What is Open Access?

At present, practically all households and commercial establishments are not free to choose their electricity supplier. There are several generating companies that can supply power but consumers generally buy power only from their local distribution utility.

By the same token, generators/suppliers cannot sell directly to households and commercial establishments. They can only sell to distribution utilities who re-sell the electricity to end-users.

The implementation of the retail open access will break open this supply chain. Retail open access is a condition wherein consumers- industries, commercial establishments and residential users- exercise freedom to choose their respective supplier of electricity whom they deem offers the most reasonable cost and the most efficient service.

The supplier of electricity could be a power generator, distribution utility or an independent aggregator. An aggregator is an electric industry participant who adds together individual power requirements into a size large enough that would enable them to shop for a best deal in the, power market. In like manner, power suppliers can directly transact business with any customer class - commercial establishments and the residentials.

Why do we need to implement Open Access?

The ultimate objective of the reforms in the power industry is consumer-focused, that is:

Consumer Satisfaction

The open access policy fosters competition that will naturally bring about increased efficiencies in the power industry. Because the threat of changing suppliers will be real which could mean possible loss of a market, all suppliers of electricity 411 be forced to maintain optimum operation to be able to offer the most competitive power rates and the most efficient level of service.

Consumer Choice

Given a wide array of electricity suppliers, industries will gain greater flexibility and effectiveness in managing their technical and financial activities with regard to electricity expenses, Well-managed operating expenses could lead to growth in economic activities.

Consumer Empowerment

In a competitive power market brought about by open access, consumers will patronize suppliers that can provide quality and reliable power services at reasonable prices. Likewise, consumers will not patronize suppliers whose level of service and power rates are not at par with what the market is offering.

How can we Accelerate the Implementation of Open Access?

The Electric Power Industry Reform Act mandates the implementation of the open access. The Law, however, prescribes certain conditions prior to its implementation. These are: establishment of the WESM, approval of unbundled transmission and distribution wheeling charges, initial implementation of the cross subsidy removal scheme, privatization of at least 70% of the total generating assets of Napocor in Luzon and Visayas and transfer of the management and control of at least 70% of the total energy output of power plants under contract with Napocor to the IPP administrators.

The Government, however, believes that open access can already kick off even without meeting all the pre-conditions. For one, the Energy Regulatory Commission has already started ruling on the unbundled rate hike petitions filed by the power firms. The DOE is also exerting all efforts to start by the end of the year the operations of the interim WESM. The DOE is also considering introducing a limited form of open access by the end of 2003, regardless of the privatization of Napocor assets by transferring the management of Napocor-owned plants and IPP-owned plants to independent administrators.