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Manila Bulletin devider Business devider The Economy devider DOE triples cash incentives for power host communities

DOE triples cash incentives for power host communities

Published Jan 14, 2026 02:57 pm
Host communities are set to receive a three-fold increase in financial incentives from power projects as the Department of Energy (DOE) begins implementing the strengthened subsidy framework this month.
In a statement on Wednesday, Jan. 14, the DOE said the total financial benefit for localities hosting power generation facilities and energy resource development projects has been raised to ₱0.03 per kilowatt-hour of electricity generated and sold.
The new rate, effective as of January 2026 under the Energy Regulation No. 1-94 program, replaces the previous ₱0.01 per kilowatt-hour allocation that had been in place for years.
Under the new rules, ₱0.025 per kilowatt-hour is now dedicated to community-driven programs, a fivefold increase from the previous ₱0.005 per kilowatt-hour. These funds are legally earmarked for social services, including livelihood development, environmental protection, healthcare, and education.
Energy Secretary Sharon S. Garin said the policy shift was a turning point for the sector, noting that the benefits of energy development must result in visible improvements for host residents.
The policy grants greater autonomy to local government units and indigenous cultural communities, allowing them to identify and approve priority projects through local council resolutions rather than waiting for national-level clearance.
A key provision in the new circular aims to prevent the accumulation of idle funds. The DOE introduced an automatic electricity-rate reduction mechanism that triggers if allocated funds remain unused for two consecutive fiscal years. This ensures that if local governments fail to deploy capital for infrastructure or social services, the benefits are passed directly back to consumers through lower monthly utility bills.
The remaining ₱0.005 per kilowatt-hour of the total incentive will continue to fund electrification initiatives. These funds are prioritized for connecting unserved households to the grid or subsidizing rates in areas that have already achieved full electrification.
To illustrate the scale of the increase, the department provided estimates for different types of energy assets.
A 100-megawatt conventional power plant is now expected to generate approximately ₱21 million in annual community benefits under the new rates. Meanwhile, a 100-megawatt solar facility, which typically operates at a lower capacity factor than baseload plants, could yield around ₱5.5 million annually for its host locality.
As of late 2024, the program supported 683 local government units across the archipelago. Officials expect this number to grow as the Philippines continues its push for renewable energy capacity, providing a steady stream of non-tax revenue for provincial and municipal treasuries.
Generation companies are required to begin remittances to dedicated trust accounts within 60 days of completing their documentary requirements. (Gabriell Christel Galang)

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