# DC2013-01-0002 — Promulgating the Retail Rules for the Integration of Retail Competition and Open Access in the Wholesale Electricity Spot Market ## Department Circular No. DC2013-01-0002 Signed: 9 January 2013 by DOE Secretary Carlos Jericho L. Petilla Effectivity: Immediately following publication in at least two (2) newspapers of general circulation --- ## WHEREAS RECITALS 1. EPIRA (RA 9136) Section 37 mandates DOE to supervise the restructuring of the electric power industry, formulate implementing rules and regulations, and exercise other powers necessary or incidental to the Act's objectives. 2. On 6 June 2011, ERC Resolution No. 10, Series of 2011 certified that RCOA's five EPIRA §31 pre-conditions had been met. 3. In preparation for RCOA, DOE conducted public consultations and focused group discussions with electric power industry stakeholders and government agencies, then promulgated the "Prescribed Policies" governing RCOA implementation through [[digest/regulations/dc2012-05-0005|DC2012-05-0005]] (9 May 2012) and [[digest/regulations/dc2012-11-0010|DC2012-11-0010]] (28 November 2012, amending DC2012-05-0005). 4. ERC published and conducted public consultation on the proposed "Transitory Rules for the Initial Implementation of Open Access and Retail Competition" ("Transitory Rules"). 5. Pursuant to its EPIRA mandate, DOE spearheaded formulation of the Rules for the Integration of Retail Competition in the Wholesale Electricity Spot Market ("Retail Rules") consistent with the Prescribed Policies and Transitory Rules. 6. The draft Retail Rules were published on the DOE website (18 October 2012) and the WESM website (30 October 2012), then presented in regional public consultations: Western Visayas (9 October 2012, Iloilo City); National Capital Region (16–17 October 2012, Makati City); Bicol Region (19 October 2012, Naga City); Southern Tagalog (30 October 2012, Batangas City); Central Visayas (15 November 2012, Cebu City); Central Luzon (21 November 2012, Pampanga); and Northern Luzon (23 November 2012, Baguio City). 7. ERC promulgated the final Transitory Rules on 17 December 2012, published on the ERC website on 21 December 2012. 8. The proposed Retail Rules were revised and finalized based on consultation feedback and the final Transitory Rules. --- ## OPERATIVE PROVISIONS **Section 1. Title.** This Circular and its Annexes — the Rules for the Integration of Retail Competition in the Wholesale Electricity Spot Market ("Retail Rules"), attached as Annex "A" — are adopted. **Section 2. Separability Clause.** If any section or provision of this Circular and its Annexes is declared unconstitutional or invalid, unaffected parts remain in full force and effect. **Section 3. Effectivity.** Takes effect immediately following publication in at least two (2) newspapers of general circulation. Signed on 9 January 2013, Energy Center, Bonifacio Global City, Taguig City. **CARLOS JERICHO L. PETILLA** Secretary, Department of Energy --- ## ANNEX "A" — RETAIL RULES FOR THE INTEGRATION OF RETAIL COMPETITION IN THE WESM ### Chapter 1 — Introduction **Purpose** [Retail Rules §1.2.2]: Implements the Act (EPIRA), its IRR, and related laws to promote retail competition, greater efficiency, and customer choice; provides rules integrating retail competition into WESM operations and governance, the transactions of Suppliers and Contestable Customers, and the Central Registration Body's (CRB) operations. **Legal framework** [§1.2.4]: The Retail Rules are promulgated by DOE under its EPIRA mandate to jointly formulate WESM operating rules with industry participants; ERC has authority to enforce them; they form part of the WESM's governing rules and are read together with the WESM Rules. **Interpretation** [§1.2.5]: Italicized terms are defined in Chapter 6 (Glossary) and the WESM Rules; interpretation follows WESM Rules Chapter 9, EPIRA's objectives, and other law. **Integration into the WESM** [§1.3]: Upon the declared commencement of RCOA, retail competition is integrated into WESM operations and governance; Suppliers and Contestable Customers transact per Chapter 3; the WESM provides the venue for both wholesale and retail electricity sales/purchases. **Central Registration Body (CRB)** [§1.4]: Administers retail competition in the WESM, allocates resources for its functions, carries out Customer switching, and provides information exchange among WESM Participants. Where the Rules require the CRB to develop procedures, it must consider compliance costs to Participants and route rule changes through the WESM Rules Chapter 8 process, subject to DOE approval. The CRB must comply with all applicable requirements, implement transitory provisions, act before the retail competition commencement date per Chapter 5, and develop