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Agency Issuance Number
Published Date
Microgrid Systems Act
Republic Act No. 11646
January 21, 2022
Case Overview and Summary
Summary of Republic Act No. 11646 (Microgrid Systems Act)Objectives and Policies (Section 2):
- Pursue sustainable rural development and poverty reduction through energy access for all.
- Accelerate total electrification and ensure reliable electricity in unserved and underserved areas.
- Promote private sector participation in electrifying unserved and underserved areas.
- Prioritize low-cost, indigenous, renewable, and environment-friendly energy sources.
- Ensure adoption of dynamic regulatory environment for accessing new technologies.
Scope and Application (Section 3):
- Applies to development of microgrid systems in unserved and underserved areas nationwide.
Definition of Key Terms (Section 4):
- Defines terms like Authority to Operate, microgrid system provider, decentralized power generation, distribution system, underserved area, unserved area, etc.
Microgrid Systems in Unserved and Underserved Areas (Section 5):
- Microgrid system providers (MGSPs) may provide services in DU identified unserved areas following procedure in Section 9.
- MGSPs shall provide services in DOE declared unserved and underserved areas after competitive selection process per Sections 8, 11, and 12.
- Only isolated and island mode grid-tied microgrid systems allowed.
Microgrid System Providers (Section 6):
- Ownership and operation of microgrid system not considered public utility.
- MGSPs not required to secure franchise from Congress, but need Authority to Operate from ERC.
- Qualified third parties renamed as MGSPs.
- Various entities like private corporations, LGUs, cooperatives, generation companies can be MGSPs.
Waiver of DU Obligations (Section 7):
- In areas awarded to MGSPs, DU waived from providing distribution services, connections, and electricity supply.
- Waiver does not transfer or modify DU's franchise.
- Bestows MGSP exclusive right and obligation to provide integrated services during MSC period.
Competitive Selection for DOE Declared Areas (Section 8):
- DOE to declare unserved and underserved areas for electrification by MGSPs.
- Competitive selection process (CSP) to be conducted for these areas.
- CSP prioritizes low-cost, renewable, environment-friendly sources.
- Procedure for CSP including DU's right to tender lower offer.
- Provisional authority for MGSP upon award, execution of MSC, and ERC application.
Procedure for DU Identified Unserved Areas (Section 9):
- DU may identify unserved areas for electrification by DU operated microgrid systems.
- Procedure for MGSPs and DU to offer all-in price for identified areas.
- DU has right to tender lower offer, else award to lowest MGSP offer.
- Provisional authority similar to Section 8.
Availment of Universal Charge for Missionary Electrification (UCME) (Section 10):
- MGSPs and DU operated microgrid systems in unserved, off-grid areas may avail UCME subsidy as determined by ERC.
Powers and Functions of ERC (Section 11):
- Provide simplified permitting process and issue Authority to Operate to MGSPs.
- Develop minimum technical and service standards for microgrid systems.
- Review and act on MSCs within timeframes.
- Determine MGSP/DU rates, subsidies, recovery mechanism for assets.
- Monitor compliance of MGSPs.
- Exercise jurisdiction over disputes arising from the Act.
Powers and Functions of DOE (Section 12):
- Prepare and publish National Total Electrification Roadmap annually.
- Provide simplified permitting process for MGSPs and DU microgrid systems.
- Determine DU clustering for submissions and conduct of CSPs.
- Receive petitions and declare unserved and underserved areas regularly.
- Prepare standard MSC templates and conduct CSPs.
- Monitor operations of awarded MGSPs and MSCs.
- Determine transition procedure between NPC/DU and MGSP.
Functions of NEA (Section 13):
- Assist electric cooperatives in preparing Local Total Electrification Roadmaps.
- Evaluate and verify unserved and underserved areas submitted by ECs.
Functions of NPC (Section 14):
- Prepare and execute NPC Graduation Plan annually.
- Perform missionary electrification in areas with no MGSP.
- Conduct CSPs if authorized by DOE.
- Execute MSCs with awarded MGSPs.
- Collect, administer, and apply UCME.
- Streamline and release UCME subsidy claims.
Functions of Distribution Utilities (Section 15):
- May enter joint venture for installing and operating microgrid systems.
- Allowed separate rate for DU/MGSP served unserved areas without cross-subsidy.
- Prepare and submit Local Total Electrification Roadmap.
Functions of MGSPs and DU Operated Microgrid Systems (Section 16):
- Build, operate, maintain microgrid system per MSC and laws.
- Supply load requirements and implement electrification program.
- Prepare and submit required reports.
- Ensure end-user safety and protection.
- MGSPs exempt from public listing and market share limitation requirements.
- End-users in unserved, off-grid areas exempt from FIT allowance and universal charges.
Expiration of MSC (Section 17):
- Upon grid extension, DU may acquire MGSP's microgrid system and resume obligations.
- If DU doesn't acquire, new CSP to be conducted with right for existing MGSP to tender lower offer.
- ERC to determine if new MGSP entitled to subsidy.
Non-Disqualification from Franchise Extension (Section 18):
- Presence of MGSP shall not disqualify DU from seeking franchise renewal or extension.
Permitting Process (Section 19):
- Energy Virtual One-Stop Shop Act to apply with reduced timeframes unless specified.
Strengthening DOE and Creating ERC Division (Sections 20-21):
- DOE to strengthen and expand Electric Power Industry Management Bureau.
- ERC to create Special Division for implementing the Act.
Prohibited Acts and Penalties (Sections 23-24):
- Prohibits refusal to allow MGSP installation, turnover to MGSP/DU, imposing unapproved charges, non-compliance with timeframes.
- Prescribes imprisonment and fines for violations by officers/employees.
- Administrative penalties for government officers/employees.
Congressional Oversight, Implementing Rules, Amendments, Separability, Repealing, and Effectivity Clauses (Sections 25-30).
Amends
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distribution utilities
energy regulatory commission
department of energy
national power corporation
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local total electrification roadmap
national total electrification roadmap
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Law
Microgrid Systems Act
Republic Act No. 11646
•January 21, 2022
January 21, 2022
REPUBLIC ACT NO. 11646
AN ACT PROMOTING THE USE OF MICROGRID SYSTEMS TO ACCELERATE THE TOTAL ELECTRIFICATION OF UNSERVED AND UNDERSERVED AREAS NATIONWIDE
SECTION 1. Title. — This Act shall be referred to as the "Microgrid Systems Act."
SECTION 2. Declaration of Policy. — It is hereby declared the policy of the State to:
(a) Pursue sustainable rural development and poverty reduction towards nation-building through energy access for all;
(b) Accelerate total electrification and ensure the provision of quality, reliable, and secure electricity service at reasonable rates in unserved and underserved areas;
(c) Promote private sector participation in the electrification of unserved and underserved areas;
(d) Provide a competitive environment for different kinds of energy sources while prioritizing low-cost, indigenous, renewable, and environment-friendly sources of energy; and
(e) Ensure the adoption of a dynamic regulatory environment that does not impair nor inhibit end-users from accessing or enjoying the benefits of technologies and innovations in the electric power industry.
SECTION 3. Scope and Application. — This Act shall apply to the development of...
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