Renewable energy resources are those collected from natural processes and which are naturally and continuously replenished. They are also commonly referred to as “green energy” or “alternative energy.” Renewable energy sources include sunlight, geothermal heat, wind, rain, tides, wave and some forms of biomass, all of which are abundant in the Philippines. The use of renewable energy is promoted by some environmental groups because conventional energy sources, such as coal, oil and natural gas, are identified to cause climate change and other serious environmental problems. Moreover, most of the conventional energy sources are non-renewable and limited which will thus be depleted one day. Unlike conventional energy sources, renewable energy is believed to be environment-friendly, safe and sustainable.
Power to Choose
Renewable energy can now be chosen by consumers or end-users as the sources of energy for their electricity needs.
Seventeen years after the enactment of the Electric Power Industry Reform Act of 2001 (Republic Act No. 9136) which under Section 27(e)(i) mandates the Department of Energy to promote the development of renewable energy sources. Further, Section 9, Chapter III of the Renewable Energy Act of 2008 (Republic Act No. 9513), directs the DOE to adopt a mechanism to allow consumers the option to choose renewable energy for their energy needs. Thus, the DOE created the Green Energy Option Program (the “Program”).
In July 2018, the DOE issued Department Circular No. DC2018-07-0019 or the Rules Governing the Establishment of the Green Energy Option Program (GEOP) in the Philippines (the “GEOP Rules”). This sets the guidelines for consumers or end-users, renewable energy suppliers, and network service providers, among other stakeholders, in facilitating and implementing such energy source under the EPIRA.
Specifically under such DOE issuance, the Program allows all end-users with a monthly average peak demand of 100kW and above for the past twelve (12) months, may opt to participate.
End-users with new connections can also opt to participate in the Program and choose renewable energy resources for their energy/electricity needs, provided their average peak demand meets the threshold provided in the GEOP Rules.
The participation of the end-users in the Program will be governed by a supply contract between the end-user and the renewable energy supplier. Said contract need no approval from the Energy Regulatory Commission (ERC).
End-users with average peak below 100kW may also participate in the Program, subject to the determination by the DOE, in consultation with the National Renewable Energy Board (NREB) and industry stakeholders, that the technical requirements and standards are already met.
However, the Program is presently available to end-users in Luzon and Visayas only. Until such time that the DOE, in consultation with the NREB and industry stakeholders, determines the readiness of the Mindanao market, the Program will then be made available to them. One key factor that is considered is the operation of the wholesale electricity spot market and declaration of retail competition in Mindanao.
Billing Mechanism: A Practical Advantage
With regard the billing mechanism, the GEOP Rules provide that a “dual billing system” may be adopted by the end-user availing of the Program.
Under this system, the end-user will be billed separately – first, by its Renewable Energy (RE) Supplier for the supply of electricity generated by the RE Resource including replacement power; and second, by its distribution utilities, the National Transmission Corporation (TRANSCO) or its successor-in-interest for the wires services and charges. In the event that the end-user, RE Supplier, and the DU elect the dual billing scheme, the bills shall reflect itemized and unbundled all-in charges under the GEOP Supply Contract including the monthly energy consumption. The bill shall reflect all other wires and service charges, including but not limited to, the transmission or distribution charges, and other pass-through charges.
Consistent with the Renewable Energy Act of 2008, the GEOP Rules provides penalties—administrative and criminal—for non-compliance with its provisions. Distribution utilities and generation facilities may be fined an amount ranging from
P100,000.00 to P500,000.00. Moreover, the DOE, upon its discretion, may recommend to the appropriate government agency, the revocation of their license, franchise or authority to operate.
The conviction for willful failure to comply with or any violation of the GEOP Rules warrants the imposition of the penalty of imprisonment of one to five years, or a fine ranging from
P100,000.00 to P100,000,000.00, or twice the amount of damages caused or costs avoided for non-compliance, whichever is higher, or both.
With the promulgation of the GEOP Rules, the DOE hopes to attract more consumers to source their power from renewable energy resources. The DOE believes that the GEOP will not only promote sustainability, but will also empower more Filipinos by giving them a wider variety of options for their energy needs.
(Jorge Patrick A. Yasay joined the Firm in January 2018 and spends a lot of time being mentored by Senior Partner Dicky Salazar as part of Corporate and Commercial Law practice group. Jorge may be reached at [email protected])