Epira Law

The Road to Open Access & Retail Competition (OARC)

Are you ready to change?

Soon, end-users, called the contestable market (meaning qualified), shall have the power to choose their supplier of electricity.

The Electric Power Industry Reform Act (EPIRA) of 2001, also known as R.A. 9136, envisioned a regime of fair and free competition in the country’s power sector as means to achieve quality, reliable, secured and affordable supply of electricity for the public. Herein, the law has been defined: “allowing any qualified person the use of transmission, and/or distribution system, and associated facilities…”, a key component to introduce competition in the market where electricity end-users have the choice where to source their power requirement. Subsequently, this should bring about competitive rates, competitive business environment, and best quality of service in electric industry.

But getting over the hurdles of several preconditions such as: unbundling and privatization of energy sectors, subsidy removal, establishing Whole Electricity Spot Market (WESM), and transfer of IPPs – made the Retail Competition quite difficult to implement;  but the Energy Regulatory Commission (ERC) has been consistently very optimistic that sometime on the 3rd quarter of 2011, restructured power industry shall commence. According to the commission, four of the five preconditions have already been met and implementing rules & regulations were duly laid down. 

The EPIRA prescribes a phased-in implementation, from the largest electricity consumers to the household level:

• In the initial phase, all electricity end-users with a monthly average peak demand of at least 1MW for the past 12 months shall compose the contestable market.
• In the 2nd phase ( two years after), end-users with at least 750 KW monthly average peak demand will join the list of contestable market. Aggregation of demand is allowed in this level.
• And ERC shall yet to determine and schedule the 3rd phase for end-users up to household level.

To update ERC's database of the contestable market, let us enlist ourselves so it can provide us updates and consequently enable us to prepare for developments. Please send the following information at contestable@erc.gov.ph or aamendoza@erc.gov.ph:

• Name of Company;
• Type of Business;
• President or Chief Executive Officer; and
• Contact Details, i.e., business address, e-mail address, telephone and fax numbers, etc.

Please note that the schedule of Retail Competition in the Visayas and Mindanao is yet to be determined by ERC. And there is no retail electricity choice in small island grids and all other areas that are not connected to the main transmission grid.

As property management company, what can we do to prepare for OARC in behalf of our Project/s? In this regard, we urge everyone to understand and prepare for the following:

• Ensure your electric power contract is updated, duly paid, and under the name of actual end-user.
• Do load-profiling by determining your company/project’s consumption pattern, i.e., the peak demand, energy usage & loads, loading time and overtime.
• Know the components of the Electric Bill
• Know the options in a Contestable Market
• Know how the Contestable Market works by reading the governing rules & regulations of Open Access and Retail Competition.

By understanding the above areas, these will help youtake control of your energy usage and load utilization and consequently reduce your electricity billing through competitive pricing by different Retail Electricity Suppliers.

In a competitive retail environment, contestable customers are encouraged to actively seek the Retail Electricity Supplier (RES) of their choice and take advantage of the competitive offers in the market. To assist the contesable customers in seeking a new RES, a list of licensed RES is posted in the ERC website
(www.erc.gov.ph). Only licensed RES’ are allowed to market or offer services to end-users.

But before going into the details of comparing offers from RESs, how to switch from RES to RES, practice the consumer rights, knowing how your electricity bill will look like, and learning by heart the Retail Competition rules ad resolutions, we ought to answer first the FAQ “Is my Project/ Building  a Contestable Market and when?”

On the initial implementation of OARC,

Art. 2, Sec.1.1 of Rules on Contestability specifically stated that the Contestable Market shall consist of end-users with a monthly peak demand of at least 1MW”.

And Art. 2, Sec. 2.4 further provides that the eligibility of an End-user shall be based on the monthly average peak demand as indicated by a single utility meter. An End-user maintaining multiple utility meters in a Single Premise has the option to consolidate its demand by requesting the Distribution Utility (DU) to install a single main utility meter, which may result in modifications in its connection agreement and Distribution Wheeling Service Agreement with the DU. In this case, the basis for contestability is the consolidated forecasted demand, which shall be based on the historical coincident peak demand of all meters, except that an end-user whose coincident peak demand totaling at least one (1) MW is not measurable by all its meters will be treated as newly connected End-user.

Therefore, if you are an end-user with 1MW you are in, provided that you are a Single Premise (meaning one Project) with either one registered utility meter or consolidated utility meter  (in case of a Project maintaining multiple utility meters of tenants/offices).

On the second phase of Retail Competition,

Art. 2, Sec. 1.2 & Art. 2, Sec. 2.7 of Rules on Contestability specifically stated that OARC shall occur two (2) years after the first phase. Thus, the threshold level for the Contestable Market shall be reduced to 750 kW. At this level, end-users within a Contiguous Area may aggregate their demand to reach the threshold level and become part of the Contestable Market.

