HOUSE OF REPRESENTATIVES
Quezon City,  Manila
NINETEENTH CONGRESS
Second Regular Session
HoUSEBILLNo.         8703
RECEIVED
DATE  0  2 AU620ZJ      #
Ctry      +
Introduced by Rep. Arnulf Bryan "Amie" 8. Fuentebella
EXPLANATORY NOTE
Republic Act  No.  9136,  otherwise  known  as  the  Electric  Power  Industry  Reform  Act  of 2001,
declares  it the  policy  of the  State to  ensure the  quality,  reliability,  security  and  affordability  of
supply Of electric power, and to ensure socially and environmentally compatible energy resources
and  infrastructures.  Likewise,  the  EPIRA  declares  it  is  a  policy  for the  State  to  promote  the
utilization of indigenous,  new and Renewable Energy (RE) resources in the power generation in
order to reduce dependence on imported energy.
In finding alternative modes of generating energy, including, the promotion of renewable energy,
the  Energy  Regulatory  Commission,  through   its   resolution   recognized  and  institutionalized
Distributed   Energy   Resource   (DER)   in   the   pursuit   of   accelerating   the   exploration   and
development of renewable energy.
As such, in order to further enhance and explore the capabilities of DERs, we are introducing this
bill to allow for technology integration, particularly, the implementation of smart grid systems, peer
to peer trading, and introduction of the Distributed Energy Market Operator.
Given the foregoing, the immediate passage of this measure is being sought.


HOUSE OF REPRESENTATIVES
Quezon City,  Manila
NINETEENTH CONGRESS
Second Regular Session
HOUSEBILLNo.      8703
Introduced by Rep. Arnulf Bryan "Arnie" 8. Fuentebella
AN ACT INSTITUTIONALIZING DISTRIBUTED ENERGY RESOURCES
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:
CHAPTER I
GENERAL PROVISIONS
SECTION 1. Title. -This Act shall be known as the "Distributed Energy Resources Act of 2022".
SECTION 2. Declaration of Policy. It is hereby declared the poliey of the State:
a)   To ensure the quality, reliability, security, and affordability of electric power supply;
b)   To promote investments and private inflow in the power industry;
c)    Increase the utilization of renewable energy and promoting its efficient and cost-effective
commercial applications;
d)   To protect the public from the volatile fluctuations in electricity pricing; and
e)   Establish the necessary infrastructure and mechanism to carry out the mandates specified
in this Act and other existing laws.
Towards this  end,  a  holistic approach  on  Distributed  Energy  Resources  shall  be established,
which  includes  among  others,  its  different  components,  commercial  aspects  and  technical
requirements.
SECTION 3. Scope and Application.  This Act shall apply to any Distribution utility, Generation
Company, End-User, System Operator and Market Operator.
SECTION 4. Definition of Terms. -For purposes of this Act, the following terms shall be defined
as stated below: Provi.ded, That, other terms used in this Act not otherwise but not defined herein
shall have such means as ascribed to them be understood to mean the way they are defined in
Republic Act No. 9136 and Republic Act No. 9513 and their lmplementing Rules and Regulations:
a)   Advanced   Distribution  Management  System   (ADIVIS)  -  refers  to  a  platform  that
integrates hardware and multiple utility-based systems which provides automated outage
restoration and optimization of distribution grid performance;


b)   Department of Energy (DOE) - refers to the government agency created  pursuant to
Republic Act No. 7638 and whose functions were expanded by Republic Act No. 9136;
c)   Distributed Energy Resouree (DER) -as defined in Section 5 of this Act;
d)   DI.tr]buted  Energy  Ft®soLirce.  Market  Operator  (DERMO)  I  rofers  to  the  Du  wlth
ro8pect to the DER8 within its franchise area. For this purpose, the DU can engage a third-
party market operator to execute thl8 function;
®)   DI.trlbutod G®n®matlon . refore to a Sy8tem Of small generation entities Supplying directly
to the distribution grid, regardless of capacity;
f)    DER Participant - refers to any End-User that owns or operates any DERs or any End-
User that participates in any Peer-to-Peer Transaction involving DER.
g)   Distribution Utility -refers to any Electric Cooperative, private corporation, government-
owned utility, or existing local government unit which has an exclusive franchise to operate
a distribution system;
h)   Embedded Generation - refers to generation system directly and physically connected
to the DU that is either (1) exports power to the Grid through the distribution  utility or (2)
physically supplies power exclusively to the host DU;
i)     End-User - refers to any person or entity requiring the supply or delivery of electricity for
its own use;
j)    Energy Regulatory commission (ERC) -refers to the regulatory body created pursuant
to Republic Act No. 9136;
k)   Electronic Net`^rork-Based Platform - refers to a computer network system as well as
the instruments and apparatuses allowing the execution of related methods of operation
and a plurality of user client devices capable of connecting to the communication network;
I)    Fault   Location,   Isolation   and   Service   Restoration   (FLISR)   -   refers  to   various
technologies and systems which work in tandem to locate a fault, reduce both the impact
and  length of power interruptions by isolating the affected area/s,  and automate power
restoration;
in)  Generation Company -refers to any person or entity authorized to operate facilities used
in the generation of electricity;
n)   lvlarket Operator -the operator of the Wholesale Electricity Spot Market as established
by the DOE pursuant to Republic Act No. 9136;
o)   Peer-to-Peer Transaction  - refers to any form of transaction  between or among  End-
Users within the same franchise area and involving the exchange of excess energy of any
DER belonging to one or more of the End-Users. All Peer-to-Peer Transactions shall be
conducted through the DERMO.
p)   Retail Electricity Supplier (RES} - refers to entities licensed by the Energy Regulatory
Commission (ERC) to supply electricity to contestable end-users; and


