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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No, 4893

Introduced by HON, REYNALDO V, UMALI

EXPLANATORY NOTE

It is the declared policy of the State to encourage the efficient use of energy and other
modalities of demand side management. The Department of Energy (IDOE) is mandated to
provide adequate, reliable and affordable energy to industries and ordinary citizens to enable
them to enjoy a decent life and engage in successful businesses. To this end, it is important to
ensure that energy is produced and used in a manner that will promote sustainable development
in order to achieve government’s goal of spurring economic activity and growth.

Thus, with the demand for energy growing at a fast-paced rate, the government must
promote the judicious conservation and efficient utilization of energy resources and, at the same
tine, minimizing negative environmental impact. This can be done by managing domestic energy
consumption.

Recent DOE energy saving forecast projection (2010-2030) shows that there is an annual
energy saving potential of 3,445 kilotons of oil equivalent (KTOF) coming from the energy
demand sector comprising of households, industrial, commercial, transport and agriculture
sectors. This is estimated to have a monetary equivalent value of about PhP 122 million per year.

Furthermore, the benefit to the environment in terms of CO) reduction is substantial at an
estimated level of 8.9 million tons per year, which directly translates to the reduction of stress to
the environment and to the planet as a whole and has a beneficial effect on the survival and
quality of life of the global population.

Hence, it should be the goal of government to directly and aggressively promote energy
efficiency and conservation by making it a way of life. This demand-side approach contributes to
the national economy and preserves the environment as well, through reduetion of harmful
emissions.

In conjunction with this demand-side management, the use of renewable energy
technologies and systems by individual households and industries should also be accelerated.
This is another effective response to the country’s energy security concerns because this will
result in the rationalization of the country’s demand for petroleum products and the lessening of
the impact of escalating prices to the nation’s economy towards energy sufficiency.

It is for this purpose that this bill on Sustainable Energy Efficiency and Conservation is
being proposed.


While executive orders and issuances have been issued in the past to implement this
policy, the apparent lack of an overall framework has precluded the crafting of comprehensive
national energy efficiency, conservation and sufficiency programs, It is high time to
institutionalize such a program through legislation

assage of this bill is urgently sought,

In view of the foregoing, the deliberation and

REYNALDO V. UMALT
! District, Oriental Mindoro


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS,
First Regular Session

House Bill No._4393

Introduced by HON. REYNALDO V. UMALI

AN ACT
INSTITUTIONALIZING SUSTAINABLE ENERGY EFFICIENCY AND
CONSERVATION, ENHANCING THE EFFICIENT USE OF ENERGY, GRANTING
INCENTIVES TO ENERGY EFFICIENCY AND CONSERVATION
PROJECTS, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

CHAPTER I
GENERAL PROVISIONS

. 1. Short Title. - This Act shall be known as the “Sustainable Energy Efficiency
and Conservation Act of 2014.

SEC. 2. Policy Declaration. - It is hereby declared the policy of the State to:

(a) Institutionalize energy efficiency and conservation as a national way of life geared
towards the efficient and judicious utilization of energy by formulating, developing, and
implementing energy efficiency and conservation plans and programs to secure stability
and sufficiency of energy supply in the country to cushion the impact of the high price of
imported fuels to local markets and protect the environment in support to the economic
and social development goals of the country:

(b) Promote and encourage the development and utilization of efficient renewable energy
technologies and systems to ensure optimal use and sustainability of the country’s energy
resources.

(c) Reinforce related laws and other statutory provisions for a comprehensive approach to
energy efficiency, conservation, and sufficiency in the country.

SE Role of Energy Users. - All Energy users shall exert efforts to use every
available energy resources judiciously, efficiently and promote the development and utilization
of renewable energy technologies and systems across sectors from the household level to
industries in compliance with the fundamental policies of this Act.

SEC. 4. Scope. - This Act shall establish a framework for introducing and
institutionalizing fundamental policies on energy efficiency and conservation including the
promotion of efficient and judicious utilization of energy, increase in the utilization of renewable
energy technologies and the definition of responsibilities of various government agencies and
private entities.



