ERC reports higher retail power rates

Published July 2, 2022, 12:12 PM

by Myrna M. Velasco

The Energy Regulatory Commission (ERC) has reported an increase in the average rate offer in the electricity retail market space at P4.05 per kilowatt hour (kWh) as of April this year; from a leaner average of P3.63 per kWh weighted average as of its monitoring report in 2021.

The electricity retail market rate is for the so-called contestable customers, which refer to the segment of end-users that can already directly contract their electricity needs with their preferred retail electricity suppliers (RES) under the dictum of Retail Competition and Open Access (RCOA) policy of the restructured power sector.

ERC said the number of contestable customers already hovered at 1,897, accounting for total demand of 3,924.53 megawatts within the review period. This particular customer sector has current threshold of contestability at least 500 kilowatts (kW) of demand within a prescribed period under the RCOA rules. But ERC has also allowed recently the pilot implementation of aggregation of customer-demand within contiguous or adjacent areas while full implementation will be enforced by yearend.

“Aggregation of the electricity requirements of end-users whose total monthly average peak demand is at least 500kW within a contiguous area shall be implemented effective on 26 December 2022,” the ERC has stipulated.

With aggregation, the ERC expects increase in the number of retail customers in the power sector because adjoining areas of end-users can already pool their demand so they can participate in the retail market.

Lower tariff as well as improved services had always been the enticement for customers to shift to retail suppliers – especially the energy-intensive large scale customers opting to save costs on their electric bills.

In previous months, however, energy markets had seen fuel costs soaring to unprecedented levels. This is being viewed as a major contributing factor to the escalated power rates being offered, even in the retail market.

With the newly-enforced retail aggregation being piloted by the University of the Philippines (UP) and Manila Electric Company (Meralco), ERC Chairperson Agnes T. Devanadera sounded off that “electricity consumers will be more enlightened about the benefits of retail aggregation which ultimately is for the consumers to have the power to choose from among the electricity suppliers that offer better rates and better services.”

The array of customers that can participate in retail aggregation will include: subdivisions; villages; business districts; special economic zones; condominium buildings; commercial establishments such as malls; mixed-use development complexes; and other geographical areas that are proximately situated and can be seamlessly measured by metering devices.

As defined by the ERC, the retail aggregation program “is a scheme wherein two or more end-users or all end-users within a contiguous area joined together and are treated as a single contestable customer, based on the current threshold demand prescribed under the rules.”

Devanadera opined that by expanding RCOA’s reach via retail aggregation, this shall serve as an “enabling and empowering move that offers consumers alternative means to manage their power consumption from the volatility of power rates that are sensitive to external factors such as fuel and the current global crisis.”