ERC amends guidelines on license issuance to RES
The Energy Regulatory Commission (ERC) published on February 15, 2006 the amended Guidelines on the Issuance of Licenses to Retail Electricity Suppliers (RES). The RES is a person or entity authorized by the ERC to sell, broker, market or aggregate electricity to the end-users in a contestable market to be determined by the ERC in accordance with the Electric Power Industry Reform Act (EPIRA). In a contestable market, consumers have the power to choose their electricity supplier or RES.
The guidelines was amended to include, as an additional qualification, the ability of a RES to set-up and operate (within the ‘customer-transfer system’ approved by the ERC) an automated information exchange associated with business to business (B2B) communications and transactions.
The guidelines aims to promote free and fair competition, and accountability among electric power industry participants to achieve greater operational and economic efficiency, thus, rationalize electricity prices and make them competitive and transparent.
It is also the goal of the guidelines to ensure consumer protection and enhance the competitive operation of the retail electricity market. “The ERC would like to make sure that each RES complies with its obligations as an electricity provider consistent with the qualifications, criteria and limitations of a RES as established in this guidelines and other pertinent laws, rules and regulations,” ERC Commissioner and Officer-in-Charge Alejandro Z. Barin stated.
The guidelines spells out the requirements and procedures for licensing,
the schedule of fees and the reportorial requirements. The RES license
which is non-transferable shall have a term of three (3) years and must
be renewed not later than sixty (60) days before the expiration of the
current license.
The guidelines will apply to: (1) a generation company or its affiliate;
(2) a distribution utility (DU) that shall operate as RES outside its
franchise area; (3) an affiliate of a DU with respect to the latter’s
Contestable Market within or outside its franchise area; (4) an Independent
Power Producer (IPP) Administrator; and (5) persons intending to engage
in the selling, brokering or marketing of electricity to the Contestable
Market, consistent with the EPIRA and its Implementing Rules and Regulations
(IRR).
To safeguard the interests of customers, a RES will be required to post a security deposit in an amount based on the sales value collected from such customers as deposit. The amount will be held in escrow in a commercial bank. The RES is required to submit to the ERC a certification from the commercial bank with which the escrow facility will be availed. The RES will pay an annual interest to its customers on the collected deposits equivalent to the interest earnings of the amount in escrow.
Separate guidelines shall be issued for Aggregators prior to the implementation of the second phase of retail competition and open access. DUs within their franchise areas and persons authorized by appropriate entities to supply electricity within their respective Economic Zones are exempted from securing a supplier’s license.
“The ERC hopes that the DUs and other service providers are beginning to prepare for the upcoming retail competition and open access to better serve the requirements of electricity end-users,” OIC Barin said.