MANILA Electric Co., the country’s largest power distributor, said Thursday it was seeking Energy Regulatory Commission (ERC) approval to branch out into the retail electricity supply business.
In a disclosure to the Philippine Stock Exchange (PSE), Meralco said it filed an application for retail electricity supplier (RES) license with the ERC on Nov. 29, 2016 through its wholly owned subsidiary, Vantage Energy Solutions and Management Inc.
The issuance of a RES license is in accordance with the government’s retail competition and open access (RCOA) policy in the power sector.
As a distribution utility (DU) affiliated RES, Vantage Energy intends to provide retail energy services which will include wholesale contracting, energy trading and sourcing, marketing, selling and aggregating electricity, billing, collection and the provision of other value-added services to contestable customers.
Contestable customers or the so-called contestable market are those customers within a certain level of electricity consumption and who are allowed to select their own power supplier.
The registration of an affiliate distribution utility is a feature of the RCOA implementing rules issued earlier by the ERC.
According to the rules, no entity may supply power to the contestable market without an RES license issued by the ERC. The rules also provide that existing local distribution utilities like Meralco may no longer supply electricity to end-users in this market unless this is done in their capacity as “suppliers of last resort” or by creating an affiliate with a duly-issued RES license.
The ERC has also directed the inclusion of customers with average monthly peak demand of one megawatt (MW) into the contestable market by the 26th of December this year.
Meanwhile, customers with a monthly peak demand of 750 kilowatts (kW) will be included in this category by June 16, 2017.
The ERC is now reviewing the timeline to give existing power distributors enough window to conform to the requirement.
The policy, in effect, further expands the number of power customers who will benefit from the freedom to choose their RES. This also boosts RES competition in the power sector, which is seen as favorable to lowering the prices of electricity.