by Myrna Velasco – November 20, 2015
from Manila Bulletin
Distribution utilities (DUs), like the Manila Electric Company (Meralco), are being mandated to finally wind down the supply segment of their businesses once the rules on mandatory migration to retail competition are firmed up by the Energy Regulatory Commission (ERC).
In essence, these DUs can no longer supply the requirements of contestable customers – or those end-users who can already choose or can contract directly with their preferred power generators or suppliers.
The draft rules on the mandatory migration to the competitive retail electricity market had been issued last week and up for comment and inputs by affected industry stakeholders.
Correspondingly, the industry regulator has enjoined the DUs “to wind down their respective supply businesses such that no local RES shall be allowed to act as such by 26 June 2016.”
Complementary to the policies set forth by the Department of Energy, the ERC has further directed that the DUs must reduce their contracted capacities to match only the requirements of their captive customers – or those end-users who cannot exercise their power of choice yet as reckoned on the set thresholds of retail competition.
The ERC said the DUs may push for “renegotiation of existing power supply contracts” with generation companies for so long as these “do not contain provisions on the reduction of contracted energy volumes upon migration of the contestable customers.”