Open access starts June, ‘but mind the line rentals’

By: Vanessa Claire Lucero March 01,2016 - 09:22 PM
Under an open access regime, electricity consumers who need one megawatt a month may choose from among the power plants in Cebu, such as the Kepco SPC plant in the City of Naga. (CDN FILE PHOTO)

Under an open access regime, electricity consumers who need one megawatt a month may choose from among the power plants in Cebu, such as the Kepco SPC plant in the City of Naga. (CDN FILE PHOTO)

By June 26 this year, electricity consumers who use at least 1,000 kilowatts, or one megawatt, a month will be able to choose their suppliers under an open access regime.

The Department of Energy (DOE) targets to finalize today at the earliest the rules for the retail competition and open access system, Energy Regulatory Commission (ERC) Commissioner Jose Salazar told the Cebu Chamber of Commerce and Industry last week.

“We believe that we will just be attending to some minor details, and in the next few days, we’ll be able to thresh out and resolve these issues,” Salazar said.

By December this year, Salazar said consumers with a requirement of at least 750 kW a month will also be able to avail of the open access system.  The requirement will be further lowered to 500 kW next year.

Roger Lim, chief executive officer and president of East Asia Utilities Corp., warned consumers that without proper research, they may end up spending more rather than saving on electricity bills.

He warned that line rentals, or the charges for the use of transmission lines from the supplier to the end-user, can increase the cost of power.

Electricity from Cebu, where transmission lines are congested, may be more expensive than electricity from Luzon.

“Line rental can be negative or positive. If and when you want to change from your current supplier, be sure you know how to choose your supplier and you know exactly where it is because line rental can be cheap or expensive, and can change from day to day,” he said.

Failure to make a choice will result in consumers going to the nearest supplier, or the supplier of last resort (SOLAR).

Based on simulations conducted by the ERC, these are generally more expensive because the lines are more congested.

“This will incentivize or encourage you (as consumer) to try to determine whether other suppliers are actually offering a lower rate,” Salazar said.

Under an open access regime, Salazar said suppliers will be forced to lower their charges to cope with competition.

“Whenever there is competition, the general rule is for as long as the market is really free and open, prices (of electricity) will go down,” he said. Lower costs will not happen overnight, though, he added.

Meanwhile, Salazar said that by the end of the first quarter this year, the commission will finish its position paper on the new rules for the performance-based requirements (PBR) on transmission charges.

By the third quarter of this year, an approved permanent maximum allowable revenue (MAR) on transmission charges will be in place, based on the new rules in the PBR.

“This is a mechanism to provide incentives for utilities to lower costs in order for them to become competitive. I assure you that based on the presentation that we got and based on the rules we are trying to formulate, bababa po ang transmission charges (transmission charges will go down),”  he added.

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TAGS: Cebu, Commissioner Jose Salazar, Department of Energy, East Asia Utilities Corp, Kepco, Naga City, open access, power supply

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