Microgrid Systems Act

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).