MANILA—The Philippines will implement a fivefold increase in financial benefits for communities that host power-generating facilities and energy resources effective January 2026 under a new policy aimed at local empowerment and sustainable development.
Department of Energy (DOE) Secretary Sharon Garin signed Department Circular (DC) No. 2025-10-0023 on Oct. 14, 2025, which significantly boosts the financial support under the Energy Regulation Program No. 1-94 (ER 1-94).
The circular increases the total ER 1-94 financial benefit from P0.01 to P0.03 per kilowatt-hour (kWh) of electricity generated and sold.
The portion allocated directly to host communities will see a fivefold increase, rising from the previous P0.005 per kWh share to P0.025 per kWh.
“This marks a major turning point for our energy-hosting communities,” Garin said in a statement on Wednesday.
“We are shifting our approach to focus on empowering people and giving them a greater stake in our country’s energy growth,” she said.
The enhanced shares will fund projects such as livelihood development, health care, environmental protection, and educational initiatives tailored to each locality’s needs, the DOE said.
The policy also allows for the funds to be used to lower the electricity rates of host communities. This can be done voluntarily through a resolution by the local government units (LGUs) or mandatorily if the host LGUs and the distribution utilities (DUs) fail to utilize the funds for two years.
The remaining P0.005 per kWh, which is allocated through DUs, will continue to finance electrification projects intended to connect households requiring electricity service.
As of December 2024, the ER 1-94 Program had supported 683 LGUs, including 321 barangays, 286 municipalities and cities and 76 provinces. The DOE projects a threefold increase in community investments with the tripled allocation.
For example, the DOE estimates that hosting a 100-megawatt (MW) conventional power plant could generate ER 1-94 benefits of around P21 million annually, while a 100-MW solar power plant could generate approximately P5.5 million per year, assuming maximum capacity factor.
The strengthened framework promotes community-driven planning, empowering host LGUs and indigenous cultural communities/indigenous peoples (ICCs/IPs) to identify and approve priority projects. The funds will be managed through dedicated trust accounts: the Development and Livelihood Fund (DLF), the Reforestation, Watershed Management, Health and/or Environment Enhancement Fund (RWMHEEF), and the Electrification Fund.
To ensure transparency, the financial allocations will be subject to regular audits by both the DOE and the Commission on Audit (COA).
The new circular also introduces nonfiscal benefits, such as local employment preferences, skills development programs and procurement of locally produced supplies.
