ERC asked to clarify issues on retail competition

by Alena Mae S. Flores, 28 March 2016

from Manila Standard Today

The Semiconductor & Electronics Industries in the Philippines Foundation Inc. reiterated a call to the Energy Regulatory Commission to clarify certain issues under the proposed rules on retail competition and open access.

Seipi, in a series of letters to ERC, sought for a “smooth transition” in the wake of the forthcoming implementation of retail competition and open access by June 2016.

It also urged the regulator to review the impact of excluding distribution utilities and retail electricity suppliers from delivering to the contestable market.

Seipi is the leading organization of foreign and Filipino semiconductor and electronics companies in the Philippines, allied industries and the academe.

The industry accounts for 49 percent of the total Philippine exports, directly employing 351,387 operators and technicians and has invested a total of P80.783 billion.

The group has sought clarification “whether the life of the existing preferential rate contracts will still be observed even after the deadline of mandatory contestability, or whether will these contracts be rescinded.”

ERC wants the remaining contestable customers or customers to switch to the retail electricity suppliers by June, which is also the start of the voluntary implementation of the 750-0kilowatt threshold of open access.

Retail electricity suppliers refer to any person or entity authorized by the ERC to sell, broker, market or aggregate electricity to end users in the contestable market.

Contestable customers are electricity end users who are given the choice to choose their supplier of electricity.

“The industry is very supportive of the country’s shift to retail competition and open access… We would just like to highlight the need of facilitating a smooth transition, so as not to burden the companies with the volume of arrangements that need to be settled,” Seipi president Dan Lachica, who signed the letters, said.

The group noted ERC’s proposed rules preventing a distribution utility from supplying electricity to the contestable market, unless the supply is made in its capacity as supplier of last resort.

ERC’s proposed rules released in November 2015 further stated that the distribution utilities were enjoined to wind down their respective supply businesses, meaning no local retail electricity supplier should be allowed to act as such by June 26, 2016.

Seipi expressed concern over the possible outcome of the ERC ruling in terms of having less retail electricity supplies to choose from.

“With less suppliers in the market, this could very well pose the risk of having lower bargaining power during supply contract negotiations,” it said.

It added that the draft rules did not explain what would happen to the existing contracts of the contrastable customers with local retail electricity suppliers that have already been executed.