Following a legal challenge over its directive ousting S.I. Power Corp. (Sipcor), the Department of Energy (DOE) vows to implement the structured “three-strikes” framework for underperforming power generators to ensure future regulatory sanctions stand up in court.

Energy Secretary Sharon Garin said on Thursday, Aug. 20, that Villar-led Sipcor must undergo a strict evaluation process and clear its record of past operational failures before the agency considers granting new permits or endorsements.

“They have to go through the process, and they have to qualify and justify to us, and also they have to clear up some issues also on what happened in Siquijor,” Garin said in an interview.

That evaluation, she said, forms part of the government’s updated guidelines on generation company accountability. Under the rules, a third violation will prompt the DOE to suggest blacklisting the operator or canceling its certificate of endorsement.

Garin’s statement follows a court victory for Sipcor that allows the power producer to restart generation on Siquijor island, even as the Energy Regulatory Commission (ERC) warned that the company still lacks valid operating authority.

Premier Island Power REIT Corp. (PREIT) announced on Wednesday that the Court of Appeals set aside an ERC order revoking Sipcor’s operational permits after ruling that the regulator violated procedural due process by immediately canceling the firm's provisional authorities.

The ERC has since filed a motion for reconsideration with the appellate court to reverse the ruling.

Under Department Circular No. DC2026-02-0006, generation companies are required to maintain valid operating permits, including a Certificate of Compliance, and strictly adhere to health, safety, and regulatory conditions.

Operators must also maintain transparent data, undergo periodic government assessments, and report major incidents alongside clear corrective plans. The DOE said repeated non-compliance can trigger progressive penalties, culminating in endorsement revocation.

The government announced last year that Sipcor would cease operations on Siquijor island after recording 568 power interruptions—an average of more than 31 outages a month. The DOE also cited Sipcor’s failure to maintain a stable minimum fuel inventory.

However, the new policy does not completely bar the firm from future operations, as prospective applications will undergo a progressive evaluation process under the guidelines, according to Garin. She added that a single violation does not immediately trigger cancellation, as the process moves from a stern warning to suspension before reaching a third strike.

Following Sipcor’s exit, the Province of Siquijor Electric Cooperative signed an Emergency Power Supply Agreement with Total Power Inc. for approximately 15.3 megawatts generated across three facilities.