=== dc2013-01-0002-pages-01.ppm === Republic of the Philippines DEPARTMENT OF ENERGY DEPARTMENT CIRCULAR NO. _0€ 2013 - DI - 0002 | PROMULGATING THE RETAIL RULES FOR THE INTEGRATION OF RETAIL COMPETITION AND OPEN ACCESS IN THE WHOLESALE ELECTRICITY SPOT MARKET WHEREAS, Section 37 of the Republic Act No. 9136, otherwise known as “The Electric Power Industry Reform Act of 2001” (the “Act”), the Department of Energy (the “ DOE”) is mandated to, among other things to: (a) Supervise the restructuring of the electric power industry; (b) Formulate rules and regulations as may be necessary to implement the objectives of the Act; and | (c) Exercise such other powers, as may be necessary or incidental to attain the objectives of the Act. WHEREAS, on 06 June 2011, the Energy Regulatory Commission (the “ERC”) through Resolution No. 10 Series of 2011, certified that the five (5) pre-conditions for the implementation of Retail Competition and Open Access as stipulated in Section 31 of the EPIRA have already been met; WHEREAS, in preparation for the implementation of Retail Competition and Open Access, the DOE: (a) Conducted a series of public consultations and focused group discussions with relevant stakeholders of electric power industry as well as relevant government agencies for the purposes of developing the implementing rules and regulations as well as identifying specific areas of concerns that requires policy intervention; and (b) Following the public consultations and focused group discussions, promulgated the prescribed policies (collectively “Prescribed Policies”) that will govern the implementation of Retail Competition and Open Access through Department Circular No. DC2012-05-0005 dated 09 May 2012 entitled “Prescribing the General Policies for the Implementation Energy Center, Merritt Rd., Fort Bonifacio, Taguig, Metro Manila, Philippines Tel. Nos.: (Trunkline) 840-1401 to 21; Fax 840-1731; 840-2138; 840-2067 ; (632) 840-1731; (632) 840-2138; Telefax (632) 840-2067 Website: www.doe.gov.ph, E-mail: info@doe gov.ph === dc2013-01-0002-pages-02.ppm === of Retail Competition and Open Access and Department Circular No. 2012-11-0010 dated 28 November 2012 entitled “Providing for Additional Guidelines and Implementing Policies for Retail Competition and Open Access and Amending Department Circular no. (DC) 2012-05-0005 entitled “Prescribing the General Policies for the Implementation of the Retail _ Competition and Open Access” WHEREAS, also as part of the preparations, the ERC published and conducted public consultation on the proposed “Transitory Rules for the Initial Implementation of Open Access and Retail Competition” (the “Transitory Rules”); WHEREAS, pursuant to its mandate under the Act, DOE spearheaded the formulation of the Rules for the Integration of Retail Competition in the Wholesale Electricity Spot Market (the Retail Rules) in accordance with the Prescribed Policies and Transitory Rules; WHEREAS, the draft Retail Rules were first published in the DOE website at www.doe.gov.ph on 18 October 2012 and on the WESM website at www.wesm.ph on 30 October 2012; and were presented in a series of public consultations with stakeholders of the electric power industry which were conducted in order to discuss and solicit comments and views and suggestions on the proposed Retail Rules, which consultations were held as follows: AREA COVERAGE 09 October 2012 Western Visayas Sarabia Manor Hotel, {loilo City 16-17 October 2012 | National Capital Region | Dusit Thani Hotel, Makati City 19 October 2012 Bicol Region Naga Regent Hotel, Naga City Southern Tagalog Mt. Malarayat Golf & Country 2012 30 October Region Club, Batangas City 15 November 2012 Central Visayas Marco Polo Plaza, Cebu City 21 November 2012 Central Luzon Holiday Inn Clark, Pampanga === dc2013-01-0002-pages-03.ppm === Summer Place Hotel, Baguio 23 November 2012 Northern Luzon City WHEREAS, the ERC promulgated the final Transifory Rules on 17 December 2012, and published the same in the ERC website at www.erc.gov.ph on 21 December 2012; WHEREAS, the proposed Retail Rules were then revised and finalized based on the comments, views and suggestions solicited during the public consultations conducted by the DOE, and on the final version of the Transitory Rules promulgated by the ERC; NOW, THEREFORE, pursuant to its mandate under the Act, the DOE hereby issues, adopts and promulgates the following : Section 1. Title. This Circular and its Annexes referred to as Rules for the Integration of Retail Competition in the Wholesale Electricity Spot Market (the Retail Rules) attached hereto as Annex “A” are hereby adopted. Section 2. Separability Clause. If for any reason, any section or provisions of this Circular and its Annexes are declared unconstitutional or invalid, such parts not affected shall remain in full force and effect. Section 3. Effectivity. This Circular shall take effect immediately following its publication in at least two (2) newspapers of general circulation. Signed on JAN 0 9 2013 Energy Center, Bonifacio Global City, Taguig City. CARLOB JERICHO L. PETILLA Secretary Republic of the Philippines PARTMENT OF ENERGY IN REPLYING PLS CITE: SOE-JLP-13000081 HNC === dc2013-01-0002-pages-04.ppm === R.A. 9136 Electric Power Industry Reform Act of 2001 RULES FOR THE INTEGRATION OF RETAIL COMPETITION IN THE WHOLESALE ELECTRICITY SPOT MARKET ANNEX “A” === dc2013-01-0002-pages-05.ppm === === dc2013-01-0002-pages-06.ppm === Retail Rules Table of Contents CHAPTER 1: INTRODUCTION... cecssessssessesseeseecessseneseesesensnseeststaesesencnsusneseneaseess 1 1.1. SCOPE OF CHAPTER 1... ceceeeseeeestesesneseeseseesereersecsnasesssseassneresssenneasenensseeatentes 1 1.2 PURPOSE, APPLICATION AND INTERPRETATION OF THE RULES......1 13. INTEGRATION OF RETAIL COMPETITION IN THE WESM....... ccc 2 14 CENTRAL REGISTRATION BODY. ccessesescsseseesessceeeecerersveseerevesececanencsesensesssanes 2 1.5 GOVERNANCE OF THE MARKET 1. ee csseeessesssccnesescseenessassenrsresenesneneenes 5 1.6 MARKET INFORMATION AND CONFIDENTIALITY uc ec seeeeeres 5 1.7 ENFORCEMENT AND DISPUTES. 