Energy Secretary Alfonso G. Cusi has signed two department circulars that the agency hopes will pave the way for the resumption of the implementation of the retail competition and open access (RCOA) scheme that was temporarily stopped by the Supreme Court (SC).
The Department of Energy (DOE) said it was compelled to provide immediate guidelines to affected power industry players seeking clarification on the implications and effects of the temporary restraining order (TRO) on the pre-existing RCOA processes.
“The issuance of the circular is necessary to address policy and regulatory gaps resulting from and consistent with the above-mentioned cases and TRO,” Cusi said.
RCOA, in a nutshell, allows consumers to source power from a licensed retail electricity supplier (RES) to encourage competition in the generation and supply sector. At present, the majority of power consumers are being supplied by Manila Electric Co. (Meralco), the country’s largest distribution utility (DU) firm.
The SC issued on February 21, 2016, a TRO against a DOE circular and Energy Regulatory Commission (ERC) resolutions days before these were supposed to take effect.
The mandatory switching of consumers with an average peak consumption of 750 kilowatts to 999 kW, which should have taken effect on June 26, 2017, was among the rules that were halted by the SC.
But the mandatory switching of power users consuming an average of at least 1 megawatt (MW) per month is already in effect. Its implementation took effect on December 26, 2016, more than a month prior to the issuance of the TRO.
The newly issued circular on “Providing Policies on the Implementation of RCOA for Contestable Customers (CC) in the Philippines Electric Power Industry” is meant to implement RCOA on a voluntary basis instead of mandatory.
Section 1 of the circular calls for the voluntary participation of contestable customers with average peak demand of 750 kW and above for the past 12 months in the retail market.
Section 2, meanwhile, also calls for the voluntary participation of consumers with average peak demand of 500 kW to 749 kW in the retail market by June 2018 or an earlier date specified by the ERC.
Participation in the retail market shall require a retail supply contract (RSC) between a contestable customer and RES, and registration of the RSC in the WESM (Wholesale Electricity Spot Market).
By December 2018, or an earlier date, electricity end-users within a contiguous area, whose aggregate average peak demand is not less than 500 kW for the preceding 12-month period, may aggregate their demand to be part of the contestable market and may voluntarily enter into RSC with aggregators.
Aggregators refers to any person or entity engaged in consolidating electric-power demand of end-users in the contestable market for the purpose of purchasing and reselling electricity on a group basis.
The circular states that the ERC will come up with the guidelines on the licensing of the RES and the retail aggregation. Also, the DOE and the ERC shall annually review and issue policies to achieve the full implementation of RCOA until it reaches the household-demand level.
The other circular is meant to allow a local RES, or an affiliate of a distribution utility that functions as a RES, to continue serving the captive market under a separate entity.
“DUs may provide electricity services to contestable customers within its franchise area as a local RES, upon authorization from the ERC; Provided, that the DU shall comply with the unbundling provisions of Republic Act [RA] 9136 and Rule 10 of the rules and regulations to implement RA 9136,” the circular, “Providing Policies on the Implementation of RCOA for RES in the Philippines Electric Power Industry.”
RES are the entities licensed by the ERC to supply electricity to end-users in contestable market.
The following entities maybe considered to become RES: generation company or affiliate thereof; an affiliate of a distribution utility; retail aggregators; an IPP administrator; and any prospective generation company whose power project is undergoing construction.
To serve the contestable customers, these entities shall secure a license from the ERC.
The circular also states that a licensed RES engaged in the generation and distribution sectors of the power industry shall unbundle its supply business.