This content is from: Local Insights

Open access and retail competition in the Philippines’ power section

On December 17 2012, the Energy Regulatory Commission of the Philippines (the ERC) adopted the Transitory Rules for the Initial Implementation of Open Access and Retail Competition (the Transitory Rules) to ensure a smooth transition towards an open access and retail competition regime in the power sector. Under an open access regime, contestable customers (electricity end-users which have a choice of electricity suppliers) have the option to choose their own electricity supplier.

In the previous system, customers had no choice but to procure their electricity from the distribution utility (DU) with an exclusive franchise over their area.

Under the Transitory Rules, customers are required to enter into contracts for the sale of electricity (each a retail supply contract) with retail electricity suppliers on or before May 20 2013. If the customer: (i) fails to enter into a retail supply contract with a supplier; (ii) does not opt to source its power requirements from the wholesale electricity spot market; or (iii) does not signify its intention to remain with its current DU, then the customer will be disconnected by the DU on June 26 2013. Alternatively, the customer may opt to use the services of a supplier of last resort, that is, an entity designated by the ERC with the obligation of serving customers.

On June 10 2013, the ERC adopted supplemental rules to the Transitory Rules. Considering the difficulties faced by customers in entering into retail supply contracts with suppliers by the deadline, the supplemental rules provide that customers that fail to enter into such a contract by June 25 2013 will be deemed to be staying with their current DU until December 25 2013 or until such time that it is able to find a supplier.

It is worth noting that once a customer decides to enter into a retail supply contract with a supplier, they are no longer allowed to revert to the DU's regulated service.

Marie Corinne T Balbido

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