200. cceeeccccesseessreeeenerenseecetseecessteeaceeesens 5 18 RULE CHANGE PROCESS... ccccesscsenssessenseesesescresirasssesseeenssesecseanesaserseesensess 5 CHAPTER 2: REGISTRATION ou... eesesssssssesssssescessssescnsssssscnseasensarstssnsetsenseseseeseeres 6 2.1 SCOPE OF CHAPTER 2......... lesescessaveeconsnscensouaeecnsuncccnneececasresnsncecnneessannrescannrttee 6 2.2 CONTESTABILITY OF CUSTOMERS. .......cccccesseccseetseseteeeessneeseransessensssessseneey 6 2.3. CONTESTABLE CUSTOMER INFORMATION. .......cecccceneecsesteeseeseeeenene 6 2.4 REGISTRATION uu. eeecceeeseecescseceetsncsesnsseassvencacnenssesueressaeessesseepeceeeesseseacssensanseenenres 7 2.5 REGISTRATION PROCESS .00....csseseceescseeesneseeecesssseseeseesssessssnsnssescenseeseensense 10 2.6 SUSPENSION DE-REGISTRATION AND CESSATION OF MEMBERSHIP10 CHAPTER 3: THE MARKET ........cssssssssssessssrssanensssneecensscscsersusssseceassceseesecasansanssanes 11 3.1 SCOPE OF CHAPTER 38.0... cscccsssssessseseesecnsenesnsecsesseseseearsesscansessceeneressacereeeeees 11 3.2 CONTESTABLE CUSTOMER TRANSACTIONS... cscceseseesteeesseneeneeens 11 3.3. SETTLEMENT QUANTITIES AND AMOUNTS... oe eecccseeeseeeseeseseeaeseees 16 3.4 FAILURE OF A SUPPLIER Ac eececsesseceseetseesecesieneaceeesseeneasseneceseeesuesentensneeentente 20 i === dc2013-01-0002-pages-07.ppm === CHAPTER 4: METERING ....cccccccsssscsstsssssssssesereneecerescsesserseratenearesseenanaesseanorsansnnsens 22 4.1 SCOPE AND APPLICATION OF CHAPTER 4 w..sscssssesssssseessseesstestneeus 22 4.2 METERING SERVICE PROVIDERS |..ssssscsssssessseesstsssstensstesssesnetneetveten 22 4.3 PROVISION OF METERING INSTALLATIONS ..eessssssssssssseesssessenesstissen 22 AA METERING DATA cecssossscsssnsessssssesvsstersssnssiveteiestsnetisssttnneeeesennstensnenetes 25 4.5 DATABASES w.csssccsssssssssesscessnssaseeseenesesenssnessnsstsnenenerieessaseesnstnnarestes 26 4.6 DATA VALIDATION AND SUBSTITUTION ...sssssssssssssseesesteesttnseesaten 28 4.7 PROCESSES AND REVIEW. .esssssccsssesncesnsesesseuestnnstssnseunsseesetsnsensseastes 28 4.8 AUDIT OF METERING ARRANGEMENTS.....sssssscseesssesseeeusssenstensteneen 28 4.9 FORMULATION AND PUBLICATION OF MARKET MANUAL.........-0 28 CHAPTER 5: TRANSITORY PROVISIONS .sssesssssssssssssssesessssssssseneneseernssseennst 30 5.1 SCOPE OF CHAPTER 5.vesssssssssssssseesssnessceeestisseinssstinssianeeieeensnsessetne 30 5.2 COMMENCEMENT AND TRANSITION PERIOD .....ssessssscssssnseesseensseee 30 5.3 REGISTRATION AND MEMBERSHIP IN THE WESM..u.ss.esssessssssnseeniiee30 5.4 CONTESTABLE CUSTOMER INFORMATION ....sssseessessneessseessstenstsstei 32 5.5 METERING essssssssssssceccersstenesnseceeteceneeestsanesnetiestnneriyetesevasensesesess 33 5.6 RETAIL SUPPLY CONTRACTS ..esssstsssesseesnssisnsesseressssissetonnsessnssnsteneen 33 5.7 INTERIM SUPPLIER ARRANGEMENTS DURING INITIAL COMMERCIAL OPERATIONS vsesssossssssssssssossscessnsssnssssetsneennsounesinneeieeeunsesinarinnseeneteeennneteetie 34 5.8 FAILURE OF SUPPLIER DURING INTERIM COMMERCIAL OPERATIONS 35 5.9 SETTLEMENT OF MARKET TRANSACTIONS |...ssscsssssssssesesstsnserssernte 36 5.10 PRUDENTIAL REQUIREMENTS. ....sscsssssstieessssessessetiesstesssseerseeessseent 36 CHAPTER 6: GLOSSARY .cssssssssscsssnecsesensecssnneeeesinssesssnnsceecesssttensenssesenseseteenest 38 APPENDIX A: SETTLEMENT QUANTITIES AND AMOUNTS ....scssssssesseees 41 === dc2013-01-0002-pages-08.ppm === A.t. ABOUT THIS APPENDIX A... ceecscseeteseeneseeeseenereneneeeessneaeaeneresasaeseseersesenies 41 A2. CALCULATION OF SETTLEMENT QUANTITIES AND AMOUNTS.......41 A3. CALCULATION OF THE EX-ANTE ENERGY TRADING AMOUNTS ....41 A4. ALLOCATION OF GROSS EX-ANTE SETTLEMENT QUANTITIEG.......... 42 A.5. CALCULATION OF THE EX-POST ENERGY TRADING AMOUNTS .....43 A. ALLOCATION OF EX-POST ENERGY SETTLEMENT QUANTITIES ......44 A.J. DETERMINATION OF THE METERED QUANTITIES FOR DISTRIBUTION © UTILITIES wiiccececccscecscsesceseeseensnesessececscsscevsscsesnesesersssesensseseneassasasensnenesasersnsseeseseanearancarenes 45 A8. CALCULATION OF THE LINE RENTAL TRADING AMOUNTS............. 45 iii === dc2013-01-0002-pages-09.ppm === CHAPTER 1: INTRODUCTION 1.1 SCOPE OF CHAPTER 1 This Chapter 1 sets out the: 1.1.1 1.1.2 1.1.3 1.1.4 Purpose, application and interpretation of these Retail Rules; Parties bound by these Retail Rules; Responsibilities of the Central Registration Body; Governance of the participation and transactions of Suppliers and contestable customers in the WESM. 1.2 PURPOSE, APPLICATION AND INTERPRETATION OF THE RULES 1.2.1 Name and Promulgation 1.2.1.1 1.2.1.2 This document shall be known as the Rules for the Integration of Retail Competition in the Wholesale Electricity Spot Market or the Retail Rules. These Retail Rules shall be promulgated by the DOE. 1.2.2 Purpose of the Rules These Retail Rules are promulgated to implement the provisions of the Act, its Implementing Rules and Regulations, and other related laws as well as to: 1.2.2.1 1.2.2.2 Promote retail competition; greater efficiency and customer choice; and Provide rules for the integration of retail competition in the operations and governance processes of the WESM, themanagement of the transactions of Suppliers and Contestable Customersand the operations of the Central Registration Body. 1.2.3. Parties Bound by the Rules Together with the WESM Rules, these Retail Rules form part of the legal and regulatory framework which is applicable to all WESM Members, as well as the owners, operators and users of the power system under the Act. 1.2.4 Legal and Regulatory Framework 1.2.4.1 These Retail Rules are promulgated by the DOE pursuant to its mandate under the Act to supervise the restructuring of the electricity industry and to promulgate the detailed === dc2013-01-0002-pages-10.ppm === 1.2.5 rules for the operation of the WESM jointly with electric power industry participants. 