RETAIL COMPETITION AND OPEN ACCESS

Section 1. Guiding Principle.

As per Section 31, Retail Competition and Open Access shall be implemented no later than 3 years from the effectivity .

Section 2. Scope of Application.

The provision of open and non-discriminatory access to the transmission system and Distribution Systems shall apply to the following:

• a) WESM Participants;
• b) TRANSCO or its Buyer or Concessionaire;
• c) DUs;
• d) EZs;
• e) Suppliers;
• f) IPP Administrators;
• g) Market Operator
• h) End-users in Contestable Markets.

Section 3. Conditions for Declaring Initial Implementation of Open Access

The ERC shall, after due notice and public hearing, declare initial implementation of Open Access not later than three (3) years from the effectivity , subject to the following conditions:

• a) Establishment of the WESM. For this purpose, the “establishment” of the WESM shall be deemed to have occurred upon the effectivity of the Market Rules by the DOE and initial operation of the AGMO pursuant to Rule 9 on the Wholesale Electricity Spot Market (WESM). (b) Approval of unbundled Transmission and Distribution Wheeling Charges. The ERC shall approve the unbundled rates of NAPOCOR and Distribution Utilities, which shall include the transmission and wheeling charges, within one (1) year from the effectivity .

• c) Initial implementation of the Cross Subsidy Removal scheme.

For this purpose, initial implementation of the cross subsidy removal scheme shall occur on the next billing period after the issuance of ERC approval. The scheme for cross subsidy removal shall include guidelines or a schedule for the removal of each type of cross subsidy and may be altered, modified and/or amended by the ERC pursuant to Rule 16 on Removal of Cross Subsidies.

• d) Privatization of at least seventy (70%) percent of the total capacity of generating assets of NAPOCOR in Luzon and Visayas. (e) Transfer of the management and control of at least seventy percent (70%) of the total energy output of power plants under contract with NAPOCOR to the IPP Administrators.

Section 4. Specification of the Contestable Market for Open Access

Upon the initial implementation of Open Access, the ERC shall allow all electricity End-users with a monthly average peak demand of at least one megawatt (1 MW) for the preceding twelve (12) months to be the Contestable Market.

Two (2) years thereafter, the threshold level for the Contestable Market shall be reduced to seven hundred fifty kilowatts (750 kW). At this level, Aggregators shall be allowed to supply electricity to End-users whose aggregate monthly average peak demand within a Contiguous Area is at least seven hundred fifty kilowatts (750 kW).

Subsequently and every year thereafter, the ERC shall evaluate the performance of the market. On the basis of such evaluation, it shall gradually reduce the threshold level until it reaches the household demand level. In the case of ECs, Retail Competition and Open Access shall be implemented not earlier than five (5) years from the effectivity .