cost-recovery processes for liabilities arising from its own acts/omissions. **CRB performance and audit** [§1.4.2–1.4.3]: The CRB must act per applicable statute/regulation, reasonably and prudently, in good faith, and consistent with retail competition's objectives, while maintaining a full audit trail. The PEM Board adopts CRB performance standards (reviewed/approved by DOE) and publishes an annual performance report. The PEM Auditor audits the CRB's systems, processes, and procedures, including market-related software testing, per WESM Rules Chapter 1. **Governance, information, enforcement, rule changes** [§1.5–1.8]: WESM Rules Chapter 1 governs retail-competition governance; the PEM Board may create working groups. Market information/confidentiality follows WESM Rules Chapter 5 (with CRB standing in for the Market Operator where relevant). Enforcement and disputes follow WESM Rules Chapter 7. Rule changes to the Retail Rules and Market Manuals follow the WESM Rules Chapter 8 process, subject to DOE approval. ### Chapter 2 — Registration **Contestability** [§2.2]: Only ERC-certified Contestable Customers may register and transact (directly or indirectly) in the WESM; directly-connected end-users must register regardless of ERC certification. Distribution Utilities (DUs) notify the CRB of end-users meeting contestability requirements; the CRB confirms certification with ERC and requires WESM registration. Within 30 days of ERC certification, a Contestable Customer must apply as a Direct WESM Member or elect a Supplier as its Indirect-Member counterparty; the DU continues service until registration succeeds. **Contestable Customer information** [§2.3]: The CRB publishes required information, timetables, and procedures; DUs submit end-user information for customers meeting the demand threshold. Customer information is released to a Supplier only upon the Contestable Customer's written/electronic authorization, per CRB-published procedures and fees. Contestable Customers/Suppliers with bilateral supply contracts they wish accounted for in WESM settlement must enroll them with the Market Operator and notify the CRB, both no later than 30 days before contract effectivity. **Registration requirements** [§2.4]: Suppliers must hold an ERC license/authorization and register with the WESM as a Direct Member (Customer Trading Participant category); this registration is deemed to include CRB registration as Supplier. Contestable Customers must hold ERC contestability certification and register either directly (as Direct WESM Member) or indirectly (electing a registered Supplier as Direct-Member counterparty). Direct Members handle spot-market activities and provide the CRB connection/metering information directly; Indirect Members transact only through their elected Supplier counterparty (one at a time) and provide information through that Supplier. Customers with multiple registered facilities register each separately, matching each ERC contestability certification. DUs register as Direct or Indirect WESM Members for captive-customer transactions, and separately as Supplier (for Contestable Customers within their franchise) and as Supplier of Last Resort (SOLR). Retail Metering Services Providers (RMSPs) must hold an ERC license and register in the WESM; DUs are the default RMSP for Contestable Customers in their franchise area without further registration. **Registration process and de-registration** [§2.5–2.6]: The CRB publishes a Market Manual setting out registration requirements/procedures (consistent with WESM Rules Chapter 2), required Contestable Customer data, and the criteria for assigning a customer's market trading node. Suspension, de-registration, and cessation of WESM membership follow the WESM Rules. ### Chapter 3 — The Market **Customer switching** [§3.2.1–3.2.2]: Switching (commercial transfer between Suppliers, other than a last-resort transfer) requires an existing supply contract and valid wheeling/metering-services agreements; it takes effect only at the start of a billing period (except SOLR-to-Supplier switches, which the CRB may allow mid-period). The new Supplier submits the switch request to the CRB at least 30 days before the proposed effective date (which must align with a billing-period end). The CRB verifies conditions, requires prudential-requirement updates via the Market Operator, and notifies all parties on confirmation; the Contestable Customer remains responsible for settling obligations to both incumbent and new Supplier. Non-compliant requests are rejected with reasons given, and may be resubmitted after correction. **Customer relocation** [§3.2.3]: A relocating Contestable Customer wishing to keep its Supplier must request relocation from the Supplier and relevant DU/Network