ERC issues draft rules on interim open access

The Energy Regulatory Commission (ERC) has released the draft rules that will govern the interim open access (IOA) scheme for the power sector.

The IOA, a prelude to retail competition and open access, will empower heavy users with their own choice of electricity supplier.

According to the ERC, the new rules will pave the way for the smooth implementation of the IOA.

The rules also put in place appropriate measures to ensure that “ no dominant players can enjoy undue advantage” of the IOA scheme.

The rules will be effective only for the duration of IOA which will start upon the ERC’s declaration.

Based on the rules, the IOA cannot start unless the sale of the Calaca and Masinloc power plants are completed.

“In no case shall interim open access commence earlier than the date of transfer of the operation of Calaca and Masinloc – privatized National Power Corp. (Napocor) generation assets – to the private generation companies concerned,” it said.

Under the draft guidelines, electricity users with an average peak demand of at least one megawatt for the past 12 months could quality in the IOA.

The rules also stressed that participation in the IOA is on a voluntary basis.

Eligible generating companies include new owners of Napocor’s generating assets who will be allowed to voluntarily sell or contract directly with eligible contestable customers.

The ERC rules also said eligible generating companies must secure a retail electricity supplier license.

The implementation of the IOA will be terminated once the ERC declares the establishment of actual open access and retail competition.

“No distribution utility shall be allowed to participate in interim open access without the appropriate authorization granted by the ERC,” the power sector watchdog said.

The drafting of the IOA rules was an offshoot of a petition filed by the Philippine Independent Power Producers Association and private distribution utilities which include Manila Electric Co., and Davao Light and Power Co. in May this year.

The PIPPA petition said its members are willing to voluntarily implement retail competition and open access even before full realization of the pre-conditions.

Under Sec. 31 of the Electric Power Industry Reform Act of 2001, certain conditions should be met before actual open access is carried out.

Since some conditions have to be complied immediately, there is thus the need for an IOA.

These conditions that will pave the way for actual open access are: establishment of the wholesale electricity spot market ; approval of unbundled transmission and distribution wheeling charges; initial implementation of the cross-subsidy removal scheme; privatization of at least 70 percent of the total capacity of generating assets of the Napocor in Luzon and Visayas; and transfer of the management and control of at least 70 percent of the total energy output of power plants under contract with the Napocor to the independent power producer administrators.

Of these, only the 70 percent level of privatization and IPP contracts sale have yet to be accomplished.