1.2.4.2 To ensure a greater supply and rational pricing of electricity, the Act provides the ERC the authority to enforce the rules and regulations governing the WESM which include these Retail Rules. 1.2.4.3 These Retail Rules shall form part of the rules that govern the operations of the WESM and, as such, shall be read and used in connection with the WESM Rules. Interpretation 1.2.5.1 Words and phrases that appear in italics are defined in the glossary in Chapter 6 of these Retail Rules and in the WESM Rules. . 1.2.5.2 These Retail Rules shall be interpreted in accordance with the provisions of Chapter 9 of the WESM Rules, the objectives of the Act and other provisions of law. 1.3 INTEGRATION OF RETAIL COMPETITION IN THE WESM 1.3.1 1.3.4 Upon declaration of the commencement of retail competition and open access, retail competition shall be integrated in the operations and governance of the WESM as provided in these Rules. Objectives of Integration and Retail Competition Consistent with the Act and with the objectives of the WESM as set out in the WESM Rules, the integration of retail competition in the WESM aims to promote competition, customer choice and empowerment, transparency, accountability and greater efficiency in the power industry and to reflect the true cost of electricity. Upon commencement of retail competition, Suppliers and Contestable Customers shall be permitted to transact in the WESM in accordance with Chapter 3 of these Rules. Upon commencement of retail competition, the WESM shall provide the venue for wholesale and retail sales and purchases of electricity 1.4 CENTRAL REGISTRATION BODY 1.4.1 Responsibilities of the Central Registration Body 1.4.1.1 The Central Registration Body shall, generally and non- restrictively, have the following functions and responsibilities: === dc2013-01-0002-pages-11.ppm === a) Administer retail competition in the WESM and its operations in accordance with these Retail Rules; b) Allocate resources to enable it to perform its functions; c) Carry out Customer switching between Suppliers; and d) Provide an information exchange amongst WESM Participants. ; 1.4.1.2 Where the Retail Rules require the Central Registration Body to develop procedures, processes or systems, the Central Registration Body shall: a) Develop such procedures, processes and systems taking into consideration the likely costs to Participants of complying with those procedures or processes and of obtaining, installing or adopting those systems, as the case may be; and Consistent with the purpose set forth in clause 1.2.2 of this Chapter 1, recommend changes to these procedures in accordance with the rule change process set out in Chapter 8 of the WESM Rules. Provided, further, that such changes shall be approved by the DOE. 14.1.3 The Central Registration Body shall: a) b) Comply with each of the requirements and obligations imposed on it under these Retail Rules, and other applicable laws, rules and regulations; Implement the transitory provisions specified in these Retail Rules; Perform those actions that are required to be taken prior to the retail competition commencement date, as specified in Chapter 5 of these Retail Rules and in relevant issuances of the DOE and the ERC; and Develop appropriate cost recovery processes to cover its liabilities in the event of damage or injury, which may be caused by its acts or omissions in the faithful performance of its functions. 1.4.2 Central Registration Body Performance 1.4.2.1 In exercising its discretions and performing its obligations under these Retail Rules, the Central Registration Body shall === dc2013-01-0002-pages-12.ppm === 1.4.2.2 1.4.2.3 1.4.2.4 1.4.2.5 1.4.3 Audit 14.3.1 a) Act in accordance with any standard of performance provided for by any statute, and regulation to which the Central Registration Body is subject; b) Act in a reasonable and prudent manner; c) Act in good faith; d) Take into consideration, act consistently with and use its reasonable endeavours to contribute towards the achievement of the objectives of retail competition; and e) Ensure an audit trail of documentation that is fully adequate to substantiate and reconstruct all relevant actions performed. The foregoing clause 1.4.2.1 or any provision of these Retail Rules shall not be interpreted as to prevent the Central Registration Body from performing any of its obligations under these Retail Rules. The PEM Board shall adopt performance standards which monitor and provide an indication of the Central Registration Body's performance with respect to: a) The Central Registration Body's responsibilities under these Retail Rules in relation to relevant provisions of the Act, its Implementing Rules and Regulations, the WESM Rules, the Grid Code, the Distribution Code and all other applicable laws, rules and regulations; and b) The achievement of the objectives of the Act and retail competition. The Central Registration Body performance standards adopted by the PEM Board shall be reviewed and approved by the DOE. Every year, the PEM Board shall publish a report on the performance of the Central Registration Body in accordance with the performance standards adopted under clause 1.4.2.3 of this Chapter 1. The PEM Auditor shall: a) Conduct the audit of the Central Registration Body and the systems, processes and procedures and other matters relevant to the operations of the === dc2013-01-0002-pages-13.ppm === Central Registration Body and the performance of its functions as set forth in these Retail Rules; and b) Test and check any new items or new versions of market-related software used by the Central Registration Body or provided by the Central Registration Body for use by WESM members. 1.4.3.2 The PEM Auditor shall perform the functions stated in clause 1.4.3.1 in accordance with Chapter 1 of the WESM Rules and relevant Market manuals. 