ERC Expands RCOA Implementation
The Energy Regulatory Commission (ERC) recently promulgated the Resolution that expands the coverage of Retail Competition and Open Access (RCOA) pursuant to its mandate under Section 31 of the Electric Power Industry Reform Act (EPIRA) and Rule 12 of its Implementing Rules and Regulations (IRR) to promote competition and ensure the successful restructuring and modernization of the electric power industry.
“The expansion of the RCOA coverage is the embodiment of the EPIRA’s end-goal of achieving competition at the retail or end-user level. Promoting robust and fair competition among the market participants is definitely one of the significant considerations that the ERC is eyeing which can help boost further the country’s economy especially in the power industry during this trying times,” said ERC Chairperson and CEO Agnes VST Devanadera.
The new resolution prescribed the latest coverage of the RCOA which shall be expanded to cover end-users with an average monthly peak demand of at least 500kW for the preceding twelve (12) months, which is Phase III, on a voluntary basis. Based on the said threshold, all qualified end-users can be considered as contestable customers under the Phase III threshold level (500kW-749kW) and shall be allowed to switch to the Competitive Retail Electricity Market (CREM) starting 26 February 2021.
The expansion of the threshold was a result of ERC’s thorough evaluation and study of the readiness of the market, the necessary infrastructure, customer awareness, and the economic impact of the migration of contestable customers towards CREM, in support of the National Government’s thrust towards economic recovery.
“Based on our data as of November 2020, the weighted average price in the Competitive Retail Electricity Market or the CREM for Phase 1 (those consuming 1 MW and up) and Phase 2 (those consuming 750 kW) is PhP3.63/kWh, which is lower than the Generation Charge billed by DUs for the captive market, for the same period, in Luzon and Visayas which ranges from PhP3.9513/kWh to PhP5.0985/kWh. We expect that competition will be stronger and the supply of electricity will become more affordable and reliable as RCOA becomes more popular in the coming years,” ERC Chair Devanadera added.
At present, the RCOA scheme is operational, and shall remain in effect, in the Luzon and Visayas grids.
“Indeed, the RCOA has gained ground and the intent of the EPIRA was achieved for the Phases 1 and 2. We are optimistic that the expanded RCOA implementation will result to further reduction in electricity rates, which will encourage more investors in the country and bring more job opportunities. This will definitely aid the country towards economic recovery from the negative impacts of this pandemic,
” ERC Chair Devanadera concluded.