q)   Rooftop Solar -refers to a photovoltaic voltaic (PV) system that has electricity generating
solar panels mounted on the rooftop of a residential or commercial building or structure;
r)    Smart Distribution/Smart Automation (SDA/SSA) - refers to various automated control
techniques  that  optimize  the  performance  of  power  distribution  networks  by  allowing
individual devices to sense the operating conditions of the grid  around them and  make
adjustments to improve the overall power flow and optimize performance;
s)   Smart Grid - refers to a modernized  electrical grid that utilizes innovative technologies
with  two-way  and/or  multi-way  communication  technologies,  real-time  monitoring  and
control  systems to  (1)  improve  overall  reliability,  power quality,  security,  efficiency  and
management  of the  electricity  grid  with  full  cybersecurity  and  interoperability;  (2)  allow
suitable integration of bulk and flexible generation,  distributed energy  resources,  micro-
grids, and electric vehicles with management systems; and (3) empower customers with
the   provision   of  timely   information   and   control   options   through   enhanced   energy
management systems;
t)    Smart Meter - refers to an electronic real-time energy-measuring device that is capable
of remote connect /disconnect switching, outage and tamper detection, and  has a two-
way communication between the meter and the utility. A smart meter records consumption
of electric energy in intervals of an hour or less and communicates that information back
to the utility for monitoring and  billing;
u)   Virtual  Power Plant OVPP) -  refers to a  cloud-based  power plant that aggregates the
capacities of various distributed generators for the purposes of trading or selling power on
the DERMO.
v)   Wholesale  Electricify  Spot Market (WESM)  -  refers to the wholesale  electricity  spot
market created pursuant to Republic Act No. 9136
CHAPTER 11
TECHNOLOGY INTEGRATION
SECTION 5. The DER Components. DERs refer to smaller power sources, either demand or
supply side, that can  be aggregated to provide power necessary to meet regular demand and
reliability needs of the Distribution Utility.  DERs may either be active or passive energy systems
built up from behind or in-front of the meter at the side of the End-User.  DERs shall include the
system of energy aggregation, central scheduling and dispatch, as well as, settlement of energy
transactions between End-users. The general components of DER are as follows:
a)   Embedded generation
b)   Rooftop solar
c)    Distributed generation
d)   Virtual Power plant
e)   Peer-to-Peer Transaction
f)     DERMO
g)   End-User participant
h)   Other participants as determined by the Department of Energy
SECTION   6.   Smart  Grid   lmplemenfation.   The   DUs   shall   prepare  for  a  full   smart  grid
implementation   based   on  a   plan  to  be  issued   by  the   DOE,   in   consultation  with   industry


stakeholders. The short-, medium-, and long-term targets shall be included in the plan. The DU's
plan shall be subject to the approval of the DOE.
All DUs shall identify the current smart grid implementation level and submit all  pertinent details
to DOE and ERC no later than six (6) months from the effectivity of this Act.
The ERG shall estimate the costs of full conversion to smart grid and coordinate with DOE on the
smart  grid  implementation  plan  for  all  DUs.  The  ERC  shall  correspondingly  approve  capital
expenditures of each  DU  aligned with the smart grid  implementation  plan  as approved  by the
DOE.
After the DOE certifies that a DU has initiated the implementation of Fault Location, Isolation and
Service  Restoration  and/or Advanced  Distribution  Management System with  Smart Distribution
Automation  and  Smart  Substation Automation,  the  DU  shall  be qualified to function  as a  DER
Market Operator.
SECTION 7. Standards and Accreditation of DERs by DUs.  The ERC shall develop a defined
list of inverters allowed for use by customers, in consultation with the DUs.
SECTION 8. Distribution Network Improvement. The DUs shall be allowed to upgrade facilities
to cater to DERs and include projects under its capital expenditure program to be approved  by
ERC.  The  ERC  shall  take  into  account the  DER  projections  and  system  requirements  in  the
approval of such capital expenditures. The ERC shall also revise the Philippine Distribution Code
to consider DER implementation.
CHAPTER Ill
DER MARKET OPERATOR
SECTION  9.     DER  IVIARKET  OPERATOR  (DERMO).   In  order  to  balance  the  DU  system
requirements, the commercial aspects and ensure End-user participation, there shall be a DER
market which will be operated by the DERMO, wherein all Peer-to-Peer and Virtual Power Plant
Transactions shall be registered and settled.
An  End-User  owning  or  operating  any  DERs  system  shall  be  entitled  to  become  a  DER
Participant, subject to the requirements and qualifications that shall hereafter be promulgated by
the Department of Energy.
SECTION   10.      Responsibilities   of  the   DERMO.   The   DERMO   shall   have  the  following
responsibilities:
a)   AIlow the connection and operation of DERs in the franchise area, subject to the technical
requirements of the host DU;
b)   Serve as the coordinator or facilitator of DERs,  and ensure that the operation  of DERs
within their franchise areas shall not disrupt system security and reliability;
c)    Monitor risks to the overall condition of the distribution system;
d)   Address any questions or inquiries that may be raised  by End-Users in connection with
DERs, including the implementation of this Circular; and
e)   Perform such other duties and functions as may be necessary to attain the objectives of
this Circular.
SECTION  11.    Responsibilities  of  DER  Participants.  All  DER  Participants  shall  have  the
following responsibilities:


