ERC slates revised draft of "Rules for Contestability for PubCon
The ERC (Energy Regulatory Commission) slated for public consultation (PubCon) the revised draft of “Rules for Contestability” on 09 October 2007 from two o’clock to five o’clock in the afternoon (2:00 P.M. to 5:00 P.M.) at the ERC Hearing Room, 15th Floor, Pacific Center Building, San Miguel Avenue, Ortigas Business District, Pasig City.
The Rules aim to clarify and establish the conditions and eligibility requirements for end-users to qualify as a Contestable Customer. Contestable Customers are electricity end-users that belong to the Contestable Market who will have a choice of their electricity retail supplier. The Contestable Market will be in place upon implementation of open access and retail competition.
Initially, open access and retail competition will be implemented in the franchise areas of private distribution utilities, electric cooperatives and the economic zones in the Luzon Grid. Under Sec. 31 of the EPIRA (Electric Power Industry Reform Act), the Contestable Market will consist initially of electricity end-users with a monthly average peak demand of at least one megawatt (1 MW) for the twelve-month period immediately preceding the open access date (Phase 1). Two (2) years thereafter, the threshold level for the Contestable Market in the Luzon grid will be reduced to seven hundred fifty kilowatts (750 kW). At this level, aggregators will be allowed to supply electricity to end-users whose aggregate demand within a contiguous area is at least 750 kW (Phase 2). Subsequently and every year thereafter, the ERC shall evaluate the performance of the market. On the basis of such evaluation, it shall gradually reduce the threshold level until it reaches the household demand level which is seen to occur seven (7) years after Phase 2.
Electricity customers under a Contestable Market will be served by either a Retail Electricity Supplier (RES) or a Local RES. RES are persons or entities authorized by the ERC to sell, broker, market or aggregate electricity to end-users in a Contestable Market. A Local RES, on the other hand, is a non-regulated business segment of a distribution utility (DU) catering to the Contestable Market but only within its franchise area. As such, a license for a RES is not required. In the event, however, that a customer ceases to receive service from its RES or Local RES, or when a customer fails to choose a RES, a Supplier of Last Resort (SOLR) will
serve the requirements of such customer. A SOLR is a regulated entity designated by the ERC to serve end-users in the Contestable Market following a last resort supply event.
“The promulgation of the Rules for Contestability is another step of the several that the ERC has taken in the march towards retail competition. As envisioned in the EPIRA, our ultimate goal is to provide electricity consumers with a power of choice,” ERC Chairman and CEO Rodolfo B. Albano, Jr. concluded.
October 5, 2007