excavations or lay conduits in public places and related public structures in the covered provinces, cities, and/or municipalities.
- The authorization is subject to prior approval of the Department of Public Works and Highways (DPWH) or the concerned LGU, in accordance with the Grid Code or the Distribution Code, as the case may be.
- Any disturbed, altered, or changed public place, road, highway, street, lane, alley, avenue, sidewalk, tunnel, or bridge must be repaired or replaced in workmanlike manner at the expense of the grantee, successors, or assignees, consistent with DPWH or LGU standards.
- After fifteen (15) days from notice by the authority, if the grantee fails to repair or replace, DPWH or the LGU may repair or replace in good order and condition and charge the grantee at double the amount of the costs and expenses.
Public responsibility and consumer protection
- The grantee must operate DERs or microgrids in the least cost manner.
- For the public good and as far as feasible, the grantee must modify, improve, or change facilities and equipment to provide efficient and reliable service and reduced electricity costs.
- The grantee must charge reasonable and just power rates approved by the ERC to all types of consumers to enable business and industries to compete.
- The grantee is subject to all applicable regulatory rules governing private and public utilities promulgated by DOE and ERC pursuant to Republic Act No. 9136 and Republic Act No. 9513.
- The grantee must establish a consumer desk to handle consumer complaints and ensure adequate protection of consumer interests.
- The grantee must act with dispatch on all complaints brought before it.
Rates, bill transparency, and lifeline
- The retail rate charged to end users must be the true cost and the grantee is not entitled to any government subsidy.
- Retail rates are regulated by and subject to ERC approval.
- Retail rates must be made public and transparent.
- The grantee must identify and segregate in the electricity bill the components of the retail rate pursuant to Republic Act No. 9136, unless amended.
- The grantee must implement lifeline rates for marginalized end users as mandated under Republic Act No. 9136.
Government special rights and eminent domain
- The President of the Philippines may, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, temporarily take over and operate the grantee’s facilities or authorize any government agency to temporarily use and operate them.
- Any temporary use or operation requires due compensation to the grantee.
- The grantee is authorized to exercise the right of eminent domain to the extent reasonably necessary for construction, installation, establishment, and efficient operation and maintenance of DERs or microgrids, subject to legal limitations and procedures.
- The grantee may install and maintain poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar property of the Government of the Philippines and its branches or instrumentalities.
- The grantee may acquire private property needed for the franchise purposes, including property already devoted to public use or with public character, provided that it results in greater benefit for the public, and proper condemnation proceedings are instituted with compliance with applicable rules.
Franchise term and operational continuity
- The franchise has a term of twenty-five (25) years from the date of effectivity of the Act unless sooner cancelled or revoked.
- The franchise is deemed ipso facto revoked if the grantee fails to operate continuously for two (2) years.
Existing franchises and competition rules
- The franchise does not revoke existing franchises.
- No waiver of rights from franchised distribution utilities is required to operate DERs or microgrids in remote and unviable, unserved, or underserved areas as determined by the DOE under Sections 1 and 2.
- The franchise does not affect the DOE’s duty to promote private sector participation in electrification of remote and unviable, unserved, and underserved areas.
- Other qualified third parties may continue to participate in the competitive selection to operate in such areas as determined by the DOE under Sections 1 and 2, even without a similar franchise from Congress.
Service obligations and government indemnities
- The grantee must aim to provide and ensure full electrification for all or a substantial portion of connected end users in the specified localities as remote and unviable, unserved, or underserved, subject to interruptions caused by temporary failure of system items.
- The grantee must act promptly to remedy failures or require repair or construction where such repairs or construction cannot be performed without interruption to electricity supply.
- The grantee must 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 its electric service lines.
Damages liability for defective construction
- The grantee is liable for any injury to persons and damage to property arising from or caused by accidents to persons due to defective construction under the franchise or due to neglect or omission to keep poles and wires in safe condition.
Employment opportunities commitment
- The grantee must create employment opportunities and allow on-the-job trainings in franchise operations.
- Priority must be given to residents in areas where the grantee’s principal office is located.
- The grantee must follow applicable labor standards and allowances under existing labor laws, rules and regulations, and similar issuances.
- Employment opportunities or jobs created must be reflected in the General Information Sheet submitted to the Securities and Exchange Commission (SEC) annually.
