Retail Competition and Open Access (RCOA)

Retail Competition and Open Access (RCOA) is the policy framework established under the Electric Power Industry Reform Act (EPIRA, RA 9136) that allows eligible electricity end-users — called contestable customers (CCs) — to choose their preferred electricity supplier at a negotiated contract price, rather than being tied to their franchise distribution utility [PEP 2023-2050 Vol. II, p.92, 2023].

RCOA is a core element of the EPIRA’s market liberalization strategy, alongside the Wholesale Electricity Spot Market (WESM) . Its effectiveness depends on the ERC declaring that EPIRA market conditions have been met.

Foundational Policy Framework (DC2012-05-0005)

The DOE issued DC2012-05-0005 on 24 May 2012, establishing the general RCOA policy framework after ERC certified — in ERC Case No. 2011-0041-RM dated 6 June 2011 — that all five EPIRA Section 31 pre-conditions had been satisfied [DC2012-05-0005, Whereas clauses, 2012-05-24].

RCOA-WESM integration: All Contestable Customers must become WESM Trading Participants (directly or indirectly). This makes RCOA structurally inseparable from WESM operations [DC2012-05-0005, §3, 2012-05-24].

Supplier framework: ERC-licensed Suppliers must register with PEMC as direct WESM Trading Participants and publish their terms and conditions publicly. Supply contracts carry a minimum term of one year following the WESM billing cycle [DC2012-05-0005, §§5–6, 2012-05-24].

Supplier of Last Resort (SOLR): The franchised Distribution Utility acts as SOLR when a Last Resort Supply Event occurs — defined as supplier default due to cessation, license revocation, non-payment for transmission/distribution services, or WESM suspension. The DU-SOLR sources electricity from WESM or other available supply [DC2012-05-0005, §10, 2012-05-24].

Original switching rules: CCs may switch supplier only every 6 months, at end of billing period, with at least 1 month advance notice to PEMC [DC2012-05-0005, §12, 2012-05-24]. (See Switching Rules Reform below for later amendments.)

Single billing: The Supplier acts as billing entity for CCs, issuing one bill covering all applicable charges [DC2012-05-0005, §14, 2012-05-24].

Central Registration Body (CRB): PEMC was designated as CRB under DC2012-02-0002 and ERC Resolution No. 15 s.2006, responsible for managing customer switching systems and WESM settlement for retail participants. CRB functions transferred to IEMOP upon its establishment as Independent Market Operator in 2018 [DC2012-05-0005, §16, 2012-05-24].

Captive market protection: DUs must procure supply for captive customers in the least-cost manner. DUs are permitted to serve CCs within their franchise area as a separate Supplier entity [DC2012-05-0005, §13, 2012-05-24].

Statutory Triggering Conditions (Section 31, RA 9136)

EPIRA mandated that RCOA be implemented not later than three years from effectivity, but only after all five conditions are satisfied [RA 9136, Section 31, 2001]:

Contestable customer threshold schedule upon implementation [RA 9136, Section 31, 2001]:

Electric cooperatives: RCOA shall not apply earlier than five years from EPIRA’s effectivity (i.e. not before 26 June 2006).

Supplemental CC Empowerment Policies (DC2013-07-0013)

DC2013-07-0013 (2 July 2013, Secretary Petilla) addressed early RCOA market problems: only 19 RES and 8 Local RES were licensed; RES favored larger customers; offers to CCs were scarce, above DU rates, or tied to long contracts with harsh pre-termination penalties. RCOA was perceived as a Suppliers’ market, contrary to its customer-empowerment intent [DC2013-07-0013, whereas clauses, 2013-07-02].

Direct GenCo contracting: CCs may enter Retail Supply Contracts directly with a Generation Company — not limited to RES/Local RES — provided the GenCo holds an ERC Certificate of Compliance, is registered as a WESM Trading Participant, and secures an ERC Supplier’s license before the RSC’s effective date [DC2013-07-0013, §1, 2013-07-02].

Mandatory switching clause: Every RSC must include a “Customer Switching” provision allowing CCs to terminate and switch to a more competitive offer regardless of contract period. Incumbent RES retains a right of first refusal — it may match the superior offer to retain the CC. ERC issues guidelines defining what constitutes a “superior” or “competitive” offer [DC2013-07-0013, §2, 2013-07-02].

Dual power bill for DU-served CCs: CCs who remain with their DU (due to absence of acceptable RES offers) receive two bills: (1) the existing power bill format; and (2) a new unbundled bill separating (a) generation and supply charges; (b) regulated charges (transmission and distribution wheeling); (c) pass-through charges (government taxes and subsidies). Purpose: preparing CCs for the competitive billing system before switching. DUs must submit monthly rate summary schedules to DOE within 10 days of each reference month [DC2013-07-0013, §3, 2013-07-02].

Retail Market Manuals (DC2013-07-0014)

DC2013-07-0014 (signed July 2013, Secretary Carlos Jericho L. Petilla) formally adopted four Retail Market Manuals drafted by the CRB (PEMC) pursuant to the Retail Rules (DC2013-01-0002). The RCOA Commencement Date was 26 June 2013 [DC2013-07-0014, §2(a), 2013-07].

