DOE sets guidelines for transition to retail competition, open access

MANILA, Philippines - The Department of Energy (DOE) has laid the guidelines for the transition of the energy sector to a scheme that allows certain end-users to choose their electricity supplier.

The retail competition and open access (RCOA) will make power distribution service more competitive, an official said.

In a circular, the DOE set the guidelines for the six-month transition that will start on Dec. 26.

“To ensure smooth implementation of RCOA and to prepare all stakeholders, it is hereby prescribed that a transition period of six months shall be observed,” DOE said.

“We saw that without putting a definite date, it is very difficult to put timelines in so that the stakeholders themselves would be well aware of the deadlines they have to set for themselves,” said DOE Undersecretary Josefina Patricia Asirit.

Specifically, during the transition period, the distribution utilities will continue to serve contestable customers in their franchise area.

Under the RCOA, 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.

Contestable customers, for their part, “shall start with or continue to negotiate and enter into supply contracts with suppliers,” DOE said, adding that the contract should take effect at the end of the transition period.

Asirit said RCOA is a stakeholder environment.

“The government is not going to look into their contracts, is not going to be the one to match them, is not even going to review the contracts,” Asirit said.

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

“The Energy Regulatory Commission (ERC) shall continue to evaluate and issue certificate of contestability to all eligible contestable customers,” DOE said.

As of end-October, the 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.

The ERC was also tasked to identify distribution firms that will act as supplier of last resort “in areas where franchise holders were deemed not capable to perform their roles as default supplier of last resort.”

Asirit said RCOA will make service more competitive as the electric cooperatives will face competition for the supply of power to contestable customers.