Meralco seen to benefit from retail competition

MANILA, Philippines - Power distribution giant Manila Electric Co. (Meralco) is seen to benefit from the implementation of the retail competition and open access (RCOA) scheme next year, an energy official said.

“[RCOA] becomes a default advantage of Meralco. At no fault of its own, since these contestable customers were once their captive customers,” Energy Undersecretary Josefina M. Asirit told reporters.

Large electricity users should make sure they enter into competitive supply deals to lower their energy costs, she said.

Meralco, the country’s largest power distributor, has secured around 90 percent of its electricity needs for its customers through large contracts.

Asirit said whoever has the supply contract can sell output to consumers.

“We see Meralco now doing its contracting with its contestable customers,” Asirit said.

Under the RCOA, which will be implemented on June 26, 2013, customers can freely choose their electricity service provider.

This means that electricity end-users with an average monthly peak demand of one megawatt or the “contestable customers” can choose from whom to procure their electricity service.

“In terms of the availability, supply is there. But the cost will depend on how you as a contestable market behaves,” Asirit said.

As of end-October, the Energy Regulatory Commission (ERC) had identified 909 firms in Luzon and Visayas that are considered contestable customers.

The contestable customers can source their electricity needs from retail suppliers, a local supplier or from the wholesale market.

Through RCOA, retail electricity suppliers like Meralco can tailor their supply packages to provide customers with the best value based on their power consumption profile and other preferences.

To lower the electricity bills, Asirit said contestable customers should negotiate a competitive deal with distribution utilities or retail electricity suppliers.

The Department of Energy previously targeted the full implementation of already delayed RCOA in December last year. In November last year, the ERC approved the deferment of RCOA due to the lack of necessary infrastructure and policies. It was supposed to kick off on Dec. 26, 2011.

As envisioned in the Electric Power Industry Reform Act of 2001, RCOA will introduce competition in the retail supply segment of the electric power industry.