Service Provider (NSP); if the Supplier agrees, the CRB is notified and relocation proceeds under DU/NSP procedures. If the Supplier declines, the customer must switch Suppliers before relocating (with additional prudential securities if a Direct Member) or face disconnection. Where a new ERC contestability certificate is issued for the new location, the customer must register the new facility afresh under Chapter 2 rather than use the relocation procedure. **Prohibited transfer and termination** [§3.2.4–3.2.5]: A Supplier cannot transfer a Contestable Customer without the customer's authorization and the switching procedure. On non-renewal, the Supplier must notify the customer and CRB at least 30 days before contract expiry; on early termination, notice follows the contract's terms plus notice to the CRB, NSP, and RMSP before the termination date. In either case the customer must switch Suppliers (submitting additional securities if a Direct Member); an Indirect Member that fails to switch in time is disconnected by its original Supplier, which must notify the CRB. **Settlement quantities and amounts** [§3.3]: Settlement follows WESM Rules Chapter 3 and this Chapter, using settlement prices at the Contestable Customer's associated market trading node. Gross ex-ante and ex-post settlement quantities at each grid off-take metering point are allocated among connected Trading Participants per Annex A's formulas; a DU's settlement quantity is the residual after subtracting its Contestable Customers' quantities at that point. Metered quantities are determined from RMSP/Metering Services Provider (MSP) data; absent timely data, historical load profiles are used with a later settlement revision once actual data arrives. Bilateral contracts with WESM-registered Generation Companies may be accounted for in settlement if declared per WESM Rules Chapter 3; Supplier-to-Supplier contracts are settled privately, outside WESM settlement. Trading and settlement amounts for Contestable Customers, DUs, and Suppliers are computed per WESM Rules §§3.13.8–3.13.9 and this Chapter; settlement information is confidential per WESM Rules Chapter 5, with Indirect Members' data routed through their Supplier counterparty (or directly on CRB request). **Prudential requirements** [§3.3.13]: Direct-Member Suppliers and Contestable Customers must meet WESM Rules Chapter 3 prudential requirements; a Supplier's required security is based on the aggregate trading limits/maximum exposure of all Contestable Customers it represents. **Failure of a Supplier** [§3.4]: A Contestable Customer transfers to the SOLR upon: the Supplier ceasing operations; ERC revocation of its license; suspension/deregistration/cessation of its WESM membership; or termination of its transmission/wheeling/distribution service agreements. The CRB notifies affected parties of the transfer and its effective date. An Indirect Member has 24 hours to notify the CRB and SOLR of its election to be served by the SOLR; the SOLR then has 24 hours to communicate contract terms/rates, with both parties confirming to the CRB within 48 hours of the original notice. A Direct Member similarly elects within 24 hours, or submits additional prudential securities if declining SOLR service. Non-compliant or non-electing customers are disconnected by the relevant DU/NSP on CRB notice; the SOLR itself must continuously meet WESM Rules prudential requirements. ### Chapter 4 — Metering **Scope** [§4.1]: Governs RMSP/CRB/Trading Participant metering obligations, installation/use/security requirements, metering-data management, the CRB's metering database, and new-technology adoption — applicable only to Contestable Customers connected to a DU's distribution system (directly-connected end-users follow WESM Rules Chapter 4 instead). **Metering service providers and installations** [§4.2–4.3]: Non-default RMSPs must register with the WESM and CRB before providing services; all RMSPs (including the default DU) follow WESM Rules Chapter 4 and relevant Market Manuals except as modified here. Metering installations must be RMSP-provided, WESM/CRB-registered, accurate per the Grid Code/Distribution Code/WESM Rules, secure, capable of transmitting to the MSP database, equipped with an accessible data display, capable of recording bi-directional flows separately where applicable, and equipped with an internal data logger (≥60 days' storage, 48-hour backup on power failure) plus active (and, where required, reactive) energy metering. The registered installation is the CRB's primary settlement-data source; the CRB is not liable for metering-data inaccuracies absent its own gross negligence or willful misconduct. RMSPs must secure installations against interference and metering data against unauthorized