Republicof the Philippines

DEPARTMENT
OFENERGY
DEPARTMENTcIRcULAR No. D C 2ot2 -A|-uoosu
PRESCRIBINGTHE GENERAL POLICIESFORTHE IMPTEMENTATION
OF THE RETAIL COMPETITION AND OPENACCESS
WHEREAS, Section2 (c) of Republic Act No. 9136,otherwise known as the Electric
Power Industry Reform Act of 2001(EPIRA),declaresthat it is the policy of the State
"[t]o ensure kansparent and reasonableprices of electricity in a regime of free and
fair competition and fuU public accountability to achieve greater operational and
economicefficiency and enhancethe competitivenessof Philippine producb in the
globalmarket"l
WHEREAS, Section37 of the EPIRA provides that the Deparhent of Energy (DOE)
is mandated to, among others, supervise the restructuring of the electric power
industry, formulate ru1esarrd tegrrtatioos as aniry he necessaryta rno,glesresttre
objectives of the EPIRA, and exercisesuch other powers as may be necessaryor
incidental to attain the objectivesof the EpIRA;
WHEREAS,Section
the EPIRAprovides that the RetailCompetitionand Open
l-1-of
-the
A_ccess(RCOA) shall
be implemented not later than three (3j years upon
effectivity of the EPIRA subjectto the fulfilment of the five pre-conditions,to wit:
1. Establishmentof the wholesaleelectricity spot rnarke!
2'' Approval of unbundled transmissionand distribution wheeling charges;
3. Initial implementation of the crosssubsidy removal scheme;
4' Privatization of at least seventy (70y') percent of the total capacrtyof
generating assetsof National Power Corporation (NPC) in Lrlon and
Visayas;and
5' Transfer of the managementand control of at least seventy percent (70y,)
of the total energy output of power plants under contract with NpC to the
IndependentPower producer (Ipp) Admjnistrators.
WHEREAS, the above preconditions have been fulfilled as certified by the
Energy
RegulatoryCommission(ERC)in ERCCaseNo. 2011-0041-RM
dated 06fune 2011;

Energy
Center,
Menitt
Rd.,FortBonihcio,
Philippines
Taguig
Manila,
City,Metro
Fax# 81241-94
Tel.#
840-20-08
Fax# 84&21-38
Tel# &[0.22-36
Fax# 840.17-31
Tel# 817-8G03
Trunkline
479-29.00
Website:
www.doe.gov.ph,
info@doe.gov.ph
E-mail:

a

WHEREAS, Section--St,{urttrer provides that upon the initial implementation
of
RCOA, the ERC shall allow all electricity end-userswith a
monthly averagepeak
demand of at least one megawatt (1 MW) for the preceding twelve
(ti) months to be
the Contestable Market. Two (2) years thereafter, the threshold
level for ttre
Contestable Market shall be reduced to seven hundred fifty kilowatts
(750 kW),
where at this level, Aggregators shall be allowed to supply electricity
16 lnd-users
whose aggregatedemand within a contiguous area is ;a Gast ,.o"r,
h,rodred fifty
kilowatts (750kw). Subsequentlyand e;ry year thereafter,the ERC
shall evaluate
the performanceof the market. on the faiis of such evaluationnit
shall gradualty
|
reducethreshold level until it reachesthe householddemand leve|
WHEREAS, all Generating Companies, Distribution Utilities,
Suppliers, Bulk
Consumers/end-usersand other simitur entities authorized by the ^gRC,t
ull bu
eligible to become members of the Wholesale Electricity Spot Market (WESM),
subject to the compliance with the membership criteria set forth und.er the
WESM
Rules;
WHEREAS, on !7 Jwte 201,1.,
the DOE issued Department Circular No. DC2011-060006 entitled, "Creating the Steering Committee Defining the policies for the
Implementation of Retail Competition and Open Access,j, to ensure that the
appropriate conditions for the efficient transition to RCOA implementation are in
place;
WHEREAS/ one of the functioru of the RCOA Steering Committee is to "review
existing rules and procedures on RCOA, develop urid ,".o**und
policies to
implement systemsand processesneededto govem the transactiontherein";
WHEREAS, after several deliberations and a careful study, the RCOA Steering
Committeerecorunended the following policies:
1. to integratethe RCOA in the WESM;and
2. to define specific policies to operationalize the RCOA concepts such as
customer empowerment or customer choice, the business of supply of
electricity, supplier, supplier of last resor! and membership in the WESM,
among others.
NOW THEREFORE,for and in consideration of the foregoing premises,the DOE,
in the exerciseof its supervisory functions in the implementation of the EPIRA,
hereby declaresthe following:
Section1. Declaration of Policy. Consistent with the EPIR& it is hereby
declared that the transition to RCOA should promote genuine competitiory greater
efficiency,customerchoice,and the true cost of electricity.

