The Energy Regulatory Commission (ERC) projects greater acceptance of retail competition and open access agreements or RCOAs by consumers over other modes of securing electricity contracts over the next four to five years.
According to the regulator, the relevance of power supply agreements (PSAs) and of the competitive selection process (CSP) is waning as consumers enjoy the RCOA) providing consumers direct supply from power generators.
“As we lower the threshold for RCOA over the next four to five years, we see more consumers migrating as captives of distribution utilities to contestable customers choosing their own suppliers,” Monalisa Dimalanta, ERC chair, told reporters at the sidelines of the Power Summit event hosted by the Philippine Chamber of Commerce and Industry in Makati City last week.
“In the near future, there will be less customers served by DUs under PSAs so there will be less relevance for CSPs because customers will be contracting directly for their own supply,” Dimalanta added.
Under RCOA, businesses are allowed to choose their energy supplier if they consume at least 500 kilowatt-hours a month.
Last year, the ERC issued updated guidelines on the conduct of CSPs for DUs and electric cooperatives.
Changes in the ERC guidelines beginning October last year include the reinforced distribution utility obligation to apply the least cost on their financial or physical PSAs.
Financial PSAs require a fixed tariff structure for the duration of the contract and are not power plant-specific while physical PSAs are plant-specific and its tariff structure and cost-components clearly provided by distribution utilities in their terms of reference.
The ERC also streamlined the process for procuring emergency PSAs with more robust timelines to meet the emergency power needs of distribution utilities while also providing clear compliance parameters for situations exempt from CSP requirements.
The ERC also set a maximum contract duration for PSAs with one-year EPSAs, 10 years for financial PSAs, 15 years for physical PSAs and 20 years for PSAs involving renewable energy.
Updated CSP guidelines also require PSAs for ERCr approval reviewed on two levels, starting with the review determining compliance and the second more substantive review determining the PSA’s reasonableness in terms of tariff, costs, risk allocation and other contractual terms.
The ERC said the updated guidelines provide distribution utilities with a protest mechanism and remedies like the blacklisting of suppliers of winning bidders frustrated by the process or the failure of delivery of supply requirements of signed PSAs.