SEC. 5. Definition of Terms. - or purposes of this Act, the following terms shall,
unless the context indicates otherwise, have the following meanings:

(a) Certified Energy Manager (CEM) relers to a Professional who becomes eligible for
this certification after demonstrating expertise in several areas ranging from standards for
energy-consuming appliances, equipment, products, vehicles and systems; air quality; energy
audits; procurement and financing. It recognizes individuals who have demonstrated high levels
of experience, competence, proficiency and ethical fitness in the energy management profession.
‘Type 2 Designated Establishments shall appoint a CEM who shall be responsible for
management of energy consumption of its facility or facilities.

(b) Demand Side Management refers to measures undertaken by distribution utilities to
encourage end-users in the proper management of their load to achieve efficiency in the
ilization of fixed infrastructures in the systems;

(0) Designated Establishment (Type 1/Type 2 Designated Establishment) reters to
private entity in industrial, commercial, transport and power sectors consuming energy and/or
having other index equivalent to such energy for the previous year beyond the level specified by
the Department of Energy (DOE). Such establishments shall be categorized as Type | or Type 2
Designated Establishment, according to the annual energy consumption [Type 1: 2'1,000,000 but
<2,000,000 Liters of Oil Equivalent (LOE), Type 2: 2'2,000,000 Liters of Oil Equivalent (LOF)];

(d) Distribution Utility refers to any electric cooperative, private corporation,
government-owned utility or existing local government unit (LGU) which has an exclusive
franchise to operate the system of wires extending between the delivery points of the
transmission system and the customer point of connection, A distribution utility shall have the
obligation to provide distribution services to any end-user within its franchise area;

(c) Energy Audit refers to the evaluation of energy consumption and review of current
energy cost, to determine ways in which energy can be conserved to achieve savings. The three
types of energy audit are walk-through audit, preliminary audit and detailed audit;

(8) Energy Conservation refers to reducing the loss and waste in various energy stages
from energy production to energy consumption and using energy more efficiently and rationally
through application of appropriate energy management system and adopting measures which are
technologically feasible, economically sound and environmentally and socially affordable:

(g) Energy Conservation Officer (ECO) refers to a person appointed by Type 1
Designated Establishments responsible for the supervision and maintenance of facilities for the
proper management of energy consumption and such other functions deemed necessary for the
efficient and judicious utilization of energy prescribed under this Act:

(h) Energy Efficiency refers to the efficient utilization of energy in its various forms
through cost-effective options towards the use of less energy for the same or higher performance
than regular products or energy systems,

(i) Energy Management refers to the process of managing energy consumption to ensure
that energy has been efficiently consumed;

(j) Energy Using Entities refers to all energy demand sectors such as commercial,
industrial, transport, agricultural, household, government buildings and the power generation,
transmission and distribution industry sectors,



(k) Energy Conservation Report refers to the periodic report submitted to the DOE by
Type 2 Designated Establishments and Transmission Utility with regard to the EL&C plan, The
items to be reported in the Energy Conservation Report shall be specified by the DOF;

()) Energy Consumption Report refers to tile periodic report submitted to the DOE by
Type I or Type 2 Designated Establishments and Transmission Utility with regard to the energy
consumption and energy loss and other status of energy use. The items to be reported m the
Energy Consumption Report shall be specified by the DOB;

(m) Energy Sufficiency refers to a condition where the quantity of the supply of energy
needed or required is enough or sufficient to meet demand.

(n) National Sustainable Energy Efficiency and Conservation Coordinating Officer
refers to the person appointed by the Leagues of the local government units from among the local
government’s Energy Efficiency Conservation and Sufficiency Officer who shall be responsible
for integrating local energy efficiency, conservation and sufficiency programs,

(0) Office of Sustainable Energy Efficiency and Conservation (OSEEC) refers to the
office to be established in local government units headed by the Energy Efficiency Conservation
and Sufficiency Officer responsible for overseeing the implementation of the program at the
local government level

(p) Specific Energy Consumption (SEC) refers to the energy consumption volume
required per unit, such as production volume, sales amount, transportation ton-km, transportation
km, floor space and such other indicators relevant to energy consumption:

(q) System Loss refers to the difference between the electric energy purchased and
generated and the electric energy sold by a Distribution Utility. For purposes of this Act, the term.
System Loss shall consist of the following components: Technical System Loss, referring to the
loss inherent m the physical delivery of electric energy, including conductor loss, transformer
core loss and technical errors in meters; Non-Technical Loss, referring to energy loss not related
to the physical characteristics of the electrical system, including those attributable to pilferage.
tampering of meters and erroneous meter reading; and Administrative Loss, referring to the
energy required for the operation of the distribution system and any un-billed energy for
community-related activ

