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Understanding the Dynamics of Electricity Trade in the
Philippines with the Entry of Retail Competition and Open
Access
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Discussion Flow
A Background of the IndustryOpen Access and Retail CompetitionThe New PlayersUpdatesThe Way Forward
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A Background of the Industry
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EPIRA
- To ensure adequate and reliable power
supply
- To ensure the non-
discriminatory use of
Transmission and
distribution network
facilities for the benefit of
the consumers
- To ensure competitive
market driven prices through
healthy competition
among electricity suppliers
- To ensure transparency
of rates through
itemization and
segregation of various
components of electricity
tariffs
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End goal of the EPIRA: Competitive Electricity Prices
5
The goal of the EPIRA is a vibrant power industry with healthy competition creating competitive prices of electricity for the benefit of the consumer.
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The industry before and after open access
CREM6
Generation Transmission Distribution SupplyCaptive &
Contestable Customers
Generation &
Transmission
Distribution & Supply
Captive Customers
Before After
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Competitive generation
Regulated transmission
and distribution
Competitive retail
providers
End-users Reformed Power Sector
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Open Access and Retail Competition
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What is Open Access?
Non-discriminatory use of transmission and distribution facilities
Transmission open access is already in place
Distribution open access to commence with retail competition
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What is Retail Competition?
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I have no choice
better offer here
Now With Competition
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5 Conditions Precedent
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Unbundling Removal of
Subsidy
WESM NPC AssetsPrivatization
IPP Administrator
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2 Additional Conditions
12
Designation of the
Central Registration Body (CRB)
Establishment of the B2B
System
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Electricity Markets
WESM
Competitive Retail Electricity Market
CREM
Competitive Retail Electricity Market (CREM) refers to the retail market once Open Access and Retail Competition commences.
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The New Players
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The Contestable Customer
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An electricity End-user that belongs to the Contestable Market under Open Access and Retail Competition.
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The Retail Electricity Supplier
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A Retail Electricity Supplier (RES)is a person or an entity authorized by the ERC to sell, broker, marketor aggregate electricity to end-users in the Contestable Market.
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Who may obtain a license?
1. A Generation Company
2. A Distribution Utility which will operate outside its franchise area or suppliers which will operate outside the Economic Zones
3. An Affiliate of a DU
4. An IPP Administrator
5. Entities who would be Selling, brokering or marketing electricity to contestable customers
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The Local Retail Electricity Supplier
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The business segment of an ElectricityDistribution Utility entity catering to theContestable Market only within its franchise area.
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Local RES
RES
The RES & The LOCAL RES
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CREM 20
Supplier of Last Resort
The Supplier of Last Resort (SOLR)is an entity designated by the ERCto serve contestable customersfollowing a last resort supply eventor a SOLR event
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SOLR Reasons
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You failed to choose
your supplier
of electricity upon Open
Access Date
RES ceased operations
RES violated obligations to DU
RES is no longer allowed to trade in
the WESM
RES license was revoked
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RetailElectricitySupplier(RES)
Local RES
Supplier ofLast Resort(SOLR)
Contestable Customers1 MW & up
18 licensed RES
745 - Luzon 96- Visayas 5 Local RES
26 SOLRs
SELLERSBUYERS
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Ensuring Continuous Electricity Supply for the Consumers
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With the wide array of electricity supplier choices made available tothe consumer, continuous powersupply at competitive rates and efficient service will be assured.
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Updates
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Rules for RES Licensing- July 13, 2005 (Amended: Feb 1, 2006 & Feb 15, 2011)
Business Separation Guidelines- Sept. 22, 2006
Distribution Services and Open Access Rules- Jan. 18, 2006
Code of Conduct- June 7, 2006
Supplier of Last Resort (SOLR)- June 21, 2006
Rules on Rate Filing by the SOLR- Oct 10, 2007
Competition Rules- June 23, 2006
Rules on Customer Switching (RCS)- Sept. 26, 2007
Rules for Contestability- Jan. 23, 2008
ERC RULES GOVERNING OPEN ACCESS AND RETAIL COMPETITION
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UpdatesThe Issuance of ERC Resolution 27, Series of 2011 directing the Distribution Utilities to:
1. Install TOU Meters in the facilities of customers consuming a monthly average of at least 1MW; and
2. Provide a 12 month load data to customers consuming a monthly average of at least 1MW.
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Updates
18 licensed Retail Electricity Suppliers (RES), 26 SOLRprovidersand 5 Local RES
The Contestable Market (August 2012)
GridNo. of
Customers Power Demand
Luzon 745 2,488 MW
MERALCO 628 1,804 MW
Visayas 96 757 MW
VECO 39 225 MW
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The Way Forward
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Updates
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Transitory Rules for the CompetitiveRetail Electricity Market (CREM)
Objectives:
• To ensure the smooth transition from the existing structure to a competitive environment.
• To promote the interests of all stakeholders in the electricity industry.
Salient Features:• Effectivity of 1 year from December 26, 2012.• 6-month Transition period from Dec 26, 2012 to June 26, 2013.• DU to continue supply to Contestable Customers (CCs) during the 6-month transition period.• CCs have the option to maintain supply from the DU, in so far as the latter’s function as a Local RES.• CRB to develop the B2B IT System & Market Manuals prior to the 6-month transition period.• CCs who fail to enter into an RSC shall be serviced by the designated SOLRs.• SOLRs for DCCs shall be the designated SOLR for the franchise area where the DCC is located.• Protocols and processes in the ERC promulgated OARC rules shall be adopted during the transitory period and the initial OARC phase.
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The Establishment of the B2B System
30
Accounting, Billing and Settlement Rules and Procedures
The Way Forward
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Requirements
Know Thyself
Current bill
Attractive Value Added Services
Assess your Company
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DeliberateInve
stiga
te
Due Diligence
RES Profile
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END OF PRESENTATION
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ERC websites: www.erc.gov.ph www.buyyourelectricity.com.ph
E-mail address: [email protected]
Telephone numbers: (02) 914-5000 Loc. 147
Tel/Fax number: (02) 633-3253
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