Philippines’ Electric Power
Regulatory Framework
Asia Pacific Energy Regulatory (APER) Forum 2016
29 September 2016
Atty. Neil Simon S. Silva
Executive Director
Energy Regulatory Commission (ERC)
Points of Discussion
• Pre-Restructuring/EPIRA
• Post-Restructuring
• Electricity Markets
• Retail Competition and Open Access
(RCOA)
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RESTRUCTURING
Before the reforms…
NATIONAL POWER CORPORATION
POWER
PLANTS
& IPPs
OTHER IPPs
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TRANSMISSION
SYSTEMS
OPERATIONS
DISTRIBUTION
• 18 PRIVATE
UTILITIES
• 2 LOCAL
GOVERNMENT
UNITS
• 120 ELECTRIC
COOPERATIVES
END
USERS
END
USERS
RESTRUCTURING
After the reforms…
GENERATION
TRANSMISSION DISTRIBUTION
POWER
PLANTS
& IPPs
NATIONAL TRANSMISSION
CORPORATION
END
USERS
NGCP
TRANSMISSION
OTHER IPPs
SUPPLY
DISTRIBUTION
SUPPLY
MARKET
OPERATOR
SYSTEMS
OPERATIONS
RE SOURCES
Solar, ROR
Hydro,
Wind,
Biomass,
Ocean
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• 20 PRIVATE
UTILITIES
• 120 ELECTRIC
COOPERATIVES
END
USERS
RESTRUCTURING
Performance
Based
Regulation
Benchmarking
Competition at
the wholesale
& retail level
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RESTRUCTURING
Existing contractual arrangements
Generators/
WESM
NGCP/
TRANSCO
Distribution Utility
End-users
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RESTRUCTURING
Transaction flow under Open Access Regime
WESM
RES
Generators
NGCP/
TRANSCO
Distribution Utility
End-users
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Electric Power Industry Restructuring
• Generators
–
–
–
–
–
NPC/PSALM
San Miguel Energy Corporation
Aboitiz Power
FirstGen
Filinvest Development Corp
• Transmission
– Previously, TransCo
– Now, National Grid Corporation
of the Phils (NGCP)
Generation
Transmission
Distribution
Supply
Captive &
Contestable
Customers
• Distribution
–
–
–
–
Davao Light (DLPC)
SOCOTECO II
CEPALCO
Visayan Electric (VECO)
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ERC’s MANDATES – Sec. 43 EPIRA
Promote
competition
Monitor the
Market
Ensure
customer
choice
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Encourage
market
development
Penalize
abuse of
market power
Sectoral Functions
Generation
 Certificate of Compliance
 Generation tariffs = Bilateral
power supply contracts
 Feed-in-Tariffs (RE)
 SPUG (Missionary
Electrification)
WESM monitoring
Competition Rules
Supply
 Suppliers’ licenses
 Issuance of needed rules
for retail competition
Declaration of open access
and retail competition
Competitive
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Transmission
 Tariffs of NGCP
 Philippine Grid Code
 CAPEX plans
 Ancillary services
Distribution
 Tariffs of distribution
utilities
 Philippine
Distribution Code
 Lifeline rate
 Franchise for
consortium of subtransmission assets
 Stranded contract
cost
Regulated
 Systems loss
 CPCN
 Spot inspections/
audits
 Bilateral power supply
contracts
CAPEX plans
Magna Carta and
DSOAR enforcement
Objective of EPIRA
RETAIL
COMPETITION
& OPEN
ACCESS
RESTRUCTURING
R.A. 9136 (EPIRA)
The BLUEPRINT of
the electricity
industry.
