DOE issues rules for entry of third parties in areas without electricity

The Department of Energy (DOE) has recently issued guidelines for the entry of the so-called qualified third parties (QTPs) in the unserved areas within the franchise of distribution utilities (DUs).

Under Department Circular No. 2004-06-006, Energy Secretary Vincent S. Perez said a set of the criteria was drawn for QTPs in providing electricity service to remote and unviable areas within the franchise area of DUs.

Perez said there are a number of barangays still unserved by the distribution utility present in the area due to different reasons.

Perez explained that, geographically, line extension is not feasible in some areas. There are also other areas that are considered very unviable such that operations there could mean further losses to the utilities.

Once distribution utilities have declared these areas unviable and waived, Perez said QTPs are encouraged to seriously consider becoming the "alternative" distributor or supplier of electricity.

QTPs willing to venture in these projects are required to get accreditation from the DOE’s Electric Power Industry Management Bureau to determine, among others, the firm’s technical and financial capabilities to operate a power generation facility or a distribution system.

The Bureau is also expected to evaluate the proposed project to best suit the needs of the people in the particular location.

QTPs include private firms, local government units, cooperatives, non-government organizations, generation companies or its subsidiaries or subsidiaries of distribution utilities.

Consistent with DOE’s policies in the development of renewable energy, Perez also said local enterprises and organizations with expertise in renewable technologies are encouraged to operate as QTPs.

The DOE has also issued guidelines promoting greater private sector participation in the management and operation of rural electric cooperatives.

Department Circular No. 2004-06-007 promotes investment management contract (IMC) as one of the measures to help ECs improve their efficiency of service, reduce systems losses and eventually lower their costs to consumers.