Department Circular No. DC 2008-06-0003





WHEREAS, the Department of Energy (DOE) is mandated to supervise the restructuring of the electric power industry pursuant to Republic Act No. 9136, otherwise known as the “Electric Power Industry Reform Act (EPIRA) of 2001”.  The DOE is further authorized under Section 37 (e) (ii) of the EPIRA to facilitate and encourage reforms in the structure and operations of distribution utilities for greater efficiency and lower costs;


WHEREAS, Section 2 (f) of EPIRA declares it a policy of the State to protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power;


WHEREAS, the DOE under Section 5 (p) of R.A. 7638 or the DOE Act of 1992 as amended by EPIRA is authorized to formulate rules and regulations as may be necessary to implement the objectives of the said Law, as amended;


WHEREAS, Section 1 (r), Rule 3 of the EPIRA-IRR provides that it is the function of the DOE to exercise such other powers as may be necessary or incidental to attain the objectives of the EPIRA;


WHEREAS, the DOE is likewise mandated to take the initiative to devise policies, plans and programs to achieve, among others, adequate, reliable and affordable supply of electricity, in cooperation with other government agencies and electric power industry participants and electricity end-users, taking into consideration first and foremost the welfare of the public and promoting, at the same time, partnership with the private sector;


WHEREAS, the continuous rise in the cost of electricity is affecting the welfare of the people and causing unease to the marginalized sectors of the society;


WHEREAS, Her Excellency President Gloria Macapagal-Arroyo, during the Cabinet Meeting held on June 10, 2008, in recognition of the above circumstances, mandated all government agencies to explore and adopt the necessary measures to mitigate the impact on increasing cost of electricity.  To execute the said directives the DOE was designated and authorized to take the lead and create a Technical Working Group (TWG) to address the current issue on power rate reduction;


NOW, THEREFORE, in consideration of the foregoing, a TWG is hereby created for the aforementioned purposes and in accordance with the terms provided in this Department Circular.


Section 1.  Mandate.  – Pursuant to the directive of the President during the Cabinet Meeting of June 10, 2008, there is hereby created a Technical Working Group (TWG) which the DOE Secretary shall lead and with the following government agencies together with the different stakeholders in the electric power industry as members:


(a)       National Economic Development Authority (NEDA)


(b)       Department of Finance (DOF)


(c)       Department of Justice (DOJ)


(d)       Department of Trade and Industry (DTI)


(e)       Department of Interior and Local Government (DILG)


(f)       Department of Budget and Management (DBM)


(g)      Philippine Economic Zone Authority (PEZA)


(h)      One representative each from the industrial sector, electric power industry associations, and other private sector participants as determined by the TWG.


Pursuant to Economic Managers Meeting held on 19 June 2008, all the Department Secretary Members agreed to designate their respective permanent representative of an Undersecretary level to the TWG.


The TWG shall perform its mandate with the objective of ensuring that the declared policies of the State under EPIRA are properly achieved and implemented.


SEC. 2.  Scope of Responsibilities.  – The TWG shall take action on the issues that currently affect the power sector including, but not limited to, the following:


(a)                Review the VAT on systems loss


(b)               Review of the systems losses/caps on recoverable systems losses


(c)                Review and renegotiation of power supply contracts


(d)               Review and rationalize Lifeline Policies and Subsidies


(e)                Implementation of Open Access and Retail Competition within Economic Zones


(f)                Review of Wholesale Electricity Spot Market (WESM) Rules


(g)               Study on proposed NPC flat rate of Php 4.11 per kWh


(h)               Implementation of Time of Use Rates and Demand Side Management (DSM) Program at the distribution level


(i)                 Review power purchasing practices of distribution utilities


(j)                 Audit the operation of National Power Corporation and Transco in relation to rates


(k)               Review and validate the operation of Distribution Utilities in coordination with the Energy Regulatory Commission


(l)                 Implementation/rationalization of National Wealth Tax provisions on benefits to Host LGUs/Regions


(m)             Conduct diagnostics of the status and manner of EPIRA implementation of all relevant stakeholders


SEC. 3.  Technical Support Staff.  – The TWG shall also constitute an Inter-Agency Technical Support Staff (IATSS) composed of representatives who have direct knowledge and expertise on the power issues, and duly nominated by the TWG members.  The IATSS shall provide the necessary support and other related services to the TWG and coordinate with the TWG Secretariat.


To ensure continuity, the IATSS shall work on a permanent basis for the duration of the implementation of the TWG’s program.  They shall be authorized to avail themselves of the facilities and communication networks of other member agencies of the TWG as may be necessary and in addition to what they may have.


Whenever necessary, the TWG may also direct other concerned agencies for additional membership in the TWG Secretariat or the IATSS.  The TWG may likewise appoint specific Leader of the Technical Support Staff depending on the issues being addressed.


SEC. 4.  Secretariat.  – The Electric Power Industry Management Bureau of the Department of Energy (DOEEPIMB) shall act as the TWG Secretariat and shall provide administrative support and facilities for central coordination and monitoring of the TWG’s activities.


SEC. 5.  Meetings.  – The TWG shall meet regularly once every two weeks and as often as necessary with due consideration to the exigency of the issues at hand.


SEC. 7.  Budget.  – The activities of the TWG and its sub-groups including the TWG Secretariat shall be funded through a supplemental budget, duly approved by the Department of Budget and Management.


SEC. 8.  Effectivity.  – This Department Circular shall take effect immediately upon publication in two newspapers of general circulation.


Fort Bonifacio, Taguig City, 23rd day of June, 2008.







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