ER 1-94 Program Brief Overview

(Benefits to Host Communities)

June 27, 2018

Bacolod City

Department of Energy
Empowering the Filipino
 PRESENTATION OUTLINE

1 Background

2 Evolution of the ER 1-94 Program

3 Accomplishments, Insights and Learnings

Salient Features of the Draft Department

4 Circular

Department of Energy
Empowering the Filipino
BENEFITS TO HOST COMMUNITIES

Generation Companies Distribution Utilities

(P0.01/kWh)
DLF – for projects supporting
development and livelihood
EF – for projects supporting
opportunities
the total electrification
RWMHEEF – for projects
supporting environmental and
health agenda Host Communities

Energy Regulations No. 1-94 is a program intended to recompense for the

contribution made by the communities hosting Energy Resources and/or Energy
Generating Facilities.
Department of Energy
Empowering the Filipino
 Evolution of ER 1-94 Program
ER 1-94-A
ER 1-94 DC98-05-007 RA 9136
Amending ER 1- DC2000-03-003 DC2018-02-005
Provided the 94, Sec.7.d – to Authorizing NPC to An Act Ordaining
implementing provide benefits Grant AFA to Further Amending Reforms in the Prescribing
guidelines to for Natural Gas, Farmers/Tenants the Provisions of EPIRA Amending Guidelines
provided financial LNG and LPG- Displaced by the ER 1-94 and its for the Purpose recognizing the
benefits to host fired power Masinloc Coal Power Attendant Rules Certain Laws and rights of
communities plants… Plant and Procedures for other Purposes Indigenous People

Dec ‘92 Nov ‘95 Aug ‘96 Nov ‘98 Oct ‘00 Oct ‘02 Mar ‘02
Jan ‘97

May ‘94 July ‘96 May ‘98 Mar ‘00 Feb ‘18
Jun ‘00

RA 7638 DC96-08- DC98-11-010 DC2000-10-011 EPIRA-IRR

DC95-11- Revised Rules and
009 Setting Portion of Electric Power
(DOE Act of Procedures to
009 the Trust Accounts Industry Reform Act
1992) Guidelines & Implement
established under of 2001-
Section 5 (i) Guidelines & Procedures Barangay
ER 1-94 in amounts Implementing
“devise ways Procedures of of Granting of reasonable to meet Electrification Rules and
and means of Granting of Benefits and cover Program Funded Regulations
giving direct Benefits necessary under ER 1-94
benefits…” JOINT COA-DBM-DOF expenditures
Circular No. 1-97 ( Item needed or to be COA DECISION No. 2002-240
2.2.4 ) incurred in the
discharge by the The DOE hereby allowed to directly apply the
Exempts from the Trust and Its income for the purpose for
DOE of its functions
coverage cash accounts which it was created. Xxx…the same shall
owned by government
as Administrator of
not be used as a precedent in the cases of
owned and/or controlled said funds.
agencies administering trust funds but each
corporations and local case shall be treated separately.
government units.
Department of Energy
Empowering the Filipino
 PROCESS FLOW OF ER 1-94 PROGRAM

ER 1-94 MOA “Audit of Initial

(Basis for Trust Issuance of
STAR
T Accounts and for Electricity Sales” remittance of DOE Official
Compliance with ERC (prior to establishment ER1-94 Funds Receipt
COC) of Trust Accounts) (based on Audit)

Evaluation and Opening of

Project Trust Accounts
Approval of
Proposals (EF, DLF and RWMHEEF
Project Proposals under DOE and GenCo

LOA, NTP Allocation Project

and MOA Project imple-
of Funds Release imple-
(for Project mentation
(based on of Funds mentatio
Implemen-
GAAM) Monitoring
tation) n

Technical Inspection and Report on

Project
END Audit of Disbursements disbursement
completion
(project close-out) of funds

Department of Energy
Empowering the Filipino
 SUMMARY OF APPROVED PROJECTS
(As of April 30, 2018)

Department of Energy
Empowering the Filipino
 Insights and Learnings

• Rigid and tedious documentary requirements

resulted to delays in ER 1-94 project
implementation
• About Php1.9Billion ER 1-94 funds remain
unutilized under DOE’s administered Trust
Accounts
• Delay in the immediate delivery of financial
benefits to host LGUs only results to opportunity
loss –
 Economic opportunities
 Poverty alleviation
 Rural development
 Improved Human Development Index

Department of Energy
Empowering the Filipino
 Directive and Way Forward

 EPIMB to prepare an action plan to redirect

the administration of ER 1-94 Funds.

