The Energy Regulatory Commission (ERC) will be lifting the moratorium on the licensing of retail electricity suppliers (RES), or those that have been selling electricity to qualified contestable end-users under the Retail Competition and Open Access (RCOA) policy regime of the restructured power sector.
Prior to the revocation of the rules suspending the issuance of RES licenses, the regulatory body said it will secure their comments and inputs first for the crafting of new guidelines in the competitive retail electricity market (CREM).
The ERC rules enforcing moratorium on the approval of new RES licenses had been decreed in 2014, but these have already been eclipsed by recent developments -- including the issuance of a Circular by the Department of Energy (DOE which prescribes the voluntary participation of qualified customers in the power retailing segment of the industry.
A decision of the Supreme Court this year also sided with the DOE Circular, which stipulates that a customer can exercise its choice to patronize RES on voluntary basis – and not mandatory, as previously targeted by rules laid down by the ERC.
On its promulgation of new rules for RES licensing, the regulatory body indicated that it will “issue appropriate guidelines” for the implementation of the 2017 DOE circulars that mandated voluntary enlistment of consumers when it comes to securing their electricity supply from RES.
As emphasized by the ERC, if the moratorium on RES licenses will not be immediately scrapped, at least eight (8) retail electricity suppliers could be unduly affected, and that could compromise the welfare of 265 contestable customers.
Contestable customers are those in the segment of end-users who can already contract directly or can exercise their power of choice on their energy supply procurement – and that is anchored on a threshold approved by the ERC, which to-date is now at 500-kilowatt (kW) level.
The 8 RES, according to the ERC, “are expected to file for the renewal of their respective licenses within the year,” because if they would fail to do so, their customers “shall be left without a supplier and may be exposed to higher prices of the supplier of last resort.”
The industry regulator is targeting to further reduce the threshold for power retailing contestability to 100kW by January 26 next year; and the final phase that could already be brought down to the household level will be 10-99kW - and that is due for implementation on January 26, 2023.
Customers opting to be served by RES are given leeway to negotiate for the price of power that they want to buy as well as the quality of service they prefer; and they can also choose to source their electricity from clean technologies, primarily from renewable energy (RE) generation.