By Danessa O. Rivera (The
Philippine Star) | Updated November 17, 2015 - 12:00am
MANILA, Philippines - The Energy
Regulatory Commission (ERC) has laid down draft rules for the mandatory shift
of power distributors and retail electricity suppliers to the new electricity
market for contestable customers.
Contestable customers refer to the
electricity end-user who is part of the “contestable market” or electricity
end-users who have a choice of a supplier of electricity.
These guidelines form part of the
retail competition and open access (RCOA) system, which aims to promote
competition and ensure consumer protection.
In a notice over the weekend, the
ERC published its first draft of the “Rules on Mandatory Migration to the
Competitive Retail Electricity Market (CREM).
The draft rules direct the lowering
of the threshold for contestable customers to 500 kilowatts (kW) and the
transition to CREM.
The transitory period will take
place once the rules are promulgated until June 26, 2018.
During this time, a distribution
utility (DU) will no longer be allowed to supply electricity to the contestable
market, unless it is called upon to be a supplier of last resort (SOLR).
The SOLR contract is for contestable
customers in case they fail to choose or find a willing retail electricity
supplier or when their supplier is unable to service its contestable customers.
“The DUs are hereby enjoined to wind
down their respective supply businesses such that no Local RES shall be allowed
to act as such by June 26, 2016,” the rules said.
“Further, no DU affiliate shall be
allowed to operate as an RES by June 26 in which case, a winding down of
its supply business is likewise enjoined,” the rules added.
The ERC, however, noted a DU
affiliate shall be granted a license to operate depending on the supply and
demand in the retail market.
Failure of parties to comply with
the rules will result in the imposition of appropriate fines and penalties, the
power regulator said.
The ERC is seeking comments from
industry stakeholders on the proposed rules until Dec. 4.
In 2012, the ERC adopted the
Transitory Rules for the Initial Implementation of RCOA which would ensure the
smooth transition from the existing structure to a competitive environment and
to promote the interests of all stakeholders in the electricity industry.
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