Annex A — Registration Criteria and Procedures: Requirements for registering Contestable Customers, Suppliers, and Retail Metering Service Providers (RMSPs) in WESM; suspension, disconnection, and de-registration procedures [DC2013-07-0014, §1(a), 2013-07].

Annex B — Market Transactions Procedures: Procedures for customer switching, relocation, contract termination, and SOLR transfer [DC2013-07-0014, §1(b), 2013-07]:

• Switch Request submitted by new Supplier to CRB ≥30 working days before effective date
• Required documents: Switch Request Form, Retail Supply Contract, Wheeling Service Agreement, Metering Services Agreement
• CRB initial assessment (completeness): 3 working days; Supplier remedy if incomplete: 10 working days
• Switches take effect at start of billing period (SOLR-to-Supplier transfers may be mid-period)
• No switching during Initial Commercial Operations — first 6 months from 26 June 2013

Annex C — Disclosure and Confidentiality of Contestable Customer Information: Types of CC data subject to disclosure and request procedures; applies WESM information disclosure standards to CC data [DC2013-07-0014, §1(c), 2013-07].

Annex D — Metering Standards and Procedures: 46 pages of detailed technical metering standards covering installation requirements, instrument transformer accuracy standards, data security, redundant metering, and the Site Equipment Identification Number (SEIN) system [DC2013-07-0014, §1(d), 2013-07].

Transitory provisions: Pending-registration CCs had 90 days from promulgation to complete requirements; metering data and bilateral contract declaration corrections allowed within 3 days of billing period end but only during the first 3 billing periods from Commencement Date [DC2013-07-0014, §2, 2013-07].

Participant Growth

RCOA registered participants grew from 962 in June 2013 to 2,108 in September 2023 — a 119.1% increase over the decade [PEP 2023-2050 Vol. II, Table 45, 2023]:

As of September 2023, CCs comprised 93.2% of total registered participants. The 54 Retail Electricity Suppliers (RES and LRES) and 25 SOLRs form the competitive supply side of the retail market [PEP 2023-2050 Vol. II, p.92, 2023].

Prospective Participants Pipeline (June 2023)

[PEP 2023-2050 Vol. II, Table 46, 2023]

Mindanao RCOA Launch

Mindanao was the last major grid to implement RCOA. The DOE issued DC2024-03-0009 on 1 March 2024, declaring 26 March 2024 as the commercial operations date of RCOA and the Green Energy Option Program (GEOP) in Mindanao. This followed WESM Mindanao commercial operations on 26 January 2023 (DC2022-12-0039) and public consultations in Davao City, Zamboanga, Butuan, Cagayan de Oro, and General Santos City from May–August 2023 [DC2024-03-0009, §1, 2024-03-01].

Displaced Contract Capacity or Energy (DCC/E): When customers migrate from a DU to RCOA or GEOP, the DU may be left with excess contracted capacity or energy. DC2024-03-0009 provides five options for handling DCC/E [DC2024-03-0009, §2, 2024-03-01]:

1. Invoke adjustment provisions in existing PSAs
2. Renegotiate reduction of contracted capacity/energy (subject to ERC, least-cost compliance)
3. Auction DCC/E to other DUs or RES
4. Declare DCC/E in WESM as quantities for sale
5. Other means, subject to least-cost and anti-discrimination rules

The ERC monitors all DCC/E transactions for anti-competitive behavior or market power abuse. Remaining DU capacity must remain adequate to supply the captive market including demand growth [DC2024-03-0009, §2, 2024-03-01].

Retail Aggregation

ERC Resolution No. 4 series of 2022 (26 June 2022) introduced retail aggregation — a mechanism where two or more end-users within a contiguous area are jointly treated as a single CC. Aggregation of end-users with total monthly average peak demand of at least 500 kW within a contiguous area is implemented effective 26 December 2022.

The ERC launched a pilot implementation at UP Diliman Campus on 24 June 2022 through a Memorandum of Understanding signed between the University of the Philippines and Meralco — the first operational test of the Retail Aggregation Program [PDP 2023-2050, Ch.3 Sec.4.2, p.114, 2025].

Eligible contiguous areas include subdivisions, villages, business districts, special economic zones, condominium buildings, commercial malls, and mixed-use development complexes [PEP 2023-2050 Vol. II, p.93, 2023].

Switching Rules Reform

ERC Resolution No. 1 series of 2023 amended the switching and billing rules to reduce friction in CC supplier-switching:

• CCs already served by a RES may switch to another RES or SOLR even if they have an outstanding balance with the current supplier
• Eligible end-users migrating to the competitive retail market (CREM) are entitled to refund of security/bill deposits from their DU
• However, an eligible end-user with an outstanding balance to the Network Service Provider may not switch to a RES [PEP 2023-2050 Vol. II, p.93, 2023]

Plans and Programs

The DOE’s RCOA roadmap includes [PEP 2023-2050 Vol. II, pp.92–94, 2023]:

The threshold-lowering study will assess retail market readiness, evaluate local guidelines, analyze economic and technical impacts, and benchmark against RCOA frameworks in other jurisdictions with similar market designs [PEP 2023-2050 Vol. II, p.93, 2023].