A CIRCULAR of the Department of Energy (DoE) that gives retail electricity users a choice of suppliers has taken effect, prodding the retail competition and open access (RCOA) scheme forward.
Department Circular No. DC 2019-07-0011 amends various DoE issuances implementing RCOA, which is provided under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) to allow greater competition among power sellers by letting “contestable” consumers — or those whose consumption has reached a set threshold — choose their electricity supplier.
“Consistent with the definition of open access, CCs (contestable customers) are hereby allowed use of transmission and distribution systems and may voluntarily register as a trading participant in the WESM (wholesale electricity spot market),” according to circular, which was published in newspapers on Aug. 14.
The circular, which took effect 15 days after publication, has also been posted on the department’s Web site.
EPIRA mandates that upon initial implementation of “open access,” the Energy Regulatory Commission (ERC) is to allow electricity end-users with a monthly average peak demand of at least 1 megawatt (MW) for the preceding 12 months to be part of the contestable market.
Two years after, the threshold for the contestable market is to be reduced to 750 kilowatts (kW). At this level, aggregators are allowed to supply electricity to contestable customers whose total demand within a contiguous area is at least 750 kW.
After every year, the ERC will evaluate the market’s performance and use findings as basis for gradually reducing the threshold level until it reaches household demand level.
“Consistent with the objectives of EPIRA and its implementing rules and regulations (EPIRA-IRR), and other applicable rules and regulations, a CC shall source its electricity supply requirement from ERC-licensed/authorized suppliers,” the circular states.
The circular also directed the ERC to issue rules necessary to implement the system with 30 calendar days from its effectivity.
The new rules amend some sections of DC2012-05-0005, which states that — consistent with the definition of open access — contestable customers “are hereby allowed the use of the transmission and distribution systems and shall therefore be integrated into the WESM. For this purpose, all CCs shall become members of the WESM as trading participant directly or indirectly…”
Under the new circular, the market operator is directed to recommend to the DoE the appropriate changes on existing WESM rules, retail rules and market manuals to carry out policies for the further development of RCOA.
Retail electricity suppliers (RES) have been awaiting developments in this business segment after the Supreme Court issued a temporary restraining order on the RCOA rules that stopped the lowering of the consumption threshold for contestable customers.
ERC Chairperson and Chief Executive Officer Agnes VST Devanadera had said her office would defer issuing new RES licenses until the court will have lifted its order.
Some retail suppliers have been doing business despite their expired licenses. Those with valid licenses expect theirs to lapse in the coming months.
Officials of the DoE and ERC did not immediately respond to questions on whether the new circular will circumvent the court’s hold order and whether expired licenses will be renewed or new ones will be issued. The DoE did not validate whether the new circular is now in effect.
According to the latest data from the Philippine Electricity Market Corp., the country as of the first quarter had a total of 1,240 registered contestable customers, up from 1,198 as of the previous quarter.
The market recorded a total of 31 registered retail electricity suppliers (RESs), 14 registered local RESs, or affiliates of distribution utilities that sell within their franchise areas.
Majority or 1,119 registered contestable customers were in Luzon and the remaining 121 were in the Visayas. Of the total registrants, 19% were in the 750 kW-999 kW contestability threshold, while 81% were in the 1 MW and above threshold.
The total energy consumption of the registered contestable customers for the first quarter of 2019 stood at about 4,477 gigawatt-hours. This consumption level accounts for about 24% of the combined energy use of the registered contestable customers and the captive customers, or those sourcing power from franchised utilities.
If the new circular is not questioned in court, retail electricity suppliers will be competing for 34% of the 1,884 electricity end-users that have been issued “certificates of contestability” but have not yet registered in the market. — Victor V. Saulon