1.5 GOVERNANCE OF THE MARKET 1.5.1 The provisions of Chapter 1 of the WESM Rules shall apply with respect to the governance of the integration of retail competition in the WESM, the operations of the Central Registration Body and the participation and transactions in the WESM of Suppliers and Contestable Customers. 1.5.2 When relevant, necessary or practicable, the PEM Board may create working groups to deal with matters specifically pertaining to the integration of retail competition in the WESM, the operations of the Central Registration Body and the participation and transactions in the WESM of Suppliers and Contestable Customers. 1.6 MARKET INFORMATION AND CONFIDENTIALITY 1.6.1 Confidentiality and disclosure of information pertaining to these Retail Rules are set out in Chapter 2, Chapter 3 and Chapter 4 of these Retail Rules. 1.6.2 Unless any provision of these Retail Rules pertaining to specific information provide otherwise, the provisions of Chapter 5 of the WESM Rules also apply to retail competition market information, Provided that the matters set out in said Chapter 5 pertaining to the Market Operator shall likewise pertain to the Central Registration Body. 1.7 ENFORCEMENT AND DISPUTES The provisions of Chapter 7 of the WESM Rules shall apply with respect to enforcement and disputes related to these Retail Rules. 1.8 RULE CHANGE PROCESS The provisions of Chapter 8 of the WESM Rules shall apply with respect to changes to be made to these Retail Rules and Market Manuals.Provided, further, that such changes shall be approved by the DOE. === dc2013-01-0002-pages-14.ppm === CHAPTER 2: REGISTRATION 2.1 SCOPE OF CHAPTER 2 This Chapter 2 sets out the rules for contestability of customers, maintenance of Contestable Customer information, and registration of Suppliers, Contestable Customers and Retail Metering Services Providers. 2.2 CONTESTABILITY OF CUSTOMERS 2.2.1 2.2.3 Contestability of electricity end users shall be certified by the ERC and only the end users that have been issued a certification of contestability shall be registered and shall be permitted to transact, directly or indirectly, in the WESM; Provided, however, that a directly-connected end user is required to register in the WESM pursuant to WESM Rules clause 2.2.4.2 whether or not it is certified by the ERC as a Contestable Customer. Distribution utilities shall notify the Ceitral Registration Body of any end user that has met the requirements to be certified as Contestable Customer and shall provide the customer information required in Section 2.3 of this Chapter 2. Upon such notice, the Central Registration Body shall secure confirmation from the ERC if such end user has been certified as contestable and, if so certified, shall require the customer to be registered in the WESM. Within thirty days from issuance by the ERC of the certification of contestability, the Contestable Customer duly certified shall: a) If it elects to be a Direct WESM Member, apply for registration with the Central Registration Body in accordance with Chapter 2 of these Rules; or b) If it elects to be an Indirect WESM Member, choose a Supplier which shall serve as its Direct Member counterparty for its transactions in the WESM and cause that Supplier to apply for registration on its behalf. c) Provided, however, that a Contestable Customer shall continue to be served by the Distribution Utility until it is successfully registered with the Central Registration Body. 2.3 CONTESTABLE CUSTOMER INFORMATION 2.3.1 Establishment of Customer Information by the Central Registration Body === dc2013-01-0002-pages-15.ppm === 2.3.14 2.3.1.2 Prior to commencement of retail competition and at any time thereafter, the Distribution Utility shall submit information as may be required by the Central Registration Body on all end users within its franchise area that it deems to have already met the required demand threshold. The Central Registration Body shall, from time to time, publish the list of information that it requires and the timetable and procedures for submission. 2.3.2 Request and Release of Customer Information 2.3.2.1 2.3.2.2 2.3.2.3 Upon prior authorization, provided in written or electronic form, by a Contestable Customer, the Central Registration Body shall provide the information so authorized to the Supplier or to such other person or entity authorized by the Contestable Customer. The information shall be provided in such form and upon payment of fees as the Central Registration Body deems appropriate. The Central Registration Body shall prepare and publish the procedures for request and release of customer information and the corresponding service fees. 2.3.3 Contestable Customer Supply Contract Information 2.3.3.1 2.3.3.2 2.3.3.3 2.4 REGISTRATION No later than thirty days before the effectivity of their contracts, Contestable Customers and Suppliers that have entered into bilateral power supply contracts with Generation Companies registered in the WESM and wish those bilateral contracts to be accounted for in WESM settlements shall enrol those contracts with the Market Operator in accordance with the customer enrolment procedures in the WESM. No later than thirty days prior to the effective date of their contracts, Contestable Customers or their respective Suppliers shall notify the Central Registration Body of their retail electricity supply contracts and provide the information that will be required by the Central Registration Body. The information that shall be submitted pursuant to clause 2.3.3.1 and clause 2.3.3.2 shall include but shall not be limited to the names of counterparties to the supply contract and the duration of the contract. 