Regulators push retail power open access

GENERAL SANTOS CITY—The Energy Regulatory Commission (ERC) is finalizing rules that seek to promote competition in the emerging retail power industry by requiring distribution utilities with affiliated electricity suppliers to offer capacity to those outside their corporate family.

ERC chair Jose Vicente B. Salazar told reporters that the commission had just issued a resolution that generation companies (gencos), distribution utilities (whether private firms or electricity cooperatives) and their affiliates might resume applying for retail electricity suppliers (RES) licenses. Next up will be rules defining restrictions on RES, among others, he said.

“Today, there are applications pending, so we will process those. Next, we will issue rules on contestability and restrictions,” Salazar said.

The quasi-judicial/quasi-legislative body, Salazar said, would include restrictions that would prevent conglomerates from taking unfair advantage of having both RES and client-firms within their group of companies.

Contestability rules will also state the dates by which contestable customers, who are big-ticket power users, can start getting power supply from an RES instead of their local distribution utility.

On widening open access participation to users below 1 megawatt, Salazar said ERC would state in soon-to-be-published rules that instead of making it mandatory in June this year, due to delays in finalization of the rules, participation of those using 1,000kW would still be voluntary up to Dec. 26 this year. For those consuming 750 kW and 500kW, participation will remain voluntary until June 2017 and 2019, respectively.

Commissioner Alfredo J. Non said there would also be restrictions to be set.

“While it was already in the old provision in 2013, we were saying that if you are a RES and you are intending to supply only affiliates, we cannot allow that because it will limit especially large RES like Ayala and SM. They are the ones capable of getting big [power] suppliers and at a lower cost, with the savings to be passed on to their affiliates. It’s unfair to other customers,” Non said.

He said such large companies would also, in effect, be acting like an aggregator, for whom ERC did not have any rules yet. ERC will limit their capability to supply affiliates exclusively, Non said.

“For example, if they need to supply 2,000MW to their affiliates they must get 4,000MW of power,” Salazar said. At the same time, if an RES of a distribution utility such as Manila Electric Co. (Meralco) has capacity of 2,000MW, it must supply only half of that to affiliates and the rest must be made available to other contestable customers.”

In 2014, the Retail Electricity Suppliers Association of the Philippines, Inc. (Resa), an organization of electricity suppliers in the competitive regime of the industry, questioned in a local court the ERC’s revised rules which excluded gencos, D.U.s, and their affiliates from being awarded RES licenses.

Since the other players, such as the Independent Power Producer Administrators (IPPAs), are being allowed to secure RES license, the group noted that the ERC ruling would discriminate them in what could have been envisioned as widened base of industry competition.

On imposition of market share limitations and supply procurement cap, Resa said the amended RES Rules “erroneously apply Section 45 of the Epira (Electric Power Industry Reform Act) or the Republic Act No. 9136) to the RES contrary to the intention thereof.” Riza T. Olchondra