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III. RCOA Fundamentals
I. Introduction
II. Introduction to WESM

IV. RCOA Processes

 RCOA FUNDAMENTALS 03

OUTLINE

01 BASIC PRINCIPLES OF RCOA

02 ELECTRICITY INDUSTRY STRUCTURE AND RCOA FUNDAMENTALS

01 BASIC PRINCIPLES OF
RCOA
 RCOA FUNDAMENTALS 05

BASIC PRINCIPLES OF RCOA

Power Industry Sectors

EPIRA Sec. 30 (Wholesale) EPIRA Sec. 31 (Retail)

GENERATION TRANSMISSION DISTRIBUTION SUPPLY

 RCOA FUNDAMENTALS 06

BASIC PRINCIPLES OF RCOA

Power Delivery Flow

EPIRA Section 30

WHOLESALE

RETAIL

EPIRA Section 31
 RCOA FUNDAMENTALS 07

BASIC PRINCIPLES OF RCOA

WHAT IS RETAIL COMPETITION AND OPEN ACCESS (RCOA)?

Retail Competition

• refers to the provision of electricity to a Contestable Market by Suppliers through

Open Access*

Open Access

• refers to the system of allowing any qualified Person the use of transmission, and/or
Distribution System and associated facilities subject to the payment of transmission
and/or distribution retail wheeling rates duly approved by the ERC. For this purpose,
qualified Persons shall include all WESM Participants**
*(EPIRA IRR Rule 4 (vvv)
**(EPIRA IRR Rule 4 (hhh))
 RCOA FUNDAMENTALS 08

BASIC PRINCIPLES OF RCOA

Transmission
Charges

Transmission Distribution Customers

Spot Retail Competition
Payment
Generation
Charges
Transact in the WESM

Spot
Payment DU Charges
Generation
Contestable
Spot
Generation Charges
Payment
Customers

Suppliers
 RCOA FUNDAMENTALS 09

BASIC PRINCIPLES OF RCOA

DEFINITION OF TERMS

Contestable Customer
• refers to the electricity end-user who is a part of the Contestable Market.

Contestable Market
• refers to the electricity end-users who have a choice of a supplier of electricity, as
may be determined by the ERC in accordance with EPIRA.

Captive Market
• refers to the electricity end-users who do not have a choice of a supplier of
electricity, as may be determined by the ERC in accordance with EPIRA.
 RCOA FUNDAMENTALS 010

BASIC PRINCIPLES OF RCOA

DEFINITION OF TERMS

Central Registration Body

• refers to the entity assigned to undertake the development and management of the
required systems and processes and information technology system that shall be
capable of handling customer switching and information exchange among retail
electricity market participants, as well as the settlement of their transactions in the
WESM

Certificate of Contestability
• refers to the certificate issued by ERC to the qualified contestable customers based
on rules on contestability

DOE Circular 2012-05-0005, 2012-11-0010

 RCOA FUNDAMENTALS 011

BASIC PRINCIPLES OF RCOA

DEFINITION OF TERMS

Customer Switching
• refers to commercial transfer of a Contestable Customer from one Supplier to
another

Initial Switch / Switching

• refers to the commercial transfer of a Contestable Customer from DU as Captive
Customer to a RES/Local RES
 RCOA FUNDAMENTALS 012

BASIC PRINCIPLES OF RCOA

DEFINITION OF TERMS

Directly-Connected Customers
• refer to industrial or bulk electricity end-users, which are directly supplied with
electricity by a Generation Company or Power Sector Assets and Management
Corporation (PSALM) or NPC pursuant to Republic Act No. 6395 as amended by
Presidential Decree No. 395;

Last Resort Supply Event

• refers to an event when a supplier of a Contestable Customer has defaulted on its
obligations or fails to provide electricity based on the following reasons: (i) cessation
of its operation; (ii) revocation of its license; (iii) non-payment of transmission and
distribution services; (iv) suspension of its membership in the WESM due to non-
compliance to WESM Rules and retail market (v) such other grounds that may be
specified by the ERC

DOE Circular 2012-11-0010

 RCOA FUNDAMENTALS 013

BASIC PRINCIPLES OF RCOA

DEFINITION OF TERMS

Open Access Date

• refers to the date determined by the ERC that marks the commencement of the
operations of RCOA in the grid specified.

