DC2012-11-0010: Providing for Additional Guidelines and Implementing Policies for Retail Competition and Open Access and Amending Department Circular No. (DC) 2012-05-0005

Department Circular No. DC2012-11-0010, signed 28 November 2012 by DOE Secretary Carlos Jericho L. Petilla. Adds implementing guidelines and amends DC2012-05-0005 , the founding RCOA policy circular, following a further round of stakeholder consultations after that circular’s May 2012 issuance.

Background: Why This Circular Was Needed

DC2012-05-0005 (9 May 2012) set the general RCOA policy framework, itself following ERC’s 6 June 2011 certification that EPIRA §31’s five pre-conditions for retail competition were met [DC2012-11-0010, Whereas clauses, 2012-11-28]. Between July and September 2012, DOE, the RCOA Steering Committee (created by DC2011-06-0006), ERC, and PEMC held nine rounds of public consultations and focused group discussions — with distribution utilities (MERALCO, VECO, BATELEC II, CEBECO I/II, PHILRECA), contestable customers in the Visayas and Luzon grids, government entities certified as contestable customers, the Retail Electricity Suppliers’ Association, PEZA economic zone locators, and directly connected customers — to develop RCOA’s implementing rules. This circular is the product of that consultation round [DC2012-11-0010, Whereas clauses, 2012-11-28].

Amendments to DC2012-05-0005

Section 2 definitions amended [DC2012-11-0010, §4.1, 2012-11-28]:

• Directly Connected Customers — narrowed to industrial or bulk electricity end-users directly supplied by a Generation Company, PSALM, or NPC pursuant to RA 6395 as amended by PD 395.
• Last Resort Supply Event — expanded to enumerate five specific triggers: cessation of the supplier’s operation, revocation of its license, non-payment of transmission/distribution services, suspension of WESM membership for non-compliance, or other ERC-specified grounds.

New Section 2 definition added [DC2012-11-0010, §4.2, 2012-11-28]: Local Supplier — the non-regulated supply business of a DU serving Contestable Customers within its own franchise area, extended to cover PEZA and PEZA-accredited Utility Ecozone Enterprises.

All other DC2012-05-0005 definitions are unchanged insofar as they are not inconsistent with this circular [DC2012-11-0010, §4.3, 2012-11-28].

Transition Period and Timeline

A six-month Transition Period runs from the ERC-declared Open Access Date. During it: the DU keeps serving Contestable Customers in its franchise area; negotiated supply contracts take effect only at the Transition Period’s end; ERC keeps issuing Certificates of Contestability and identifies backup SOLR DUs; and the CRB (PEMC) begins customer/supplier registration and trial settlement operations [DC2012-11-0010, §6, 2012-11-28]. The Full RCOA Commercial Operation Date follows the Transition Period, per ERC’s Transitory Rules.

Supply contract terms [DC2012-11-0010, §8, 2012-11-28]: Contestable Customers must hold a minimum one-year supply contract through the initial year of Full RCOA Commercial Operation; switching to a new supplier is allowed six months after that date; full flexibility on contract duration applies one year after. Switching takes effect at the start of a WESM billing month, with at least one month’s advance notice to the CRB.

Customer choice mechanics [DC2012-11-0010, §7, 2012-11-28]: A Contestable Customer may source supply from an ERC-licensed Supplier, a Local Supplier, or directly through the WESM (managing its own registration and risk in that case). General rule: one Supplier per Metering Point, though multiple contracts under a single Metering Point are permitted if consistent with the Retail Rules.

Directly Connected Customers and Embedded Generation

Existing Directly Connected Customers must register with PEMC as Direct or Indirect Trading Participants in the WESM regardless of peak demand, and are deemed Contestable Customers requiring an ERC Certificate of Contestability — but their existing supply contracts with Generators are unaffected by RCOA implementation [DC2012-11-0010, §9, 2012-11-28]. Embedded generators register with PEMC per WESM Rules; DOE develops embedded-generation policy in coordination with stakeholders, including future Demand Response programs [DC2012-11-0010, §10, 2012-11-28].

Supplier of Last Resort (SOLR)

Where a Supplier defaults, the franchised DU acts as SOLR for a Last Resort Supply Event; if the franchised DU cannot perform that role, ERC designates a substitute DU before the Full RCOA Commercial Operation Date. The SOLR sources electricity via WESM or other available supply and may recover its SOLR-attributable costs. ERC is directed to design a mechanism preventing Last Resort Supply Events, including due-diligence parameters for Supplier licensing [DC2012-11-0010, §11, 2012-11-28].

Government Entities

DOE, the Department of Budget and Management, and the Government Procurement Policy Board are directed to issue supplementary procurement rules for government entities that are Contestable Customers, including a step-by-step procedure to be issued before the Open Access Date [DC2012-11-0010, §12, 2012-11-28].

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