7 Key Points You Need To Know About The Energy Efficiency and Conservation Law

Compliance yields profits, incentives, and a more sustainable future
by Maita de Jesus
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As early as the 1980s, the Philippines already passed a law that urged businesses to volunteer to conserve energy. But it was a law that seemingly lacked teeth. It merely urged them to promote energy conservation, like avoiding the use of “unnecessary and excessive lighting.”

Now, decades later, there’s more muscle in the enforcement. With Republic Act No. 11285, the Energy Efficiency and Conservation (EE&C) law finally took effect on May 24, 2019—and compliance is now mandatory.

To help understand and support this law, the Manila Electric Co. (Meralco) held a forum titled “Gearing Up for the Energy Efficiency & Conservation Law.” on June 28, 2019. The event’s enticing subtitle: “Understand. Comply. Profit.”

"Meralco’s corporate clients are the top customers of Meralco and are our biggest consumers – we want them to be the first to save and to benefit from this law”, says Ma. Cecilia M. Domingo, vice president and head, Corporate Business Group of Meralco.

Since Meralco will join the Department of Energy’s working committee to help craft implementing rules and regulations for the law, insights from their customers will also serve as helpful inputs.

On hand to explain the new law’s features was Alexander Ablaza, president of the Philippine Energy Efficiency Alliance. Also present to answer other concerns were experts from MSERV, Meralco’s energy-solutions subsidiary, who explained to businesses what they can do to help businesses comply with the law.

What do businesses need to know?

1. Efficiency and conservation work hand in hand.

The law aims to “institutionalize energy efficiency and conservation as a national way of life geared towards the efficient and judicious utilization of energy by formulating, developing, and implementing energy efficiency and conservation plans and programs.”

The law’s main objectives are clear: to safeguard a sufficient, stable energy supply; cushion the impact of high imported-fuel prices; and protect the environment in support of Philippine economic and social development goals.

2. Energy efficiency is good for the bottom line—both for your company and your country.

A 2016 Energy Policy report found that in 30 developing countries around the world—from Bangladesh to Zambia—a higher energy efficiency promoted higher productivity.

“It stimulates the economy, puts money in your pocket, and gives a healthier environment and promotes a healthier you,” says Ablaza.

3. Non-compliance results in severe penalties.

The previous law mainly wanted to promote energy conservation practices. The EE&C law, as stated in Sec. 2-a of the law, puts teeth in the regulation.

The new law raises the amount of penalties to be paid and includes mandatory jail time, to discourage companies from just absorbing the cost of the fines instead of complying.

The Department of Energy (DoE) may impose fines and penalties to persons or entities that violate any provision of the law, its implementing rules and regulations, or other related issues. Meanwhile, responsible officers and employees of any establishment or organization that wilfully commits any such prohibited acts under Section 30 of the law will be criminally liable.

4. Manufacturers, importers, dealers, buildings and products must comply.

The retrofitting of old buildings will be checked for compliance, while new building construction , for permitting purposes, will need to conform with the “Guidelines on Energy Conserving Design on Buildings” to be issued by the DoE, in consultation with the Department of Public Works and Highways (DPWH).

Select products and equipment, such as automobiles and electronics, that fall under the EE&C law must be examined, tested, and verified, and must display an energy label.

Establishments are also mandated to employ a Certified Conservation Officer (CECO) or a Certified Energy Manager (CEM). They would be responsible for submitting the ECCRs to the DoE. What’s the difference between the two? A Type 1 establishment—determined by an annual energy consumption of 500,000 to 4,000,000 kilowatt hours, based on the previous year’s readings—would need to employ a CECO. A Type 2 establishment—or one with an annual energy consumption of more than 4,000,000 kilowatt hours for the previous year—would need to employ a CEM.

Type 1 EstablishmentType 2 Establishment
Previous Year's Energy Consumption 500,000 to 4,000,000 kWh annually More than 4,000,000 kWh annually
Type of Energy Management Professional That Needs to be Employed Certified Energy Conservation Officer (CECO) Certified Energy Manager (CEM)

5. Your company needs to conduct energy audits and submit Energy Consumption and Conservation Reports (ECCR).

Companies must regularly submit ECCRs to the DoE, which is also tasked to visit establishments and check for EE&C compliance.

Further instructions will be included in the Implementing Rules and Regulations (IRR), expected within the year.

6. For those who comply, incentives and tax deductions await!

The Board of Investments will now include energy efficiency projects in all their investment priorities plans for a period of at least 10 years.

Incentives such as income tax holidays and duty free importations are also provided.

The law exempts energy efficiency (EE) projects from Article 32 (1) of Executive Order No. 226 (The Omnibus Investment Code of 1987). This means EE projects may avail of incentives, regardless of the nationality of the company’s ownership.

In addition, companies implementing EE projects may be entitled to non-fiscal incentives such as technical assistance from government agencies in the development and promotion of energy efficient technologies.

7. Energy Service Companies like MSERV can assist businesses in energy-efficiency projects.

Businesses will want to secure expert advice to ensure conformity with the EE&C Law. An Energy Service Company (Esco) such as MSERV can help companies navigate the law’s complexities, and make it more affordable for them to adapt new practices or technologies.

An Esco, as defined in Section 4-r of the act, “offers multi-technology services and goods towards developing and designing energy efficiency projects, delivering and guaranteeing energy savings, and ensuring cost-effective and optimal performance.”

As Meralco’s beyond-the-meter energy solutions specialist, MSERV provided the participants at the forum with an overview of its services to help businesses become EE&C-compliant.

For more pictures from the forum on the Energy Efficiency and Conservation Law, please click here.

To learn more about Meralco Corporate Partners and its services, visit our site. For inquiries, contact us or call our business hotline at 02 16210.