Duterte signs electrification EO

by Alexis Romero – The Philippine Star, 12 Dec 2021

MANILA, Philippines — President Duterte has signed an executive order (EO) instituting measures to ensure consistent and reliable electricity service in inadequately served areas, including transferring the power to take over the operations of ailing electric cooperatives to the Office of the President.

Duterte noted in EO 156 that it is the policy of the state to accelerate the total electrification of the country and to enable electric cooperatives to pursue rural electrification, especially in economically unviable areas.

He stressed that underperforming distribution utilities and electric cooperatives are hampering the government’s electrification efforts.

“While electrification of the entire country is one of the primary concerns of the government, certain distribution utilities, as well as ailing electric cooperatives, continue to underperform and thus hamper government efforts for the country’s total electrification,” the President said in the order he signed last Dec. 9.

“There is a need to utilize rapid advancements in technology, which have facilitated the development of integrated systems such as microgrids, distributed energy resources and other alternative service providers, where the nature of production, delivery and consumption of electricity can be controlled and operated on a smaller scale suitable for unserved and unviable areas,” he added.

The order transfers the power to take over the operations of ailing electric cooperatives from the National Electrification Administration (NEA) to the Office of the President.

“The power to exercise step-in rights and take over the operations of ailing electric cooperatives under RA (Republic Act) No. 10531 and its IRR (implementing rules and regulations), to improve the financial condition of such electric cooperatives, is hereby transferred to the Office of the President,” the order read, referring to the National Electrification Administration Reform Act of 2013.

The NEA was directed to submit within 30 days from the effectivity of the order a report to the Office of the President on the status of ailing electric cooperatives, including the measures undertaken to restore the economic and financial viability of their operations.

The Department of Energy (DOE) was directed to identify unviable, unserved, underserved and poorly served places within the franchise areas of distribution utilities.

The agency is also expected to mandate all distribution utilities to submit within 30 days from the effectivity of the order a comprehensive master plan for the total electrification of their respective franchise areas, including detailed inventory of all inadequately served areas, action plans and programs to achieve the timely implementation of their total electrification program, including proposals to waive identified areas for alternative service providers and qualified third parties; specific timelines to implement each action plan and program to deliver continuous, reliable and affordable service; and budgetary requirements.

The DOE may reject or modify a submitted plan if it is not in line with the aim of total electrification or if it is not expected to provide the highest quality and least cost of service.

The agency was also instructed to take steps to ensure the electrification of areas that remain inadequately served after the lapse of the submitted timeline for satisfactory service.

Areas that have been declared as remote and unviable by the DOE, with a waiver from their respective distribution utilities, will be prioritized for the supply of their electricity requirements by alternative service providers or qualified third parties.

Duterte also directed the DOE to craft procedures for the participation of local governments and communities in determining whether their respective areas are inadequately served and the appropriate measures for their electrification.

The agency is also expected to consult with all relevant agencies and power industry stakeholders to identify all underperforming and ineffective distribution utilities and to undertake necessary actions to improve their performance.

The DOE was also tasked to conduct a performance audit of all distribution utilities and assess the performance of all agencies and electric power industry participants involved in the total electrification program, recommend appropriate actions and promulgate the regulations for the entry and integration of microgrids, distributed energy resources and other alternative service providers into the electric power industry.

Meanwhile, the Energy Regulatory Commission is expected to promulgate rules in computing rates that allow full cost recovery for the facilities built by alternative electric service providers; issue guidelines for the registration of microgrids, distributed energy resources and other alternative service providers; impose fines against non-compliant distribution utilities and recommend to Congress the revocation of their franchises if warranted.

The DOE shall submit a report to the Office of the President on the programs and timelines adopted by distribution utilities within 60 days from the effectivity of the order.

Another report on the status of the implementation of the order will be submitted to Duterte within six months after the submission of the initial report.