ERC tightens rules on DU, RES operations in power retail market

by Lenie LecturaMay 27, 2016

from Business Mirror

THE Energy Regulatory Commission (ERC) has issued rules imposing restrictions on the operations of distribution utilities (DUs) and retail electricity suppliers (RES) in the competitive retail electricity market.

Resolution 11, Series of 2016, stated four rules aimed at providing safeguards in order to promote competition and prevent harmful monopoly and market power abuse.

First, no DU shall engage in the supply of electricity to end users in the contestable market unless such supply is made in its capacity as a supplier of last resort (SOLR).

The ERC explained that SOLR happens when customers stop receiving supply from their RES.

Second, all local RES or DUs that are currently engaged with the supply of electricity to end users in their respective franchise areas shall wind up their business within three years from the effectivity of the said resolution.

Existing retail supply contracts (RSCs) entered into with their respective contestable customers shall remain valid until the expiration of said contracts subject to the winding down period.

Accordingly, no new RSCs shall be signed and executed after the effectivity of the resolution. Likewise, renewal of RSCs are also not allowed.

Third, no RES shall be allowed to supply more than 30 percent of the total peak demand of all contestable customers in the retail market. The ERC will determine the level of demand on a quarterly basis. This would be posted every 30th of the month following the quarter.

Fourth, no RES shall be allowed to transact more than 50 percent of its total energy transactions of its supply business with its affiliate contestable customers.

The RES shall be given two years from December 26 to comply, the ERC said.

The ERC, it added, within 18 months from implementation of the first phase of mandatory contestability, conducts a continuous review and monitoring of the market conditions.