ERC directed to craft rules on lower RCOA

By Myrna M. Velasco – November 30, 2017, 10:00 PM
from Manila Bulletin

Independent entity Energy Regulatory Commission (ERC) has been directed by the Department of Energy (DOE) to craft the guidelines on the lowered threshold of retail competition and open access (RCOA) policy in the power industry that will already reach consumers within the 500 kilowatts (kW) consumption base.

That has been based on a Circular that was signed by Energy Secretary Alfonso G. Cusi this week, effectively lowering the base of power retail competition to initially 750kW on voluntary basis and to lower it further next year to 500kW via aggregation or the pooling of capacity needs within contiguous or adjacent areas.

“For the proper implementation of the policies set herein, the ERC is hereby enjoined to promulgate the supporting guidelines, including but not limited to, the licensing of the RES (retail electricity supplier) and retail aggregation,” the DOE Circular has stipulated.

The RES cannot operate or offer capacity to qualified contestable customers without first securing required licenses from the ERC. As prescribed, the contestable customers are the end-users that are already allowed by relevant policies and regulatory frameworks to exercise their freedom of choice on securing electricity service and underwriting power supply contracts with preferred suppliers.

The DoE Circular further noted that the ERC guidelines shall “specify sanctions and penalties that may be imposed to electric power industry participants for violations of the promulgated policies and guidelines.”

As set forth by the energy department, contestable customers with peak demand from 750kW and above for the preceding 12 months can already voluntarily participate in the RCOA upon the effectivity of the Circular and following registration with the Philippine Electricity Market Corporation (PEMC) being the central registration body of the competitive retail market.

For demand aggregation that shall essentially cover households within a contiguous area, it is targeted for implementation on December 26, 2018. Even with this new DOE Circular though, these propounded voluntary enforcements of power retail competition would still need to hurdle major legal stumbling block on a pending case at the Supreme Court.

DOE officials previously indicated that they will file a motion with the high court using the Circular as basis on a plea for the lifting of the TRO previously rendered against the power industry’s retail competition rules and policies.

RCOA is presently stalled at the 1.0-megawatt threshold and done on voluntary basis following the Supreme Court ruling that effectively junked a previous Circular of the DOE and the rules issued by the ERC.

The questioned provisions included the mandatory enforcement of RCOA; the cost premium to contestable customers that would not have been able to switch on the prescribed deadline; and the prohibition of the local-RES of the distribution utilities (DUs) to continue with their respective power retail business units.