Power retail competition expanded
More Filipino consumers can already exercise their ‘power of choice’ on their electricity service as the threshold for power retail competition will be brought down to 500 kilowatts by February 2021, based on the prescription of Retail Competition and Open Access (RCOA) policy in the restructured power industry.
To gain ‘power of choice’ entails that a consumer can already tap its own power supplier and sign up a contract with that provider at a rate that one prefers and fitting to his/her budget.
As explained by the Energy Regulatory Commission (ERC), the lowering of RCOA’s threshold is geared toward providing wider competition among power retailers, that in the process will benefit consumers with better service quality and lower electricity rates.
RCOA started with 1.0-megawatt and up threshold, then it was brought down to 750kW to 999kW in 2016. And by next year, it will be reduced further to 500kW up to 749kW – to be enforced on “voluntary’ basis. Retail competition is among the milestone accomplishments of the Electric Power Industry Reform Act (EPIRA), the bible of reforms in the Philippine electricity sector.
ERC Chairperson Agnes T. Devanadera said “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.”
She expounded that “promoting robust and fair competition among 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 these trying times.”
Notably, one of the main benefits gained by consumers who opted to contract their own electricity service had been lower rates – at average P3.63 per kilowatt hour (kWh), which is lower than the grid rates of P3.9513 to P5.0985 per kWh for the covered markets in Luzon and Visayas.
“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,” the ERC chief stressed.
At 500kW threshold, it is expected that more commercial customers will be covered and even residential consumers who are big-ticket users of electricity.
The new threshold accounts for Phase III of the RCOA; and Phase IV will be implemented by January 26, 2022 at 100kW to 499kW level; then the final phase will be January 26, 2023 at 10kW to 99kW threshold.
“The expansion of the threshold was a result of the ERC’s 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 (Competitive Retail Electricity Market),” the regulatory body noted.
Devanadera asserted “we are optimistic that the expanded RCOA implementation will result (in) further reduction in electricity rates, which will encourage more investors in the country and bring more job opportunities.”