I. Pursuant to ER 1-94, as amended.
SEC. 6. Nature of Benefits. – Consistent with Section 5 hereof, the community and people affected, the pertinent host LGU indicated below or the host region shall be entitled to the following benefits from the energy resource developer or power producer, depending on the type of energy resource being developed or energy-generating facility being constructed or operated:
(a) Power Benefits.
(1) Electrification. – (a) The power producer shall set aside twenty-five percent of one centavo (P 0.0025) per kilowatt-hour of the total electricity sales of the energy-generating facility as an electrification fund to be applied exclusively to the missionary electrification of the official resettlement or relocation sites of the community and the people affected, and thereafter, of the relevant host LGU or host region in the following order of radiating benefit: (i) the host barangay, (ii) the host municipality or city, (iii) the host province, and finally (iv) the host region. In implementing said order of radiating benefit, priority in electrification shall be given to the more populous barangay that is nearer in distance to the electricity-generating facility. Any dispute regarding the sequence of electrification of barangays shall be settled through a final determination by the DOE after due consultation with the affected parties. In settling such disputes, the DOE shall give due weight to the relative population density of, and proximity of the energy-generating facility to, the contending host LGUs.
(2) The electrification of the host municipality or city may be accomplished through a public service cooperative or PSC. In this connection, the NEA shall facilitate the granting of the necessary franchise to a PSC but upon satisfactory showing that such PSC is economically viable, and will be able to provide better service at lower cost to consumers within the pertinent host LGU. Once the PSC is established, the operator of the energy-generating facility shall provide, in a manner that will not entail substantial incremental cost to the operator, technical assistance to the PSC, particularly in the area of reducing system losses.
(3) The PSC, or in its absence, the relevant franchise holder shall use the electrification fund exclusively to defray the cost of necessary capital expenditures associated with electrification such as distribution lines, transformers, and substations, and subsidiarily, associated operating expenses such as repairs and maintenance. Priority in extending expenditure shall be given to the extension and upgrading of distribution lines: Provided however, That the PSC or in its absence, the relevant franchise holder shall retain each year twenty percent (20%) of the amount it received for the year to defray the cost of repairs and maintenance of its existing distribution lines and substations. The electrification fund shall be used as provided in Section 6 (a) (1) (c): Provided however, That the assets financed by the electrification fund shall not form part of the rate base, and the maintenance expenses as well as the depreciation of the assets financed by the electrification fund, shall not form part of the operating cost base of the PSC or relevant franchise holder, for purposes of setting its power tariffs and return on rate base.
(4) The power producer shall be responsible for directly remitting the electrification fund to the PSC or in its absence, the relevant franchise holder. The DOE shall ensure that the electrification fund shall be used as provided in Section (a) (1) (c). Towards this end, the DOE shall formulate the appropriate guidelines and mechanisms for fund disbursement and utilization.
(b) Prioritization of load dispatch.
In times of energy shortage, the energy-generating facility shall prioritize up to twenty-five percent (25%) of its contracted or available capacity (whichever is lower) which shall be delivered to the appropriate electric utility for distribution to the official resettlement/relocation sites of the community and people affected, and thereafter, to the relevant host LGU or host region in the following order of radiating benefit: (i) power circuits in direct contact with the host barangay; (ii) power circuits in direct contact with the host municipality or city; (iii) power circuits in direct contact with the host province; and (iv) power circuits in direct contact with the host region. The remaining seventy-five percent (75%) shall be dispatched to the grid so as not to unreasonably deprive other municipalities, cities, provinces, or regions of their energy requirements.
Towards this end, the energy generating facility, NPC, the relevant electric utility, and such other party that may be contractually involved with the generation, transmission, and distribution of power shall reach an agreement to ensure the implementation of this benefit, which agreement shall be approved by the DOE.
The NPC, unless another government owned and/or controlled corporation engaged in energy projects is designated by theSecretary of the DOE, shall effect the prioritization of load dispatch benefit in the absence of a power purchase agreement or arrangement between the power producer and the electric utility in the relevant resettlement/relocation sites or host LGU/s.
(c) Reduction in the cost of electricity.
(1) Pursuant to the mandate of Section 294 of the Local Government Code that “at least eighty percent (80%) of the proceeds derived from the development utilization of hydrothermal, geothermal, and other sources of energy shall be applied solely to lower the cost of electricity in the local government unit where such a source of energy is located,” host LGUs are strongly urged to operationalize this directive through an appropriate system. The term “proceeds from the development and utilization of hydrothermal, geothermal, and other sources of energy” shall have the same meaning as it has under Section 294 of the Local Government Code.
