COMMUNITIES that host power projects will be entitled to receive 2.5 centavos per kilowatt hour (kWh) of electricity generated and sold, up from the current P0.01 per kWh, the Department of Energy (DOE) said on Tuesday.
Under Department Circular 2025-10-0023 signed by Energy Secretary Sharon S. Garin, the agency increased the ER 1-94 financial benefit starting January 2026 from P0.01 to P0.03 per kWh of electricity generated and sold.
Of the P0.03 per kWh, 2.5 centavos per kWh will be allocated for projects tailored to each locality’s needs, such as livelihood development, environmental protection, healthcare and educational initiatives. The remaining half-centavo allocation will be for electrification projects through the distribution utilities (DUs) will continue to fund electrification projects intended primarily to connect households requiring electricity service.
The increase ensures that communities directly contributing to the nation’s energy production are more equitably rewarded and better equipped to drive local progress. ‘This marks a major turning point for our energy-hosting communities. We are shifting our approach to focus on empowering people and giving them a greater stake in our country’s energy growth. By reinvesting the benefits of power generation back into local areas, we are building shared prosperity and a stronger foundation for a sustainable future,’ said Garin.
Hosting a 100 megawatt (MW) conventional power plant may facilitate an ER 1-94 benefits of approximately P21 million per year, while hosting a 100-MW solar power plant may generate benefits approximately P5.5 million per year, assuming these plants operate at their maximum capacity factor.
The DOE will strictly enforce funds’ transparency and accountability through regular audits by both the DOE and the Commission on Audit (COA). Beyond financial support, the new circular also enables non-fiscal benefits, including local employment preferences, skills development programs, and procurement of locally produced supplies, further stimulating community-based growth.
As of December 2024, the ER 1-94 Program had benefitted 683 local governments (LGUs), comprising 321 barangays, 286 cities towns, and 76 provinces. With the tripled allocation, the DOE projects a threefold increase in community investments-translating into improved facilities, more livelihood opportunities, and stronger local economies.
The policy, likewise, considered option to use the funds to lower electricity rates of the host communities, either, voluntary through a resolution by the LGUs, or mandatory when the host LGUs and the DUs are unable to utilize the funds for two years.
The strengthened ER 1-94 framework promotes community-driven planning by empowering host LGUs and indigenous cultural communities or indigenous peoples (ICCs/IPs) to identify and approve priority projects through their respective local council resolutions.
To ensure proper management and transparency, the financial allocations will be administered through dedicated trust accounts, namely the Development and Livelihood Fund (DLF), the Reforestation, Watershed Management, Health, and/or Environment Enhancement Fund (RWMHEEF), and the Electrification Fund.