ERC mulls portfolio approval of contracts

by Myrna Velasco June 20, 2016 (updated)

http://www.mb.com.ph/erc-mulls-portfolio-approval-of-contracts/

The Energy Regulatory Commission (ERC) is looking at the possibility of adopting “portfolio approval” of contracts as one way to fast-track consent for power supply agreements (PSAs).

According to ERC Chairman Jose Vicente B. Salazar, they are currently pursuing benchmarking initiatives so they will have a gauge on how to approve PSAs either according to technologies or geographical siting of power plants.

He noted that they are currently exploring that option to unload the voluminous PSA cases still pending with them for approval as well as with the new filings.

This is also being explored to streamline approval processes in the competitive selection process (CSP) enforced for distribution utilities (DUs) in their supply contracting.

It was gathered that on the April 30, 2016 deadline of the CSP implementation alone, roughly 90 power supply contracts have been lodged with the Commission.

From the industry, another proposal is for “portfolio power supply contract approvals” that will factor in various technologies according to the power system’s need, so that the final blended rate that shall be passed on to consumers will end up lower.

“We are currently studying portfolio approvals of contracts, so we want to do some benchmarking – for example, for power plants that are located in the same area,” Salazar said.

The CSP is a recent contracting edict prescribed both by the ERC and the Department of Energy (DOE) – and at the nick of deadline time this year, the regulatory body was again swamped with rate application filings.

Such mode of supply contracting requires all distribution utilities to “conduct an open and competitive process in selecting the power generating company from whom they are to purchase supply for their so-called captive markets,” the ERC has explained.

Captive market would refer to the segment of end-users that will remain without choice in their supply contracting, primarily the residential end-users.

As enforced, the power supply deals under CSP can only be done after the DUs have undertaken successful form of acceptable bidding process.

Salazar noted that the CSP shall set transparency on the energy volume that a DU must procure; what generation sources it intends to tap; as well as the contract or cooperation period.

The other important matters considered in the CSP have been “the tariff structure unbundled for capacity fees, variable and fixed operating and maintenance fees; fuel fee and others; and also the details of the transmission projects or grid connection facilities necessary to complement the proposed generation capacity.