Tuesday, February 28, 2017

Key EPIRA provisions not implemented amid stakeholder resistance

Posted on February 17, 2017

TWO important provisions of the law that restructured the energy sector have yet be fully implemented, the Department of Energy (DoE) said, citing factors such as resistance from stakeholders and the lack of awareness from industry participants.
The DoE said the two provisions are those relating to the creation of an independent market operator (IMO) for the wholesale electricity spot market (WESM) and the full implementation of retail competition and open access (RCOA).

The agency made the assessment on Thursday during the first public hearing of the energy Joint Congressional Power Commission (JCPC) at the Senate, which assessed the implementation of Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

“For IMO, we have encountered resistance because of the provision on joint endorsement from stakeholders,” said Energy Secretary Alfonso G. Cusi during the hearing.

Under EPIRA, the electricity market should be implemented by an operator as called for by the WESM rules. The market operator is meant to be an autonomous group, to be constituted by DoE, with equitable representation from industry participants, initially under the administrative supervision of the National Transmission Corp. (TransCo).

The market operator is to undertake the preparatory work and initial operation of the WESM. The EPIRA called for the creation of the independent entity one year after the implementation of the WESM.

WESM is governed by the Philippine Electricity Market Corp. (PEMC), a 16-man board chaired by the DoE secretary, plus 15 directors coming from the industry.

“But we have already conducted studies on structures, on what forms that independent market operator may operate,” Mr. Cusi said. “We need to fast-track the appointment of IMO.”

On RCOA, Mr. Cusi said the implementation was delayed because contestable customers were not prepared on how and when they must contract power supply agreements with retail electricity suppliers.

“So their readiness is an issue that we sometimes keep on extending the deadlines,” Mr. Cusi said.

In November, the Energy Regulatory Commission (ERC) moved to Feb. 26, 2017 the deadline for the mandatory migration of contestable consumers with an average peak demand of at least 1 megawatt (MW).

The mandatory contestability for customers with an average peak demand of 750 to 999 kilowatts will continue to take effect on June 26, 2017. The lowering of the threshold to cover consumers with an average monthly peak demand of 500 kW is by June 26, 2018, but subject to the review of the performance of the retail market by the ERC. -- Victor V. Saulon

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