24.1 Before being able to transact in the WESM, Suppliers shall: === dc2013-01-0002-pages-16.ppm === 2.4.1.1 2.4.1.2 - Hold a licence or authorization from the ERC to act as a retail electricity Supplier, and Register in the WESM as a Direct Member under the Customer Trading Participant category and shall fulfil all such registration requirements as set out in the WESM Rules Chapter 2; Provided that its registration as a Direct Member is deemed to include registration as a Supplier by the Central Registration Body. 2.4.2 Before being able to transact in the WESM, either directly or indirectly, Contestable customers: 2.4.2.1 2.4.2.2 24.2.3 Shall hold a certification from the ERC as a contestable customer, and If it intends to participate in the WESM directly, shall register as a Direct WESM Member and shall fulfil all such registration requirements as set out in the WESM Rules Chapter 2 and this Chapter; Provided that its registration in the WESM is deemed to include registration as a Contestable Customer by the Central Registration Body. If it intends to participate in the WESM indirectly, shall elect a Supplier registered as Direct WESM Member as its counterparty and said Supplier shall register the Contestable Customer as Indirect WESM Mentber; Provided that the registration of the latter in the WESM is deemed to include registration as Contestable Customer by the Central Registration Body. 2.4.3 Contestable customers that register as Direct WESM Member shall: 2.4.3.1 2.4.3.2 Be able to undertake activities or participate in or in relation to the spot market, and Be responsible for providing the Central Registration Body with information on their connection and metering details. 2.4.4 Contestable customers that register as Indirect WESM Member shall: 2.4.4.1 2.4.4.2 2.4.4.3 Be able to transact in the spot market through a Supplier that is registered as a Direct WESM Member and shall always have such Direct Member counterparty to maintain its registration in the WESM as Indirect Member; Elect only one Supplier as its Direct WESM Mentber counterparty; and Through its Direct WESM counterparty, provide information on their connection and metering details. === dc2013-01-0002-pages-17.ppm === 2.4.5 The registration of Contestable Customers shall be in respect to their facilities that have been issued certifications of contestability by the ERC, Provided, that - 2.4.5.1 2.4.5.2 2.4.5.3 Contestable Customers that have more than one registered facility shall have multiple registrations, and, at their option, each registration may either be as a Direct WESM Member or Indirect WESM Member; and Registration shall be in accordance with the certification of contestability issued by the ERC and each registered facility covered by one certification of contestability shall have a single and separate registration, regardless that the same is served by more than one metering installations. If registering as Indirect WESM Member for a registered facility, it shall elect only one Direct WESM Member counterparty to transact on its behalf for said registered facility. 2.4.6 Distribution utilities shall register and transact in the spot market: 2.4.6.1 2.4.6.2 As either Direct WESM Member or Indirect WESM Member in accordance with the requirements and procedures for registration set out in the WESM Rules Chapter 2 for transactions in respect to the supply of electricity to their captive customers; As Supplier in accordance with Section 2.4.1 of this Chapter 2 for transactions in respect to the supply of electricity to Contestable Customers and for transactions as Supplier of Last Resort. 2.4.7 Before being able to provide metering services for Contestable Customers, a Retail Metering Services Provider shall: 24.7.1. 2.4.7.2 Hold license as a Retail Metering Services Provider issued by the ERC; and Register in the WESM as a Retail Metering Services Provider and shall fulfil all such registration requirements as set out in the WESM Rules Chapter 2; Provided that its registration as with the WESM is deemed to include registration by the Central Registration Body. 2.4.8 At the commencement of retail competition in the spot market, the Distribution Utilities shall serve as the default Retail Metering Services Provider for Contestable Customers with service addresses located within their franchise area, and as such, are deemed registered in the WESM and the Central Registration Body without need of complying with the requirements set in Section 2.4.7 of this Chapter 2. === dc2013-01-0002-pages-18.ppm === 2.5 REGISTRATION PROCESS TheCentral Registration Body shall prepare and publish a Market manual which sets out: 2.5.1 The requirements and procedures which Suppliers, Contestable Customers and Retail Metering Services Providers shall follow to enable registration in the WESM, which requirements and procedures shall be consistent with relevant provisions of WESM Rules Chapter 2. 2.5.2 The data required to be provided to the Central Registration Body for registration as a Contestable Customer, and 25.3 The criteria for determining the market trading node represented in the Market Network Model to which the contestable customer shall be associated as its grid off-take metering point. 2.6 SUSPENSION DE-REGISTRATION AND CESSATION OF MEMBERSHIP The suspension, de-registration and cessation of the membership of Suppliers and Contestable Customers in the WESM shall be governed by the WESM Rules. 10 === dc2013-01-0002-pages-19.ppm === CHAPTER 3: THE MARKET 3.1 SCOPE OF CHAPTER 3 This chapter sets out the rules which govern operation of the market pertaining to the following and related matters: 3.1.1 Switching of Suppliers by Contestable Customers 3.1.2 Settlement of the transactions of Suppliers and Contestable Customers in the WESM,; and 3.13 Failure of Suppliers. 