PROVIDING REVISED RULES AND PROCEDURES TO IMPLEMENT ELECTRIFICATION PROGRAM FUNDED THROUGH ENERGY REGULATIONS NO. 1-94, IMPLEMENTING SECTION 5 (i) OF REPUBLIC ACT NO. 7638, OTHE…

WHEREAS, Energy Regulations (E.R.) No. 1-94, promulgated by the
Department on 24 May 1994, prescribed the provision of direct benefits
to pertinent Local Government Units (LGUs) hosting energy generating
facilities and/or energy resource development projects within their
jurisdiction pursuant to Section 5(i) of Republic Act (R.A.) No. 7638;

WHEREAS, Department Circular (D.C.) No. 95-11-009 and D.C. No.
96-08-009, issued by the Department on 08 November 1995 and 09 August
1996, respectively, prescribed the guidelines and procedures for
granting of financial benefits required under E.R. 1-94;

WHEREAS, D.C. No. 2000-03-003 issued on 17 March 2000, amended
certain provisions of E.R. 1-94 and its attendant rules and procedures;

WHEREAS, pursuant to the policy of the state to ensure total
electrification of the country, the Department seeks to achieve full
electrification of all barangays by year 2004 as embodied in its Rural
Electrification Program (REP);

WHEREAS, in the interest of exigency of public service and to
further accelerate the implementation of the REP to ensure the
implementation and completion of the project on time, there is an urgent
need to institute summary procedures in the approval and subsequent
release of the electrification fund to the franchised distribution
utility or project implementor, as the case may be;

WHEREFORE, premises considered, the Department hereby adopts and
promulgates the following summary procedures in the utilization and
implementation of electrification projects funded under E.R. 1-94:

SECTION 1.       Evaluation and Approval of Electrification Projects. —

a.         Priority shall be given to unenergized areas of the following:

i.     Official Resettlement Areas;
ii.    Host Barangays; and
iii.   Host Municipalities/Host Cities.

b.         After electrification has reached the municipal or
city level, the electrification fund of each energy generating facility
in the same province or region, as the case may be, shall be combined to
finance unenergized areas in the host province or host region, as the
case may be;

c.         The National Electrification Administration (NEA)
shall provide support to the Department in the identification of
electrification projects including submission by the concerned
franchised distribution utility of the staking sheets or single line
diagram, and cost estimates;

d.         All concerned franchised distribution utilities shall
submit to the Department the corresponding staking sheets or single
line diagram detailing the design of the project including the estimated
cost estimates and completion date of the project; and

e.         The Department, with the assistance of the (NEA),
shall evaluate initial documents submitted by the franchised
distribution utilities and the reasonableness of the cost estimates.

SECTION 2.       Release of Funds and Project Implementation. —

a.         A Memorandum of Agreement (MOA) shall be forged among
the Department, relevant franchised distribution utility or project
implementor, power producer and/or energy resource developer, NEA and
the concerned LGU/s to effect the implementation of the project/s. In
cases where the electrification project lacks necessary information and
documentation, the MOA shall stipulate specific time frame or date for
the franchised electric distribution utility to comply with the
submission, among others, cost estimates, proposed work program, target
date of project completion;

b.         The Department shall make the necessary fund
allocation and forthwith release the funds to the franchised
distribution utility or project implementor within fifteen (15) days
upon accomplishment of the MOA;

c.         For projects to be undertaken by contract, initial
release of fund shall be equivalent to fifteen percent (15%) of the
total project cost. Subsequent release of fund balance shall be based on
the result of the qualified lowest bid cost;

d.         For projects to be undertaken by administration,
total project cost shall be released upon accomplishment of the MOA;

e.         The NEA or other government agencies shall ensure
compliance by the franchised distribution utility or project implementor
to the provisions of the MOA to facilitate post-audit by the Department
upon completion of the projects;

f.          All electrification projects shall be completed or energized consistent on the time or date specified in the MOA;

g.         All electrification projects shall be undertaken in
at least-cost manner. The concerned franchised distribution utility or
project implementor may either adopt the conventional line design or
utilize indigenous and renewable energy sources to energize the area;
and

h.         In cases where the electrification project is
implemented by entity other than the relevant franchised distribution
utility, the project implementor shall turn-over said project to the
relevant franchised distribution utility for operation and maintenance.

SECTION 3.       Post Project Implementation. —

a.         The franchised distribution utility or project
implementor shall, in writing, inform the Department of the project
completion along with the submission of the pertinent documents, such as
but not limited to, as-built staking sheets, documents detailing costs
incurred and the number of potential households connected or to be
connected, and completion date of the project;

b.         In the event that the franchised distribution utility
or project implementor incurred additional cost in implementing the
project, recovery shall be allowed subject to the following:

i.        The additional or extra works and/or change order are necessary to complete the project;

ii.       Submission of Certificate of Completion and
Certificate of Acceptance from the franchised distribution utility if
the project shall be undertaken by contract. If the project shall be
undertaken by the administration of franchised distribution utility, a
Certificate of Completion is sufficient;

iii.      Audit report detailing the additional or extra works done;

iv.      All provisions in the MOA have been strictly complied
with, in accordance with the commitment of the franchised distribution
utility;

v.       Electrification project is completed within the specified time frame or date specified in the MOA; and

vi.      Availability of electrification fund from the relevant energy generating facility.

Provided, however, that the amount to be recovered shall not
exceed 20 percent (20%) of the total estimated project cost as specified
in the MOA.

c.         The Department shall conduct audit of the expenses
incurred as well as technical inspection of the facilities installed.
Accordingly, the financial and technical teams of the Department shall
prepare their respective reports detailing their respective findings of
the project completed. The as-built staking sheets and documents
submitted by the franchised distribution utility shall serve as
reference or initial basis for audit.

SECTION 4.       Other Provisions . —

a.         This Circular shall be amended, replaced or repealed
in due time as may be deemed necessary by the Department to rationalize
the implementation of the REP of the Department.

b.         This Circular shall only apply to barangay
electrification projects of the Department, utilizing electrification
fund and interest earnings under E.R. 1-94.

c.         All previous pertinent orders, resolutions or
memorandum circulars inconsistent herewith are hereby superseded,
modified or amended accordingly.

d.         This Circular shall take effect immediately.

Adopted: 02 Oct. 2000

(SGD.) MARIO V. TIAOQUI
Secretary