The Energy Regulatory Commission (ERC) is drafting new rules to promote renewable energy (RE) in off-grid areas, a move that is expected to lower power costs and reduce the financial burden on electricity consumers.
ERC Chairperson announces draft rules
In a briefing on Thursday, ERC Chairperson and Chief Executive Officer lawyer Francis Saturnino Juan said the planned off-grid RE Distributed Energy Resources (DER) policies will prioritize dispatching RE sources over diesel generation through targeted operational and financial mechanisms. This, he explained, will increase the use of clean energy and lessen dependence on imported diesel fuel, ultimately providing cheaper energy.
“At the heart of these reforms is a simple objective: to deliver more affordable, reliable, and sustainable power to our off-grid communities while easing the burden on all electricity consumers who bear the UC-ME charge,” Juan said.
Impact on Universal Charge for Missionary Electrification
The move aims to reduce power consumers’ contribution to the Universal Charge for Missionary Electrification (UC-ME), which subsidizes RE projects. Currently, off-grid areas rely heavily on diesel-run power facilities, which are costly and environmentally damaging. By increasing RE resources, the ERC hopes to provide more options for these communities and lower the UC-ME levy.
Incentives and payment structure
Under the draft rules, DER owners will be paid 80 percent of the subsidized and approved generation rate (SAGR), while distribution utilities (DUs) will receive 20 percent for grid maintenance and upgrades. Developers may also avail of incentives, including a cash incentive equivalent to 50 percent of the UC-ME rate per kilowatt-hour generated, and earn RE certificates for compliance with national RE targets.
Timeline for public consultation
The ERC is scheduled to make the draft rules public on July 10, 2026. It will accept public comments until July 23 and conduct public consultations on July 30 through Microsoft Teams. The initiative is part of the government’s broader push to shift towards greater utilization of renewable energy and lower power costs nationwide.
