CSP guidelines issuance on power contracting lapses

by Myrna Velasco October 28, 2015

All stakeholders in the power industry waited with bated breath if the implementing guidelines of the proposed competitive selection process (CSP) on power supply contracting for distribution utilities (DUs) would have been out on the government-imposed deadline of October 27, but what came next was a perplexing ‘suppression of information flow’ and finger-pointing between the Department of Energy (DOE) and the Energy Regulatory Commission (ERC).

In a text message from Europe, Energy Secretary Zenaida Y. Monsada has noted that it should be the ERC “that will be coming up with a statement on or discussing with the media” the deferred issuance of the CSP guidelines.

Sources from the regulatory body, on the other hand, have indicated that deliberation on a resolution explaining the next moves on the CSP was still on calendar yesterday (October 28).

Ironically, despite the promise of transparency and purported positive impact of the CSP on electricity consumers, the concerned government agencies have been unbelievably muted when media queried about the lack of decision on their prescribed October 27 deadline.

Energy officials have been explaining earlier though the extent of the unresolved questions from stakeholders have prompted them to delay “and study first all of the issues” relating to the CSP mandate.

Among the contentious issues thrown against the CSP policy have been anchored on the aggregation plan for the DUs; probable subsidization between strong and weak electric cooperatives; possibility of incurring additional stranded liabilities that will eventually be passed on to consumers; and the manner of appointing the prescribed third party that shall undertake the tendering process for the power supply contracts.

Just recently, CSP proponent and senatorial aspirant Carlos Jericho L. Petilla has sounded off that he prefers a third party that shall be under the supervision or is supported by the United States Agency for International Development (USAID).

“I want USAID to be the third party,” he stressed, apparently referring to a consultancy firm that is being underpinned by a grant or any form of support from the American multilateral agency.

It can be culled that a USAID-funded study channeled through the University of the Philippines-School of Economics is openly promoting the CSP process on supply procurement for the restructured power sector.

For many of the industry stakeholders though, they find higher level of comfort in having a carved-out unit of the ERC as a third party in the power supply tendering process.

The CSP third party shall be entitled to a fee that shall be collected from the participating generation companies that will then subsequently be passed through to the concerned distribution utilities.

The final pass-on of the fee to the consumers and the magnitude of that cost are still unknown though in the draft guidelines jointly issued previously by the DOE and the ERC.