General Electrification Policy Framework
Since the shift in 2001 from a largely state-run system of electrification to a market-based approach, the Philippine strategy on electrification is grounded on competition with government support through regulation. The framework of Philippine electrification is fundamentally shaped by the Electric Power Industry Reform Act of 2001 (EPIRA), which covers rules governing power generation, transmission, distribution, supply and competition.
Electric Power Industry Reform Act of 2001
The passage of EPIRA was a pivotal moment in the policy direction of the Philippines on electrification. EPIRA removed NPC’s control of the generation and transmission sectors by reinforcing a more competitive structure. In restructuring the industry, EPIRA reorganized the industry in order to introduce higher efficiency, greater innovation and end-user choice. It covered a range of alternatives, enhancing exposure of the industry to competitive market forces. EPIRA implemented the following core elements: “separating utilities for generation, transmission and distribution; maximizing private ownership and competition; and establishing an independent regulator, especially to ensure that prices reflect costs.”
Renewable Energy Act of 2008
In order to accelerate, increase, and encourage the exploration, development, and utilization of renewable energy (RE) resources, such as biomass, solar, wind, hydro, geothermal and ocean energy sources, the Renewable Energy Act of 2008 (REA) was enacted. (Republic Act No. 9513) The REA established the framework for the accelerated development and advancement of renewable energy resources, and the development of a strategic program to increase its utilization.
Feed-in Tariff
The FIT system is a scheme that involves the obligation on the part of electric power industry participants to source electricity from RE generation at a guaranteed fixed price applicable for a given period of time, which shall in no case be less than 12 years, to be determined by the ERC.[1] The system aimsto accelerate the development of emerging renewable energy resources through the promulgation of rules which shall include the following:
Net-Metering Program for Renewable Energy
The Net-Metering policy featured under the REA empowers consumers by encouraging them to directly source RE. Section 4 of the REA defines Net Metering as “…a system, appropriate for distributed generation, in which a distribution grid user has a two-way connection to the grid and is only charged for his net electricity consumption and is credited for any overall contribution to the electricity grid…”[2]
The DOE explains: “Net-metering allows customers of Distribution Utilities (DUs) to install an on-site Renewable Energy (RE) facility not exceeding 100 kilowatts (kW) in capacity so they can generate electricity for their own use. Any electricity generated that is not consumed by the customer is automatically exported to the DU’s distribution system. The DU then gives a peso credit for the excess electricity received equivalent to the DU’s blended generation cost, excluding other generation adjustments, and deducts the credits earned to the customer’s electric bill.”[3]
Renewable Portfolio Standard
RPS is a market-based policy mechanism under the REA that requires load-serving entities to source an agreed portion of their energy supply from eligible RE facilities.[4] The National Renewable Energy Board (NREB), created under the REA, shall set the minimum percentage of generation from eligible RE resources.[4]The DOE issued RPS for both on-grid and off-grid areas to boost investments of renewable energy sources.
Green Energy Option Program (GEOP)
The Green Energy Option is a mechanism to empower end-users by giving them the option to choose RE resources as their sources of energy. Through this program, end users may directly contract from RE facilities their energy requirements distributed through their respective distribution utilities.[6] In this regard, TRANSCO, DUs, PEMC and all relevant parties are mandated to provide support for the physical connection and commercial arrangements necessary to ensure the success of the Green Energy Option. End-users opting to join the program will be informed of how much of their monthly energy consumption and generation charge is provided by RE facilities through their monthly electric bills.[7]
National Electrification Administration Reform Act of 2013
To further push for the national policy of total electrification, the National Electrification Administration Reform Act of 2013 (NEARA) was enacted on May 7, 2013. The NEARA, amending Presidential Decree No. 269 that created the National Electrification Administration (NEA), declared it as a state policy to (a) promote the sustainable development in the rural areas through rural electrification; (b) empower and strengthen the NEA to pursue the electrification program and bring electricity to the countryside even in missionary and economically unviable areas; and (c) to empower and enable electric cooperatives (ECs), the implementing arm of NEA, to cope with the restructuring of the electric power industry pursuant to EPIRA.[8] The implementation of the NEARA reinforces the importance of inclusive growth of rural areas by supporting ECs until they are economically and financially viable. This support is needed to highlight the important role of ECs in “expanding energy access and attaining energy security.”[2]
[1] Rule 2, Sec. 5, REA IRR [2] Sec. 4 (gg), REA [3] https://www.doe.gov.ph/1-how-net-metering-works-understanding-basics-policy-regulation-and-standards?ckattempt=2 [4] Philippine Energy Plan [5, 6, 7] Renewable Energy Act [8] Sec. 2, Republic Act No. 10531 [9] Philippine Energy Plan 2020