Businesses are being urged to explore retail electricity supply as the government’s open-access power market expands, giving more companies the ability to choose their electricity provider and potentially reduce costs.
The continued lowering of the eligibility threshold under the Retail Competition and Open Access, or RCOA, program is opening the market to smaller commercial establishments and small and medium-sized enterprises, said Marko Sarmiento, vice president and head of operations at COREnergy, the retail electricity supply unit of Cebu-based Vivant Group.
The threshold for contestable customers was reduced to 100 kilowatts of peak demand in June from one megawatt when the program began in 2013, expanding the pool of businesses that can negotiate directly with retail electricity suppliers.
‘The biggest potential savings are in the generation charge,’ Sarmiento said, noting that the component accounts for more than half of a typical electricity bill.
Customers shifting to a retail electricity supplier may cut generation costs by about 10 percent to 15 percent although actual savings depend on the distribution utility, consumption profile and prevailing electricity prices.
The arrangement can also give businesses greater certainty over power expenses. Retail suppliers may offer fixed-rate contracts of at least one year, allowing companies to better manage electricity budgets and protect against price volatility.
The transition requires no major investment in power infrastructure. Existing electrical lines and distribution assets remain under the local distribution utility, while the shift largely involves documentation and regulatory coordination. An advanced meter may also be installed.
An initial transition typically takes about 90 days, while customers already under a retail electricity supply arrangement may switch providers in about 30 days, Sarmiento said.
Still, awareness remains one of the biggest obstacles to wider adoption. More than half of eligible contestable customers have yet to switch suppliers, according to Sarmiento, as many businesses remain unfamiliar with the program or view the process as complicated.
Companies also need to look beyond headline rates when choosing a supplier, weighing contract terms and the provider’s ability to execute the transition.
McDonald’s Philippines is among companies turning to the open-access market to help manage operating costs while continuing to expand.
‘We had to find ways to optimize our operations, and that’s precisely why COREnergy comes in,’ McDonald’s Philippines Managing Director Margot Torres said at an Aug. 27 briefing.
Utilities account for about 6 percent to 7 percent of the company’s sales, with electricity representing roughly 72 percent of its utility expenses, Torres said.
The company has shifted 17 stores to COREnergy and plans to add 19 outlets in Negros. The partnership will eventually cover 59 stores across Cebu, Negros, Northern Mindanao and Davao.
In Cebu, McDonald’s expects to save about P52,000 per store each month, equivalent to an estimated 10 percent to 14 percent reduction in electricity costs.
The savings are expected to help offset rising labor and other operating expenses without passing the full impact on to consumers.
‘For us, it’s not just a cost savings exercise. It’s cost optimization,’ Torres said.
Energy management is becoming increasingly important as the restaurant chain expands. McDonald’s has 38 stores in Cebu and plans to open five more before the end of the year. It operates about 100 stores across the Visayas and around 75 in Mindanao, out of 862 nationwide.
Torres said the company intends to keep expanding in the two regions, increasing the need to manage energy costs across a growing store network.
‘We are not just a big market; we’re also a high-growth market,’ she said, noting that the Philippines ranks among McDonald’s fastest-growing markets globally in terms of store expansion.
Switching to a retail electricity supplier, however, does not eliminate power interruptions. While suppliers may source electricity from different generation facilities across the country, the distribution utility remains responsible for the local network.
The growing retail electricity market nonetheless gives businesses greater control over the generation component of their power costs, Sarmiento said.
COREnergy is targeting about 300 accounts by year-end, up from around 50 at the end of 2025, as more businesses become eligible under the lower threshold. More than 50 retail electricity suppliers now operate in the country, giving eligible customers more options to compare providers and negotiate power contracts.