PHILIPPINES Law and Practice Contributed by: Maria Lethel C. Alburo-Mejia, Puno Law
mance-based regulations. The EPIRA also man- dated the privatisation of TransCo through an outright sale or concession contract carried out by PSALM. In December 2007, the consortium of Monte Oro Grid Resources Corporation, Calaca High Power Corporation and the State Grid Corporation of China won the concession con- tract for TransCo. On 14 January 2009, PSALM formally turned over the 25-year concession of TransCo to the National Grid Corporation of the Philippines, the project company established by Monte Oro Grid Resources Corporation for this purpose. Ownership of the transmission assets remains with TransCo. Distribution The distribution of electricity to end-users is considered a common carrier business requir- ing a national franchise and is regulated primarily by the ERC. Distribution of electricity is carried out by a distribution utility which is any electricity co-operative, private corporation, government- owned utility or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with the EPI- RA. A distribution utility must provide distribu- tion services and connections to its system for any end-user within its franchise area. Access by all users to its system must be open and non- discriminatory. In remote and unviable areas where immediate extension of the distribution line is not feasible, the areas must be opened to other qualified third parties that may provide the service. Under the EPIRA, distribution utilities are required by law to supply electricity in the least expensive manner, given that generation costs are passed entirely to consumers. Distribution utilities may enter into bilateral power supply contracts with generation companies subject to the review of and approval by the ERC. Distribu-
tion utilities are also mandated to procure the supply of electricity through a competitive selec- tion process, which is a transparent process for procuring power supply for the captive market. Supply The supply of electricity means the sale of elec- tricity directly to the end-users. The supply func- tion used to be undertaken by the franchised distribution utility. However, with the implemen- tation of Retail Competition and Open Access (RCOA), a retail electricity supplier is authorised to supply electricity to “contestable customers” with an average monthly peak demand of at least 500 kW for the 12 months preceding. Con- testable customers, as opposed to the captive market that is served by the distribution utility, have their choice of retail electricity supplier. This framework encourages competition at the retail level and is structured so that the threshold for retail competition will gradually decrease over time to reach household levels. The supply of electricity is not a public util- ity. Retail electricity suppliers are nevertheless required to secure a licence from the ERC and are subject to the rules and regulations on abuse of market power and other anti-competitive behaviour. In 2008, pursuant to the goal of strengthening and enhancing the energy efficiency and con- servation programme of the Philippines and aggressively developing its renewable energy (RE) potential, the Philippine Congress enacted Republic Act No 9513 or the Renewable Energy Act of 2008 (the “RE Act”). The RE Act sets out the framework for the accelerated development and advancement of RE resources including biomass, solar, wind, geothermal, ocean energy, and hydropower. It
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