Energy regulator to clarify rules on microgrids in cooperative franchise areas

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THE Energy Regulatory Commission (ERC) said it will amend its draft rules on microgrids to include provisions that will clarify whether the private sector can enter areas within the franchises held by electric cooperatives.

The revised draft will also put in place a transition period for those that have already built microgrids, ERC Spokesperson Floresinda B. Digal told reporters on Wednesday during Powertrends 2018, an annual conference on the energy and power industry.

“The microgrid (policy) has a draft. What they will be posting is a second draft,” she said.

“They’re processing the comments submitted for the first draft,” she added, referring to the ERC unit handling the revision.

She said the draft will be presented shortly to industry participants for their comment in the fourth quarter of the year.

Ms. Digal said one of the issues being discussed within the ERC pertains to the legal implications of microgrids, including the entry of the private sector into the franchise areas of electric cooperatives.

“That’s one of the major issues now and that’s one of the things being processed — the legal issue as to the franchise. It’s being studied now, but we cannot say what the result will be,” she said.

The establishment of microgrids and minigrids became contentious after private companies came out with such projects in some areas within the franchise territory of electric cooperatives.

The Department of Energy (DoE) itself has said that President Rodrigo R. Duterte ordered full energization in rural areas by opening unserved and underserved areas to private entities.

“What he is saying is franchise holders should not make their franchises as a barrier to interested investors to come in areas that are unserved and underserved,” DoE Undersecretary Jesus Cristino P. Posadas told participants of Powertrends on Wednesday.

“Their mandate is to serve these communities. If these are unserved and underserved, they should waive their franchise,” he added.

In mid-2017, the ERC issued an initial draft of licensing rules for “distributed energy resources” or small power sources whose output can be lumped together to meet regular power demand.

Its draft rules, which were posted for public comment, also covered regulation for microgrids, or a group of interconnected loads and distributed energy resources with clearly defined boundaries.

A microgrid acts as a single controllable grid and can connect and disconnect from the national grid to enable it to operate in both grid-connected or island mode.

“Nobody has approached us, but we’d be willing to look at (microgrids),” said BDO Capital and Investment Corp. President Eduardo V. Francisco.

However, a microgrid project with a cost of less P1 billion may not be worth the effort of studying its viability, he said. — Victor V. Saulon