HOPING to spur competition among private generation companies to help lower cost of electricity to industrial and commercial users to a comfortable level, the Energy Regulatory Commission (ERC) is targeting to pass a resolution on the proposed interim open access (IOA) in the next two months.

“I hope we could act on the petition on interim open access soon, especially before I retire on July 9 this year,” said ERC chairman Rodolfo Albano Jr. in an interview with reporters.

In an order dated May 26, 2008, the ERC has set a series of jurisdictional hearings, expository presentations, pretrial conferences and evidentiary hearings to immediately act on the petition that would bring open access in the Luzon and Visayas grids.

The chief regulator said it expects it would be able to resolve this petition immediately as most of the power-industry stakeholders are in favor of such a proposal.

“The ERC welcomes the initiative of the power providers to make electricity rates competitive and give electricity consumers the power to choose their source of power,” Albano said.

The petitioners include the Philippine Independent Power Producers Association (Pippa) and seven private distribution utilities, namely, Manila Electric Co., Visayas Electric Co. (Veco), Davao Light Power Co., Clark Electric, Cagayan Electric Power and Light Co., San Fernando Light and Power Co. and Panay Electric Co. Inc.

The petitioners expressed their willingness to voluntarily implement retail competition and open access even before full realization of the preconditions.

Section 31 of the Electric Power Industry Reform Act (Epira) requires the following conditions to be met before open access can be implemented: establishment of the Wholesale Electricity Spot Market and approval of unbundled transmission and distribution wheeling charges.

Ernesto Pantangco, president of Pippa, earlier said interim open access will not, however, immediately bring down rates but would do so in the long term.

“With our proposal for interim open access, contestible customers of 1 megawatt [MW] and above will now have a third option, which is to contract directly with suppliers beyond the distribution utility and electric cooperatives,” said Pantangco.

He said that if a consumer at present avails itself of the special ecozone rate of P3.27 per kilowatt-hour (kWh) offered by Meralco, and a hydro offers P3/kWh, obviously that consumer will shift to the hydropower plant.  

“So what we’re saying is that it will not automatically lower rates. What we’re saying is that let competition, market and consumers decide. If power is so crucial to consumers’ operation and as long as they’re willing to pay for premiums, then so be it,” he added.

Pantangco added that all generation companies, including newly privatized National Power Corp. (Napocor) assets that are under the mandated 30-percent market cap in a grid and 25 percent of the national grid, will be allowed to compete.

“Indirectly, this means the Power Sector Assets and Liabilities Management Corp.  and Napocor cannot compete since they’re over the cap, and that’s what we mean by level playing field. In other words, Epira was meant and crafted for everybody to have a level playing field. We don’t want to compete with government,” he said.

Pantangco said his group had proposed that the threshold or demand requirement of 1 MW be reduced to 750 kilowatts (kW) six months after implementation of interim open access.

“With the way Epira works, the threshold being reduced to 750 kW until it eventually reaches the households will be determined by the ERC. So, eventually, it will reach the household, but that will be up to the ERC to determine.”

After one ERC hearing, Pantangco said interim open access could begin on June 23 at the earliest or end of June at the latest, based on their reading of  commission chairman, Albano’s, statements.

Pantangco said his group hopes open access would encourage new investments and attract transferred industries back.  

“One thing we’d like to emphasize with this proposal, there’s no more need to amend the Electric Power Industry Reform Act, since you have already achieved the objectives of Epira, which is to bring forth open access,” said Pantangco.

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HOPING to spur competition among private generation companies to help lower cost of electricity to industrial and commercial users to a comfortable level, the Energy Regulatory Commission (ERC) is targeting to pass a resolution on the proposed interim open access (IOA) in the next two months.

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