Rule-setting eyed on ‘double counting’ of power market cap

by Myrna Velasco – January 6, 2016

from Manila Bulletin

With the anticipated full incursion of retail electricity suppliers (RES) as added layer of players in the restructured power sector, the Energy Regulatory Commission (ERC) has indicated that one of the concerns they will flesh out will be on “double counting” of capacities that shall be integrated in setting the market share caps.

This will be applicable particularly to generation companies (GENCOs) and the independent power producer administrators (IPPAs) that shall also be having RES as affiliates.

The IPPAs have the control on the ‘call for dispatch’ of the plant capacities of the supply contracts that had been transferred under their charge via the privatization process undertaken by the Power Sector Assets and Liabilities Management Corporation.

ERC chairman Jose Vicente B. Salazar has noted that the issue on “double counting” of capacities will be among the regulatory issues that they will resolve both in the setting of market share caps and in the yet-to-be finalized rules on mandatory retail competition and open access.

“The regulatory process will not be adversarial, it is proactive. We consult with them on a regular basis so they (industry players) can give feedback to us on the things that we have been doing and provide us with better understanding of how we can respond to industry concerns,” he stressed.

The provision on market share caps under the Electric Power Industry Reform Act (EPIRA) sets capacity limit on each GENCO that is equivalent to 25 percent of installed capacity on a nationwide basis; and 30 percent of installed capacity per grid.

With the competitive retail regime, however, GENCOs and IPPAs are allowed to put up RES as separate business units – and such could have implications on capacities attributed to them.

The crediting of capacity must be set clear, as the EPIRA stipulated that the count shall consider all of those attributed to affiliate companies.

Salazar said the mandatory retail competition at a lower threshold of 750 kilowatts will definitely kick off this year.

According to ERC Commissioner Gloria Victoria Yap-Taruc, the reduction in the consumption threshold will add roughly 1,500 customers in the competitive retail market.

She stressed that in the franchise area of Manila Electric Company (Meralco) alone, “the number of contestable customers will be around 600.”

Contestable customers are those who can already exercise their “power of choice” – having been given leeway by regulatory edict to directly contract or purchase their power supply requirements with generators or retail electricity suppliers.

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