ERC okays rules on power supply options

MANILA, Philippines - The Energy Regulatory Commission (ERC) has approved the rules for the Power Supply Option Program (PSOP), giving bulk power users another option in choosing the source of their power requirements.

This new ruling will provide the regulatory framework to ensure the effective implementation of the PSOP and to provide an additional choice of supply to qualified customers, the power sector watchdog said.

The PSOP is the latest addition to existing supply programs such as the Customer Choice Program of Manila Electric Co. (Meralco) and the One Day Power Sale (ODPS) of the National Power Corp. (Napocor).

The new program will be available to Luzon grid electricity consumers with a monthly average peak demand of one megawatt for the past 12 months preceding the implementation of the program.

The rules stemmed from the petition filed in 2008 for an Interim Open Access (IOA) program by several industry players seeking the early implementation of open access in the Luzon and Visayas grids towards the lowering of electricity rates.

The ERC decision noted the tight supply situation in the Visayas grid, thus the PSOP was made available only to Luzon grid customers.

A notable major modification was the renaming of the scheme from IOA to PSOP. This was done to avoid confusion once the actual Retail Competition and Open Access (RCOA) regime starts.

Unlike RCOA, participation in the PSOP is voluntary. All contracts and transactions made under the PSOP will be automatically terminated upon the commencement of RCOA.

The PSOP is designed to be initially implemented 90 days after the completion of either: the transfer of the operation of the Calaca Napocor generation assets to the private generation companies concerned or its equivalent in terms of capacity; or the privatization of at least 70 percent of the total capacity of generating assets of the Napocor in Luzon and Visayas, whichever comes first.

Given that the Calaca Napocor generation assets were privatized on Dec. 3, 2009, the actual start will be on March 4, 2010.

It must be noted that under the rules, the ERC is tasked to do pre-operating functions such as the issuance of certifications for eligible PSOP customers.

Such certifications shall be coursed through participating distribution utilities (DUs), who must send such to the eligible customers within five days from receipt of notice from the ERC.

The ERC, however, noted that there remain the issues of accounting, settlement of energy imbalances and line rentals.

The settlement of these issues, the ERC said, will require a separate set of rules that will be based on a scheme that must be formulated by the Philippine Electricity Market Corp. and the original petitioners to the IOA.

 “The PSOP is a voluntary scheme which gives some high load electricity consumers in Luzon the power to choose their own energy supplier. Such power to choose engenders competition among the eligible suppliers, which translates to more affordable rates and better service for the consumers,” ERC chairperson Zenaida Cruz-Ducut said.