The Energy Regulatory Commission (ERC) has expanded the coverage of Retail Competition and Open Access (RCOA), which intends to promote competition and ensure the successful restructuring and modernization of the electric power industry under the Electric Power Industry Reform Act (EPIRA).
The ERC’s latest resolution expands the RCOA’s coverage to end-users with an average monthly peak demand of at least 500 kilowatts (kW) for the last 12 months on a voluntary basis. Based on the said threshold, all qualified end-users can be considered as contestable customers under the Phase III threshold level (500kW-749kW) and will be allowed to switch to the Competitive Retail Electricity Market (CREM) beginning February 26, 2021.
“The expansion of the RCOA coverage is the embodiment of the EPIRA’s end-goal of achieving competition at the retail or end-user level. Promoting robust and fair competition among the market participants is definitely one of the significant considerations that the ERC is eyeing which can help boost further the country’s economy especially in the power industry during this trying times,” said ERC Chairperson Agnes Devanadera.
The ERC decided to expand the RCOA threshold following a thorough evaluation and study of the readiness of the market, the necessary infrastructure, customer awareness, and the economic impact of the migration of contestable customers towards CREM in support of the government’s thrust towards economic recovery.
“Based on our data as of November 2020, the weighted average price in the [CREM] for [those consuming one megawatt and up] and [those consuming 750 kW] is Php3.63/kWh, which is lower than the Generation Charge billed by [distribution utilities] for the captive market, for the same period, in Luzon and Visayas which ranges from Php3.9513/kWh to Php5.0985/kWh. We expect that competition will be stronger and the supply of electricity will become more affordable and reliable as RCOA becomes more popular in the coming years,” Devanadera added.
At present, the RCOA scheme is operational in the Luzon and Visayas grids.
“We are optimistic that the expanded RCOA implementation will result to further reduction in electricity rates, which will encourage more investors in the country and bring more job opportunities.” Devanadera said.
Following the ERC’s earlier pronouncement to expand the RCOA coverage, the Wholesale Electricity Spot Market is doing its own research to develop detailed proposals for lower threshold implementation of the retail electricity scheme.