Meralco mulls new retail affiliate under RCOA rules

MANILA, Philippines – Manila Electric Co. (Meralco) is exploring all options, including putting up an affiliate retail electricity supplier (RES), after the Supreme Court (SC) junked its case with a local regional trial court (RTC) to stop the implementation of new retail competition and open access (RCOA) rules, company officials said.

Meralco is examining all its legal options following the high court decision on RCOA, first vice president and regulatory management head Ivanna dela Peña said.

 “We are examining the legal remedies that we can explore and our comment is due on the 29th of this month,” she said.

The company believes it provides customers with the power of choice, which is the goal of RCOA, Meralco SVP and head for customer retail services and corporate communications Alfredo Panlilio said.

“We are providing an environment where there is customer choice and competition because if you limit players in the market, and you mandate customers to do a certain way then it doesn’t open a competitive market,” he said.

At the same time, Meralco is also considering the possibility of just getting a RES license and form an affiliate RES – separate from its existing local RES Mpower – to meet its current contestable customers.

 “We are also exploring the possibility of (putting up an)affiliate RES because that is allowed under the rules that have been issued by the Energy Regulatory Commission (ERC) and the Department of Energy (DOE) so that is one way we are taking as well,” Dela Peña said.

 “These are things that will have to be worked out. Definitely we would like to give our current customers a choice and considering MPower is a substantial corporation of a contestable market right now, we would like to establish an affiliate RES to likewise give them the choice of a competitive supply of power,” she said.

Meralco sought court relief after the government issued new RCOA rules which, it claimed, were not in accordance with the Electric Power Industry Reform Act and its implementing rules and regulations.

The new ERC and DOE rules required all RES to obtain license to operate and ordered the winding down the operations of all local RES in three years. A local RES is defined as entities under a distribution utility (DU) that may engage in the business of supplying electricity to the contestable market without need of obtaining a license from the ERC.

Meralco opposed the new rules, since its local RES MPower would be affected. MPower accounts for about 50 percent of the market share of the contestable market within its franchise, or 18 percent of the total nationwide.

The Pasig RTC sided with Meralco, stopping ERC and DOE to enforce the new rules. But in a resolution dated Oct. 10, the SC issued a temporary restraining order enjoining the Pasig RTC and Meralco from blocking the full implementation of RCOA.

Under the RCOA regime, end-users that are part of the contestable market, or contestable customers, are given the choice to choose their supplier of electricity aimed to foster competition in the generation and supply sector.

Mandatory contestability for customers with peak demand of one megawatt was supposed to take effect on Dec. 26, 2016. For customers with at least 750 kilowatt demand, mandatory contestability is scheduled on June 26, 2017.

However, the ERC said it would draw up a new timeline for mandatory contestability following the SC decision favoring RCOA implementation.