1.

HOW NET-METERING WORKS:

UNDERSTANDING THE BASICS OF
POLICY, REGULATION AND
STANDARDS
Author: Atty. Ranulfo Ocampo, President PEPOA, Chairman NREB Sub-Committee on
Net-Metering

According to Wikipedia Net metering is an electricity policy for consumers who own
renewable energy facilities (such as solar power) which allows them to use
electricity whenever needed while contributing their production to the grid.
In the Philippines, net-metering is the first policy mechanism of the Renewable
Energy Act of 2008 which has been fully implemented.
The picture below illustrates the flow of electricity from power generation via high
voltage transmission and distribution utilities to the end-user who can now install a
renewable energy facility and send not needed electricity back into the distribution
grid and earn credit for this export.

This Frequently Asked Questions section of the guide addresses net-metering policy,
regulation and standards in the Philippines. Further clarification on the subject of
accumulated peso credits, exemption from the imposition of the Universal Charge,
Certificate of Compliance (COC) for Renewable Energy (RE) facilities, and the
treatment RE facilities with installed capacity greater then 100KW is provided in a
letter by the Energy Regulatory Commission dated November 25, 2013 in the
annexes.

Q1. What is net-metering?

A1. Net-metering allows customers of Distribution Utilities (DUs) to install an on-site
Renewable Energy (RE) facility not exceeding 100 kilowatts (kW) in capacity so they
can generate electricity for their own use. Any electricity generated that is not
consumed by the customer is automatically exported to the DUs distribution
system. The DU then gives a peso credit for the excess electricity received
equivalent to the DUs blended generation cost, excluding other generation
adjustments, and deducts the credits earned to the customers electric bill.

Q2. Is net-metering already available in the Philippines?

A2. On 27 May 2013, the Energy Regulatory Commission adopted ERC Resolution
09, Series of 2013 approving the Rules Enabling the Net-Metering Program for
Renewable Energy. This resolution was published on 10 July 2013 in newspapers of
general circulation in the country and took effect 15 days thereafter. Thus, the NetMetering Rules took effect in the Philippines on July 24, 2013. The Net-Metering
Program is available only to On-Grid distribution systems (or DUs connected to the
transmission grid).

Q3. What is the legal basis of ERC in approving a net-metering program for renewable
energy in the Philippines?
A3. Section 10 of the Renewable Energy Act of 2008 (Republic Act No. 9513)
provides that subject to technical considerations and without discrimination and
upon request by distribution end-users, DUs shall enter into net-metering
agreement with qualified end-users who will be installing the RE system. The ERC, in
consultation with the NREB and the electric power industry participants, shall
establish net-metering interconnection standards and pricing methodology and
other commercial arrangements necessary to ensure success of the net-metering
for renewable energy.

Q4. Why is there a capacity limit of 100 kW placed on RE systems under the net-metering
program?
A4. This is because net-metering, as defined under Section 4 (gg) of the RE Law,
refers only to a system appropriate for Distributed Generation (DG). DG, as defined
under Section 4 (j) of the RE Law, as small generation entities supplying directly to
the distribution grid, any one of which shall not exceed one hundred kilowatts (100
kW) in capacity.

Q5. What types of power generating facilities are eligible for net-metering?
A5. RE facilities such as solar, wind, biomass or biogas energy systems, or such
other RE Systems not exceeding 100 kW in power generating capacity, capable of
being installed within the customers premises, are eligible to participate in the netmetering program.

Q6. What benefit will I get if go into net-metering?

A6. By generating electricity for own use, you reduce the amount of electricity you
buy from your local DU. The rate of savings (or avoided cost) realized on electricity
generated for own use is equivalent to the DUs retail rate consisting of charges for
generation, transmission, system loss, distribution, subsidies, taxes and other
charges.

You also earn peso credits on any excess electricity exported to the DU equivalent
to the DUs blended generation cost, excluding other generation adjustments. The
peso credits earned is then used to reduce your electric bill/s.

Q7. How will my DU meter my import and export energy?

A7. The DU may opt to install two uni-directional meters one to meter energy you
buy from your local DU, and the other to meter the energy you export to the DU.
The DU may at its option install a single bi-directional meter that can meter both
import and export energy if it finds it to be a more economical.
The DU may also install a third meter in proximity to your RE facility to meter its
total RE generation. The total RE generation shall earn for the host DU RE
Certificates which the DU can use to comply with its Renewable Portfolio Standards
(RPS) obligations.

Q8. Who are qualified to participate in the net-metering program?