 Revisit Options considered:

• Amend Rule 29 (A) of the EPIRA-IRR
• Amend Section 5 of Rule 29 (A) to create
another trust account under the name of
another agency
• Transfer the Trust Funds to the LGU

Department of Energy
Empowering the Filipino
 Directive and Way Forward

 DOE to amend Rule 29(A) of the EPIRA-IRR and

other issuance related to the administration of
financial benefits under E.R. 1-94 program.
• to accelerate socio-economic development;
• to have a more effective and efficient utilization of
the funds; and
• to enforce the immediate provision of benefits to
host communities, it is imperative.

Department of Energy
Empowering the Filipino
 UPDATE

JUNE 13, 2018 – DOE CONDUCTED A

PUBLIC CONSULTATION ON THE DRAFT
DEPARTMENT CIRCULAR PROVIDING FOR
THE AMENDMENTS TO RULE 29 PART (A)
OF THE IMPLEMENTING RULES AND
REGULATIONS OF REPUBLIC ACT NO. 9136

Department of Energy
Empowering the Filipino
 SALIENT FEATURES OF THE DRAFT DC

Allocation and Application of Financial Benefits Fund

Electrification Fund - The Annual Work Program (AWP) will be prepared by the host LGU,
host region, host ICC and IP, in coordination with the DUs/ECs, based
on the Distribution Development Plan (DDP) and shall be submitted, in
print and in electronic copy, to the Generation Company not later than
March 15 of every year.

The AWP shall contain electrification projects similar or related to the

following:

a. Provision of electric service connection to qualified

unserved households through house wiring and/or subsidy;
b. Extension of distribution line facilities on unenergized
areas/households;
c. Alternative electrification solution to unenergized areas where
extension of distribution line is not technically or financially
feasible, as determined by the DU;
d. Improvement/Rehabilitation/Restoration of distribution line
facilities on areas affected by calamity; and
e. Distribution facilities in unviable areas.

Department of Energy
Empowering the Filipino
 SALIENT FEATURES OF THE DRAFT DC
Development and Livelihood Fund (DLF) and Reforestation, Watershed Management, Health
and/or Environment Enhancement Fund (RWMHEEF)

No classification of Highly and Non-Highly Urbanized Area

Allocation per Host Community

(a) Designated resettlement area/s - 5%

(b) Host barangay/s - 20%
(c) Host municipality/ies or city/ies - 35%
(d) Host province/s - 30%
(e) Host ICC/IP - 5%
(f) Host region/s - 5%

The AWP shall be prepared by the host LGU, host region, host ICC and IP and shall be submitted,
in print and in electronic copy, to the Generation Company not later than March 15 of every year.

For IPs/ICCs, the AWP shall be based on their Ancestral Domain Sustainable Development and
Protection Plan (ADSDPP). For the Local Government Units, it should be consistent with their
Community Development Plan (CDP) and Comprehensive Land Use Plan (CLUP).

The AWP shall contain the list of projects similar or related to the following:

a. Livelihood and Community Development;

b. Reforestation, Watershed Management and Climate Resiliency;
c. Health Service Enhancement; and
d. Public Service Facility/ies

Department of Energy
Empowering the Filipino
 SALIENT FEATURES OF THE DRAFT DC

Direct Remittance of Financial Benefits

• The EF shall be remitted by the Generation Companies and/or Energy
Resource Developers to the franchised DU/s, while the DLF and
RWMHEEF shall be remitted to the host LGUs/ICCs/IPs.

• The Financial Benefits Fund which is generated from the total electricity
sales of a particular generation facility from the billing period 26
October 2018 to 25 December 2018 shall be directly remitted within
fifteen (15) days thereafter. For the succeeding quarters, the
remittance of financial benefits shall be remitted within fifteen (15)
calendar days after the end of each calendar quarter.

• Remittance of financial benefits shall be subject to the compliance of

the host LGUs/ICCs/IPS of their submission of the AWP and the
liquidation by host LGUs/ICCs/IPS/DUs of the completed projects
funded and included in the AWP.

Department of Energy
Empowering the Filipino
 SALIENT FEATURES OF THE DRAFT DC
• In the event of the non-compliance of the host LGUs/ICCs/IPS/DUs
of the requirements of the remittance of financial benefit due to
pending liquidations or non-submission of AWP, the corresponding
fund shall be remitted to the trust account established by the
Generation Companies and/or Energy Resource Developers.

• All project proposals under the AWP for EF, DLF and RWMHEEF
shall be implemented within one (1) year upon receipt of funds. All
projects covered shall be implemented, supervised and
administered by the concerned host community and all funds
disbursements shall follow government accounting and auditing
rules and regulations.

Department of Energy
Empowering the Filipino
 Thank you!

Department of Energy
Empowering the Filipino