Testimony last week before the Philippine Joint Congressional Power Commission seemed to establish that the prerequisites for declaring open access in electricity markets had been established, but both regulators and market participants predict further delays before businesses and consumers start to enjoy the benefits of competition.
Under the Electric Power Industry Reform Act of 2001 (EPIRA), open access is designed to create a competitive market for electricity generation in the Philippines by allowing businesses and consumers to choose their electricity supplier based on price and source (e.g., traditional or renewable sources). In the first phase of implementation, open access would be made available to entities consuming more than 100 kilowatt-hours per day as soon as 70% of state-owned generating assets and 70% of independent power producer administrator (IPPA) contracts are privatized.
After a decade of waiting for the privatization of generation assets to be completed, it looked like the threshold had been met this week. Representatives of the Energy Regulatory Commission (ERC) and the Power Sector Assets and Liabilities Management Corp. (PSALM) testified before the Philippine Congress that 79.56% of the generating assets and 76% of IPPAs have been successfully auctioned off. This led Senator Sergio Osmena III to recommend "the declaration of open access especially with the anniversary of the EPIRA coming up."
If it were only so simple. The ERC replied that it was still evaluating public comments. Its Executive Director said that he hoped the ERC would be in a position to declare open access "by this year, maybe the middle of the year."
Of course, regulatory approval is just the first step. Once open access is declared, the commercial terms, settlement rules, appointment of a settlement agent, and other logistics of operating an open market must be implemented. Some regulators and market participants estimate that this process could add another year or two before consumers get the benefit of a law passed a decade ago.
John Howley
Woodbridge, New Jersey
Under the Electric Power Industry Reform Act of 2001 (EPIRA), open access is designed to create a competitive market for electricity generation in the Philippines by allowing businesses and consumers to choose their electricity supplier based on price and source (e.g., traditional or renewable sources). In the first phase of implementation, open access would be made available to entities consuming more than 100 kilowatt-hours per day as soon as 70% of state-owned generating assets and 70% of independent power producer administrator (IPPA) contracts are privatized.
After a decade of waiting for the privatization of generation assets to be completed, it looked like the threshold had been met this week. Representatives of the Energy Regulatory Commission (ERC) and the Power Sector Assets and Liabilities Management Corp. (PSALM) testified before the Philippine Congress that 79.56% of the generating assets and 76% of IPPAs have been successfully auctioned off. This led Senator Sergio Osmena III to recommend "the declaration of open access especially with the anniversary of the EPIRA coming up."
If it were only so simple. The ERC replied that it was still evaluating public comments. Its Executive Director said that he hoped the ERC would be in a position to declare open access "by this year, maybe the middle of the year."
Of course, regulatory approval is just the first step. Once open access is declared, the commercial terms, settlement rules, appointment of a settlement agent, and other logistics of operating an open market must be implemented. Some regulators and market participants estimate that this process could add another year or two before consumers get the benefit of a law passed a decade ago.
John Howley
Woodbridge, New Jersey
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