Philippines: ERC seeks to settle row with Meralco over retail power supply scheme

Philippines: ERC seeks to settle row with Meralco over retail power supply
scheme

THE Energy Regulatory Commission (ERC) has talked to Manila Electric Co.
(Meralco) to try to settle their differing views on the rules covering
retail competition and open access (RCOA), some parts of which are on hold
after the distribution utility sought and obtained a court injunction.

ERC Commissioner Alfredo J. Non said he had talked to Meralco President and
Chief Executive Officer Oscar S. Reyes and Senior Vice-President Alfredo S.
Panlilio "to see how we can manage an earlier settlement."

He said the initial talks did not result in an agreement but he said the ERC
was also asking some "industry players" to try to influence Meralco and
allow the "smooth transition" into RCOA, an envisioned competitive
environment under Republic Act 9136 or the Electric Power Industry Reform
Act of 2001 (EPIRA).

"Most probably we will try to go at it again," Mr. Non told reporters on the
sidelines of the regulator's visit to a wind energy project on Friday.

Meralco's court filing in June 2016 sought the issuance of a temporary
restraining order or a writ of preliminary injunction against ERC Resolution
5, which was issued on March 8, 2016, as well as Resolutions 10 and 11, both
issued on May 12, 2016.

Resolution 11 imposes restrictions on the operations of distribution
utilities and retail electricity suppliers in the competitive retail
electricity market, while Resolution 10 adopts the revised rules on what is
a "contestable customer."

Resolution 11 also bars distribution utilities from engaging in the supply
of electricity in the contestable market, which is composed of customers who
were determined by the ERC to have a choice of electricity supplier. This
market is made up of those whose average monthly peak consumption is at
least 1 megawatt (MW) for the past 12 months, although the aim is to
gradually lower this threshold until it reaches households.

Under Resolution 5, the ERC adopted the rules governing the issuance of
licenses to retail electricity suppliers and prescribed the requirements and
conditions.

Mr. Non clarified that the court injunction covers only the amendments to
the ERC resolutions, specifically the provisions that make it mandatory for
contestable consumers to buy power from licensed retail electricity
suppliers (RES).

"The injunction is only for the amendment that was proposed last year," he
said, referring to the requirement for big power users to source their
electricity from licensed RES and away from the distribution utility that
holds the franchise of the customers' location.

"So it (the court injunction) does not affect RCOA itself," Mr. Non said.

He said customers can still choose to transfer to a RES because what the
court put on hold was the mandatory provision of the ERC resolution, that
is, they have an option to move to a retail supplier but they are not
required to do so because of the injunction.

But he said the injunction had stopped distribution utilities from getting a
contestable customer as part of its function as a "local RES" in its
franchise area, and it had also put on hold any move to organize an
affiliate RES. The ERC resolution called for the winding down of a
distribution utility's local RES while allowing it to put up an affiliate
retail electricity supplier.

"I cannot understand why the distribution utilities like Meralco or Veco
(Visayan Electric Co.) would oppose [the] change," Mr. Non said. "The longer
they waive, or the longer they have the injunction, then they cannot
participate in the CREM (competitive retail electricity market)."

"So if this takes three years or four years, the injunction, and then the
other RES na pinapayagan naming mag-operate ngayon (that we allow to operate
now) are able to cover most of the contestable customers, sila ang mawawalan
[they will lose]. I don't know why they do not understand that. So it (the
injunction) is to their disadvantage," he added.

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Ref:
http://www.bworldonline.com/content.php?section=Economy&title=erc-seeks-to-s
ettle-row-with-meralco-over-retail-power-supply-scheme&id=133299

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com