Gencos, DUs told to set up trust accounts for electrification fund

Published June 12, 2019, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2019/06/12/gencos-dus-told-to-set-up-trust-accounts-for-electrification-fund/

The Department of Energy (DOE) is mandating the establishment of separate trust accounts by the generation companies (Gencos) and distribution utilities (DUs) on the electrification fund that shall be funneled to host communities of energy projects.

The department has likewise crafted a template memorandum of agreement (MOA) that the GenCos or energy resource developers (ERDs) and the DUs must enter into corresponding to the setting up of the trust accounts.

This is a follow-through directive to an earlier DOE Circular modifying the disbursement of financial benefits to host communities of power and energy facilities. That had been in line to the department’s order for a more direct disbursement of funds to provincial, city or municipality as well as barangay host communities of energy ventures.

The prescribed fund accumulation is from Energy Regulations 1-94 (ER 1-94) or the DOE-underpinned program that allocates financial benefits to host local government units (LGUs) of energy projects – with fraction of collection also being earmarked even to non-host LGUs.

For power firms and energy resource developers, they are bound by edict to set aside one-centavo per kilowatt-hour (P0.01/kWh) of electricity sales as financial benefits to host communities. The bulk of 50% goes to electrification fund.

For the generating firms and resource developers, they have been directed to put up separate trust accounts for the various fund collections under ER 1-94. One will be for the electrification fund (EF); another will be for development and livelihood fund (DLF); and the third trust account shall be for reforestation, watershed management, health and/or environment enhancement fund (RWMHEEF).

“All accrued financial benefits after the effectivity of the DC (Department Circular) shall be deposited to the trust accounts established and shall thereafter be allocated and remitted directly to the concerned DUs for EF and to the designated beneficiaries for the DLF and RWMHEEF,” the energy department stipulated.

For the DUs, they are also required to open and/or maintain electrification fund trust account with an authorized government depository bank.

“The fees and charges relative to the maintenance of such trust account shall be considered administrative expenses and shall be deducted from the EF trust account,” the DOE has specified.

The electrification fund to accrue in the newly mandated trust accounts shall be reckoned from September 26, 2018 to December 25, 2018 as remitted to the DU on or before February 28, 2019; while the next collections will be based on quarterly billing periods.

The DOE further noted that “any adjustments based on the post-audit shall be reflected and applied in the immediate succeeding remittance,” in which the Gencos or ERDs had also been directed to furnish the department with proof of remittance.