Monday, March 28, 2016

ERC postpones CSP implementation



by Myrna Velasco March 22, 2016

After several complaints and requests for clarifications on the policy, the Energy Regulatory Commission (ERC) has finally moved to April 30 this year the mandatory implementation of the competitive selection process (CSP) on power supply contracting for distribution utilities.
This effectively provides transition on the policy which was first enforced by a Resolution dated October 20 last year. Nevertheless, myriad of questions were raised as the edict hobbled some power project implementations in the industry.
The ERC noted that it received “several letters from stakeholders which raised issues on the constitutionality of the effectivity of the CSP resolution.”
Additionally, the affected industry players “sought clarification on the implementation of the CSP and its applicability to the renewal and extension of the PSAs (power supply agreements).”
The stakeholders further requested for definitive guide on the accepted forms of CSP that they must execute when entering into supply contracts with DUs; and what are the possible exemptions to the rules.
In its newly issued resolution, the regulatory body emphasized that the CSP resolution’s effectivity is restated to be April 30, 2016.
It stipulated further that “all PSAs executed on or after the said date shall be required, without exception, to comply with the provisions of the CSP Resolution.”
The ERC similarly upheld “the requirement of at least two (2) CSP qualified bids for the CSP to be considered successful.”
On requirement of CSP renewals, the Commission qualified that this could only be done once at least a year from the end of their respective terms.
Beyond that, the ERC stated that “automatic renewal clauses or extension of PSAs shall no longer be permitted upon effectivity of (the) Resolution.”
It has to be recalled that several power generation companies and electric cooperatives sought exemption from the conduct of CSP on their supply deals that lapsed immediately after the issuance of the October 20 resolution.
In that preliminary edict, the cut-off on contracts that shall not go through CSP process had been November 6, 2015 for those that have not been filed yet with the Commission.

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