A8. DU customers who are in good credit standing in the payment of their electric
bills to their DU are qualified to participate in the Net-Metering Program for
Renewable Energy. These customers are referred to in the Rules as Qualified EndUsers or QE.

Q9. If I am a contestable customer getting my power supply from a competitive Retail

Electricity Supplier (RES), am I qualified to participate in the net-metering program?
A9. No. Only distribution end-users (or captive customers) or contestable customers
who opted to remain with their DU are qualified to participate in the net-metering
program. This is because the excess electricity received by the DU from the QE can
only be distributed to the DUs other customers, and the credit to be given for the
excess electricity received by the DU is equivalent to the DUs blended generation
costs. Contestable customers getting their power supply from an RES are thus not
eligible to join the Net-Metering program.

Q10. If I am a customer directly-connected to the transmission grid, am I qualified to

participate in the net-metering program?
A10. No. Customers directly-connected to the transmission grid are not DU
customers but are transmission load customers of the National Grid Corporation of
the Philippines (NGCP).

Q11. How do I determine the DUs blended generation cost for a particular month?
A11. DUs are required to publish in their websites their monthly generation cost. You
only need to access your DUs websites to get the blended generation cost of your
DU for a particular month so that you will know how much credit you are entitled to
on any excess electricity you export to your DU.

Q12. Please give an example of a DUs blended generation cost, say for the billing month
of November 2013?

A12. Using Meralcos generation costs for November 2013 (as downloaded from its
website), its blended generation costs, excluding other generation adjustments, for
November 2013 is highlighted in yellow (see table).

Q13. Will I incur additional charges if I avail of net-metering?

A13. Yes, DUs shall impose a net-metering charge to all customers who avail of netmetering equivalent to their existing ERC-approved Php/customer/month supply and
metering rate based on the exported energy as registered in the export meter. This
net-metering charge shall cover the DUs incremental costs related to system
enhancement and additional meter reading and other operating costs.
The DUs may also apply before ERC a different schedule of net-metering charges
subject to ERC approval after due notice and hearing. Meantime, the net-metering
charges cited above shall prevail until a different schedule of net-metering charges
is approved by ERC.

Q14. Please give a simulation of how my electric bill would look like if I am a net-metering
customer with a 2kW solar-powered facility installed on my roof top?
A14. See assumptions and simulated electric bill below:

Q15. Are all customers ideal candidates for net-metering?

A15. Not all DU customers are ideal candidates for net-metering. Customers with
demand-related (kW) charges may not be ideal candidates for net-metering
because net-metering displaces only energy related (kWh) charges.
Be that as it may, customers whose peak demand of electricity coincides with the
availability of the RE resource may also stand to benefit from net-metering even if
he has demand-related (kW) charges. This is because his RE production can
potentially reduce his coincident peak demand for electricity.

Q16. Who then would be ideal candidates for net-metering?

A16. Customers with pure energy-related charges will benefit from net-metering.
As mentioned above, customers whose peak demand of electricity coincides with
the availability of the RE resource may also stand to benefit from net-metering even
if he has demand-related (kW) charges because his RE production can potentially
reduce his coincident peak demand for electricity.

Q17. What is the optimum size of an RE facility should I install in my premises?

A17. If you consume all of your RE production, you avoid 100% of the retail rate of
your electric bill.
If you export any excess RE to your DU, you only offset the blended generation cost
(or weighted average power production cost) of your DU. This is about 40-45% of
the retail rate of your electric bill.
So for an RE facility like a solar roof top system, the optimum capacity that you
should install in your premises should not exceed your daytime peak demand for
electricity so that you can maximize your savings/avoided cost on electricity, and

shorten to the extent possible the payback period of your investment in the solar
roof top facility.

2. HOW TO APPLY FOR NET-METERING

SERVICES WITH YOUR DISTRIBUTION
UTILITY
Author: Anna M. Reodica, Senior Manager Utility Economics, MERALCO

2.A Filing of net-metering service application

The customer goes to his Distribution Utility (DU) to request to participate in the
Net-Metering Program. Upon receipt of the request, the DU will provide the
customer the following list of required documents:

Net-Metering Application Form

Identification Document
Detailed Planning Data
List of Certified Equipment
Plant Parameters Form
Once the requirements listed above are in order, the customer files the
accomplished Net-Metering Application form with the supporting documents. The
DU will then verify the accuracy and completeness of the documents. Within ten
(10) business days upon receipt of the application, the DU will issue an
acknowledgement receipt with feedback on whether or not the application is
complete.