For this pu{pose, the power of choice of supplier as envisioned in the EPIRA is
hereby provided to ContestableCustomers(CCs)subjectto the rules and regulations
herein disc11ss.6as well as to subsequent rules and regulations as may be
promulgated by the DOE.
Section 2. Definition of Terme. Unlessotherwiseprovided, the terms used in this
circular shall have the samemeaning as defined in the EPIRA and its Implementing
Rulesand Regulations(IRR).
a) " Cantestable
Customey''relerc to the electricity end-user who is a part of the
ContestableMarket.
b) "Cnntestable
Markef" refers to the electricity end-userswho have a choiceof a
supplier of electricity, as may be determined by the ERC in accordancewith
EPIRA.
c) " CaptiaeMaflcef' refers to the electricity end-userswho do not have a choiceof
a supplier of electricity, as may be determined by the ERCin accordancewith
EPIRA.
d) "C*ntral RegistrationBody" refers to the entity assigned to undertake the
development and managementof the required systems and processesand
information technology system that shall be capable of handling customer
switching and information exchange among retail electricity market
participants, as well as the settlementof their transactionsin the IAIESM.The
Philippine Electricity Market Corporation (PEMC) was designated as the
Central Registration Body (CRB)through DOE Departrnent Circular No. DC
2012-02-AAA2
dated 24 February 2A12arrd ERC Resolution No. 1.5,Seriesof
2406.
e) " C-ertiflcate
of Eligibility" refers to the certificate issued by the ERC to a CC to

be recognizedassuch.
"Directly C-onnected
Customers"refer to industrial or bulk electricity end-users,
which are directly supplied with electricity by a Generation Company or
Power SectorAssetsand ManagementCorporation (PSALM)or NPC tlrrough
SubtransmissionAssets.

s) "Inst ResortSupplyEaen{' refers to an event when a supplier of a CC fails to

provide electricity for reasonscausedby a default of the Supplier, including
but not limited to: (i) cessationof its operation; (ii) revocation of its license;
(iii) non-payment for transmission and distribution services; and (iv)

suspension of its membership in the WESM due to non-compliance to WESM
Rules.
h) "Open AccessDate rcfers to the date determined by the ERC that marks the
commencement of the operations of RCOA in the Wd/ s specified.
0

"Supplief'refers to any person or entity authorized" by the ERC to sell,braker,
market or aggregate electricity to the end-users.

t)

" Structural Unbundling" refers to the separation of different activities through
the creation of separate divisions or deparhenb within a qingle company or/
at the option of any Electric Power hrdustry Participan! a separation into
different juridical entities, with a clear separation of accounts between
regulated and non-regulated business activities.

k) "Functional Unbundling" refets to the separation of functions into different
components, i.e., separation of the wire from the supply functions of a
Distribution Utility or separation of the products from the sale of electricity by
a Generation Company.
Section 3. RCOA Integration into the WESM. Consistent with the definition of
Open Access, CCs are hereby allowed the use of the transmission and distribution
systems and shall therefore be integrated into the WESM. For this pu{pose/ all CCs
shall become members of .the WESM as Trading Participant directly or indirectly, as
herein provided.
Section 4. Custome/s Choice. Upon Open Access Date, a CC shall be allowed to
choose where to source ib electricity. For this purpose, a CC can source from a
Generation Company, a Supplier, an affiliate of a DU which has constituted itself as
a Supplier, or the Supply Business of a Distribution Utility (DU) within its franchise
area.

4.1.. All CCs shall only deal with a supplier of electricity duly licensed by
the ERC. This includes DUs that have structurally or functionally
unbundled their business into Wire and Supply businesses,duly
approved by the ERC.
4.2.

The ERCshall certify all eligible CCs at leastsix (6) months prior to the
initial implementation of the RCOA. For this purpose, all DUs are
hereby mandated to provide DOE, ERC and PEMC the list of CCs
including pertinent infonnation, such as but not limited to load profile
for the last twelve (12)months, name of customers/among others.

4.3.

The PEMC is hereby directed to register all eligible CCscertified by the
ERCwithin three (3) months prior to Open AccessDate.

