Understanding the Dynamics of Electricity Trade in the

Philippines with the Entry of Retail Competition and Open

Access

Discussion Flow

A Background of the IndustryOpen Access and Retail CompetitionThe New PlayersUpdatesThe Way Forward

A Background of the Industry

EPIRA

- To ensure adequate and reliable power

supply

- To ensure the non-

discriminatory use of

Transmission and

distribution network

facilities for the benefit of

the consumers

- To ensure competitive

market driven prices through

healthy competition

among electricity suppliers

- To ensure transparency

of rates through

itemization and

segregation of various

components of electricity

tariffs

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End goal of the EPIRA: Competitive Electricity Prices

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The goal of the EPIRA is a vibrant power industry with healthy competition creating competitive prices of electricity for the benefit of the consumer.

The industry before and after open access

CREM6

Generation Transmission Distribution SupplyCaptive &

Contestable Customers

Generation &

Transmission

Distribution & Supply

Captive Customers

Before After

Competitive generation

Regulated transmission

and distribution

Competitive retail

providers

End-users Reformed Power Sector

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Open Access and Retail Competition

What is Open Access?

Non-discriminatory use of transmission and distribution facilities

Transmission open access is already in place

Distribution open access to commence with retail competition

What is Retail Competition?

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I have no choice

better offer here

Now With Competition

5 Conditions Precedent

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Unbundling Removal of

Subsidy

WESM NPC AssetsPrivatization

IPP Administrator

2 Additional Conditions

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Designation of the

Central Registration Body (CRB)

Establishment of the B2B

System

Electricity Markets

WESM

Competitive Retail Electricity Market

CREM

Competitive Retail Electricity Market (CREM) refers to the retail market once Open Access and Retail Competition commences.

The New Players

The Contestable Customer

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An electricity End-user that belongs to the Contestable Market under Open Access and Retail Competition.

The Retail Electricity Supplier

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A Retail Electricity Supplier (RES)is a person or an entity authorized by the ERC to sell, broker, marketor aggregate electricity to end-users in the Contestable Market.

Who may obtain a license?

1. A Generation Company

2. A Distribution Utility which will operate outside its franchise area or suppliers which will operate outside the Economic Zones

3. An Affiliate of a DU

4. An IPP Administrator

5. Entities who would be Selling, brokering or marketing electricity to contestable customers

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The Local Retail Electricity Supplier

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The business segment of an ElectricityDistribution Utility entity catering to theContestable Market only within its franchise area.

Local RES

RES

The RES & The LOCAL RES

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CREM 20

Supplier of Last Resort

The Supplier of Last Resort (SOLR)is an entity designated by the ERCto serve contestable customersfollowing a last resort supply eventor a SOLR event

SOLR Reasons

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You failed to choose

your supplier

of electricity upon Open

Access Date

RES ceased operations

RES violated obligations to DU

RES is no longer allowed to trade in

the WESM

RES license was revoked

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RetailElectricitySupplier(RES)

Local RES

Supplier ofLast Resort(SOLR)

Contestable Customers1 MW & up

18 licensed RES

745 - Luzon 96- Visayas 5 Local RES

26 SOLRs

SELLERSBUYERS

Ensuring Continuous Electricity Supply for the Consumers

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With the wide array of electricity supplier choices made available tothe consumer, continuous powersupply at competitive rates and efficient service will be assured.

Updates

Rules for RES Licensing- July 13, 2005 (Amended: Feb 1, 2006 & Feb 15, 2011)

Business Separation Guidelines- Sept. 22, 2006

Distribution Services and Open Access Rules- Jan. 18, 2006

Code of Conduct- June 7, 2006

Supplier of Last Resort (SOLR)- June 21, 2006

Rules on Rate Filing by the SOLR- Oct 10, 2007

Competition Rules- June 23, 2006

Rules on Customer Switching (RCS)- Sept. 26, 2007

Rules for Contestability- Jan. 23, 2008

ERC RULES GOVERNING OPEN ACCESS AND RETAIL COMPETITION

UpdatesThe Issuance of ERC Resolution 27, Series of 2011 directing the Distribution Utilities to:

1. Install TOU Meters in the facilities of customers consuming a monthly average of at least 1MW; and

2. Provide a 12 month load data to customers consuming a monthly average of at least 1MW.

Updates

18 licensed Retail Electricity Suppliers (RES), 26 SOLRprovidersand 5 Local RES

The Contestable Market (August 2012)

GridNo. of

Customers Power Demand

Luzon 745 2,488 MW

MERALCO 628 1,804 MW

Visayas 96 757 MW

VECO 39 225 MW

The Way Forward

Updates

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Transitory Rules for the CompetitiveRetail Electricity Market (CREM)

Objectives:

• To ensure the smooth transition from the existing structure to a competitive environment.

• To promote the interests of all stakeholders in the electricity industry.

Salient Features:• Effectivity of 1 year from December 26, 2012.• 6-month Transition period from Dec 26, 2012 to June 26, 2013.• DU to continue supply to Contestable Customers (CCs) during the 6-month transition period.• CCs have the option to maintain supply from the DU, in so far as the latter’s function as a Local RES.• CRB to develop the B2B IT System & Market Manuals prior to the 6-month transition period.• CCs who fail to enter into an RSC shall be serviced by the designated SOLRs.• SOLRs for DCCs shall be the designated SOLR for the franchise area where the DCC is located.• Protocols and processes in the ERC promulgated OARC rules shall be adopted during the transitory period and the initial OARC phase.

The Establishment of the B2B System

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Accounting, Billing and Settlement Rules and Procedures

The Way Forward

Requirements

Know Thyself

Current bill

Attractive Value Added Services

Assess your Company

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DeliberateInve

stiga

te

Due Diligence

RES Profile

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END OF PRESENTATION

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ERC websites: www.erc.gov.ph www.buyyourelectricity.com.ph

E-mail address: contestable@erc.gov.ph

Telephone numbers: (02) 914-5000 Loc. 147

Tel/Fax number: (02) 633-3253

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