a)   Inform  the  DU  of  any  intended  installation  of  DERs,  including  the  capacity,  number,
location, and type of DER installation;
b)   Provide all information and documentation requested and deemed necessary by the DU;
and
c)   Comply with the technical requirements of the DU.
SECTION  12.  Embedded Generation. Embedded Generation  participation in the DERMO will
be limited to those not registered to the Vvholesale Electricity Spot Market (WESM).
CHAPTER IV
PERMITTING REQUIREMENTS
SECTION  13.  DERs  Registration.  Distributed  generation  facilities  shall  be  exempted  for  a
Certificate of Compliance requirement. However, all Distributed generation facilities shall register
through  their  respective  Local  Government  Units  (LGUs),  including  requirements  under  local
electrical  code.  The  LGUs  shall  coordinate  with  the  Distribution  Utility  in  the  corresponding
franchise area on all applications received and approved.
Wlthin five (5) years from the effectivity of this Act, the registration of Distn.buted generation shall
be through a cellphone/computer application and integrated into the DERMO.
SECTION  14. Incentives.   All  DER components, as certified  by the DOE through Republic Act
No.11234, shall be included in the Strategic Investment Priorities Plan (SIPP) for the next twenty
(20) years from the effectivity of this Act. Persons or entities engaged in said projects registered
with the DERMO of it host DU, and duly registered  by any Investment Promotion Agency (lpA)
shall  be  entitled  to  all  the  incentives  under Title  XIII  (Tax  Incentives)  of the  National  Internal
Revenue Code Of 1997, as amended, and other incentives as may be provided by law.
The DER components which are also generation facilities shall  not be liable to pay for ER  1-94,
Universal Charge and all other charges that may be applicable under Section 66 of Republic Act
No.  9136.
SECTION 15. Virtual Power Plant (VPP) Certification. All VPP participants to the DERs Market
shall first secure a certification from the  host DU  confirming  its status of being a Virtual  Power
plant and capability to participate in the DERs Market.
CHAPTER V
FINAL PROVISIONS
SECTION 16.  Responsibilities of the Department of Energy. The DOE shall prepare and issue
a  DER  implementation  roadmap,  and  prescribe the  standards  and  guidelines  needed  for the
different DER technologies in order to ensure security and  reliability of the grid when the DERs
are connected. Included in the DER implementation roadmap is the smart grid plan as defined in
Section 6 of this Act.
SECTION  17. Regulatory Support. The Energy Regulatory Commission  is  hereby directed to
formulate   and   implement   all   the   guidelines,   rules,   and   regulations   concerning   DERs   in
accordance with this Act and consistent,  aligned and in accordance with the policy-direction of
the DOE.  In addition, the following shall be the responsibilities of ERC:


a)   Ensure approval of capital expenditure for DUs for system improvements in the inclusion
of DERs in the network;
b)   Redesign  the  distribution  wheeling  rate  to  take  into  account  the  effect  of  DERs,  e.g.
inclusion of fixed component;
c)   Allow meter cost recovery;
d)   Redesign net metering rules to account for the market model;
e)   Allow DUs recovery as DERMO.
SECTloN 18. Separabiljfy Clause. -lf, for any reason, any provision of this Act is declared to
be  unconstitutional  or  invalid,  the  other sections  or  provisions  hereof which  are  not  affected
thereby shall continue to be in full force or effect.
SECTloN  19.  Repealing  Clause. -All  laws,  decrees,  orders,  rules  and  regulations  or  parts
thereof which are inconsistent with or contrary to the provisions of this Act are hereby repealed,
amended or modified accordingly.
SECTION 20.  Effectivify. -This Act shall take effect fifteen  (15) days after its publication  in at
least two (2) national newspapers of general circulation.
Approved.