access, ensure ≥99% annual data-transmission availability, repair malfunctions within 2 days (extendable by CRB), and synchronize all clocks to Philippine Standard Time (CRB database within ±1 second). **Data, databases, and access** [§4.4–4.5]: RMSPs must not alter original stored metering data and must transmit it to the CRB within the billing/settlement timetable. RMSPs maintain an installation database, giving affected parties access within 7 working days (data ≤16 months old) or 30 working days (older data). The CRB maintains a metering database (metering register, energy data, substituted data, settlement calculations), retaining data in accessible form for 16 months and in archive for 10 years. Read-only data access is limited to: the relevant Supplier, RMSP, CRB, Market Operator, the Contestable Customer itself, the relevant DU (where it is not the RMSP), the Market Surveillance Committee, the Enforcement and Compliance Office, the Market Assessment Group, the PEM Auditor, DOE, and ERC. Metering data is confidential per WESM Rules Chapter 5; access costs beyond settlement-purpose transmission are borne by the requesting party. **Data validation, audit, and manuals** [§4.6–4.9]: RMSPs handle metering-data errors through validation/estimation/editing per Market Manual procedures, presenting corrected data to the CRB and affected parties (with a certification in case of dispute) — obligations that apply regardless of any dispute raised. The CRB periodically reviews Chapter 4 per WESM Rules §4.10. The PEM Auditor annually (or as the PEM Board directs) audits RMSP/CRB metering arrangements and compliance. The CRB formulates and publishes a Market Manual covering meter class/accuracy requirements, data-correction procedures, installation-database content, and other implementing procedures. ### Chapter 5 — Transitory Provisions **Commencement and transition period** [§5.2]: The Open Access commencement date, transition period, and initial commercial operations follow ERC's declaration; DOE/ERC issuances prevail over this Chapter in case of conflict. After the transition period, Contestable Customers participate in the WESM (directly or indirectly) unless electing to remain a DU captive customer or to be disconnected. **Registration and membership** [§5.3]: All Suppliers, DUs, and Contestable Customers must register in the WESM/CRB no later than 30 days before the transition period ends. ERC-licensed Suppliers register as Direct Members; DUs register as Direct/Indirect Members for captive customers and separately as local Supplier and SOLR. Contestable Customers register directly or indirectly (through a Supplier that has already completed its own Direct-Member registration). A customer or its Supplier counterparty failing to register in time must elect SOLR service, continued DU captive service, or disconnection; a customer initially placed with the SOLR or DU may later switch to Direct Member status or a new Supplier, with 30 days' advance notice to the CRB, effective at the end of initial commercial operations. Directly Connected Customers are deemed CRB-registered via their WESM registration and may elect a Direct-Member counterparty by notice to the CRB. **Contestable Customer information and metering during transition** [§5.4–§5.5]: The CRB establishes the Contestable Customer information database and publishes required data/procedures upon the Open Access declaration. DUs remain the default RMSP for their connected Contestable Customers during the transition (directly-connected customers keep their existing MSP) and must transmit metering data to the CRB from the Open Access date per Chapter 4. **Retail supply contracts during transition** [§5.6]: Contestable Customers should contract with ERC-authorized Suppliers during the transition; Suppliers notify the CRB of contracts at least 30 days before the transition period ends. Contracts notified late (after the 30-day window but still meant for Indirect-Member registration) take effect at the start of the billing period following initial commercial operations' commencement. No Supplier transfers or customer switching occur during initial commercial operations itself — any switch request meant to take effect by that period's end must reach the CRB 30 days in advance. Bilateral contracts meant for WESM settlement accounting are enrolled with the CRB per Chapter 3 procedures. **Interim SOLR arrangements** [§5.7]: A customer failing to register successfully must elect SOLR service, continued DU service, or disconnection, notifying the relevant party at least 30 days before the transition period ends; the SOLR/DU in turn notifies the CRB no later than 12 days before that deadline. Unresponsive customers are disconnected by CRB notice, carried out within 48 