Bidding eyed for power firms’ supply needs

Business World Online
Posted on July 06, 2014 10:50:17 PM

THE ENERGY department wants to require all power distributors to contract their needs via bidding to ensure competitive pricing.

All distribution utilities (DUs) and electric cooperatives (ECs), said Energy Secretary Carlos Jericho L. Petilla, will be asked to present their demand and existing contracts.

“It will require all DUs and ECs to actually lay out their contracting strategy and ensure that they are contracting capacity for future demand,” Mr. Petilla added.

All distributors will be asked to contract 100% of their six-year demand forecasts, and Mr. Petilla also expects that this will benefit developers who want to build power plants but are finding it hard to secure off-takers.

“There are a lot of interest to build power plants but some of them don’t have buyers. Of course, they want assured return of investment. If we will require all DUs and ECs to fully contract, then these developers will surely get buyers,” he said.

He acknowledged that some ECs were already conducting bidding. Requiring all to do so, Mr. Petilla added, will ensure a transparent selection process and competitive pricing.

“I’d like to focus in this because we have a problem on both the pricing and supply. At the same time, by auctioning off, we are being more transparent,” Mr. Petilla said.

“By ensuring future supply, we can make prices less volatile and more competitive. We will also be less reliant to the WESM (Wholesale Electricity Spot Market), because that should only be a backup and not something we should rely on.”

The Energy department, he added, would be “more than happy to look at the issues.”

“I think the secret towards ensuring power stability is to set the tone of long-term transparent contracting now,” Mr. Petilla said.

The Energy chief said he was already discussing the possibility of implementing the scheme via a law. -- Claire-Ann M. C. Feliciano source