WESM operator urges SC to resolve issue on RCOA

MANILA, Philippines — The operator of the country’s wholesale electricity spot market (WESM) has called on the Supreme Court to resolve the case hampering the full implementation of Retail Competition and Open Access (RCOA) program, which could bring the power of choice down to the household level.

Independent Electricity Market Operator of the Philippines (IEMOP) president Francis Saturnino Juan urged authorities to end the regulatory uncertainty in the electricity market by moving full steam ahead with the RCOA.

“Having RCOA moving again will definitely enhance competition at WESM. We have received inquiries from several potential contestable customers who consume more than 750 kilowatts (kw) if they can already register. They want to benefit from lower electricity prices that retail electricity suppliers can offer,” he said.

“It’s time we push ahead with the full implementation of the EPIRA Law,” he said, joining industry advocates who are appealing to the Supreme Court to act on a pending petition that effectively blocks the full implementation of RCOA. 

The full implementation of the EPIRA Law through RCOA could be brought down to the level of household consumers.

“With RCOA, every household will soon have the power to choose the lowest cost electricity supplier and generate savings from their hard-earned pesos,” Juan said.

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

In choosing their retail electricity suppliers (RES), consumers generate savings in their power costs of up to 26 percent, according to at least one study conducted by the Manila Observatory. 

It has been 17 years since EPIRA was enacted, and RCOA is one of the policy mechanisms that have yet to be implemented. RCOA aims to institutionalize competition in the supply of electricity, allowing the electricity end-users to choose their suppliers based on low price and other factors.

And in February last year, the high court stopped the Department of Energy (DOE) and Energy Regulatory Commission (ERC) to implement the mandatory migration of large power consumers to RCOA.

The temporary restraining order (TRO) sought by the Philippine Chamber of Commerce and Industry, San Beda College Alabang Inc., Ateneo de Manila University and Riverbanks Development Corp., said the new rules supposedly limits the accredited suppliers for big power consumers which must be given a choice whether to stay with their current distribution utility suppliers.

The mandatory migration to RCOA of end-users with at least 1 MW usage was on last Feb. 26, 2017. Meanwhile, customers with at least 750 kw in demand was supposed to migrate on June 26, 2017.

The IEMOP official said the delay in acting on the petition is just causing regulatory uncertainty at a time when the government is looking for ways to reduce electricity prices to reduce the burden on ordinary Filipinos and boost the country’s competitiveness. 

Policy makers and energy industry executives agree that the TRO has had a chilling effect on the market by preventing the migration of CCs and slowing down the government’s full implementation of RCOA, which is already 10 years late in terms of the EPIRA mandated timeline. 

Without the TRO, there would be no legal obstacle for the eligible CCs to move to new RES. In addition, the lowering of the threshold to 500 kW – and, eventually, down to the household level – would increase the number of CCs. Everyone stands to benefit from an expanded market of consumers and suppliers.  

In spite of the TRO, more and more CCs, those who were earlier issued certificates of contestability by the ERC, are opting to voluntarily migrate.

Out of the 1,873 CCs who consume 750 kW or more, 62 percent or 1,153 CCs now have retail supply contracts with RES representing 71 percent of the total 4,008 megawatts (MW) demand of all CCs.

They are enjoying a generation charge of P4.58 per kWh on average, lower by P0.62 from MERALCO’s charge of P5.20 per kWh. These are significant savings that CCs can pass on to consumers or reinvest in their operations. 

Companies like Manila Water, Federal Land, and Unilever Philippines have inked deals with RES to source lower cost electricity from sustainable forms of generation like wind and solar farms. In line with its global target of shifting to renewable energy for all its power needs by 2030, Unilever will soon require all their assets in the Philippines to be powered by renewable energy.