QuestionsQuestions (ERC Resolution NO. 03, S. 2006)
To promote free and fair competition and accountability to rationalize and make electricity prices competitive and transparent; and to ensure consumer protection and enhance the competitive operation of the retail electricity market.
No person other than (1) a Distribution Utility serving its franchise area and (2) those authorized to supply electricity in Economic Zones may engage in supplying electricity to end-users in a Contestable Market unless it has secured a Retail Electricity Supplier’s (RES) License from the ERC.
It is the ERC authority granted to a person/entity to act as a Retail Electricity Supplier, stipulating the RES obligations consistent with qualification/criteria and applicable laws, and issued upon compliance with the standards and requirements.
A license is valid within Philippine territories where retail competition and open access exist.
Examples include: (1) a Generation Company or its affiliate; (2) a Distribution Utility operating as a RES outside its franchise area; (3) an affiliate of a Distribution Utility regarding its Contestable Market within or outside its franchise area; (4) an Independent Power Producer (IPP) Administrator; and (5) any other person intending to sell/broker/market electricity to the Contestable Market.
(a) Distribution Utilities within their franchise areas; and (b) persons authorized by appropriate entities to supply electricity within their respective Economic Zones.
A RES/affiliate or any stockholder/director/officer (or relatives within the fourth civil degree) shall not own any interest, directly or indirectly, in TRANSCO or its Buyer/Concessionaire or the Independent Market Operator. Also, except ex-officio government-appointed representatives, no person who is an officer/director of TRANSCO or its Buyer/Concessionaire shall be an officer/director of any RES.
It must have any of the following: (i) an investment grade credit rating by a reputable credit bureau; (ii) unused cash resources equivalent to expected monthly billings, or PHP 5 million (whichever is applicable); or (iii) proof of creditworthiness via certification from companies (Generation Companies, Transco, and Distribution Utilities) that extended credit lines to the applicant.
It must demonstrate ability/knowledge to run an electricity supply business and comply with ERC rules, ability to set up and operate the ERC-approved customer-transfer system, ability to enter access/interconnection arrangements/contracts with Transco and/or DUs, ability to secure generation if applicable under market operator requirements, ability to meet market operator/participant obligations if applicable, and adequate staffing/training to meet service commitments.
Within sixty (60) working days from the date of application.
Examples: (1) Articles of Incorporation/Partnership with Certificate of Registration (or business name registration for single proprietorship); (2) Mayor’s Permit; (3) RES Information Sheet; (4) certified true copies of audited financial statements for the two most recent 12-month periods (or life of business if <2 years); (5) five-year projected financial statements and five-year business plan; (6) list of affiliates and addresses; (7) sworn statement to comply with Code of Conduct and Competition Rules; (8) sworn statement re TRANSCO/IMO ownership and officer/director conflicts; plus application fee proof, list of directors/officers with CVs, and any other ERC-required documents.
The applicant/RES must post a security deposit based on projected or collected sales value; the deposit must be deposited in escrow (unavailable for working capital financing). ERC requires bank certification that escrow facility is available or confirmation of the escrow amount. RES must pay customers annual interest on collected deposits equal to the interest earnings of the escrow amount.
Three (3) years, renewable at the end of every term. Renewal must be filed not later than sixty (60) days before expiration.
On an ERC-prescribed form: average retail sale prices by customer category and by territory with computation method; total revenues from kWh sales; list/type of customers served and deposits collected; bank certification on escrow amount; and other information ERC deems necessary.
Examples: functionally/structurally unbundle supply from generation/distribution if also engaged in those businesses; provide updated information for contestable market choices; adopt the ERC-approved B2B interface system; segregate bill components of the retail rate (generation, transmission, distribution, supply, and other related charges) and Supplier’s Charges as required; comply with creditworthiness criteria and ensure advance deposits are covered by security deposits; comply with WESM rules if sourcing from WESM; comply with competition rules; collect Universal Charge monthly per ERC rules; notify ERC at least 30 days before ceasing operations and provide proof of refund/settlement; inform ERC of material changes within 30 days; and comply with all applicable laws/codes/rules including reportorial requirements.
Any person acting as a RES without a valid license (except those exempted under Article I, Section 5) may be subjected to appropriate sanctions under existing laws, rules and regulations, including fines/penalties and possible revocation or suspension of the license, pursuant to ERC guidelines on administrative sanctions.
They are required to secure a license from the ERC within ninety (90) days from the declaration of open access by ERC.