Therefore, if you are end-user with at least 750 KW demand you are in the 2ND PHASE of implementation.  Contiguous Area refers to areas which are located within certain boundaries such as subdivisions, villages, economic zones, business districts and other similarly situated End-users in which supply of electricity can be measured through metering devices. Procedures for aggregation shall be dealt with in detail by the Rules for Aggregation.

What will likely to happen should we find ourselves without Retail Electricity Supplier (RES) on the specified dates of implementation above?  The Supplier of the Last Resort (SOLR) shall automatically provide electricity to contestable customers. Expect however that applied rate herein is much higher than RES due to incremental WESM’s energy price, administrative and overhead expenses, and other applicable charges.

Indeed, we are glad that the government is now playing actively in favor of the consumers. On our part, let us remember that “the failure to plan is to plan for failure”. We must be prepared to answer or enlighten any members of board/association who will come to us for inquiries regarding OARC. FPD Asia wants us to extend this valued service to our clients/projects by reducing the operational cost in utilities. Soon, a survey form on LOAD PROFILING shall be sent to all the projects to be filled out and a series of governing rules & regulations will be posted out in FPD website. We highly encourage all to participate in this survey and to educate by reading. READ NOW, LEAD TOMORROW!

RA 8495: “Mechanical Engineering Law”

The law technically has been in effect since 1998, though its full implementation has just recently been felt by the property management industry a year after the Glorietta incident last October 19, 2007.  Inopportunely the act shall we say has cornered almost all players in the industry to a point where we are given no other recourse but to fully comply despite of the  highly repressive provisions of the law which will most likely digress from the very purpose as to why the law was enacted.

The law to date has not been successful in terms of the number of compliance, and the number is not even expected to improve by 2011.  This is mainly due to several gray areas in the provision, which is being strongly contested ensuing from organizations, property management companies, independent building owners as well as other industry related entities.

FPD Asia for its part has been firm in its call to amend specific stipulations of the law, revisit and review the finer points and come up with more viable conditions.  In response to the issue at hand FPD Asia has undertaken measures to show our resolve in complying with R.A 8495.  These include among others, collecting all data and information such as the aggregate number of KW capacities of all mechanical equipment of all managed properties.   FPD Asia submitted a position paper to amend some restrictive provisions since there may not be enough Professional Mechanical Engineers in the country to man all buildings not mention the cost that an association will incur.  Corollary to this, a letter was sent to the PRC through the Board of Mechanical Engineering requesting for a complete list of all Mechanical Engineers in the Philippines both professional and registered including certified plant mechanics.  FPD Asia has created a committee that is making a thorough study and compilation of data to update and assist its managed properties.  Initially, FPD suggested to all its managed properties to check the availability of PMEs from among its unitowners and tenants.

To date, all these efforts have yet to bear any significant outcome.  However, our efforts will continue working with all other industry players including some non-government organizations who have expressed their willingness to support our position and we hope that eventually PRC will somehow reconsider and be open to further discussions.

 

Building “Green”

The Philippine Green Building Council’s (PHILGBC) conferences have been bringing together leaders from the property sector to discuss relevant issues on the environment that affects the industry.  These conferences were initiated to be the platform for meaningful dialogues to further promote green building in the Philippines.  Ms. Beth Rabuy, Arch. Mon Concepcion and Ms. Beng Molina have been actively attending forums and plenary to further enhance their knowledge that will be shared to all our project management teams and clients.  It is the company’s mission to work hand-in-hand with its instructions in promoting and complying in the green building accreditation, which will become a mandatory requirement to all the properties we are managing later on.

But what is a green building? - A green building is a structure that is designed, built, renovated, operated or re-used in an ecological and resource efficient manner.  Green buildings are designed to meet certain objectives such as protecting occupant health; improving employee productivity; using energy, water, and other resources more efficiently; and reducing the overall impact to the environment.

The PHILGBC officially released BERDE – Building for Ecologically responsive Design Excellence.  The Council developed a reliable performance rating system that will provide as a basis for determining environmental sustainability for the Philippines, which includes management, land use and ecology, water, energy, transportation, indoor environmental quality, materials, emissions, waste, heritage conservation, and innovation.

The objectives of green buildings are to reduce our carbon footprint; to optimize our water consumption; to reduce material input and waste; to preserve our cultural heritage and to preserve the site’s natural ecology.  The performance of a green building is measured through a typical general performance criteria: sustainable site planning, water efficiency, energy efficiency, and renewable energy, conservation of material and resources and safe indoor environment quality within buildings.

The Net Group is part of the pilot program of BERDE.  The NET Group’s NET Lima project located at the Bonifacio Global City will be the first building to use BERDE for New Construction Version 1.0.  The developers of NET Lima believe that with BERDE, they will give companies a jumpstart in the market with the experience that is tested and proven.

The challenge for the PHILGBC now is to make the concept work and acceptable by the market…green building materials, systems and technology must be cost effective.  Let’s now ask ourselves this question, “What can we do to contribute to the development of BERDE?”