Republic of the Philippines

ENERGY REGULATORY COMMISSION

A world class and independent electric power industry regulator that equitably promotes and protects the interests of consumers and other stakeholders, to enable the delivery of long-term benefits that contribute to sustained economic growth and an improved quality of life.


ERC: Retail Electricity Market Gains Ground Despite COVID-19


The Energy Regulatory Commission (ERC), in its 2nd Quarter 2020 Monitoring Report of the Retail Electricity Market, stated that it has granted a total of forty-two (42) Retail Electricity Supplier (RES) Licenses and authorized twenty-five (25) Local RES.  The said suppliers now compete for the supply of electricity of contestable customers in the Competitive Retail Electricity Market (CREM).  The CREM is where qualified contestable customers (those consuming 750 kW and above) have the option to choose their electricity provider, either from an RES or from a Local RES, the competitive business segment of a distribution utility (DU).  

“The Commission has been regularly monitoring the activities in the Competitive Retail Electricity Market to observe the behavior of the stakeholders in this market, particularly in terms of pricing, switching patterns and the capacity and energy of contestable customers”, said ERC Chairperson and CEO Agnes VST Devanadera.

The ERC’s Monitoring Report further disclosed that as of the 2nd Quarter of 2020 total registered contestable customer issued with Certificates of Contestability by the ERC is at 2,089.  Out of the said number, 1,460 or 70% have entered into Retail Supply Contracts (RSC), which means that these qualified customers have decided to source electricity from an RES. The remaining 629 or 30% stayed with the regulated services of their respective DU.

From the total number of 1,460 contestable customers which have entered into RSCs, 1,120 or 77% are within the 1MW and above threshold, while 340 or 23% are within the 750kW to 999kW threshold.  Meanwhile, for the 629 contestable customers with Certificates of Contestability which have remained under the regulated services of their respective DUs, 328 or 52% are within the 1MW and above threshold, while 301 or 48% are within the 750kW to 999kW category.

In terms of market share, the total demand of all contestable customers as of the 2nd Quarter of 2020 is recorded at 4,977.31 MW.  Out of the said total demand, 81% are currently being served by an RES while the remaining 19% are still under the DU regulated service.

With respect to the suppliers in the CREM, the ERC’s monitoring report further disclosed that majority or 55% of the ERC-licensed RES are affiliates of generation companies (GenCos) while 20% are also operating a generation company as another business segment. Meanwhile, 17.50% have no affiliations in the electric power industry whereas the remaining 7.50% are affiliated with Distribution Utilities (DUs).    Having more suppliers that are GenCo affiliated gives confidence that electricity supply is ensured and that they have the capability to offer competitive or cheaper prices in the CREM.  This is a positive indication which signifies that competition in the CREM is gaining ground and slowly breaking the monopoly in the supply of electricity by allowing more entities to act as a supplier.

As to the contestable customers’ participation, the CREM registered an increase of almost 2% despite the Community Quarantine imposition in most of the areas in the country.  Although the contracted capacity of these contestable customers were reduced due to the impact of the pandemic on operations, the increase means that more contestable customers opted to enjoy the benefits of Retail Competition and Open Access (RCOA).

In terms of pricing, the ERC’s evaluation revealed that eleven (11) RES have decided to offer lower rates for the quarter, while fourteen (14) RES have maintained their previous quarter’s offer prices, and seven (7) RES have increased their prices.  Nonetheless, the overall price scenario for the 2nd Quarter showed a diminishing trend with a weighted average price of PhP4.12/kWh in April which decreased to PhP3.97/kWh and PhP3.95/kWh in May 2020 and June 2020, respectively. Such reduction in the weighted average prices manifests a strengthened competition in the CREM.

“The increased participation of contestable customers in the Contestable Retail Electricity Market and the diminishing trend in the prices being offered by Retail Electricity Suppliers is a silver lining in the midst of this COVID-19 pandemic.  This positive development stimulates competition among Retail Electricity Suppliers and will entice more contestable customers to shift to these electricity providers”, ERC Chair Devanadera concluded.
                                                                  

 

Today at ERC
Monday, September 21, 2020

Hearing Schedules
Time:
10:00
Case No.:
2020-001 SC [HM]
Applicant:
ERC versus MERALCO
Venue:
Virtual Hearing: Platform - ZOOM
Title:
Alleged Violation of the Advisories Issued by the ERC during the ECQ and MECG

© 2020 - Energy Regulatory Commission