3.2 CONTESTABLE CUSTOMER TRANSACTIONS 3.2.1 Conditions for Customer switching 3.2.1.1 3.2.1.2 3.2.1.3 3.2.1.4 Switching shall apply to the commercial transfer of a Contestable Customer from one Supplier to another, other than a transfer to a Supplier of Last Resort in case of a last resort event for which section 3.4 of this Chapter 3 shall apply. Switching does not apply to transfer by a Directly- Connected Customer or a Supplier to a Generation Company, provided that such transfer shall be subject to the bilateral contract enrolment procedures set out in the WESM Rules. A Supplier may submit a swifch request to the Central Registration Body if the following conditions are met: a) A supply contract has been entered into between the Supplier and the Contestable Customer for which the Switch request is made; and b) There is an existing and valid wheeling service agreement with the relevant Distribution Utility or Network Service Provider and a metering services agreement with a registered Metering Services Provider, covering the Contestable Customer. Switching shall take effect at the start of, and not within, a billing period as defined in the WESM Rules, Provided, however that the switching from a Supplier of Last Resort to a Supplier may be permitted by the Central Registration Body to take effect within a billing period. 3.2.2. Procedures for Switching 11 === dc2013-01-0002-pages-20.ppm === 3.2.2.1 32.2.2 3.2.2.3 Once all the conditions set forth in clause 3.2.1.3 are met, the new Supplier shall submit the switch request to the Central Registration Body not later than thirty days prior to the proposed effective date, Provided that the proposed effective date should coincide with the end of a billing period. If the Central Registration Body verifies that all the conditions are met and Contestable Customer for which the switch request is made is registered as a Direct WESM Mentber: a) The Direct WESM Member shall update its prudential requirements if so required by the Market Operator to ensure that it fully satisfies the prudential requirement as set out in the WESM Rules. b) Upon confirmation that the prudential requirements are satisfied, the Central Registration Body shall notify the new Supplier, the incumbent Supplier, the Contestable Customer and the relevant Distribution Utility or Network Service Provider of the confirmation of the switch request and the effective date of the switch. c) The Contestable Customer shall be responsible for ensuring that it has fully complied with its obligations to the incumbent Supplier and the new Supplier, including but not limited to the payment of outstanding obligations and posting of security deposits. If the Central Registration Body verifies that all conditions are met and the Contestable Customer for which the switch request is made is an Indirect WESM Member: a) If the new Supplier will also be the new Drrect WESM Mentber counterparty, the new Supplier shall submit securities required by the Market Operator to fully satisfy the prudential requirements as set out - in the WESM Rules. b) If the switch does not involve change in the Direct WESM Member counterparty, the latter shall update its prudential requirements if so required by the Market Operator to ensure that it continuously satisfies the prudential requirements as set out in the WESM Rules. === dc2013-01-0002-pages-21.ppm === 3.2.2.4 d) Upon confirmation that the prudential requirements are satisfied, the Central Registration Body shall notify the new Supplier, the incumbent Supplier and Direct WESM Member counterparty, the Contestable Customer and the relevant Distribution Utility or Network Service Provider of the confirmation of the switch request and the effective date of the switch. The Contestable Customer shall be responsible for ensuring that it has fully complied with its obligations to the incumbent Supplier and Direct WESM Meniber counterparty, and the new Supplier, including but not Jimited to the payment of outstanding obligations and posting of security deposits. If the Central Registration Body verifies that the conditions set forth in clause 3.2.1.3 are not met or if the Market Operator confirms that the prudential requirements are not fully satisfied: a) The Central Registration Body shall notify the Contestable Customer, the Supplier which submitted the switch request, the incumbent Supplier and the relevant Distribution Utility or Network Service Provider that the Switch request shall not take effect and the reasons therefore. The Supplier which submitted the Switch request may rectify the shortcomings in the previous stitch request and submit a new stitch request to the Central Registration Body. If the shortcoming pertains to prudential requirements, the party required to comply shall update its prudential requirements to the satisfaction of the Market Operator and the switch can take effect without need of re-submission of the switch request. 3.2.3 Customer Relocation 3.2.3.1 A Contestable Customer that wishes to relocate to a new service address within the same franchise area or in the franchise area of another Distribution Utility or Network Service Providerand wishes to continue to be served by its present Supplier shall send a prior request for relocation of 13 === dc2013-01-0002-pages-22.ppm === 3.2.3.2 3.2.3.3 3.2.3.4 service to the Supplier and the relevant Distribution Utilitiesor Network Service Providers. If the Supplier agrees to continue to provide service, the parties shall notify the Central Registration Body of the relocation and shall effect the relocation in accordance with the requirements and procedures set by the relevant Distribution Utilities or Network Service Providers. If the Supplier does not agree to continue to provide service: a) The Contestable Customer shall, prior to relocation, switch to a new Supplier in accordance with the requirements and procedures set in clause 3.2.2 and, if registered as a Direct WESM Member, submit additional securities required by the Market Operator as necessary to fully satisfy the prudential requirements set out in the WESM Rules. b) If the Contestable Customer fails to comply with the conditions set out in the previous paragraph, the Central Registration Body shall notify the Supplier and the relevant Distribution Utility or Network Service Provider. The Distribution Utility or Network Service Provider shall then not permit the relocation to the new service area, or if relocation has already been effected, the Distribution Utility or Network Service Provider concerned shall cause the disconnection of the Contestable Customer. The conditions and procedures set out in this clause 3.2.3 shall apply only when the Registered facility of a Contestable Customer is transferred to different service address and the certification of contestability issued by the ERC remains valid; Provided, however that if a new certificate of contestability is issued by the ERC for the facility at its new location, this clause 3.2.3 shall not apply and the Contestable Customer shall - a) Apply for new registration in respect to said facility, which registration shall be governed by Chapter 2 of these Retail Rules; and b) Send a notice to the Central Registration Body of the cessation of registration of the previously- registeredfacility in accordance with Chapter 2 of the Retail Rules and relevant Market manuals. 