Retail power suppliers exposed to risk by TRO

February 15, 2018 | 11:04 pm

http://bworldonline.com/retail-power-suppliers-exposed-risk-tro/

RETAIL electricity suppliers may be constrained to continue operating beyond the validity of their licenses and risk the penalty that regulators may impose amid the impasse on the rules covering retail competition and open access (RCOA).

Raymond R. Roseus, president of the Retail Electricity Suppliers Association, said seven power suppliers with expired licenses were weighing their options whether to continue serving their existing customers.

“Essentially, the seven who are serving customers would take that risk — I’d continue [in] this [business] and just take the penalty,” he said in an interview.

The problem arose after the Supreme Court issued a temporary restraining order (TRO) in February 2017 on the implementation of a Department of Energy (DoE) circular and a four resolutions issued by the Energy Regulatory Commission (ERC) on RCOA.

The TRO put on hold the continued issuance of licenses for retail electricity suppliers as well as the lowering of the consumption threshold for contestable customers, or those whose power usage has grown to reach a level that allows them to directly buy electricity from a licensed RES.

For now, those using an average of 1 megawatt for the past year are allowed to contract with a RES. The TRO blocked the lowering of the threshold to 750 kilowatts. The RCOA rules call for a gradual reduction until the threshold reached the household level.

Mr. Roseus said a RES with an expired license stands to lose its license should it continue to operate. He also said a penalty is called for under current rules.

“There’s a possibility that your license will be revoked. It’s not the end. This is not a one-time transaction. It’s a going concern,” he said.

He said the risk-takers under the current “unusual circumstances” could be at a disadvantage should the Supreme Court lift the TRO.

So far, several sectors, including RESA and the ERC, have asked the high court to lift the hold order or clarify the scope of the TRO, whether RES licensing is covered as well as the lowering of the contestable customer threshold.

Based on the latest data from the ERC, the industry has 30 suppliers with a valid license. The regulator placed the number of contestable customers at 1,485 in Luzon and 190 in the Visayas. Mindanao is not covered by RCOA rules because of the absence of a functioning wholesale electricity spot market in the area.

Mr. Roseus raised the possibility that should the impasse extend indefinitely, the retail electricity business will run out of licensed suppliers, resulting in the contestable customers returning to the distribution utilities.

“We have a five-year term of license and then after that there’s a timeline on the fifth year,” he said. “There is a timeline for you to file for renewal and subject to commission (ERC) approval.”

Sought for comment, the ERC said it had yet to study the way forward for RCOA should the TRO extend beyond five years.

ERC Commissioner Josefina Patricia A. Magpale-Asirit said the regulator would first issue a “show cause” order to the RES without a valid license. The penalty will come later, she added. — Victor V. Saulon