(2) The host LGU, through its sanggunian, may pass a resolution specifying the terms of application of said proceeds pursuant to Section 294 of the Local Government Code. The amount appropriated under the resolution may be transferred to the relevant PSC, REC or electric utility operating within the host LGU. In turn, such PCC, REC or electric utility shall immediately apply the amount in the next billing to lower the cost of electricity in its franchised area within the host LGU.
(d) Skills Development.
For the community and people affected as well as bona fide residents of the host barangay, and the host community or city, the energy resource developer and/or power producer shall establish relevant training and skills development programs which may include the development of skills pertinent to business of energy generation or electrification and skills in reforestation and other agro-industrial skills. Towards this end, upon consultation with the appropriate government agencies, a memorandum of agreement may be entered into by the host barangay, the host city or municipality, and the energy resource developer or power producer. For monitoring purposes, a copy of such memorandum of agreement must be submitted to the DOE.
(e) Preference in Employment.
Qualified members of the community and people affected and qualified bona fide residents of the host barangay and the host municipality or city shall be given preference in employment with the energy-generating facility or energy development operation pursuant to the procedure set out under Republic Act No. 6685 and the applicable provisions of Department Order No. 51 series of 1990 of the DPWH which sets forth the guidelines for the implementation of Republic Act No. 6685.
(f) Preference in Procurement of Local Supplies and Services.
All energy resource developers and power producers shall source their supplies and service requirement from within the host LGU provided such supplies and services are available therein at competitive price, delivery/service schedule, quantity, and quality.
(g) Development and Livelihood Fund.
(1) Consistent with Section 5 hereof, all power producers shall set aside twenty-five percent (25%) of one centavo (P 0.0025) per kilowatt-hour of the total electricity sales of the energy-generating facility to establish and maintain a development and livelihood fund.
(2) The development and livelihood fund shall be applied in an equitable, preferential manner for the exclusive benefit of the community and people affected, the host LGU or region in the following proportions: five percent (5%) to the barangays hosting the official resettlement/relocation sites of the community and the people affected, fifteen percent (15%) to the host barangay, twenty-five percent (25%) to the host municipality or city, twenty-five percent (25%) to the host province, and the remainder to the host region.
(3) The power producer and the energy resource developer, to the extent of their respective contributions, shall administer the development and livelihood fund. They shall each submit to the DOE for the latter’s approval, development and livelihood programs after consultation with the appropriate affected parties.
(4) The power producer and the energy resource developer shall each hold its contribution to the development and livelihood fund in trust for the beneficiaries as enumerated under Section 6 (e) (2). Such funds shall not be mingled with its general fund and must be deposited in interest bearing accounts. Interest earned on the development and livelihood fund shall accrue to the benefits enumerated under Section 6 (e) (2).
(h) Reforestation, Watershed Management Health and/or Environment Enhancement Fund.
(1) One-fourth of one centavo (P 0.0025) per kilowatt-hour of the total electricity sales of the energy-generating facility shall be set aside by the power producer to be used for reforestation, watershed management, health and/or environment enhancement. The power producer and the energy resource developer, to the extent of their respective contribution to the fund, shall each submit work programs for reforestation watershed management, health and/or environment enhancement which would have to be approved by the DOE in consultation and close coordination with the DENR, the DOH, the relevant water districts, local government units, regional development councils, non-government organizations, and other affected parties. The power producer and/or the energy resource developer may provide for the contracting out of the proposed activities, provided that the power producer and/or the energy resource developer shall remain primarily responsible for the implementation of such program. For a unified watershed management effort, however, the power producer and/or the energy resource developer shall turn over the amount allocated for reforestation and watershed management to the watershed reservation manager designated by law for the area.
The foregoing paragraph notwithstanding, the DOE may, at the request of the power producer and/or the energy resource developer after consultation with the local government officials, non-governmental organizations and other affected parties, redirect part or all of said fund in any given year to other projects which are determined to be more beneficial to the host LGUs with particular attention, although not limited to environmental projects with long-term benefits.