(8) Transmission Utility refers to any private corporation or government-owned utility,
which has an exclusive franchise to operate the system of wires extending from power generating
units to the delivery points through the grid. A transmission utility shall have the obligation to
provide distribution services to any end-user within its franchise ara; and

(s) Waste Heat Recovery refers to the extraction of heat from fluids (i.e., gases or liquids)
produced in a thermodynamic or separation process, that would otherwise be vented to the
atmosphere, reinjected to the ground or disposed of by other means, for power generation or
other applications

CHAPTER 2

TYPE 1 AND TYPE 2 DESIGNATED ESTABLISHMENTS

SEC. 6. Type I Designated Establishments. Establishments with an annual energy
consumption equal to or more than 1,000,000 Liters of Oil Equivalent (LOE) but less than
2,000,000 LOE are hereby categorized as Type I Designated Establishment and shall include the
following sectors:



a) Building Sector
1) Commercial Building
2) Hotel
3) Hospital Building
4) Educational Institutions
5) Office Building

b) Industrial/Manufacturing (Medium size industrial/manufacturing plant)
1) Food and Beverages
2) Plastic
3) Metal Fabrication
4) Chemical
5) Appliance

©) Transport Sector (Fleet)
1) Railway
2) Road Transport
3) Sea Freight and Passenger Vessel
4) Air Transport Cargo and Passenger Vessel

d) Power Sector
1) Power Generation
2) Distribution Utilities

SEC. 7. Obligations of Type 1 Designated Establishments. - Type I Designated
Establishment shall have the following obligations:

a) Employ an Energy Conservation Officer (ECO) and duly notify the Department of
Energy (DOE), said ECO's appointment or separation as soon as possible. The ECO shall
manage the energy consumption of facilities, equipment and devices, the improvement and
implementation of energy efficiency measures, the conduct of regular energy audit, energy
monitoring and control and the preparation of periodic energy consumption report:

b) Keep records of monthly energy consumption data and other energy-related data;

c) Set up annual targets and plans for the implementation of energy efficiency and
conservation projects or measures. Submit a Semi-Annual Energy Consumption Report to the
DOE, not later than the 30th day of June and December;

d) Conduct, through competent energy auditors certified by bodies accredited by the
DOE, or DOE-accredited energy service company or service provider, the periodic Energy Audit
‘once every three (3) years and submit an Energy Audit Report to the DOE upon completion of
the energy audit.

¢) Improve average Specific Energy Consumption (SEC) by at least one percent (1%)
year on year.

f) Set up programs to develop and design measures that promote energy efficiency,
conservation and sufficiency through installation of renewable energy technologies.

SEC. 8. Type 2 Designated Establishments. - Energy intensive establishments with an
annual energy consumption equal to or more than 2,000,000 Liters of Oil Equivalent (LOF) are
hereby categorized as Type 2 Designated Establishment and shall include the following sectors:

a) Building Sector
1) Commercial


2) Hotel
3) Hospital
4) Educational Institutions
5) Office
b) Industrial/Manufacturing sectors
1) Cement
2) Mining
3) Food and Beverages
4) Electronic/Semi-Conductor
5) Steel & Metal
6) Chemical
7) Vehicle
8) Appliance
9) Glas
10) Plastic
11) Others
©) Transport Sector (Fleet)
1) Railway
2) Road Transport Fleet
3) Sea Freight and Passenger Vessel
4) Air Transport Cargo and Passenger Vessel
d) Power Sector
1) Power Generating Plants
2) Distribution and Trans

SEC. 9. Obligations of Type 2 Designated Establishments - Type 2 Designated
Establishments shall have the following obligations:

a) Employ one (1) Certified Energy Manager (CEM), subject to the provisions of Section
11 of this Act, and duly notify the Department of Energy (DOE) said CEM's appointment
or separation as soon as possible. The CEM shall manage the energy consumption of
equipment and devices, the improvement and implementation of energy
efficiency measures, the conduct of regular energy audit, energy monitoring and control,

and the preparation of periodic energy consumption and energy conservation program
reports of the establishment:

b) Keep records on monthly energy consumption data and other energy-related data,

©) Set up annual targets and plans for the implementation of energy efficiency and
conservation projects;

d) Submit a Semi-Annual Energy Consumption Report and an Annual Energy
Conservation Program Report to the DOE not later than the 30th day of June and
December;

e) Conduct, through competent energy auditor certified by bodies accredited by the DOE
or DOE-aceredited energy service company or energy provider, periodic Energy Audit
once every three (3) years and submit Energy Audit Report to the DOE upon completion
of the energy audit.

