ERC to re-classify retail electricity supplier licenses

by Myrna Velasco, 25 August 2015
from Manila Bulletin

The Energy Regulatory Commission (ERC) is not a believer of ‘one-size-fits-all template’ when it comes to the issuance of licenses to the array of interested retail electricity suppliers (RES) that may swarm the industry’s competitive regime.

In an exclusive interview, ERC Commissioner Alfredo J. Non has noted that they have been thinking of four to five re-classified RES licenses that must be issued to qualified entities.

This is in line with the full implementation of the retail competition and open access (RCOA) mandate of the Electric Power Industry Reform Act (EPIRA) which is targeted building up by June next year.

“We have difficulty fitting them into the very stringent requirements of RES…so if we want to keep everybody in one or particular category, some may encounter difficulties. So our solution is to have four or five categories of RES licenses,” Non stressed.

The proposed RES licenses shall be re-classified as: RES for generation companies (GENCOs); RES for affiliate GENCOs; RES for distribution utilities, RES for Independent Power Producer Administrators (IPPAs); and RES for aggregators.

Under the aggregation scheme, the retail electricity suppliers will be categorized further – primarily for those intending to serve the requirements of residential villages and the special economic zones.

For both types of end-users that could be served by the RES-aggregators, there would also be some sort of differentiation, according to the ERC Commissioner.

The move to ‘differentiate’ or categorize the RES licenses, however, has been drawing some initial resistance from industry players as many of them would rather settle on having uniform requirements and template for the RES licensees.

The RES will cater to the needs of the restructured electricity market’s contestable customers or those who could already contract with their preferred electricity suppliers. By June 2016, that threshold is seen brought down to 750 kilowatts from currently at 1.0-megawatt level.

Aggregation of electricity needs of end-users within a contiguous area will also be introduced in the industry by 2018. It means getting the power demand of a village, economic zone or similarly-delineated domain lumped together and meet the prescribed threshold so they can be served by a RES.

The RES will have to enter into back-to-back contracts with its power supply sources as well as wires service providers so it can bring that electricity to its customer. The final contract between the RES and the contestable customer will no longer be subject to the ERC’s rate-setting regulation.