ERC, Meralco work out another settlement

MANILA, Philippines - The Energy Regulatory Commission (ERC) is working on another settlement with Manila Electric Co. (Meralco) after the power distributor asked a local court to stop the new rules on the retail competition and open access (RCOA).

“We’re preparing our defense. Meralco’s doing the same. In the meantime, we’re trying to talk to them,” ERC commissioner Alfredo Non told reporters.

“I have talked to (Meralco president and CEO) Oscar Reyes, (Meralco senior vice-president) Al Panlilio to see how we can manage the earlier settlement,” he added.

In May, Meralco sought court relief after the government issued new RCOA rules that it claimed were not in accordance with Republic Act 9136 or the Electric Power Industry Reform Act and its implementing rules and regulations.

The company secured a temporary restraining order from the Pasig regional trial court, but ERC said it has no jurisdiction over the case.

Currently, other qualified RES are continuing under the RCOA scheme.

The injunction on the new RCOA rules only brings disadvantage to distribution utilities (DUs) like Meralco because this prevents them from participating in the open market, the ERC commissioner said.

“I cannot understand why DUs like Meralco and VECO would oppose the change. The longer they are in injunction, the longer they cannot participate in the CREM (Competitive Retail Electricity Market),” Non said.

Under the RCOA regime, end-users who are part of the contestable market, or contestable customers, are given the choice to choose their supplier of electricity aimed to foster competition in in the generation and supply sector.

Under the new DOE and ERC rules, DUs are not allowed to become a retail electricity supplier (RES), requiring all DU-related local RES to wind down their businesses in three years or until expiration of their respective retail supply contracts (RSCs).

A local RES is defined as entities under a distribution utility (DU) that may engage in the business of supplying electricity to the contestable market without need of obtaining a license from the ERC.

Meralco opposed the new rules, since its local RES called MPower will be affected. MPower accounts for about 50 percent of the market share of the contestable market within its franchise, or 18 percent of the total nationwide.