14 === dc2013-01-0002-pages-23.ppm === 324 Prohibited Customer Transfer A Supplier shall not be permitted to transfer a Contestable Customer to another Supplier without the authorization of the affected Contestable Customer and without complying with the Customer switching requirements and procedures set out in clause 3.2.2. 3.2.5 Termination of Supplier Service by the Supplier 3.2.5.1 3.2.9.2 3.2.5.3 3.2.5.4 3.2.5.5 If the Supplier does not intend to renew the supply contract of a Contestable Customer, it shall send a notice of non- renewal to the Contestable Customer and the Central Registration Body at least thirty days prior to the expiration of the term of the contract. If the Supplier intends to terminate the contract prior to the expiration of its term, it shall send a notice of the termination to the Contestable Customer in accordance with terms specified in their contract, and prior to the date of termination, to the Central Registration Body and to the relevant Network Service Provider and Retail Metering Services Provider. In case of non-renewal or termination of the supply contract, the Contestable Customer shall: a) Switch to another Supplier in accordance with the requirements and procedures set out in clause 3.2.2; and b) If the Contestable Customer is a Direct WESM Member, submit additional securities necessary to satisfy the prudential requirements set out in the WESM Rules. If the Contestable Customer is an Indirect Member in the WESM and it fails to successfully switch to another Supplier prior to the expiration of the supply contract, its original Supplier shall: a) Initiate the disconnection of said Contestable Customer following prevailing rules and procedures for disconnection; and b) Notify the Central Registration Body that it has initiated disconnection procedures. The termination of the contract shall be given effect by the Central Registration Body only if the conditions set forth in clauses 3.2.5.3 or 3.2.5.4 of this Chapter 3 are met. 15 === dc2013-01-0002-pages-24.ppm === 3.2.6 The Central Registration Body shall prepare and publish a Market Manual that sets out in more detail the relevant timelines, requirements and procedures for carrying out the Contestable Customer transactions described in this section 3.2. 3.3 SETTLEMENT QUANTITIES AND AMOUNTS 3.3.1 3.3.2 3.3.3 3.3.4 The settlement quantities, settlement prices, trading amounts and settlement amounts of Contestable Customers and Suppliers in each trading interval of the billing period shall be determined in accordance with Chapter 3 of the WESM Rules and this Chapter 3. Applicable Market Prices and Market trading nodes In calculating the trading amounts of Contestable Customers and their Suppliers, the applicable settlement prices shall be the settlement prices at the market trading node associated with the grid off-take metering point to which the Contestable Customer is associated. Defining the Gross Ex-Ante Settlement Quantities 3.3.3.1 The gross ex-ante settlement quantity determined in accordance with the WESM Rules at each grid off-take metering point for each trading interval in the billing period shall be allocated among the Trading Participants connected at said grid off-take metering point as specified in Appendix A of these Retail Rules. 3.3.3.2 Thé gross ex-ante settlement quantity at a grid off-take metering point for each trading interval shall be allocated to each of the Contestable Customers connected at such grid off- take metering point in the proportion that their respective ex- post settlement quantities bears to the total ex-post settlement quantities at such grid off-take metering point, determined in accordance with clause 3.6.5 of this Chapter 3. 3.3.3.3 The ex-ante settlement quantity of a Distribution Ufility connected to a grid-off take metering point shall be the difference between the gross ex-ante settlement quantity determined at such grid off-take metering point and the total ex-ante settlement quantities of all Contestable Customers associated with such grid off-take metering potnt. Defining Gross Ex-Post Settlement Quantities 3.3.4.1 The gross ex-post settlement quantity determined in accordance with the WESM Rules at each grid off-take metering point for each trading interval in the billing period === dc2013-01-0002-pages-25.ppm === 3.3.4.2 3.3.4.3 shall be allocated among the Trading Participants connected at said grid off-take metering point as specified in Appendix A of these Retail Rules. The site specific loss adjustments determined at a grid off-take metering point shall be allocated among the Trading Participants connected at said grid off-take metering point in the proportion that their respective metered quantities bear to the total metered quantities at said grid off-take metering point. The ex-post settlement quantity of the Distribution Utility connected to a grid-off take point shall be the difference between the gross ex-post settlement quantity determined at such grid off-take metering point and the total ex-post settlement quantities of all Contestable Customers associated with such grid off-take metering point. 