Manila Water has taken a major step in expanding consumer choice in the energy
market by successfully switching its first 10 facilities—totaling 500 kilowatts (kW)—from
the captive to the contestable market under the expanded Retail Aggregation Program
(RAP). This move allows businesses with lower energy consumption to negotiate better
rates, paving the way for more affordable electricity and a competitive power sector.
Under the Electric Power Industry Reform Act of 2001 (EPIRA), electricity consumers in
the Philippines are classified into two main categories: captive and contestable markets.
The captive market refers to consumers who must purchase electricity from their
designated distribution utility (DU), such as Manila Electric Company (Meralco). These
consumers do not have the option to choose their electricity provider and are subject to
the DU’s fixed rates, which are regulated by the Energy Regulatory Commission (ERC).
On the other hand, the contestable market consists of consumers who qualify to select
their own power supplier rather than being locked into a distribution utility. These
customers can negotiate their electricity rates under the Retail Competition and Open
Access (RCOA) framework, potentially leading to cost savings and customized energy
solutions.
The expanded Retail Aggregation Program (RAP) allows smaller electricity users, who
do not individually meet the 500 kW threshold, to combine their consumption with other
facilities in the same franchise area. This aggregation enables them to qualify as
contestable customers, giving them the ability to choose their energy supplier and
secure better pricing through market competition.
Manila Water utilized this program to consolidate the electricity consumption of 10
sewage treatment plants (STPs) within Meralco’s franchise area. By aggregating their
demand, they reached the 500 kW threshold required to transition into the contestable
market, allowing them to negotiate a more competitive power supply contract.
According to Manila Water President and CEO Jocot de Dios, this transition represents
more than just a financial advantage—it is about setting a precedent for a more
consumer-driven electricity sector.
“By leading this breakthrough, we not only secure cost-efficient energy to run our water
and wastewater treatment plants, which will ultimately benefit our customers, but we are
also paving the way for a more sustainable and competitive energy market that benefits
the country,” De Dios said.
This transition is a significant milestone in the Philippines’ move toward Retail
Competition and Open Access (RCOA), a system designed to introduce competition
among power suppliers and lower electricity rates for consumers.
According to the Energy Regulatory Commission (ERC), the average electricity price in
the contestable retail market in 2024 was P5.77 per kWh, with the lowest recorded rate
at P3.50 per kWh. By making the switch, Manila Water aims to lower operational costs,
ensuring more efficient management of its water and wastewater treatment facilities.
These cost savings could ultimately result in more affordable services for the
communities it serves.
“Manila Water is proud of trailblazing with the government to improve the lives of its
customers. Working together with the ERC to introduce innovative amendments to its
Retail Aggregation Program, we are able to expand customer choice and lower power
rates through negotiated tariffs,” De Dios added.
ERC Chairperson and CEO Monalisa C. Dimalanta emphasized the impact of this
transition on consumers, stating, “It is exciting to see more consumers gaining access to
the benefits of exercising their power of choice. This inspires us at the ERC to work
even harder towards promoting this power and protecting consumer interests.”
By leading this transition, Manila Water secures cost-efficient energy for its operations
while also supporting a more sustainable and competitive energy market in the country.
The ERC reinforced the implementation of the RAP through Resolution No. 13, Series
of 2024, titled the Omnibus Rules for Customer Choice Programs in the Retail Market.
This resolution allows businesses to aggregate demand across multiple facilities,
provided they belong to the same owner or business category and are within the same
franchise area.
To power its STPs, Manila Water tapped Prime Renewable Energy Solutions
(PrimeRES), a subsidiary of Prime Infrastructure Capital Inc., ensuring a stable and
cost-efficient energy supply.
With Manila Water leading the way, more businesses are expected to explore the Retail
Aggregation Program, increasing competition in the power market and potentially
driving down electricity rates. The shift to contestable retail energy supply aligns with
the government’s broader push for energy reforms that promote sustainability,
efficiency, and consumer empowerment.
What do you think about Manila Water’s pioneering move in energy retail aggregation?
Will this lead to lower electricity rates for businesses and households in the long run?
Share your insights in the comments below, and don’t forget to follow Power Philippines
for the latest energy sector updates!
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