Law Summary
Requirement for Supplier License
- No person except Distribution Utilities within their franchise area and authorized Economic Zone suppliers may supply electricity to End-users in Contestable Markets without an ERC-issued Supplier's License.
- The License sets forth all obligations consistent with qualification criteria and existing laws.
Issuance and Validity of License
- ERC issues licenses only to qualified Retail Electricity Suppliers (RES) meeting the stipulated requirements.
- License is mandatory for selling, brokering, marketing, aggregating electricity, or WESM participation.
- License valid within Philippine territories where retail competition and open access exist.
Scope of Application
- Includes Generation Companies and affiliates, Distribution Utilities operating outside franchise areas, Independent Power Producer Administrators, and other entities selling electricity in Contestable Markets.
- Separate Guidelines for Aggregators to be issued prior to the second phase of retail competition.
Exemptions from Licensure
- Distribution Utilities within their franchise areas.
- Authorized suppliers within designated Economic Zones.
Key Definitions
- Definitions cover terms such as Affiliate, Aggregator, Contestable Market, Distribution Utility, Economic Zones, Energy Regulatory Commission, Generation Company, Independent Market Operator, Retail Electricity Supplier, Supplier's License, among others essential to the electric power industry regulatory framework.
Qualifications for RES Applicants
- Individuals of legal age and juridical persons properly registered to operate retail electricity supply.
- Must demonstrate financial capability via credit ratings, cash reserves, or credit certifications.
- Must have necessary technical and managerial expertise to ensure reliable electricity supply per customer contracts.
Ownership and Conflict-of-Interest Restrictions
- RES and affiliates must not hold interests in TRANSCO, its Buyer/Concessionaire, or Independent Market Operator.
- No cross-holding of officers or directors between RES and TRANSCO or its Buyer/Concessionaire.
Application Procedures and Requirements
- Submission of corporate documents, financial statements, business plans, and sworn statements on compliance and ownership restrictions.
- Payment of application and license fees.
- Posting of security deposits, where applicable, held in escrow.
License Term and Renewal
- License valid for three years, renewable with proper application and compliance.
- Renewal requires submission of updated documents and payment of fees.
Reportorial Obligations
- Monthly reports including sales data, pricing, customer lists, and bank escrow certifications.
- ERC guarantees confidentiality of sensitive information upon valid justification.
Obligations of Retail Electricity Suppliers
- Functional and structural unbundling of supply business from generation and distribution where applicable.
- Continuous provision of market information to End-users.
- Compliance with B2B systems, billing transparency, financial security, WESM rules, and competition rules.
- Collection and remittance of Universal Charge.
- Notification to ERC on business cessation or material changes.
- Adherence to all relevant laws, codes of conduct, and ERC regulations.
Sanctions for Non-Compliance
- Mandatory licensing within 90 days of open access declaration.
- Unlicensed operation subject to fines, suspension, or license revocation.
Monitoring and Enforcement
- ERC responsible for compliance monitoring.
- Application of administrative sanctions as necessary.
Separability Clause
- Invalidity of any provision does not affect the enforceability of the rest of the Guidelines.
Effectivity
- Guidelines effective fifteen days following publication in a newspaper of general circulation.