3.3.5 Determining the Metered Quantities of Contestable Customers 3.3.9.1 3.3.5.2 3.3.5.3 The metered quantity of each Contestable Customer connected to a grid off-take metering point shall be determined as the net metered flows at their respective metering installations associated with such grid off-take metering point, before adjustment for site specific losses. The Central Registration Body shall determine the metered quantity of the Contestable Customers at a grid off-take metering point using the meter data provided by the relevant Metering Services Provider and Retail Metering Services Provider to the Central Registration Body in accordance with the billing and settlement timetable. If no meter data is submitted by the relevant Metering Services Provider or Retail Metering Services Provider in accordance with the billing and settlement timetable: a) The Central Registration Body shall determine the metered quantity of a Contestable Customer using that Contestable Customer's historical load profiles, and the metered quantity so determined shall be used for determining the Contestable Customer's settlement quantities for the billing period. b) Upon provision by the Metering Services Provider orRetail Metering Services Provider of the meter data, a settlement revision shall be performed on the succeeding billing period using the metered quantities based on the meter data so provided. c) The Central Registration Body shall develop and publish the methodologies and procedures for 17 === dc2013-01-0002-pages-26.ppm === 3.3.6 3.3.7 3.3.8 3.3.9 3.3.10 determining metered quantity by using historical load profiles. Declaration of Bilateral Contract Quantities 3.3.6.1 If a bilateral contract is entered into with a Generation Company for the supply of electricity to a Contestable Customer and the parties wish the contract to be accounted for in settlement, the Generation Company shall declare the bilateral contract quantities in accordance with the requirements, timetable and procedures set out in Chapter 3, of the WESM Rules and in relevant market manual. 3.3.6.2 Contracts entered into between Suppliers for the supply of electricity to a Contestable Customer shall not be accounted for in settlements but will be settled by the parties among themselves. Determining the Trading Amount of Contestable Customers The trading amount of a Contestable Customer for each trading interval in the billing period shall be determined in accordance with the WESM Rules clauses 3.13.8 and 3.13.9 using the settlement quantities and the settlement prices as defined in this Chapter 3. Determining the Trading Amounts of the Distribution Utilities The trading amount of each Distribution Utility for each trading interval in the billing period shall be the sum of all the trading amounts calculated using the settlement quantities determined in accordance with clause 3.3.3.3 and clause 3.3.4.3 of Chapter 3. Determining the Trading Amounts of Suppliers The trading amount of each Supplier for each trading interval in the billing period shall be the sum of all the trading amounts determined for each of the Contestable Customers for which such the Supplier is transacting as Direct WESM Mentber counterparty. Determining Settlement Amounts 3.3.10.1 For each billing period, the settlement amount for each Supplier shall be: a) The sum of the aggregate trading amounts of all the Contestable Customers for which it is transacting as Direct WESM Member counterparty; any market fees and transaction fees which the Supplier and its Contestable Customers are required to pay to the === dc2013-01-0002-pages-27.ppm === Market Operator and the Central Registration Body; and any other amounts payable to the Market Operator or the Central Registration Body by the Supplier and its Contestable Customers; b) Less any amount payable by the Market Operator to the Supplier or its Contestable Customers, other than the trading amounts of said Contestable Customers. 3.3.10.2 Settlement amounts of Contestable Customers that are registered as Direct WESM Members shall be determined in accordance with the WESM Rules and this Chapter 3. 3.3.10.3 Settlement amounts of Distribution Utilities shall be determined in accordance with the WESM Rules and this Chapter 3. 3.3.11 Settlement process The settlement of the transactions of Suppliers and Contestable Customers in the WESM and the billing of Suppliers shall be performed by the Market Operator in accordance with the settlement process set out in Chapter 3 of the WESM Rules. 3.3.12 Settlement of Contestable Customers with their Suppliers Billing and settlement of the transactions of the Contestable Customers with their respective Suppliers shall be performed by the parties in accordance with their contracts and applicable rules and regulations promulgated by the ERC and other competent agencies. 3.3.13 Prudential Requirements 3.3.13.1 Suppliers and Contestable Customers that are registered as Direct WESM Members shall comply with the prudential requirements as set out in Chapter 3 of the WESM Rules. 3.3.13.2 The amount of security that will be required of a Supplier shall be determined based on the aggregate trading limits and maximum exposure determined in accordance with Chapter 3 of the WESM Rules of all the Contestable Customers for which such Supplier is transacting. 33.14 Settlement Information 3.3.14.1 Settlement information identifiable to Trading Participant shall be treated as confidential information by the Market Operator and the Central Registration Body and shall be subject to the provisions of Chapter 5 of the WESM Rules. 3.3,14.2 Access to settlement information pertaining to Contestable Customers registered as Indirect Members shall be provided 19 === dc2013-01-0002-pages-28.ppm === to their respective Supplier counterparties, provided, however that Indirect Members may be provided access to their own settlement information upon request from the Central Registration Body. 3.4 FAILURE OF A SUPPLIER 3.4.1