AboitizPower favors voluntary use of auctions for power supply deals

Business World Online
Posted on September 22, 2015 07:54:00 PM

ABOITIZ POWER Corp. (AbotizPower) has weighed in on regulators’ plans to implement a mandatory bidding process for power supply deals, calling instead for the scheme to be offered on a voluntary basis.

Antonio R. Moraza, AboitizPower president, said the company’s distribution business units sometimes opt for a competitive selection process (CSP) for the supply needs of distribution utilities (DUs).

“We’ve been practicing it even before the rule came out,” Mr. Moraza said.

He said Visayan Electric Co. and other distribution utilities seek bids for additional power supply.

“That way, it’s transparent and the consumers will eventually get the best price,” Mr. Moraza said.

While recognizing that the CSP’s intent is to achieve best outcomes for electricity end users, he said AboitizPower does not think that imposing “a one size fits all” policy is the solution.

“Each DU has its own issues,” he said, noting that some may need baseload or peaking supply for instance.

Mr. Moraza said what the government should do is to “make sure the process happens and give (DUs) the freedom to make their own decisions.”

“After all, they are answerable to their consuming public and to the ERC (Energy Regulatory Commission),” he added.

Manila Electric Co. (Meralco) earlier expressed its reservations on the CSP requirement, saying this would not necessarily result in least-cost of power for consumers.

Just like Meralco, the official from AboitizPower -- the second largest distributor in the country -- also noted that CSP can instead be done on a voluntary basis.

“Personally, I favor voluntary. Just the fact that they (DUs) are doing it and they have to show they are doing something, I think that’s fine,” Mr. Moraza said.

He added that “sometimes, bilateral negotiations can achieve what you want.”

“But what’s important is the transparency of pricing to the public,” he said.

A mix of bilateral negotiations and voluntary CSP would be “the most appropriate way” of securing supply, according to Meralco President Oscar S. Reyes in an earlier interview.

On the other hand, Ayala Corp. -- which is engaged in power generation through a subsidiary -- expressed support for the CSP directive, saying this will redound to the benefit of consumers.

Ayala Managing Director John Eric T. Francia said CSP will make the process of securing the customers’ power requirements “transparent and professional.”

He noted that it will also “force [power generators] to sharpen pencils and make the best deals,” and at the same time weed out the flippers, or those developers that are not serious in pursuing their projects.

The ERC released recently the first draft of the implementing guidelines for the circular issued by the Department of Energy, mandating all DUs to undergo CSP in securing power supply agreements.

The draft was made available to all interested parties, who may submit their comments before Oct. 1.

ERC Chairperson Jose Vicente B. Salazar said that nationwide consultations will be done next month, with a decision due Oct. 27. -- Claire-Ann Marie C. Feliciano source