2.B Technical evaluation

With the submission of complete documentary requirements, the application
proceeds to the technical evaluation phase. The DU will perform an initial
assessment to determine if a Distribution Impact Study (DIS) will be needed, in
accordance with the DSOAR, and inform the applicant accordingly. The DIS is
performed to assess the ability of the Distribution system to safely and reliably
accommodate a proposed interconnection of a generation source and if any
upgrades may be required. If the conduct of DIS is deemed necessary, the DU
informs the applicant and relays the following details on the DIS:

Scope of the Study

Estimated Time of DIS Completion
DIS Fee
Within thirty (30) days from receipt of the details on the DIS, the applicant informs
the DU of his decision on whether or not to proceed with the DIS. If the applicant
decides to continue with the DIS, the applicant settles the DIS fee with the DU.
During the conduct of the DIS, additional information may be requested from the
applicant. From receipt of complete information for the DIS, the DU has sixty (60)
days to complete the study.
Within five (5) days from completion of the DIS, the DU forwards to the applicant the
results of the study and the DUs findings on whether a subsequent stage of a
Distribution Assets Study (DAS) is necessary. The DAS determines all additional
distribution assets and costs required to accommodate the proposed generation
source of the Net-Metering customer.

If the conduct of a DAS is necessary, the DU issues an offer of DAS service to the
applicant. Within fifteen (15) days from receipt of the DAS offer, the applicant
informs the DU whether or not to proceed with the DAS. Upon acceptance of the
DAS offer and payment of the DAS fee by the applicant, the DU has thirty (30) days
to complete the study. Within five (5) days from completion of the DAS, the DU
informs the applicant of the results of the study.

2.C Interconnection facilities and project agreement

With the conclusion of the technical evaluation phase, the DU finalizes the design of
the interconnection facilities based on the results of the DIS and / or DAS, along with
the corresponding project costs, if applicable. This stage includes an inspection of
the Service Entrance depending on the meter set-up (2 uni-directional meter or
single bi-directional meter). A Certificate of Final Electrical Inspection (CFEI), to be
obtained from the city or municipality, may be required on a case-to-case basis.
After the completion of the plans for interconnection facilities, project agreements
(e.g. Net-Metering Agreement, Fixed Asset Boundary Document) will be executed
and the applicable fees will be paid. Construction of the interconnection facilities
may then proceed.

2.D Energization
Once the construction is completed, the applicants installed facilities will undergo
testing and commissioning to be witnessed by the DU. Commissioning will include
inspection of the system components and functional tests to ensure compliance
with the Net-Metering Interconnection Standards.
The flow chart on the following page illustrates the application process for netmetering.

3. HOW TO AVAIL THE PERMITS FOR

SOLAR ROOF TOPS AT YOUR LGU
Author: Jessie L. Todoc, Country Manager Philippines, International Copper
Association Southeast Asia Ltd.

3.A Overview of procedures

Generally, all Local Government Units (LGUs) include the application for electrical
permits to the procedure for application of a Building Permit. The processing of
building permits falls under the overall control and supervision of the Office of the
Building Official (OBO) of the LGU.
In processing the electrical permits, the Electrical Division of the OBO shall see to it
that the applicant complies with the standards and requirements on electrical safety
in the Philippine Electrical Code (PEC), the Electrical Engineering Law, and the
concerned LGU.
The applicant shall first submit certain administrative and technical requirements as
specified by the LGU. The Electrical Division will then assess the completeness and
correctness of the submitted documents and forms. If satisfied, the Electrical
Division within the indicative period of time and after payment of the required fees
by the applicant will then issue the Electrical permit.

When all of the electrical systems have been installed, the applicant submits a
request for inspection to the Electrical Division. The Electrical Division then assesses
and evaluates the installation at the site for compliance with the National Building
Code and the Philippine Electrical Code, based on the plans and specifications of the
building that were submitted to the agency. If satisfied, the Electrical Division then
issues a Certificate of Final Electrical Inspection.

3.B Requirements
The following are the required documents to be submitted to the electrical division
of the concerned LGU:

3.C Timeline

3.D Fees
Generally, all LGUs adopt the schedule of fees set by the National Building Code of
the Philippines for electrical fees as per NBCDO Memorandum Circular No. 1 series
of 2004 issued last November 16, 2004. The following schedule (d.1 through d.6) is
used for computing electrical fees in residential, institutional, commercial, and
industrial structures for Quezon City, Manila and Makati City. Pasig City, however,
has a different schedule of fees that was enacted by the city government through a
City Ordinance.