DOE issues circular on transition to open access, retail competition

MANILA, Philippines - The Department of Energy (DOE) has issued a circular seeking to ensure a smooth transition toward the implementation of retail competition and open access.

Under Department circular 2013-05-006, the DOE enjoined all generation companies, distribution utilities (DUs) and suppliers to ensure “an effective and successful transition” to the so-called open access regime.”

Under the open access regime, large power users will be able to choose their own suppliers, in contrast with the current system where they are limited to the supplier that has jurisdiction over their areas.

Mandated under the Electric Power Industry Reform Act of 2001 (EPIRA), open access is expected to spur competition among players, Energy Secretary Carlos Jericho Petilla said.

Petilla said the DOE is requiring all generation companies to submit to the department on a regular basis all power supply contracts entered into with the distribution utilities and suppliers, including directly-connected customers.

“The report shall indicate the contract price, contract levels, duration and any value-added services,” Petilla said in the circular.

Furthermore, the DOE required the generation companies, DUs and suppliers to comply with the EPIRA to prevent any player from “exercising abuse of market power and engage in any anti-competitive behavior.”

Suppliers, on the other hand, are required to submit to the DOE a list of customers, contract levels and duration and price ranges.

They are also required to provide customers coverage of the services offered and the manner by which prices are determined.

In the case of distribution utilities, the DOE is requiring these companies to provide services and perform its obligations in a non-discriminative manner over its franchise are.

Distribution utilities are also required to “submit quarterly report to the DOE on the development of contestability within its franchise area, according to the DOE circular.

The Philippine Electricity Market Corp., the operator of the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity, shall also be required to submit a monthly report to the DOE and the Energy Regulatory Commission detailing the registration status including a list of suppliers and their customers.

In addition to this, the DOE also required the PEMC to “submit issued papers to the DOE on a quarterly basis to include among others, proposed policy actions necessary to enhance implementation of a truly competitive and efficient integrated wholesale and retail supply.”

The DOE warned that failure to comply with the circular shall be subject to fines and penalties by the ERC including the suspension or revocation of their respective licenses.