After commercial operation commences, benefits and/or financial assistance advanced after Republic Act No. 7638 became effective or pursuant to these rules and regulations by the energy resource developer or the power producer during pre-operation stage or before the start of commercial operation to secure the favorable endorsement of the community and people affected or the host LGUs, shall be applied at the rate of twenty percent (20%) per year by the energy resource developer, power producer or successors-in-interest assignees thereof, against the benefits required under these rules and regulations.
Cost incurred or to be incurred by the power producer or the energy developer to comply with environmental standards imposed under DENR Administrative Order Nos. 14 and 14A and with such other stricter emission, safety, health or environmental standards that may be imposed by any government agency in the future, may be deducted from the benefits required under these rules and regulations, but at a rate of not more than fifty percent (50%) of the total benefits due in any year (inclusive of the twenty percent (20%) mentioned in the foregoing paragraph): Provided, That if in any year the cost of compliance exceeds fifty percent (50%) of the total benefits for the year. The uncovered cost shall be added to similar costs in subsequent years until the full amount is recovered without interest.
In simple terms, one centavo per kiloWatt-hour of the electricity sales shall apply to Generation Facilities located in all baranggays, municipalities, cities, provinces and regions. Therefore:
A. ELECTRIFICATION FUND at 50% of 1 centavo/KWh (0.005/kWh)
Priority will be based on 1. host barangay; 2. host municipality; 3. host province; 4. host region
B. DEVELOPMENT OF LIVELIHOOD FUND at 25% of one centavo/kWh (0.0025/kWh)
1. Host barangay -- 20%
2. Host municipality -- 35%
3. Host Province -- 30%
4. Host region -- 10%
C. REFORESTATION, WATERSHED MANAGEMENT, HEALTH AND/OR ENVIRONMENTAL ENHANCEMENT FUND at 25% of one centavo/kWh (0.0025/kWh)
II. Pursuant to Renewable Energy Act of 2008
Section 13. Government Share. - The government share on existing and new RE development projects shall be equal to one percent (1%) of the gross income of RE resource developers resulting from the sale of renewable energy produced and such other income incidental to and arising from the renewable energy generation, transmission, and sale of electric power except for indigenous geothermal energy, which shall be at one and a half percent (1.5%) of gross income.
To further promote the development of RE projects, the government hereby waives its share from the proceeds of micro-scale projects for communal purposes and non-commercial operations, which are not greater than one hundred (100) kilowatts.
Section 14. Compliance with Environmental Regulations. - All RE explorations, development, utilization, and RE systems operations shall be conducted in accordance with existing environmental regulations as prescribed by the DENR and/or any other concerned government agency.
Section 31. Incentives for RE Host Communities/LGUs. - Eighty percent (80%) of the share from royalty and/or government share of RE host communities/LGUs from RE projects and activities shall be used directly to subsidize the electricity consumption of end users in the RE host communities/LGUs whose monthly consumption do not exceed one hundred (100) kwh. The subsidy may be in the form of rebates, refunds and/or any other forms as may be determined by DOE, DOF and ERC, in coordination with NREB.
The DOE, DOF and ERC, in coordination with the NREB and in consultation with the distribution utilities shall promulgate the mechanisms to implement this provision within six months from the effectivity of this Act.
In simple terms, the government share on existing and new renewable energy development projects shall be equal to the gross income of RE developers.
National Government -- 60%
Local Government -- 40%
Where natural resources are located in the province:
Province : 20%
Component Municipality : 45%
Barangay: 35%
Where natural resources are located in two (2) or more provinces, or two (2) or more component municipalities or two (2) or more barangays, their respective shares shall be computed on the basis of:
population : 70%
land area : 30%
Incentives to Renewable Energy Hosts/Communities/LGU:
a. 80% of the local government share from RE projects and activities shall be used directly to subsidize the electricity consumption of end-users in the RE host communities/LGUs whose monthly consumption does not exceed one hundred kilo-Watt hours (100 kWh); provided that, excess funds shall after serving the end-users referred to in the preceding paragraph, be used to subsidize the electricity consumption of the same class in the host municipality or the province as the case may be.
The subsidy may be in the form of rebates, refunds, and/or any other form as may be determined by the DOE, DOF, and ERC, in coordination with the NREB. Within 6 months from the effectivity of the act, the DOE, DOF, and ERC shall, in coordination with the NREB and in consultation with the DUs, promulgate the mechanisms to implement this provision.
b. 20% of the local government share shall be utilized to finance local government and livelihood projects which shall be appropriated by their respective Sanggunian, pursuant to Section 294 of Republic Act No. 7160.
