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ERC studying way forward with licenses expiring amid Supreme Court TRO

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Agnes T. Devanadera
VIC SAULON

THE Energy Regulatory Commission (ERC) is set to deliberate on how to move forward in promoting greater competition in the retail electricity business as the licenses of those authorized to engage in it are about to expire by 2021 to 2022 while a court-issued temporary restraining order (TRO) remains unresolved.

“Really, we have to be very careful lest we may be, the action of the ERC, may be construed as something that would breach the line of the TRO. We’re very careful. But of course, we have studied this and it’s now ready for commission deliberations,” said Agnes VST Devanadera, ERC chairperson and chief executive officer.

The commission’s top official was reacting to questions on the agency’s next move amid the continuing impasse in the full implementation of rules governing retail competition and open access (RCOA), a scheme that aims to increase the number of electricity suppliers thus lowering the cost of power.

On Feb. 21, 2017, the Supreme Court issued a TRO against a circular issued by the Department of Energy (DoE) and four resolutions issued by the ERC, less than a week before Feb. 26, 2017 when power users consuming an average of at least 1 megawatt (MW) per month for the past year are required to source power from a licensed retail electricity supplier (RES) and away from distribution utilities.

In issuing the TRO, the high court noted that the petitioners — entities that include schools and business groups — had established “a clear, legal right” considering that Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) provides for the voluntary migration of end-users to the contestable market.

Among the provisions that were put on hold is the issuance of new RES licenses. The DoE has since issued a circular making the migration voluntary instead of mandatory, although the ERC opted to wait for the resolution of the case at the Supreme Court.




“We have seven expired licenses, and we have also received 12 applications to renew licenses,” said ERC Spokesperson Floresinda B. Digal. “But given the TRO, we are constrained to act on these licenses because one of the rules that are on TRO is on the licensing of the RES.”

She said the commission had issued 30 licenses, with the remaining licensed 23 retail electricity suppliers awaiting the expiry of their licenses by 2021, and only a few by 2022.

The Retail Electricity Suppliers Association previously raised the possibility that should the impasse extend indefinitely, the retail electricity business will run out of licensed suppliers, resulting in the contestable customers returning to the distribution utilities.

ERC Commissioner Catherine P. Maceda said the pending RES license applications remain “active” while the agency studies the way forward amid the TRO.

Based on existing rules, a RES with an expired license stands to lose its license should it continue to operate. It can also be penalized.

“But there’s already a study done and meron na pong recommendation din na pag-uusapan ng (there’s also a recommendation that will be discussed by the) commission,” she said. “I don’t know if they will present this for the next meeting also, but there’s already a recommendation as well.”

“This is still subject to the deliberation of the commission if that will hold water — the recommendation,” she said, adding that the recommendation covers “how to move forward” amid the TRO without disclosing what the move will be.

A report issued by the Philippine Electricity Market Corp. (PEMC) placed the number of registered contestable customers, or those whose consumption reached the threshold set by the ERC, reached 1,198 as of end-2018 from only 240 when the retail market was launched on June 26, 2013.

The market recorded a total of 30 registered retail electricity suppliers, 14 registered local retail electricity suppliers, and 24 registered suppliers of last resort. A local RES serves as the retail supplier within the captive market of a distribution utility.

Suppliers of last resort serve those who were not able to contract with a licensed RES.

Majority or 1,080 registered contestable customers were in Luzon and the remaining 118 customers were in the Visayas. Mindanao is not yet part of the market as it does not have a fully functioning electricity spot market.

Of the total registrants, 19% were in the 750-kilowatt (kW)-to-999 kW contestability threshold, while 81% were in the 1 MW-and-above threshold. The retail activities of contestable customers were almost equally divided between industrial and commercial by end-2018.

The total registrants were about 64% of the 1,876 electricity end-users that were already issued a certificate of contestability by the ERC. The remaining 36% electricity end-users already issued with the certificate have not yet registered in the market.

The total energy consumption of the registered contestable customers for 2018 stood at about 17,628 gigawatt-hours (GWh). The consumption level accounts for about 23% of the combined energy consumption of the registered contestable customers and the captive customers for the year 2018.

Majority of the registered contestable customers were located within the franchise area of Manila Electric Co. (Meralco), the country’s largest distribution utility. By end-2018, about 31% of all registrants were being supplied by the suppliers under the Meralco group. — Victor V. Saulon