Power market opens to smaller businesses with lower threshold

CEBU, Philippines — More Philippine businesses can negotiate their electricity costs directly with suppliers after the government lowered the threshold for participation in the competitive power market, giving smaller commercial and industrial users an option to manage one of their largest operating expenses.

The new 100-kilowatt threshold, effective June 26, expands access to the Retail Competition and Open Access (RCOA) framework, allowing businesses with average monthly demand of 100 to 499 kW to choose their own retail electricity supplier. Smaller establishments that do not meet the minimum requirement can participate through the Retail Aggregation Program, which allows multiple users to pool their electricity demand.

The Energy Regulatory Commission (ERC) discussed the expanded market access at a forum with COREnergy Inc., the retail electricity arm of Vivant Energy, on Oct. 8, bringing together regulators, business leaders and industry representatives.

The latest change marks the fourth phase of the RCOA rollout, which has progressively lowered the eligibility threshold from 1 megawatt when the program began in 2013 to 500 kW in 2020 and 100 kW this year.

“The lowering of the contestability threshold to 100 kilowatts is more than a regulatory milestone, it is a milestone for Filipino consumers,” said Atty. Chiara Angela Blanco, chief of the ERC’s Contestable Market Division, relaying a message from Chairman Francis Saturnino C. Juan.

More consumers can now decide how they purchase electricity, Blanco said, describing the expansion as an opportunity for businesses to exercise greater choice in the power market.

For companies facing higher production costs and inflation, the expanded eligibility could provide another avenue to manage expenses and protect operating margins.

Businesses that qualify can evaluate competing supply arrangements rather than remain limited to their existing electricity procurement options.

“At COREnergy, we are proud to earn the trust of Phase 4 contestable customers, businesses that are spending upwards of PHP 500,000 every single month on electricity,” said COREnergy president, Francis del Val.

COREnergy aims to help customers improve profitability, productivity and performance, a strategy the company calls its “3Ps,” del Val said.

The company serves 88 businesses across 144 accounts, representing 90.8 megawatts of peak capacity. Its customers include commercial and industrial users such as DEDON Manufacturing, JEG Tower and McDonald’s Philippines.

McDonald’s has brought 36 restaurants across Cebu and Negros Occidental into the competitive market, including 32 smaller branches that joined through the aggregation program, according to the company.

Representatives of Villa Escudero also shared their experience working with COREnergy at the forum, offering a perspective on how electricity procurement decisions affect businesses with different operating requirements.

COREnergy said it would continue assisting newly eligible customers in assessing their qualifications and navigating the supplier-switching process.

The lower threshold broadens the pool of businesses that can explore alternative electricity supply arrangements, although the potential benefits will depend on individual consumption profiles and the terms available from suppliers.

For smaller enterprises, aggregation offers a route into the market that would otherwise remain inaccessible because of minimum demand requirements, extending the reach of electricity competition beyond larger industrial and commercial users.