Power retailers fear ‘default’ with unresolved RCOA issues

By Myrna M. Velasco – 6, 2017, 10:00 PM

from Manila Bulletin

On the back of protracted legal skirmish on the Retail Competition and Open Access (RCOA) policy, firms affiliated with the Retail Electricity Suppliers Association, Inc. (RESA) have sounded off fears that their contractual obligations with suppliers and big-ticket customers may end up in default due to delayed action on processes of their renewal of licenses.

That had been deemed one of the “unintended consequences” of the high court’s restraining order because such technically prevented the Energy Regulatory Commission (ERC) from acting on the renewal as well as approval of new RES licenses.

In a motion for intervention and clarification filed by RESA with the Supreme Court on June 1, it raised that “RESA’s members might be declared in default of (their) contractual obligations with suppliers and customers due to the non-renewal in a timely fashion of their RES licenses.”

RES license is required before any qualified entity can negotiate and underwrite power supply contracts with contestable customers under the RCOA regime – as cast within the prescribed thresholds.

Retail competition in the restructured electricity sector kicked off at 1.0-megawatt threshold, and while that was subsequently brought down to the 750-kilowatt level, that policy had been wobbled following the high court’s verdict.

Government action, primarily that of the ERC on pending RES license applications, had been among those sought by RESA to be clarified in light of the TRO issuance by the Supreme Court.

RESA noted that if their contractual obligations would be abrogated, this will scuttle the power industry’s competitive regime and customers would also be unjustly thrown back into their “captive customer state” that may commit them to higher electricity rates.

The RES group further asserted “its members and contestable customers have been placed in limbo by the ERC’s inaction on the RES license applications.”

In view of this, the power retailers had asked the high court to “direct government or bureaucratic inaction with regard to applications for the issuance of licenses.”

RESA similarly batted for clarification as to which circumstance shall be considered “status quo” prior to the SC-TRO, since at that time, processes already started on negotiations as well as execution and signing of power supply agreements on the lowered threshold of 750kW.

“It bears emphasizing that even before the subject Resolution and the subject TRO were issued by (the) Honorable Court, the respondents had already begun implementing the ‘second phase’ of the RCOA regime where 750-999 kWh end-users are allowed to voluntarily migrate from the captive market to the contestable market,” RESA stressed.

It added that “the lowering or ‘reduction’ of the threshold level for contestability from 1MW to 750kW envisaged in Section 31 of the EPIRA (Electric Power Industry Reform Act) had already taken place before the subject resolution and the subject TRO were issued.”