By
Elijah Felice Rosales - May 27, 2019 Last
updated on
THE International
Chamber of Commerce Philippines (ICCP) has asked the Philippine government to
strengthen its competitive selection process (CSP) for power distributors to
ensure that energy supply, reserves and demand are accurately projected.
In a statement over the
weekend, ICCP said it supports the mandatory implementation of the CSP. The
circular on CSP, issued in 2015 by the Department of Energy (DOE), requires
power distributors and cooperatives to procure their supply through the CSP
instead of negotiating them with generation firms. This was seen as a way to
ensure more competitive rates, given that the Philippines has one of the most
expensive electricity prices in the region.
The ICCP statement came
weeks after the Supreme Court ordered all power service agreements submitted by
energy distributors to the Energy Regulatory Commission to undergo CSP.
In a ruling on May 3,
the SC ruled in an en banc session the ERC committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it postponed the effectivity
of the CSP requirement.
With the decision,
distribution utilities, such as Meralco, are now mandated to undergo CSP,
making prior self-negotiated deals ineffective as a basis to hike rates passed
on to consumers.
Beyond prices: supply, investments
In its statement, the
ICCP argued that the CSP could be improved to make supply, reserves and demand
forecasts well-coordinated.
The ICCP recommended
scheduling a regular bidding period for base load and reserve capacity based on
100 percent of aggregated projected demand and standardized power supply
agreement. By doing this, it argued, the government could also secure more
investments in power generation.
“This approach ensures
a well-coordinated supply, reserves and demand forecast; strengthens the market
power of smaller distribution utilities by aggregating their demand; and makes
investment in power generation more attractive to investors, inducing greater
competition that could lead to power supply security and competitive tariffs,”
the business group said.
The ICCP also stressed
that the full implementation of the CSP will benefit consumers, as the order
goes beyond lowering the cost of electricity. It said the CSP will allow power
regulators to manage the contracting of energy supply and services.
“It will give the
government, through the DOE and the Energy Regulatory Commission, a sustainable
degree of check and balance in determining the capacity, energy and service
that will be contracted, and the opportunities to infuse a holistic strategy in
energy mix, locational, environmental and technological choices instead of just
leaving them at the whim of the related company generators,” ICCP said.
“By opening the
generation market, it will further invigorate sustainable investments in power
development and assure long-term power supply for the country at competitive
rates.
It will encourage the
introduction of more efficient technologies and harness the entrepreneurial
ingenuity of the private sector for the benefit of consumers,” it added.
The ICCP also said a
mandatory CSP will provide authorities, including the National Electrification
Administration (NEA), a mechanism to assist power cooperatives in planning and
energy mixing.
The CSP covers methods
of competition to find the least power cost from alternative but qualified
sources and feasible technologies. It also intends to address issues of
conflict of interest where price negotiated by distribution utilities and power
generators are ultimately passed on to consumers.
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