Host communities of power plants and energy development projects will now receive a larger share of financial benefits, as the Department of Energy (DOE) rolled out changes to the Energy Regulation Program No. 1-94 (ER 1-94) effective January 2026.

The revised policy raises the total ER 1-94 allocation to PHP 0.03 per kilowatt-hour (kWh) of electricity generated and sold, three times higher than the previous PHP 0.01 per kWh. The increase is designed to channel more funding directly into host communities, particularly for local development and electricity-related support.

Most of the allocation, around PHP 0.025 per kWh, is now reserved for community-driven initiatives such as livelihood programs, environmental protection, healthcare, education, and an option to help reduce electricity prices. A separate PHP 0.005 per kWh continues to be set aside for electrification efforts and, where applicable, supporting electricity rate reductions once full electrification is achieved.

“This marks a major turning point for our energy-hosting communities,” Energy Secretary Sharon S. Garin said. “We are ensuring that the benefits of energy development translate into visible improvements in services and opportunities where these facilities operate.”

Unlike previous arrangements, the strengthened framework places more decision-making power at the local level. Host local government units (LGUs) and indigenous cultural communities or indigenous peoples (ICCs/IPs) are now authorized to identify priority projects and approve fund use through local council resolutions. Communities may also formally choose to apply their share toward reducing local electricity rates.

To prevent funds from remaining idle, the DOE said ER 1-94 allocations that go unused for two consecutive years will automatically be applied to electricity rate reductions. All funds will continue to be managed through dedicated trust accounts covering development, environmental protection, health, and electrification purposes.

To illustrate the scale of the changes, the DOE said that a typical 100-megawatt conventional power plant could generate about PHP 21 million annually in ER 1-94 benefits, while a 100-MW solar facility could generate around PHP 5.5 million per year. As of December 2024, the program covered 683 LGUs nationwide.

How can local governments and host communities ensure that higher ER 1-94 allocations lead to lasting development rather than short-term spending?

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