Meralco, DUs barred as retail power suppliers

by Myrna Velasco, 17 May 2015
from Manila Bulletin

Power utility giant Manila Electric Company (Meralco) as well as the other distribution utilities (DUs) will be prevented from enlisting themselves as retail electricity suppliers (RES), the re-wired Retail Competition and Open Access (RCOA) Rules has sought.

In an exclusive interview, Commissioner Alfredo J. Non of the Energy Regulatory Commission (ERC) revealed that under the yet to be issued new RCOA rules “no DU or DU-affiliate will be allowed to operate as RES.”

He noted that by June 30, 2016, “local RES will no longer be allowed.” In the current set-up, the DUs can operate as local RES to serve fraction of their customers that have been carved out as contestable.

The mandatory retail competition and open access in the restructured power industry is targeted September 30 this year, at a threshold level of 750 kilowatts (kWhs) as those to be qualified as contestable customers or be given choice and contracting preference when it comes to their electricity suppliers.

At 750kW, the level of capacity to be placed in the RCOA category would already hover at 3,844 megawatts for Luzon and Visayas grids and shall cover 1,343 contestable customers.

The ERC official stressed that the function of the DUs as local RES, like in the MPower of Meralco, is just a special case. However, the issuance of license for them as RES or local RES will have to be stopped eventually.

“The local RES is a special situation — that if they talk about RCOA and contestable customers — there are also captive customers that they would have to serve and that was brought to the attention of the ERC, so we will be addressing that,” the regulatory commissioner said.

Non has explained further that the contestable customers with no appointed RES by June 2016 will be given three options: one, will be for them to become part in the service of the supplier of last resort; to remain as captive customers under special circumstances but with prior ERC approval; or for them to participate in the Department of Energy’s demand aggregation and supply auctioning policy (DASAP).

The RCOA rules will extend more flexible set-up when it comes to the power generation companies, as they can still opt to become retail electricity suppliers.

Non said they will “allow generators to become RES or have affiliate RES but not both.” He qualified that “any prospective duly licensed GenCo-RES that failed to put up the power plant as per contract with the contestable customer or did not qualify to become RES shall be penalized.”

He noted that the ERC “shall create a platform to allow other RES to address the need of the affected contestable customers,” and such could be programs like the DASAP or any alternatives.