Economy



By Victor V. Saulon


ERC to impose restrictions on retail electricity




Posted on May 19, 2016


THE ENERGY Regulatory Commission (ERC) will issue this week rules imposing restrictions on the operations of distribution utilities and retail electricity suppliers (RES) in the competitive retail electricity market, its chairman said on Wednesday.

“The ERC deemed it appropriate to impose restrictions on the operations of distribution utilities and retail electricity suppliers in the competitive retail electricity market,” ERC Chairman Jose Vicente B. Salazar told an industry conference at the SMX Convention Center in Pasay City.

“The restrictions will be covered by an ERC resolution which we shall released before the end of the week,” he said.

He said no distribution utility shall be allowed to engage with the supply of electricity to end users in the contestable market unless such supply is made in its capacity as a “supplier of last resort,” which happens when customers stop receiving supply from their retail electricity supplier.

“Second, all local RES or distribution utilities that are currently engaged with the supply of electricity to end users in their respective franchise areas shall wind up their business within three years from the effectivity of the rules,” Mr. Salazar said.

Existing retail supply contracts entered into these electricity suppliers with their respective contestable customers “shall remain valid until the expiration of said contract subject to the winding down period,” he said.

“This also means that no new retail supply contracts shall be signed, executed or be allowed after the effectivity of the resolution and no renewal of retail supply contracts shall likewise be allowed.”

Mr. Salazar also said no retail electricity suppliers will be allowed to supply more than 30% of the total peak demand in the retail market.

He added that no retail electricity supplier may transact more than 50% of its supply business with its affiliate contestable customers.

“The ERC will take a review of the market conditions within 24 months from the effectivity of the resolution and shall revisit the said restrictions and adopt changes depending on the current market situation,” he said.

Mr. Salazar’s announcement comes after the Department of Energy (DoE) moved to a later date the full implementation of the retail competition and open access (RCOA) in the Philippine electric power industry, giving qualified “contestable” consumers more time to choose their preferred retail electricity suppliers.

In a circular, Energy Secretary Zenaida Y. Monsada postponed to Dec. 26, from June 25, the date during which contestable customers or those with an average consumption of 1 megawatts (MW) and above should have secured their retail supply contract from any licensed retail electricity supplier, power generation company or company that is constructing a power plant.

The 1-MW and above consumption is computed as the average demand by the electricity end-user for the 12 months preceding the implementation of the RCOA.

For consumers with an average demand ranging below 1 MW to 750 kilowatt (kW), securing a retail supply contract will be voluntary effective on June 26, and mandatory starting on June 26, 2017. A previous DoE circular set the mandatory date on June 25.