Electricity open access scheme participation made voluntary

The Department of Energy has issued two circulars that are seen to bring forward the development of open access in the electricity retail business by allowing qualified consumers to voluntarily choose their suppliers instead of being mandated to break ties with incumbent players.

The DOE had earlier pushed for a mandatory approach to the Retail Competition and Open Access (RCOA) scheme, which hit a snag after the Supreme Court issued a temporary restraining order on this policy.
Under the RCOA scheme, power consumers with an average monthly peak demand of at least one megawatt would be able to choose alternative suppliers—thus, they are called contestable customers.

This threshold will then be lowered progressively up to the point that the scheme can be done at the level of each household or individual consumer.

With the DOE shifting the RCOA scheme to a voluntary basis through Department Circular No. 2017-12-0013, the agency said consumers with an average monthly peak demand of at least 750 kilowatts “may participate in the retail market.”

Such participation requires a retail supply contract between the contestable customer and the retail electricity supplier (RES)—the alternative provider. This contract needs to be registered with the Wholesale Electricity Spot Market.

Also, the circular states that by June 26, 2018—or earlier if the Energy Regulatory Commission (ERC) would allow—contestable customers with an average monthly peak demand of 500 kw to 749 kw shall be able to take part in the RCOA scheme—also voluntarily.

For consumers whose demand is less than 500 kw, the DOE said they could “aggregate” to be able to be recognized as contestable customers by Dec. 26, 2018, or earlier depending on the ERC.

In a second circular, DC No. 2017-12-0014, the DOE laid down policies related to the RES or alternative power supplier for contestable customers.

The DOE said any of the following might be considered an RES: a power generation firm or its affiliate, an affiliate of a distribution utility, retail aggregators, an administrator of an independent power producer, a prospective power generation firm, or any other person that the ERC might authorize to become an RES.