ERC sets new rules on power market shift

MANILA, Philippines - The Energy Regulatory Commission (ERC) has laid down draft rules for the mandatory shift of power distributors and retail electricity suppliers to the new electricity market for contestable customers.

Contestable customers refer to the electricity end-user who is part of the “contestable market” or electricity end-users who have a choice of a supplier of electricity.

These guidelines form part of the retail competition and open access (RCOA) system, which aims to promote competition and ensure consumer protection.

In a notice over the weekend, the ERC published its first draft of the “Rules on Mandatory Migration to the Competitive Retail Electricity Market (CREM).

The draft rules direct the lowering of the threshold for contestable customers to 500 kilowatts (kW) and the transition to CREM. 

The transitory period will take place once the rules are promulgated until June 26, 2018.

During this time, a distribution utility (DU) will no longer be allowed to supply electricity to the contestable market, unless it is called upon to be a supplier of last resort (SOLR).

The SOLR contract is for contestable customers in case they fail to choose or find a willing retail electricity supplier or when their supplier is unable to service its contestable customers.

“The DUs are hereby enjoined to wind down their respective supply businesses such that no Local RES shall be allowed to act as such by  June 26,  2016,” the rules said.

“Further, no DU affiliate shall be allowed to operate as an RES by June  26 in which case, a winding down of its supply business is likewise enjoined,” the rules added.

The ERC, however, noted a DU affiliate shall be granted a license to operate depending on the supply and demand in the retail market.

Failure of parties to comply with the rules will result in the imposition of appropriate fines and penalties, the power regulator said.

The ERC is seeking comments from industry stakeholders on the proposed rules until Dec. 4.

In 2012, the ERC adopted the Transitory Rules for the Initial Implementation of RCOA which would ensure the smooth transition from the existing structure to a competitive environment and to promote the interests of all stakeholders in the electricity industry.