The power is now in our hands

The Philippine energy department is now fast-tracking the full deregulation of the electricity sector by prioritizing the shift to open access and retail competition regime.

Retail competition and open access allows retail electricity suppliers (RES) other than the distribution utility to provide supply services to customers in the contestable market. Customers will now have the power to choose their preferred electricity supplier. Thus, RES are expected to compete by offering lower prices and added customer service benefits or other incentives.

Republic Act No. 9136, popularly known as the EPIRA (Electric Power Industry Reform Act), prescribes five conditions for implementation.

The first condition, the establishment of the wholesale electricity spot market (WESM), was already accomplished. In fact, the WESM has already been in commercial operations in Luzon for about one-and-half year. In January 2008, it will now begin the Visayas spot market.

Ditto with the second and third condition. The unbundling of transmission and distribution wheeling charges and the removal of cross subsidy were all implemented since 2006.

The privatization of at least 70% of the state power firm's generating assets is within striking distance. The percentage level is now at about 50%. Thus, this fourth condition will likely be reached by next year.

With regard to the fifth condition of transferring the management and control of at least 70% of the total energy output of independent power plants (IPP) to the IPP administrator, the power asset management group mandated by the government will be taking good care of the bidding and selection process. This condition can be easily attained upon the the accomplishment of the fourth condition.

On the other hand, the energy regulator had already resolved numerous issues pertaining to the market and is in the process of promulgating more pertinent regulations. Likewise, the establishment of necessary infrastructures like competition rules and customer switching guidelines are already in placed with some undergoing commission hearing or needing minor revisions.

By the way, here are the basic steps in switching to a new RES as published by the energy regulator in its website (www.erc.gov.ph):

1. Once you have discussed your options with the RES, it should provide you with a copy of the Disclosure Statement. It contains the details of the RES’ offer, including the charges, fees and deposits to be paid, and the terms and conditions that will make up the Retail Supply Contract (RSC).
2. Make sure that all verbal offers are also written in the Disclosure Statement. Clarify any confusing phrases. Review the Disclosure Statement and finalize its contents before signing the RSC. If it will take you more than five (5) days before deciding to finalize and sign the RSC, contact your RES and clarify whether there will be changes in the offers after five (5) days. Some details might change due to the dynamic nature of the WESM.
3. After reviewing the contents of the Disclosure Statement, you and your RES are ready to sign an RSC. Read the RSC thoroughly, and make sure it is consistent with what was agreed upon in the Disclosure Statement. After signing the RSC, the new RES should give you a copy for your own records.
4. Once an RSC is signed, you have a Cooling-Off Period of five (5) days, within which you may still cancel your RSC without paying any early termination charges.
5. After the Cooling-Off Period has expired, your potential new RES will switch you from your previous RES to itself, following the switching procedures. You should receive a notification from the potential new RES whether your switch request was accepted or rejected.
6. In case your switch request was rejected, clarify with your potential new RES the reasons for rejection. If additional requirements are needed, complete the same, after which, your potential new RES needs to submit a new switch request.
7. If your switch request is accepted, the notice will indicate the effective date of switch. You will be receiving a final bill from your previous RES.
8. On the next billing cycle, you will start receiving a bill from your new RES.

Furthermore, it will be the regulator which shall announce the commencement of retail competition six months before its actual implementation. It will begin with a threshold of an average peak demand of 1-MW. The second phase will lower down the threshold of contestability to 750-kW, for both single and aggregated loads. Thereafter, the threshold will go down gradually until it reaches the household level.