Source: BusinessWorld

3 January 2019 – AYALA-LED AC Energy, Inc. is looking at its retail electricity supply (RES) unit as a long-term business whose growth in the near term is meant largely to establish a respectable customer base, its top official said.

“We don’t want to grow for growth’s sake because this is a long-term business. I don’t think anyone is making money on RES. It’s really more of acquiring the customers and hope to build a long-term relationship base with that,” AC Energy Chief Executive Officer Eric T. Francia told reporters.

“It’s still a competitive market out there,” he said. “So to us, when we started this business, we wanted to establish our base.”

Mr. Francia said to be a “respected” player in retail electricity supply, one must have a minimum scale of power sales and a “good customer base.”

“I think 100 megawatts (MW) is a good size,” he said. “[It] puts us in the top five or six players. So it’s a good position especially if you combine it with the rest of the Ayala group. We’re probably the third or fourth largest as a group. So that’s a good position.”

The RES business is governed by rules on retail competition and open access (RCOA), which calls for contestable customers to move away from being part of the captive market of a distribution utility. These are customers whose electricity consumption for the past 12 months has reached the threshold set by the Energy Regulatory Commission (ERC).

RCOA rules have been questioned by some sectors. The resolution of a court case on the matter remains pending with the Supreme Court. For now, retail electricity suppliers are competing to corner a bigger share of the 1-MW contestable customers, which are not covered by the temporary restraining order issued by the court.

The switch to a licensed retail electricity supplier is meant to allow greater participation from new players, thus spurring competition and lowering power costs. RCOA is called for under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), the law that restructured the power sector.

Based on data from the ERC, AC Energy is one of three Ayala-led companies in the RES business. The other two are Ecozone Power Management, Inc. and DirectPower Services, Inc.

As of September 2018, AC Energy had a total of 71 customers with a total consumption of 106.43 MW, taking the lead for the Ayala group ahead of Ecozone Power’s 102.40 MW and DirectPower’s 95.93 MW.

As group, the Ayala companies have a combined market share of 10.6%, trailing Manila Electric Co.’s 31.56% share from its three RES units and the Aboitiz group’s 19.67% from five different entities.

“One of our focus is to retain and keep our customers satisfied and then we will be happy to win new customers. But we’re not very aggressive in getting others and dropping price. That’s not our strategy,” Mr. Francia said.