ERC lifts moratorium on new retail suppliers

by Alena Mae S. Flores – April 07, 2016 at 11:40 pm

from Manila Standard Today

GENERAL Santos City—The Energy Regulatory Commission said Thursday it lifted the suspension on the issuance of licenses for new retail electricity suppliers.

“We have lifted the suspension,” ERC chairman Jose Vicente Salazar told reporters here.

The regulator issued a resolution in October 2014, putting on hold the evaluation of retail electricity suppliers’ licenses to provide regulatory guidance for new players.

“The suspension has already been there for almost two years, and there is now a clamor from the industry to issue rules,” Salazar said.

Salazar said the commission could now act on numerous pending applications for licenses, following the issuance of a resolution.

Meanwhile, Salazar said compliance to the 1-megawatt threshold under the retail competition and open access regime was moved to Dec. 26,  2016, while compliance to the 750-kilowatt threshold was moved to June 26, 2017.

Retail competition and open access allow large power users to choose their own power suppliers with the aim of bringing in competition to bring down power costs.

The Electric Power Industry Reform Act of 2001 mandates that the threshold for open access can be lowered to 750 kW from 1 MW two years upon implementation. Open access was implemented in December 2013.

“It seems that because of the delay in finalization of rules…with rules of contestability, definitely 1,000 kilowatts [1 MW] will still be voluntary until Dec. 26, 2016,” Salazar said.

ERC expects around 671 customers in Luzon and the Visayas with a demand of one megawatt and above to switch to the retail electricity suppliers under the retail competition and open access regime by June.

ERC released a resolution adopting the 2016 rules governing the issuance of licenses to retail electricity suppliers to promote free, fair and true competition in the power industry.

The resolution was issued after the release of two draft rules last year which were subjected to public consultations and group discussions.

“Whereas, after careful consideration of the various views and comments submitted by interested parties, the ERC deems it appropriate to adopt the 2016 rules governing the issuances to retail electricity suppliers and prescribing the requirements and conditions thereof,” it said.

ERC said in a 24-page ruling the rules were aimed at ensuring consumer protection and enhancing the competitive operation of the retail electricity market.

ERC said no person could engage in the supply of electricity to end users in the contestable market (electricity users who have a choice of electricity supplier), unless such person shall have secured a retail electricity license from the ERC.

A retail electricity supplier could be a generation company or an affiliate, an affiliate of a distribution utility, retail aggregators, independent power producer administrator and any person intending to engage in the selling, brokering or marketing electricity to the contestable market.

ERC said it would issue a license to a qualified retail electricity supplier that complied with all applicable requirements such as technical and financial qualification, conditions of cross ownership, market power abuse, anti- competitive behavior, among others.

ERC said retail electricity suppliers engaged in other electricity related businesses should ensure that that “there is no cross subsidization between and among its business activities.”

ERC also imposed rules to avoid potential abuse by retail electricity suppliers. ERC can revoke licenses if the retail electricity supplier will provide false or misleading information, failure to maintain credit standards, bankruptcy, not responding to agency’s queries or customer complaints in timely fashion, among others.