More customers are anticipated to transition from being captives of their distribution utilities (DUs) to becoming contestable customers who can select their suppliers as the regulator prepares to lower the threshold for Retail Competition and Open Access (RCOA).

Energy Regulatory Commission (ERC) chairperson Monalisa Dimalanta said this, in turn, will lower the demand for power supply agreements (PSAs) and competitive selection processes (CSPs) over the next four to five years.

“In the near future, there will be fewer customers served by DUs under PSAs. There will be less relevance for CSPs because customers will be contracting directly for their supply,” Dimalanta said in an interview at the sidelines of an energy forum last week,  

RCOA allows consumers to procure electricity directly from power generators, bypassing traditional intermediaries.

At least 500-KW consumer

Under the current provisions of RCOA, businesses are allowed to make a choice and directly tap their energy supplier if they have a monthly consumption of at least 500 kilowatt hours (kWh).

Last year, the ERC issued updated guidelines on the conduct of CSPs for the procurement of power supply of DUs and electric cooperatives.

The ERC had made several changes to the guidelines it issued last October. 

One of the changes is that DUs are now required to assess whether the least cost can be achieved through financial or physical PSAs.

Financial PSAs are not specific to a particular power plant and must outline a tariff structure that remains fixed throughout the contract term. 

On the other hand, for physical PSAs that are specific to a power plant, the tariff structure and cost components must be provided by DUs in their terms of reference.

The ERC also made the process for procuring emergency PSAs more efficient, with clearer timelines for evaluation to meet the emergency power needs of DUs.