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PRIVATIZATION
The Journey
Retail
Competition &
Open Access
Transfer of NPC-IPP Contracts
Privatization of NPC
Establishment of WESM
Cross Subsidy Removal
Unbundling of Rates
Title of Presentation
12
The
Electricity
Markets
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Wholesale Electricity Spot Market (WESM)
Market Operator (MO)
• Dispatch Scheduler
• Operates the WESM
System Operator (SO)
• Central
Dispatcher
• Ensures the reliability
and security of the system
Generator
s
Metering Service
Provider
Network Service
Provider
• Operates and maintains
the transmission network
Customer
Trading Participants
Ancillary Service
Provider
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Salient Features of WESM
Market place for trading electricity as a commodity
that reflects its market based value
Prices not subject to regulation but governed by
market forces
Uses the concept of a “gross pool” where all electricity
output including those covered by bilateral contracts
are centrally coordinated
Uses the locational marginal pricing concept
where prices vary across points in the power
system
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Limitations & Safeguards
Competition Rules and Complaint Procedures
Market Share Limitation (MSL) Guidelines
Business Separation Guidelines
Code of Conduct for Competitive Retail
Market Participants
Licensing Rules (Generation and Supply)
Market Mitigation Measures
• Offer Price Cap, Secondary Cap
Rules Imposing Restrictions of the Operations
of DUs and RES in the CREM
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Monitoring of the WESM
Prepares daily market monitoring report on the supply and
demand outlook and market clearing prices
Performs daily interval analysis to ensure compliance of
WESM participants to the WESM Rules, Philippine Grid
Code and other rules promulgated by the Commission
Requires routine reports and information from the Market
Operator and System Operator
Investigate possible anti-competitive behavior referred by
PEM Board or any other parties through creation of
Investigation Unit (IU)
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Post-Facto Investigation
Investigation made motu proprio
request made by stakeholder
or upon
Creation of an Investigatory Unit headed by the
Investigating Officer (fact-finding process)
Investigation Officer files complaint with the
Commission and prosecutes the case
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Retail Competition
and Open Access
(RCOA)
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What is RCOA?
Non-discriminatory use
distribution facilities
of
transmission
and
Scheme which paves way to the creation of a
Competitive Retail Electricity Market (CREM)
CREM- Electricity market wherein contestable
customers exercise ability to choose suppliers of
electricity by virtue of open access in the distribution
system
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RCOA Set-up
• RES
• Local RES
• SOLR
(regulated)
•
•
•
•
1MW and above
750kW-999kW
500 below
Household level
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• RCOA open in
2 grids Luzon
and Visayas
Sellers
(Suppliers)
Commercial
Operations
(26 June
2013)
Buyers
(Contestable
Customers)
Rules and
Regulations
governing
RCOA
• ERC Rules
• DOE Circulars
Salient Features
Suppliers licensed
by ERC
Power to Choose
Deregulated prices
Contracts- Not subject to ERC
approval
Default Metering Services
Provider (MSP)= DU
For directly connected
Contestable Customers,
MSP shall be NGCP
Single Billing
Concept
Monthly switching
allowed
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RCOA Benefits
Competitive rates
Entrance of new industry players
Flexible contract terms
Better Supplier service
Innovation of additional service
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ERC Issuances
New Rules
2016 Rules
Governing the
Issuance of
Licenses to
Retail Electricity
Suppliers and
the Prescribing
the Conditions
Therefor
Resolution No. 5,
Series of 2016
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Revised Rules
for
Contestability
Resolution No. 10,
Series of 2016
Resolution
Imposing
Restrictions on
the Operations
of Distribution
Utilities and
Retail Electricity
Suppliers in the
Competitive
Retail Electricity
Market
Resolution No. 11,
Series of 2016
RCOA Timeline
26 June 2016
- Threshold
Reduction
Date- 750kW
- Voluntary
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26 Dec. 2016
26 June 2017
- Mandatory
26 June 2018
Contestability -Mandatory
- 1MW and
Contestability -Retail
above
-750kWAggregation
999kW
-Lowering of
threshold to
500kW
subject to the
review of ERC
Thank you!
Visit us at:
www.erc.gov.ph