Law Summary

Introduction

This document summarizes the Energy Regulatory Commission (ERC) Resolution No. 22, Series of 2013, which adopts amendments to the Revised Rules for the Issuance of Licenses to Retail Electricity Suppliers (RES). The amendments aim to address issues faced by Contestable Customers and ensure compliance with the Electric Power Industry Reform Act (EPIRA).

Background and Purpose

• Legal Context: The ERC previously promulgated Resolution No. 1, Series of 2011, establishing standards for RES licensing.
• Reason for Amendments: The ERC identified challenges faced by Contestable Customers in securing fixed offers from RES, necessitating regulatory adjustments to support the competitive retail electricity market.
• Regulatory Mandate: The ERC is tasked with preventing market abuse and ensuring consumer protection.

Amendments Overview

• General Provisions (Article I):

  • Scope: The amended rules apply to Generation Companies, Distribution Utilities (DUs), Independent Power Producer Administrators, and other entities intending to sell electricity.
  • Transition Period Restrictions:
    • No Generation Company or IPP will be issued a RES License during the transition period.
    • Existing RES Licenses of Generation Companies will be honored until expiration, with conditions for contract assignment post-expiration.

• Qualifications and Limitations (Article II):

  • Ownership and Capacity Restrictions:
    • A conglomerate's total capacity controlled as RES entities is limited to 30% of grid capacity and 25% on a national level.
    • A RES may not sell more than 50% of its total capacity to end-user affiliates.
    • RES and its affiliates cannot purchase over 50% of capacity from affiliated Generation Companies.

• Application Requirements (Article III):

  • Basic Requirements for RES License Application:
    • Applicants must submit projected five-year financial statements and a detailed business plan outlining customer targets and service offerings.

Monitoring and Reporting

• Reporting Requirements:
  • Licensed RES must submit Retail Supply Contracts and updated Five-Year Business Plans to the ERC for monitoring purposes within 60 working days from the amendments' effectivity and annually thereafter.

Implementation and Effectivity

• Publication and Effectivity: The amendments will take effect 15 days after publication in a newspaper of general circulation.
• Constitutionality Clause: If any section is declared unconstitutional, remaining sections will remain effective.

Key Takeaways

• The ERC's Resolution No. 22 addresses the need for regulatory adjustments in the retail electricity market, focusing on consumer protection and market fairness.
• Specific restrictions on ownership and capacity for RES entities are established to promote competition.
• Enhanced reporting obligations for RES are implemented to ensure compliance and market oversight.
• The amendments are set to take effect 15 days post-publication, emphasizing timely compliance for all stakeholders involved.