Retail electricity market expands
The competitive retail market for electricity continues to gain ground despite constraints resulting from the new coronavirus disease pandemic, the Energy Regulatory Commission (ERC) said as it counted a total of 67 authorized retailers as of the end of June 2020.
The ERC said these entities that were accredited to compete with incumbent power distributors for customers within the latter’s franchise areas included 42 retail electricity suppliers (RES) such as power generation companies that needed a license to operate as retailers.
There were also 25 “local RES,” which are similar suppliers but do not need a license to operate as RES—such as retail suppliers in economic zones or distribution utilities that are matching the offers of RES in their franchise areas.
Under the ERC-supervised competitive retail electricity market (CREM) initiative, consumers or groups of consumers with a demand of at least 750 kilowatts may seek accreditation as “contestable customers” that have the option to buy from retailers other than the incumbent distribution utility.
“The [ERC] has been regularly monitoring the activities in the [CREM] to observe the behavior of the stakeholders in this market, particularly in terms of pricing, switching patterns and the capacity and energy of contestable customers,” ERC Chair Agnes Devanadera said in a statement.
ERC’s latest monitoring also showed that as of end-June, there were 2,089 consumers accredited as contestable customers.Of these, 70 percent, or 1,460 consumers, were engaging alternative suppliers while the remaining 30 percent, or 629 consumers, chose to stick with their incumbent distributors.
Of those who switched to RES and local RES, about four-fifths, or 1,120 consumers, have a demand of at least one megawatt while 340 consumers have a power demand of less than one MW but at least 750 kW.
“The increased participation of contestable customers in the [CREM] and the diminishing trend in the prices being offered by [alternative suppliers] is a silver lining in the midst of this COVID-19 pandemic,” Devanadera said.
“This positive development stimulates competition among [RES] and will entice more contestable customers to shift to these electricity providers,” she added.
From April to June, the average price in a month for electricity sourced from RES was downward at P4.12 a kilowatt-hour in April to P3.97 in May and P3.95 in June.
The ERC said the downward direction “manifests a strengthened competition” in the retail market.
Also, the regulator noted that the majority, or 55 percent, of licensed RES were affiliates of power generation companies instead of being an entity whose business portfolio included power generation or one that was affiliated with a distribution utility or not affiliated at all in the power industry.
According to the ERC, having more suppliers that were affiliated with generation companies gave confidence that electricity supply was ensured and that the suppliers have the capability to offer competitive or cheaper prices in the CREM.
