At least 400 major power users remain with distribution utilities, energy regulator says
AT least 400 power users in Luzon and Visayas with an average monthly consumption of at least one megawatt (MW) have remained within the captive market of distribution utilities as of the first quarter, giving electricity retailers enough room to gain dominance in the highly competitive contestable market.
Latest data from the Energy Regulatory Commission (ERC) show Luzon has a total of 301 “contestable customers” or those whose power usage have reached a monthly average of one MW in the past year and have gained the power to buy their electricity from licensed retail electricity suppliers (RES), which claim to offer lower rates than distribution utilities.
The contestable consumers in Luzon have a total demand of 1,440.11 MW, or way more than the share of any of the dominant players in the retail electricity market. In the Visayas, the number of customers reached 101 with a total consumption of 222.48 MW.
Retail electricity supply is enforced where the electricity spot market operates. Thus Mindanao has remained excluded under the rules covering retail competition and open access.
As of the first quarter, the contestable customers that have yet to make a switch were largely being served by private utilities, or close to 63% of the total power demand. The rest were being served by the grid operator with a 22.6% share, electricity cooperatives with 8.6%, with economic zones accounting for the rest.
The ERC data show that the weighted average price being offered by the retail electricity suppliers was P4.82 per kilowatt-hour. A total of 30 licensed RES were operating during the period, or more than the number of “local” RES, or those serving the contestable customers of a distribution utility.
The local RES of distribution utility Manila Electric Co. (Meralco) remains the dominant retail supplier with a market share of 43.28%.
The Aboitiz group trailed with a share of 18.26%, distributed among different RES units including Aboitiz Energy Solutions, Inc. with 8.52%, Adventenergy, Inc. with 4.47%, Subic Energy Corp. with 2.28% and SN Aboitiz Power-RES, Inc. with 2.26%. Aboitiz subsidiaries San Fernando Light and Power Co. and Visayas Electric Co. each has a share of less than 1%.
Phinma Energy Corp. followed with a share of 11.69%. The Ayala
group was fourth with a share of 10.91% under units Ecozone Power Management, Inc., DirectPower Services, Inc. and AC Energy Holdings, Inc.
John Eric T. Francia, AC Energy Holdings president and chief executive officer, said the company had started signing contracts with contestable customers in the fourth quarter of 2016. He estimates the company’s customers to have signed “more or less” 50 MW worth of contracts.
“We’re not ashamed to be small, for now,” he said. “Our focus is, we want to make sure that the customers that we have are extremely satisfied.”
“We don’t want to grow too fast because our priority is number one, to establish ourselves in the sector, to have a very solid base, a solid team, solid set of products and services that the customers really need,” he said. “We customize a lot for our customers,” he said, adding that growing too big quickly might reduce the company’s offering to a packaged product that will not differentiate AC Energy from other retail electricity suppliers.
Mr. Francia said the company recently signed up a project by DoubleDragon Properties Corp. in Binondo, Manila with a consumption of “a little more than 1 MW.”
Jaime T. Azurin, president of Global Business Power Corp., said there is a need for regulators to clarify whether contestable customers’ switch of power source from a distribution utility to a retail electricity supplier is voluntary or mandatory.
The source of confusion is a Supreme Court ruling putting on hold rules that called for the lowering of the mandatory threshold to include users in the 750 kilowatts to 999 kilowatts range.
Mr. Azurin said there is reluctance on the part of distribution utilities to allow the switch even for the 1-MW customer. The company’s retail electricity business operates under subsidiary Global Energy Supply Corp., which has a market share of 1.68% as of the first quarter.
“If they [regulators] will continue to [opt for] mandatory, we’ll get more,” he said.
As of March, a total of 323 customers in Luzon with a combined consumption of 257.86 MW fall under the lowered threshold. In the Visayas, the number of customers reached 35 with a consumption of 30.11 MW.