Supplier/ Retail Electricity Supplier (RES)

• refers to any person or entity authorize by the ERC to sell, broker, market or
aggregate electricity to the end-users.

Retail Supply Contract / RSC

• The contract for the sale of electricity entered into by and between the RES/ Local
RES and the Contestable Customer.

DOE Circular 2012-05-0005, 2012-11-0010

ERC Resolution 16, Series of 2012
Electricity Industry Structure and
RCOA Fundamentals
 RCOA FUNDAMENTALS 015

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

BEFORE RETAIL COMPETITION

Transmission All transactions

Charges go through the DUs

Transmission Distribution
Spot
Payment
Generation
Charges

Spot All Customers

Payment
Generation
 RCOA FUNDAMENTALS 016

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

WITH RETAIL COMPETITION

Transmission
Charges

Transmission Distribution Customers

Spot
Payment
Generation
Charges
Transact in the WESM

Spot
Payment DU Charges
Generation
Contestable
Spot
Generation Charges
Payment
Customers
Transact through a Supplier
Suppliers
 RCOA FUNDAMENTALS 017

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

ESTABLISHMENT OF RCOA

Prerequisites for the commencement of RCOA

• Establishment of the Wholesale Electricity Spot Market;
• Approval of unbundled transmission and distribution wheeling charges;
• Initial implementation of the cross subsidy removal scheme;
• Privatization of at least seventy (70%) percent of the total capacity of
generating assets of NPC in Luzon and Visayas; and
• Transfer of the management and control of at least seventy percent (70%) of
the total energy output of power plants under contract with NPC to the IPP
Administrators.
 RCOA FUNDAMENTALS 018

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

I. Department of Energy (DOE)
II. Energy Regulatory Commission (ERC)
III. National Electrification Administration (NEA)
IV. Central Registration Body (CRB) / IEMOP
V. National Grid Corporation of the Philippines
VI. Distribution Utility (DU)
VII. Contestable Customer
VIII. Supplier (RES)
IX. Local Supplier (Local RES)
X. Supplier of Last Resort (SOLR)
XI. Metering Services Provider
 RCOA FUNDAMENTALS 019

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Department of Energy (DOE)

• Supervise the restructuring of the electric power industry;

• Formulate rules and regulations as may be necessary to implement
the objectives of the EPIRA; and
• Exercise such other powers as may be necessary or incidental to
attain the objectives of the EPIRA

Section 37, EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 020

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Energy Regulatory Commission

• Evaluate the performance of the market and based on its evaluation, gradually reduce the
threshold level for the Contestable Market until it reaches the household demand level;
• Determine the appropriate mechanism to mitigate the impact of migration of Contestable
Customers in the operation of the DU and its Captive Market
• Ensure:
› customer choice and promote competition
› encourage market development,
› discourage/penalize abuse of market power, cartelization and any anti- competitive
or discriminatory behavior
• Provision of regulatory support on the recoveries of needed investments to support the
efficient and effective implementation of RCOA.
Section 37, EPIRA, EPIRA IRR
DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 021

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Energy Regulatory Commission

• Declare Open Access Date;

• Establish and approve a methodology for setting transmission and distribution wheeling
rates, and for setting retail rates for the Captive Market of a DU
• Prescribe qualifications and evaluate applications for supply of electricity to the Contestable
Market, issue license to suppliers, metering service providers
• Upon the initial implementation of RCOA, specify the Contestable Market through the
issuance of Certificate of Contestability to electricity end-users with an average twelve
months peak demand of one megawatt and above

Section 37, EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 022

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

National Electrification Administration (NEA)

• Prepare Electric Cooperatives (ECs) for the RCOA regime and
provide the technical, financial and institutional support and
assistance necessary in ensuring that the ECs are able to complete
and perform their mandates under a competitive environment
• Assist the ECs in educating their respective member-consumers
about the implementation of RCOA and its impact on electricity end-
users
• Develop mitigating measure to address any impact on the
operations and viability of the ECs resulting from the possible
migration of CC’s to their Suppliers.

EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 023

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

National Grid Corporation of the Philippines (NGCP)

• Abide by the methodology approved by the ERC for setting

transmission wheeling rates upon the implementation of RCOA
• As the System Operator, provide open and non-discriminatory
access to its transmission system to all electricity users
• Ensure reliability and adequacy of transmission system to cater to
the RCOA requirements.

EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 024

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Independent Electricity Market Operator of the Philippines

• Assumed market operations functions from PEMC

• Serves as the Central Registration Body (CRB) for the Retail Market.
• Develop Market Infrastructure, Systems and Processes
• Conduct Training for the Electric Power Industry Participants
• Coordinate with relevant stakeholders and other government
agencies

EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 025

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Distribution Utilities (DUs)

• Continuously review and update respective Distribution Development Plan (DDP) and prepare for
the investments necessary to adequately respond to the RCOA requirements
• Provide open and non-discriminatory access to its distribution system to all electricity end-users,
including supplier
• Ensure reliability and adequacy of distribution system to cater to the RCOA requirements;
• Ensure least-cost supply to electricity end-users as well as transparency in the rates and charges
applied to both regulated and competitive services
• Perform the role as the default Metering Service Provider (MSP)

EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 026

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Contestable Customers (CC)

• The electricity end-user who is a part of the Contestable Market and shall be allowed to choose
where to source its supply of electricity (either from a Supplier duly licensed by ERC, a Local
Supplier duly authorized by ERC to perform such, or through WESM).
• As a general policy, a Contestable Customer can have one Supplier of electricity per Metering
Point.

EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 027

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

CERTIFICATE OF CONTESTABILITY
Pursuant to Section 38 of Republic Act No. 9136
(RA 9136) creating the Energy Regulatory
Commission (Commission), and the pertinent
provisions of the Implementing Rules and
Regulations (IRR) of RA 9136, and the Rules for
the Contestability issued by the Commission, the
Certificate of Contestability is hereby granted to:

<Contestable Customer’s Name>

By the virtue of this certificate, the above named

Contestable Customer in the Competitive Retail
Electricity Market (CREM), shall be entitled to all
the rights and privileges subject to such
obligations appertaining, consistent with the
laws, rules and regulations pertinent thereto.
 RCOA FUNDAMENTALS 028

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Suppliers (RES)

• Any person or entity authorized by the ERC to sell, broker, market or aggregate electricity to the end-
users.
• Shall register with the IEMOP as a WESM direct member Trading Participant
• Shall submit to the CRB for posting in its website, contracting parameters to include its general offer
terms and conditions such as indicative average contract price offers and scope of services offered

EPIRA, EPIRA IRR

DOE Department Circular 2012-11-0010
 RCOA FUNDAMENTALS 029

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Local Suppliers (LRES)

• Refers to the Non- regulated supply business of a Distribution Utility (DU) catering to the Contestable
Customers within its franchise area, duly authorized by the ERC
• Shall include the Philippine Economic Zone Authority (PEZA) and the PEZA- Accredited Utility
Ecozone Enterprises in the public and private Ecozones (EZ’s) respectively
• Shall submit to the CRB for posting in its website, contracting parameters to include its general offer
terms and conditions such as indicative average contract price offers and scope of services offered

DOE Department Circular 2012-05-0005

DOE Department Circular 2012-11-0010
ERC Resolution No. 16 Series of 2012
 RCOA FUNDAMENTALS 030

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

RES LICENSE

Pursuant to Section 29, of Republic Act RA No. 9136

requiring all suppliers of electricity to the contestable
market to secure a license from the Energy
Regulatory Commission (ERC) , and the Revised
Rules for the Issuance of Licenses to Retail
Electricity Suppliers (RES), the ERC hereby grants a
RES license unto:

<RES Name>

This license is granted subject to continuing

compliance of the above named entity with the
aforementioned Guidelines and the attached Terms
and Conditions. Any operations found to be in
violation of the abovesaid Rules and related laws,
rules and regulations may result in suspension by
the ERC, in addition to such other sanctions which it
may impose under the Act.
 RCOA FUNDAMENTALS 031

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

LOCAL RES AUTHORIZATION

This pertains to <local RES name’s> application

to act as a local Retail Electricity Supplier (local
RES) within its franchise area.

