DOE to release new framework for missionary electrification

The Department of Energy (DOE) is coming out with a new framework for missionary electrification that aims to scrap subsidies and spur private sector participation by introducing new technologies that will lower power rates and help attain 100 percent electrification rate.

The agency is working on an omnibus policy guideline on missionary electrification to ensure security, reliability, adequacy, quality and affordability of electric power services in off-grid areas.

It also aims to introduce technical standards and adoption of appropriate tariff and subsidy policies.

“The omnibus missionary electrification policy covers the entire missionary electrification in off grid areas and it deals with the planning. How do we make a comprehensive plan addressing the off grid areas? How do we encourage private sector participation, how do we make sure the services they deliver are reliable, secure or affordable,” DOE Undersecretary Felix William Fuentebella said.

Under the draft rules, the DOE is introducing the auction of unserved and underserved areas through qualified third party (QTP) selection.

“We’re bidding out a number of unserved and underserved areas. We are working on their engagement and clarifying that there will be no subsidies for them,” Fuentebella said.

He said removing the subsidies would reflect the true cost of electricity in the missionary areas, which also means consumers in grid-connected areas will no longer pay for the universal charge for missionary electrification (UCME).

UCME is collected from end-users which will be used for the electrification of remote communities or areas not connected to the main transmission grid.

The missionary areas will then have a transition period from paying the true cost to the introduction of new power technologies that will lower electricity rates, Fuentebella said.

The DOE will also assign the National Power Corp. (Napocor) as the independent system operator in off-grid areas until the Energy Regulatory Commission accredits other system operators in those areas.

Fuentebella said that under the Electric Power Industry Reform Act (EPIRA) of 2001, Napocor has the mandate to provide power generation and its associated power delivery systems in areas that are not connected to the transmission system.

This is being done through NapocorSmall Power Utilities Group (SPUG), which incurs additional operating costs as a result of the fluctuation of fuel prices used in power generation. It currently has 275 SPUG plants.

“It’s in the law that their mandate is through SPUG areas. We have to make sure we have an independent system operations… to even the playing field,” the DOE official said.

At the start of the Duterte administration, Energy Secretary Alfonso Cusi said that the agency is looking at ways to lower electricity rates through a pass-on rate to consumers to cover the Napocor’s stranded debt and stranded contract costs, missionary electrification, and the environmental fund.

One solution being eyed is to use the Malampaya funds to pay for Napocor’s stranded costs and debts.