Transfer restrictions and congressional approval
- The grantee must not sell, lease, transfer, grant the usufruct of, or assign the franchise or the rights and privileges acquired under it to any person, firm, company, corporation, or other commercial or legal entity.
- The grantee must not merge with any other corporation or entity, and must not transfer the controlling interest of the grantee to any such person, firm, company, corporation, or entity without prior approval of Congress of the Philippines.
- After such approval, Congress must be informed within sixty (60) days after completion of any sale, lease, transfer, grant of usufruct, assignment, merger, or transfer of controlling interest.
- Failure to report to Congress renders the franchise ipso facto revoked.
- Any person or entity to which the franchise is sold, transferred, or assigned must be subject to the same conditions, terms, restrictions, and limitations of the Act.
Labor standards compliance duty
- The grantee (and its successors/assignees) must comply with applicable labor standards under existing labor laws, rules and regulations, and other issuances that the Department of Labor and Employment may promulgate, considering the nature and peculiarities of the electric power industry.
Annual reports to regulators and Congress
- The grantee must submit an annual report to the ERC, DOE, and Congress of the Philippines through the Committees on Legislative Franchises and Energy of the House of Representatives and the Committees on Public Services and Energy of the Senate on or before April 30 of the succeeding year.
- The annual report must include:
- An update on the roll-out, development, operation, and/or expansion of business;
- Audited financial statements;
- The latest General Information Sheet officially submitted to the SEC, if applicable;
- A certification from the DOE on the status of permits and operations; and
- An update on the dispersal of ownership undertaking, if applicable.
Operationalization rules and congressional certificate
- The DOE, in consultation with the ERC and other stakeholders, must promulgate necessary rules and regulations to operationalize the franchise within the framework provided in Republic Act No. 9136, without compromising grid stability, rate effect on consumers, continued viability and sustainability of the grantee’s operations, and other technical and financial considerations as determined by DOE and ERC.
- The grantee is authorized to continue to operate in provinces where it had existing operations prior to the promulgation of the rules and regulations.
- A reportorial compliance certificate issued by Congress is required before any application for permit or certificate is accepted by the DOE.
Penal provisions and penalties
- Failure to submit the required annual report to Congress is penalized by a fine of PHP 5,000.00 per working day of noncompliance.
- DOE collects the fine from the delinquent franchise grantee separately from reportorial penalties imposed by DOE.
- The ERC allows sufficient time to remedy any interruption, but in no case exceeding thirty (30) days from issuance of a written notice.
- 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.
- The ERC determines financial penalties in accordance with Republic Act No. 9136, its implementing rules and regulations, or any ERC circular, order, or resolution.
- The grantee must pay penalties assessed to the ERC within sixty (60) days after receipt of a demand.
- Penalties assessed under this section must not be regarded as an expenditure of the grantee.
Equality clause for favorable terms
- If a competing individual, partnership, or corporation receives a similar permit or franchise with terms and/or provisions more favorable than those granted to the grantee, or which tend to place the grantee at a disadvantage, those more favorable terms and/or provisions are deemed part of the franchise and operate equally in favor of the grantee.
- Any term and/or provision granted in this franchise that is not contained in other franchises that may thereafter be granted is enjoyed by future grantees.
Compliance with existing laws
- The grantee must comply with and is subject to Commonwealth Act No. 146 (Public Service Act), as amended; Republic Act No. 9513; and Republic Act No. 9136.
Separability, amendments, and effectivity
- If any section or provision of the Act is held invalid, all other provisions not affected remain valid.
- The franchise is subject to amendment, alteration, or repeal by Congress when the public interest so requires and is not interpreted as an exclusive grant of the privileges provided.
- The Act takes effect fifteen (15) days after publication in the Official Gazette or in a newspaper of general circulation.
Issuance details and approval
- The Act is Republic Act No. 11357, entitled “AN ACT GRANTING SOLAR PARA SA BAYAN CORPORATION A FRANCHISE TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE AND MAINTAIN DISTRIBUTED ENERGY RESOURCES AND MICROGRIDS IN THE REMOTE AND UNVIABLE, OR UNSERVED OR UNDERSERVED AREAS IN SELECTED PROVINCES OF THE PHILIPPINES TO IMPROVE ACCESS TO SUSTAINABLE ENERGY.”
- The Act is approved on July 31, 2019.
- Congress passed the Act on June 3, 2019.
- Publication appears in 115 OG No. 36, 9966 (September 9, 2019).