Section 5. Supplier of Electricity. All Suppliers duly licensed by the ERC shall
regrsterwith the PEMC as a WESM direct member Trading Participant Further, all
Suppliers shall provide PEMC with its offer of terms and conditions to the CCs for
publication in the PEMC website.
Section 6. Supply Contract. For the initial implementation of the RCO& Supply
Contractsenteredinto by CCs shall have a minimum term of one (1) year following
the WESMbilling cycle.
The CCs shall provide the PEMC, the ERC and the DOE copies of the Supply
Contracts for reference in the development of rules, guidelines and policies
necessaryfor the effectiveimplementation of RCOA.
Section 7. Directly ConnectedCustomers.
7.L.

From the effectivity of this Circular, existing Directly Connected
Customers (DCCs) must register as a Customer, either as a Direct or
Indirect Trading Participant in the WESM.

7.2.

Upon expiration of the Power Supply Confracts,all DCCsthat meet the
demand threshold shall be treated as CCs and shall be subjectto all the
rules and regulations on RCOA.

7.3.

br casea DCC doesnot qualify as a CC it may seekfor ERC'sapproval
to be consideredas a CC.

Section8. EmbeddedGeneration.
8.1.

All embedded generatorsshall regrster with PEMC as non-scheduled
GenerationCompany.

8.2.

Subject to the most beneficial arrangement,the policy for embedded
generation shall be developed by the DOE in coordination with
relevant stakeholders.

Section 9. Metering.
9.1,. Except for the DCCs connectedto the system operated by NGCP, the
DU shall be the Metering Service Provider (MSP) and owner of all
billing and the associated metering equipment prior to the
implementation of competitive metering services.

9.2.

The metering requirement for the CC shall be compliant with the
WESMmeteringstandards.

Section L0. Supplier of Last Resort. The franchised DU shall act as the Supplier of
Last Resort (SOLR) in instances of Last Resort Supply Event. To cover the
requirement of the Last ResortSupply Event, the DU-SOLRshall sourceelectricity to
be supplied to the CC through WESMor any availablesupply in the market.
Section 11. Disconnection. In consultation with the various stakeholders, the
DisconnectionPolicy promulgated by the DOE shall be reviewed and amended to
reflect ttre necessarychangesconsidering the integration of RCOA to WESM. The
policy shall apply the concept of cross-default disconnectionto all DUs, Suppliers
and CCs.
Section 12. Customer $witching. CCs shall only be allowed to switch to another
supplier every six (6,)months from the implementation of the RCOA or upon the
entry of the CC into RCOA and shall be made only at the end of the billing period.
Formal Advise/Notification to PEMC of the CCs' intent to exercisethe switching
shall be done at leastone (1) month prior to switching.
Section1.3.Protectionfor Captive Customers.
13.1. Consistentwith its mandateunder the EPIRA,DUs shall secureSupply
Contracb in the leastcost mannerfor its Captive Customers.
L3.2. DU may continue to provide electricity services to CCs within its
franchiseareaas a local Supplier, a separateentity.
Section14.Billing and Settlementfor ContestableCustomers.As far aspracticable,
a single billing policy shall be adopted with the Supplier as the billing entity incharge of issuing the bills to the CC which reflects all applicable charges. Single
bilfing policy is adopted to minimize impact to current billing anangements and
avoid possible double charging and multiple layers of attendant administrative
costs.
Section 15. Regulatory Support on RCOA Policies. The ERC shall ensure the
provision of support in the regulatory requirementsconsistentwith the policies set
forth under this Circular and in accordancewith existing laws and procedures.
Section 16. Responsibilities of Philippine Electricity Market Corporation. In
accordancewith the policies set forth in this Circular, the PEMC shall perform its
designatingit asthe CRB.
responsibilitiesand obligations under DC 2012-0?.10002

Section 17. Repealing Clause. Except insofar as tnay be manifestly incoruistent
herewith, nothing in this Circular shall be construed as to repeal any of the
mechanismsalready existing or responsibilities already provided for under existing
rules.
Section L8. Separability Clause. If for any reason,any section or provisions of
this Circular is declared unconstitutional or invalid, such parts not affected shall
remain in full force and effect.
Section l9.Effectivity. This Circular shall take into effect immediately following its
publication in at least two (2) newspapersof generalcirculation and shall remain in
effectuntil otherwiserevoked.
Issuedthis ?+h day of May20t2in Fort Bonifacio,Tug*g City, Metro Manila.

RENED.ALMENDRAS

secretaryffi:-lffi*sDoE12'003201

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