Business Mirror
by Lenie Lectura - October 6, 2015
THE Department of Energy (DOE) has thumbed down a proposal of the Manila Electric Co. (Meralco) to extend the October 27 deadline for the DOE and the Energy Regulatory Commission (ERC) to issue the implementing guidelines (IG) for the competitive selection process (CSP), a policy that mandates all distribution utilities (DUs) to bid out their power requirements.
During Tuesday’s public consultation on the draft IG of DOE Circular 2015-06-008, “Mandating all DUs to undergo Competitive Selection Process in Securing Power Supply Agreement,” the agency is determined to come out with the rules governing the implementation of CSP three weeks from now.
“We will take note of that, but there are other clarifications or defaults that we have to come out by which we can release by October 27,” Energy Undersecretary Mylene C. Capongcol said in response to the concern raised by Ronald Vallez, a Manila Electric Co. (Meralco) lawyer.
Vallez told Capongcol and ERC Executive Director Francis Saturnino C. Juan that both government agencies need not rush the issuance of the IG, amid the alarming concerns raised by various stakeholders.
“Perhaps, we can defer the October 27 deadline. I don’t see any urgency on why we have to rush this. There is nothing in the law to meet the October 27 deadline. Maybe we can address all issues first and have clear answers so it will be clear to everybody,” Vallez said.
The ERC, Juan said, would issue supplemental guidelines other than the IG that will be released on October 27. “We took note of all comments and we are studying what can be issued by October 27, and what can be supplemented in the succeeding issuances of both DOE and ERC,” said Juan, while he stressed that the bidding would take place once all of the guidelines are issued.
Meralco raised anew that the CSP should be implemented on a voluntary basis. Vallez assured that the rates Meralco are charging to its more than 5 million customers is the least cost available in the market today. “It is a big question where this will redound to benefits to consumers because, right now, Meralco rates are proven to be the least cost to consumers,” he said.
At one point during the public consultation, Meralco First Vice President Ivanna G. de la Peña challenged consumer groups to engage into a dialogue with her just to prove that securing power-supply agreements (PSAs) via bilateral agreement is the best and least cost that can be offered to its customers.
Meralco rates, she pointed out, has been declining recently. “The results of the bilateral contracts have shown significant reduction in rates. So now there is a question that if we go with CSP with a third party that we do not know will this result in least cost? This is why we resist being forced into something that is yet unknown,” said de la Peña.
Under the draft IG, a third party, which will be appointed by the ERC and the DOE, will conduct the bidding.
The ERC said the third party shall compose a team of foreign and/or national experts with vast experience in open and competitive bidding as lead auction design advisor and auction manager in at least five separate successful auctions for power-supply contracts of electric utilities preferably in other countries that have implemented auctions, such as Chile and Brazil.
The third party must be equipped with comprehensive knowledge of the legal and regulatory framework for the Philippine electric-power industry.
Basically, the tasks of the third party are to develop the CSP design for the PSAs, develop bidders’ qualification criteria, draft and propose the CSP rules, develop and propose the PSA template, and manage the conduct of the CSP up to the award and execution of the PSAs. source
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