4) Improve average Specific Energy Consumption (SEC) by at least one percent (1%)
year on year.

g) Set up programs to develop and design measures that promote energy efficiency,
conservation and sufficiency through installation of renewable energy technologies.


CHAPTER 3

PROMOTION AND ENCOURAGEMENT OF UTILIZATION OF RENEWABLE
ENERGY TECHNOLOGIES AND SYSTEMS BY INDIVIDUAL HOUSEHOLD USERS
AND INDUSTRIES FOR ENERGY SUSTAINABILITY

SEC. 10. Renewable Energy Technologies and Resources. ~ ‘The efficient management
of domestic energy consumption at the household level through the use of renewable energy
technologies and systems shall be actively promoted and encouraged with a view towards
accelerating the development and utilization thereof and increasing renewable energy capacity
nationwide whereby the sustainability of resources is secured. The Department of Science and
Technology (DOS') shall conduct research and development initiatives for this purpose.

SEC. 11. Mechanism for Grant of Subsidies. - ‘The Department of Finance and
concerned agencies shall draw-up appropriate mechanism for the grant of subsidies and/or tax
credit equivalent to one hundred percent (100%) of the customs duties and national internal
revenue taxes on the machinery and equipment whether for individual household use or shall be
given to the individual household user and industries who purchase and install said machinery
and equipment.

CHAPTER 4
ROLE OF THE DEPARTMENT OF ENERGY

SEC. 12. Responsibilities of the DOE and appropriate agencies. - The DOE shall be
the primary government agency responsible for the planning, formulation and development of
energy management policies and other related sustainable energy efficiency and conservation
plans and programs. The DOL is shall consult and coordinate with other government agencie:
local government units and the private sector or create an inter-agency committee, as may be
deemed necessary, for the effective implementation of sustainable energy efficiency and
conservation policies of the government. It shall also promote collaborative efforts with the
business sector, particularly the commercial, industrial, transport and power sectors, to broaden
and enhance their efficient and judicious utilization of energy. The DOE shall, in consultation
the DTI-BPS, require manufacturers, importers and dealers to comply with the Minimum
Energy Performance Standards (MEPS) and to display the Energy Label showing the energy
requirement and consumption efficiency of products on their packaging, and on the products
themselves, among them designated machinery and equipment, appliances, vehicles and other
ising combustion equipment and electric devices

CHAPTER 5

ROLE OF LOCAL GOVERNMENT UNITS AND LEAGUES OF LOCAL.
GOVERNMENT UNITS AND ELECTIVE OFFICIALS

SEC. 13. Support and Coordination of Local Government Units and Leagues of
Local Government Units and Elective Officials. — In support of the government’s sustainable
energy effigiency and conservation program, local government units shall establish an Office of
inable Energy Efficiency and Conservation (OSEEC) to be headed by the Sustainable
Energy Efficiency and Conservation Officer, which shall be responsible for overseeing the
implementation of the program at the local government level. ‘The Leagues of Local
Government Units and Elective Officials shall appoint a National Sustainable Energy Efficiency
and Conservation Coordinating Officer from among the local government units’ Sustainable
Energy Efficiency and Conservation Officers in the country, who shall integrate local sustainable
energy efficiency and conservation programs.



CHAPTER 6

CERTIFICATION FOR PROFESSIONAL COMPETENCY AND ACCREDITATION
FOR PROFESSIONAL SERVICES

SEC. 14. Certified Energy Manager (CEM) and Energy Conservation Officer
(ECO). - The Commission on Higher Education (CHED) and State Universities and Colleges
(SUCs) shall formulate and develop appropriate training course modules for Energy Manager
and Energy Conservation Officer under a Certificate Course Program for inclusion in the school
curricula.

Similarly, competent Non-Profit Organizations and other private training institutions duly
accredited by the DOE and CHED shall offer professional certificate programs fo
Manager and Energy Conservation Officer.

