Open access to give firms choice on power

Thursday, August 4, 2011

STARTING Dec. 26, electricity end-users with monthly peak demand of one megawatt (MW) can choose where to buy power.

That, as the Energy Regulatory Commission (ERC) set the date for the start of the open access, the day after Christmas.

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Under open access, end-users can decided which among the power generators and aggregators will supply them electricity. The end-user’s choice may be affected by price, renewable content and reliability, among other factors.

Aggregators are private companies that have their own generating capacity and may sell excess power to the market.

Open access is meant to encourage competition among electricity generation companies and aggregators. Competition is seen to attract more investments in the power generation sector, promote innovation, improve services and eventually, bring down prices.

Conditions

The ERC adopted Resolution 10, Series of 2011, which set the beginning of the open access environment, after ensuring that all the conditions provided for in the Electric Power Industry Reform Act (Epira) of 2001 have been implemented.

The conditions provided for in the Epira include the establishment and full operation of the Wholesale Electricity Spot Markets (WESMs) in Luzon and the Visayas; unbundling of electricity charges; removal of the cross-subsidy scheme; and the privatization of at least 70 percent of the total capacity of generating assets of the National Power Corp. in Luzon and the Visayas.

The ERC conducted public hearings from March 7 to 11 this year, on whether retail competition and open access can be established.

“The ERC found that all the legal pre-conditions provided in Section 31 of the Epira and Section 3, Rule 12 of its IRR, have been fulfilled,” the commission said in its resolution signed by ERC Chairperson Zenaida Cruz-Ducut and four commissioners on June 6.

An official of the Philippine Electricity Market Corp. (PEMC) on Friday said the implementation of the open access system will encourage competition among power industry stakeholders and result in fair electricity prices.

“The open access system opens doors for everyone to come in. The power supply will no longer be limited to the usual players,” PEMC assistant manager for institutional relations Eric Niño Louis said in an interview.

When ask if the same system will be employed in the household levels, Louis said the households will still be under the current system where they have to source power from the suppliers that have jurisdiction over their respective areas.

“But households will eventually enjoy the same arrangements in the future,” Louis said. He said opening the retail market to households may take a longer time.

Readiness

“It may take like seven to 10 years depending on the readiness of the country and involved parties,” he said. Louis said ERC needs to evaluate the market first and conduct intensive market awareness and education to the public.

“But assessing the development, we are now better off than the old regime (with the system in place now),” Louis said.

Louis said that since the integration of the Visayas grid into WESM last December, the region has experienced fewer rotation brownouts.

He said Luzon at times sources its power from the Visayas grid. He said the new coal plants have boosted power supply levels in Cebu, Negros and Panay and have eliminated manual load dropping. The Visayas grid demand peaked at 1, 383 MW in May 2011.

WESM is a centralized venue for buyers and sellers to trade electricity as a commodity, with prices based on actual use and availability.