The Market Monitor Minding the Nation's Business
The country’s biggest corporations and state-owned firms can now choose where to buy their electricity after the Supreme Court (SC) junked the petition of the Manila Electric Co. (Meralco) against the implementation of the retail competition and open access (RCOA), a provision of the Electricity Power Industry Reform Act (Epira).
The high court earlier granted Meralco’s petition for a temporary restraining order (TRO) on the full implementation of the RCOA provision of the Epira.
Energy Secretary Alfonso Cusi welcomed the decision, describing it as “pivotal” to the implementation of the Epira that gives the electricity consumers the power of choice.
Electricity users that can use the RCOA are classified as “contestable customers” or those that consume one megawatt (1 MW) of electricity on peak hours of the day and are entitled under the Epira to choose their electricity suppliers and manage their energy costs.
Cusi said that with the SC decision, the government now wants more electricity users to buy electricity from their preferred source.
He said the DOE was now preparing to include those consuming 750 kilowatts as “contestable” customers.
Corporations listed as contestable customers based on DoE records are those engaged in various activities including retail, property, banking, electronics, mass-transit systems, food and beverage, government agency, and manufacturing, among others.
“The Supreme Court saw the need to uphold the role of the DOE–ERC (Department of Energy-Energy Regulatory Council) in giving consumers the power of choice,” Cusi said of the high court ruling.
“With RCOA in place, those consuming one megawatt (MW) of electricity are now able to choose their power suppliers to reduce their costs,” he added. “In the former set up, electricity customers were captured by the distribution utilities within their franchise area and were forced to pay the contracted supply of their respective distribution utilities.”
Last May 27, Meralco sought court relief, saying the new RCOA rules were not in accordance with the Epira and its implementing rules.
Meralco supplies electricity to big power users or the so-called contestable customers through its local retail electricity supplier MPower. MPower accounts for about 50 percent of the market share of the contestable market within its franchise, or 18 percent of the total nationwide.
Meralco claimed in its petition that the recent issuances of DOE and ERC related to RCOA rules would stop MPower from operating and thus limit the power of choice of consumers, and, therefore, should be declared null and void.
The DOE circular said Meralco should not be allowed to become a retail electricity supplier beyond its franchise area. It also ordered existing local suppliers to stop operating until the expiration of their respective retail supply contracts.
Relatedly, Meralco officials have let it be known that the power distributor was “exploring all options,” including putting up an affiliate retail electricity supplier (RES) in the aftermath of the Supreme Court decision.
The officials also said Meralco was examining all legal remedies available before filing their comment with the high court. RIZA LOZADA