SEC. 15. Accreditation of Energy Service Company (ESCO) and other Energy
Efficiency Service Provider (RESP). - The Department of Energy shall promote and implement
an Energy Service Company (ESCO) Accreditation System as an important component for
market development measures and for the following purposes:

a) development of professional and qualified ESCOs and energy engineer

b) enhance the capabilities of ESC Os, particularly in their energy auditing servi

c) enhance support services procurement and selection procedures,
support to public sector incentive schemes in the promotion of energy
and
nergy wastage and eliminate false claims on energy ef

ency among industry

The development of this sector shall expand the general service sector and stimulates
economic development through enhancing cost competitiveness while at the same time
strengthening Philippine energy security. The accreditation process of this energy service

‘a natural segment of the knowledge economy, providing sustainable environmental and
energy-saving benefits.

CHAPTER 7

INCENTIVES FOR ENERGY EFFICIENCY AND CONSERVATION PROJE

SEC. 16. Incentives for Energy Efficiency and Conservation Projects. The DOE shall
endorse projects that utilize pioneering energy efficient technologies to the Board of Investments
(BOD) to avail of incentives for a period of five years (5) upon the effectivity of this Act. Such
incentives shall include (a) tax and duty free importation of pioneering energy efficient
technologies; or (b) income tax holiday

CHAPTER 8

MISCELLANEOUS PROVISIONS

SEC. 17. Recommendation, Disclosure, and Order. - Upon determination that an
establishment has committed of any of the prohibited acts under Section 16 of this Act, the DOE
may consider the following measures prior to the imposition of the appropriate
sanctions/penalties for such violations:

(a) Provide citations in cases where the DOE finds materially insufficient reports, false
returns, and non-submission of notifications or reports;


(b) Disclose the name of the establishment in cases where the establishment that has
received a citation under the preceding paragraph, failed to remedy such citation by the
DOE; and

(©) Issue an Order to the establishment to take measures in cases where the said
establishment failed to follow or comply with the citation or recommendations issued by
the DOL. Failure on the part of the establishment to comply with such order shall be
ground for imposition of penalties in accordance with Section 17 of this Act.

SEC, 18. On-site Inspections. - For the effective enforcement of this Act, the DOF shall
have the tight to visit Designated Establishments to inspect energy-consuming facilities, evaluate
energy management procedures, identify areas for efficiency improvement, and verify energy
monitoring reports and other documents related to the compliance requirements of this Act.

CHAPTER 9
FINAL PROVISIONS
SEC 19. Prohibited Acts. - The following acts shall be prohibited:

a) Failure and/or willful refusal to submit periodic reportorial compliance reports to the
DOE;

) Failure and/or willful refusal to appoint/designate an Energy Conservation Officer and
Certified Energy Manager:

©) Failure to comply with the Order under Section 15 hereof, and

d) Willful refusal to submit energy audit report

SEC 20. Penalties. - Any person who willfully commits any of the prohibited acts
enumerated under this Act shall, upon conviction, be liable for penalties that will be defined in
the Implementing Rules and Regulations of this Act.

SEC 21. Contingency Powers. - Upon the recommendation of the Secretary of Energy,
in times of critical energy supply disruptions or imminent danger thereof, the President may
direct the adoption of stringent energy conservation measures, including but not limited to
power/fuel allocations or rationing; limiting the operating hours of commercial, industrial and
similar establishments; restricting the use of government and private motor vehicles; staggering
or limiting working hours in both public and private sectors; and the temporary closure of all
energy intensive industries.

SEC. 22. Appropriations. - Such sums as may be necessary for the implementation of
this Act shall be taken from the current fiscal year appropriation of the Department of Energy
and the Department of Science and Technology and from such other funds that may be made
available. Thereafter, the amount needed for the implementation of the act shall be included in
the annual general appropriation.

SEC 23. Implementing Rules and Regulations. - The DOE shall, in consultation with
concerned government agencies and/or entities, local government units, the energy. industrial
and commercial sectors, and other relevant stakeholders, promulgate Implementing Rules and
Regulations (IRR) of the Act within six (6) months from the effectivity of this Act.

SEC 24, Separability Clause. -If for any reason, any section or provision of this Act is
declared unconstitutional or invalid, such parts not affected thereby shall remain in full force and
effect.


SEC. 25. Repealing Clause. - All laws, Presidential decrees, executive orders, issuances
rules and regulations, inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

SEC. 26. Effeetivity. - This Act shall take effect fifteen (15) days after its publication in
at least two (2) newspapers of general circulation following its approval.

Approved,