ERC clears final rules for retail competition, open access

Danessa Rivera (The Philippine Star) - May 20, 2016 - 12:00am

MANILA, Philippines - The Energy Regulatory Commission (ERC) has cleared the final rules for retail competition and open access (RCOA), which will cover the transition of end users and restrictions on distribution utilities migrating to an open electricity market.

The new rules for RCOA aim to clarify and establish the conditions and eligibility requirements for end-users in order to be part of the contestable market, ERC chairman Jose Vicente Salazar said in his speech during the Power & Electricity World Philippines 2016.

While the commission has approved the said rules, official notice will be released within the week, he said.

The new rules are intended to set the threshold level for the contestable market to ensure that the efficient transition towards full switch to retail electricity market in a timely manner, Salazar said.

Contestable customers refer to electricity end-users who are part of the “contestable market” or those who have a choice of their supplier of electricity.

Currently, only contestable customers with at least one megawatt (MW) demand are allowed to choose their own suppliers of electricity, on a voluntary basis.

Starting June 26 this year, the threshold for contestable customers will be lowered to 750 kilowatts.

Meanwhile, mandatory contestability for customers with peak demand of one MW will take effect on Dec. 26, 2016.

For 750 kw and above, mandatory contestability is scheduled to take place six months after or on June 26, 2017.

The reduced threshold to cover 500 kw to 749 kw is set on June 26, 2018, subject to the review of the performance of the retail market by the ERC.  

The new rules also modified restrictions on the operations of retail electricity suppliers (RES) in the competitive retail electricity market, Salazar said.

Under the rules, no distribution utility (DU) will be allowed to service contestable customers until supply is made in its “capacity as a supplier of last resort.”

The rules also stated all local RES or DUs currently engaged in the supply of electricity to end users in their franchise area are required to wind up their business within three years from the effectivity of the rules.

 “This means existing retail supply contracts or RSC entered into with their respective contestable customers shall remain valid until the expiration of said contracts subject to the winding down period,” Salazar said.

 “This also means that no new retail supply contracts shall be signed, executed, and be allowed after the effect of the resolution, and no renewal of retail supply contracts shall likewise be allowed,” he said.

No RES will also be allowed to supply more than 30 percent of the total peak demand in the retail market and transact transact more than 50 percent of its supply business with its affiliate contestable customers.

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