hours (but not later than the transition period's last midnight). Customers served on an interim SOLR/DU-captive basis during initial commercial operations must still pursue a supply contract with another Supplier; those that cannot are disconnected by the last day of initial commercial operations. **Failure of Supplier during interim operations** [§5.8]: Mirrors Chapter 3's last-resort-event procedure (24-hour Direct-Member election, 24/48-hour Indirect-Member notice sequence with the SOLR) specifically for events occurring during initial commercial operations, with CRB-ordered disconnection (within 48 hours) for non-compliant or non-electing customers. **Settlement and prudential requirements during transition** [§5.9–§5.10]: DU transactions are separately settled/billed by capacity (captive-customer service, local-Supplier service to its own Contestable Customers, and SOLR service). Before the transition period starts, the CRB assesses initial trading limits and prudential requirements from each Contestable Customer's 12-month prior load profile (a Supplier's limit being the aggregate of its represented customers'), adjusted for any bilateral contracts meant for WESM settlement; required securities are due to the CRB at least 30 days before initial commercial operations begin. ### Chapter 6 — Glossary Selected defined terms [Retail Rules, Chapter 6]: - **Captive Customer** — an end-user without supplier choice, as ERC-determined. - **Central Registration Body (CRB)** — the DOE-designated entity managing customer switching, information exchange, and WESM transaction systems/processes. - **Contestable Customer** — an end-user ERC-certified as meeting the contestability demand threshold. - **Customer switching** — commercial transfer of a Contestable Customer between Suppliers, excluding SOLR transfers. - **Directly Connected Customer** — an industrial/bulk end-user directly supplied by a Generation Company, PSALM, or NPC under RA 6395 as amended by PD 395. - **Grid off-take metering point** — the metering point at which a distribution-connected Contestable Customer's settlement quantity is determined. - **Initial commercial operations** — the period from RCOA's declared commercial-operations start until the billing month when regular Customer switching is permitted. - **Last Resort Supply Event** — any Retail-Rules-defined event giving cause for SOLR service. - **Market Manual** — a manual of specific procedures/systems/protocols implementing the WESM Rules and Retail Rules. - **Open Access Date** (also Retail Competition Commencement Date) — the ERC-determined date marking RCOA's start in a grid. - **Registered Facility** — a facility with an ERC contestability certification and CRB registration. - **Retail Metering Services Provider (RMSP)** — an entity authorized and CRB-registered to provide metering services to Contestable Customers. - **Supplier** — an ERC-authorized entity to sell/broker/market/aggregate electricity to end-users, registered as a Customer. - **Supplier of Last Resort (SOLR)** — the entity designated to serve Contestable Customers following a Last Resort Supply Event. - **Transition Period** — the period from the retail commencement date until commercial operations of retail competition begin, as ERC-declared. - **Working Day** — any day other than a Saturday, Sunday, or regular/special holiday where the CRB holds its principal office. ### Appendix A — Settlement Quantities and Amounts Provides the detailed computational methodology behind Chapter 3's settlement rules [Retail Rules, Appendix A.1]. Sets out working formulas (with defined variables) for: ex-ante energy trading amounts for Contestable Customers/DUs at a grid off-take metering point (A.3); allocation of gross ex-ante settlement quantities between Contestable Customers/DUs, proportional to their share of ex-post settlement quantities (A.4); ex-post energy trading amounts and allocation of gross ex-post settlement quantities, proportional to metered quantities (A.5–A.6); determination of a DU's metered quantity as the residual after subtracting its Contestable Customers' metered quantities at the same off-take point (A.7); and calculation of line-rental trading amounts tied to bilateral contract quantities and the ex-ante settlement-price differential between a generator's and a customer's/DU's associated trading nodes (A.8). The formulas are reproduced in the original as algebraic notation with per-symbol definitions; given OCR degradation of subscripts/superscripts in the scanned original, this cleaned copy describes each formula's computational purpose rather than reproducing symbol-level notation that cannot be verified against the source with confidence — consult the raw OCR or original PDF for the precise algebraic form.