After perusal of requirements submitted by <local

RES name> on <date> and of supplemental
documents on <date>, through <law firm>, the
Commission hereby determines that <local RES
name> is now allowed to operate as a local RES
within its franchise area.

Congratulations and more power.

 RCOA FUNDAMENTALS 032

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Supplier of Last Resort (SOLR)

• If the Supplier is not able to perform its obligations to its Contestable Customers the franchised DU
shall act as the SOLR.
• Should the franchised DU is deemed not capable to perform the SOLR service, the ERC, prior to the
Full RCOA Commercial Operation Date, shall designate another DU which will perform the SOLR
function for the affected Contestable Customers.
• The SOLR may source electricity to be supplied to the Contestable Customers through the WESM or
any available source of energy supply.

DOE Department Circular 2012-11-0010

 RCOA FUNDAMENTALS 033

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

DESIGNATION LETTER OF SOLR

…….Having found that <SOLR Name> satisfied the said criteria, the
Commission hereby designates <SOLR Name> to act as a SOLR for
the contesstble customers located in its franchise area and
connected to its distribution network.

…..As an emergency scheme for the contestable customers for

contingencies brought about by the occurrence of a last resort
supply event , the provision thereof shall be triggered by any of the
following conditions

a) The RES or local RES has ceased to operate

b) The RES license has been revoked by the ERC
c) The arrangements for distribution wheeling service between the
RES and the DU have been terminated.
d) The RES or local RES is no longer permitted to trade energy
through the WESM;
e) The RES or local RES has given notice to the ERC that it will no
longer provide services, or;
f) Any other analogous event which ERC may deem as last resort
supply event
 RCOA FUNDAMENTALS 034

ELECTRIC POWER INDUSTRY AND RCOA FUNDAMENTALS

PARTIES INVOLVED IN RCOA IMPLEMENTATION

Metering Services Providers (MSPs)

• Except for the DCCs connected to 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.
• The metering requirement for the CC shall be compliant with the WESM metering standards.

DOE Department Circular 2012-05-0005

 RCOA FUNDAMENTALS 035

MARKET DESIGN

WHOLESALE MARKET
Integrated Electricity MarketRETAIL MARKET

Bilateral Contracts Transact with a Supplier

Suppliers
Registers
Customers

Trades in the
WESM Contestable
Generation Customers

MO CRB
Trades in the WESM Participate Directly
in the WESM
 RCOA FUNDAMENTALS 036

MARKET DESIGN

WESM
Register as Direct Member Register as Direct Member
Supplier Registration GenCos
Register as
Indirect
Member
Modelling
Contestable
Customers Supplier and
Contestable
Forecasting
Customer
Directly Information
Connected Pricing and Submit Offers
Customers CRB Scheduling
• Retail Registration
Distribution • Customer Switching Retail Customer MQ
Settlement
Utilities/MSP • Retail MQ Declare BCQs to
Warehouse WESM Customers

Provide Retail Legend:

Customer MQ • Existing
• Enhanced
• New
 RCOA FUNDAMENTALS 037

MARKET DESIGN

CATEGORY WHOLESALE RETAIL

GenCos, IPP Admins, EC,DU,
Participation Suppliers, CC, DU,EC
Aggregators,NGCP, Suppliers, CC
Administration Market Operator Central Registration Body
Pricing
GenCos and Wholesale Cust thru
Contract Suppliers and CC thru RSC
bilateral contract
Spot LMP
Settlement/Billing
Contract Outside the Market
Billed to Direct Member Billed to Direct Member
Spot
(Gen or Wholesale Cust) (Suppliers or CC)
IT System MMS/CRSS

NSP NGCP DU/EC and NGCP (for DCCs)

MSP NGCP DU/EC and NGCP (for DCCs)

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