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ERC Adopts Rules for the Electric Retail Aggregation Program

Through Resolution No. 04, series of 2022, the Energy Regulatory Commission (“ERC”) adopted the Rules for the Electric Retail Aggregation Program (the “Rules”). The rules were adopted to ensure transparent and reasonable prices of electricity, protect public interest and consumers, and to establish standardized rules and procedures for the aggregation of electricity requirements of End-users in the Competitive Retail Electricity Market. The Rules shall apply to the following: (i) End-users; (ii) Retail Electricity Suppliers; (iii) Local Retail Electricity Suppliers; (iv) Distribution Utilities; (v) Suppliers of Last Resort; (vi) National Grid Corporation of the Philippines; (vii) Central Registration Body; and (viii) All other relevant industry participants, as applicable. 

The Retail Aggregator 

Under the rules, a Retail Aggregator may engage in consolidating electric power demand of End-users for the purpose of purchasing and reselling electricity on a group basis.1 End-users are any person or entity requiring the supply and delivery of electricity for its own use. To be able to engage in the consolidation of electric power demand, Retail Aggregators must first obtain a RES License from the ERC.2 The license shall be valid for five (5) years, renewable at the end of every term. It is also non-transferable and shall be subject to revocation for any violation of the Rules and other applicable laws and issuances.3 For current holders of a valid RES License, they would only need to submit a Letter of Intent to operate as a Retail Aggregator and be authorized to do so by the ERC.4 A Retail Aggregator shall follow the rules and obligations applicable to a RES as provided in the RES Licensing Rules and all other applicable resolutions. Further, it must register as a Wholesale Electricity Spot Market (“WESM”) member and comply with the rules and regulations governing Retail Competition and Open Access, and other relevant rules and regulations promulgated by the ERC and the Department of Energy.

Aggregation of End-Users within a Contiguous Area

End-users that have total monthly average peak demand of at least 500kW and that are located within a Contiguous Area may have their electricity demand aggregated with other End-users. Contiguous Areas are areas which are within the same boundaries in which the supply of electricity can be measured through metering devices. There is no limit on the number of End-users whose demand may be consolidated.5

Aggregation of End-Users may be allowed within the geographical boundaries of any of the following:

  1. Subdivisions;
  2. Villages;
  3. Business Districts;
  4. Special Economic Zones;
  5. Condominium buildings;
  6. Commercial establishments such as malls;
  7. Mixed-used development complexes; and
  8. Such other geographical areas where similarly situated End-users are located in which supply of electricity can be measured through metering devices.

For areas not provided above, the Retail Aggregator must submit a written request to the ERC for approval. End-users which demand are aggregated shall be referred to as the Aggregated Group.

Procedure of Aggregation

The Retail Aggregator shall enter into a Retail Supply Contract (“RSC”) with the Aggregated Group or into individual RSCs with the End-users.6 In either case, the terms and conditions of the contract must be the same. The billing scheme and payment may be agreed upon by the Retail Aggregator and the Aggregated Members.7

The Retail Aggregator which has consolidated demand of at least two (2) End-users must serve a written notice to the concerned Distribution Utility of such fact within sixty (60) days prior to the effectivity date of the RSC. The notice must include the customer information of the End-users and the effectivity date of the RSC between the Retail Aggregator and the Aggregated Group. 

Termination of the RSC Contract

A member of the Aggregated Group or an Aggregated Member cannot opt out of the group during the term of their contracts, unless for valid reasons. Valid reasons include, but are not limited to the following acts of default by the Retail Aggregator:8

  1. Breach of confidentiality regarding the Aggregated Member’s information;
  2. The disqualification of the Retail Aggregator from performing the services due to expiration or revocation of its License;
  3. Excess billing of the contracted electricity rate to its Aggregated Group unless measures were immediately taken by the Retail Aggregator upon discover of error;
  4. Revocation of WESM membership;
  5. Non-payment on its obligation to the Distribution Utility, Generation Company, and WESM, among others;
  6. Final decision issued by any court in the Philippines convicting the Retail Aggregator of any crime or offense involving fraud or deceit;
  7. The Last Resort Supply Event provided in the Supplier of Last Resort Rules shall likewise be considered an act of default; and
  8. Any other analogous event which the ERC may deem as an act of default or breach.

The Aggregated Member may also terminate its contract subject to the parties’ mutual agreement and in accordance with the terms of their respective contract.9

1 Section 3, Article I, Energy Regulatory Commission (“ERC”) Resolution No. 04, series of 2022.
2  Section 1, Article VII, ERC Resolution No. 04, series of 2022.
3 Article X, ERC Resolution No. 04, series of 2022.
4 Section 2, Article VII, ERC Resolution No. 04, series of 2022.
5 Section 1, Article III, ERC Resolution No. 04, series of 2022.
6 Section 3, Article IV, ERC Resolution No. 04, series of 2022.
7 Section 2, Article V, ERC Resolution No. 04, series of 2022.
8 Section 6, Article IV, ERC Resolution No. 04, series of 2022.
9  Section 7, Article IV, ERC Resolution No. 04, series of 2022