Emergency power supply procurement eyed

Published May 22, 2019, 10:00 PM By Myrna M.Velasco

https://business.mb.com.ph/2019/05/22/emergency-power-supply-procurement-eyed/

The Department of Energy (DOE) has been prodded to take “emergency recourse” on power supply procurements for the distribution utilities or electric cooperatives (ECs) knocked down by the recent decision of the Supreme Court on the case relating to competitive selection process (CSP) in the industry.

 “For emergency cases, they (DUs) can trigger an emergency purchase,” Senate Committee on Energy Chairman Sherwin T. Gatchalian has propounded. But for that policy to be operationalized, it must first be green-lighted by the DOE – as its CSP rules had been the preferred policy track of the SC ruling.

The senator cautioned though that not all cases – covering the 90 affected power supply agreements (PSAs), shall be classified as “emergency cases.” Therefore, he advocated that the energy department has “to evaluate very carefully” which power procurements it should codify as “emergency”.

An emergency PSA, he said, could last either for 30 days to six (6) months depending on the power supply exigency of specified power utilities. But to fast-track processes comprehensively, the DOE must also need to work hand-in-hand with the Energy Regulatory Commission (ERC) because the other critical end of the CSP process would be the eventual approval of the PSAs.

At the same time, the lawmaker is nudging the energy department to shorten its overall CSP process – from what it currently sets out at six (6) months to just 45 days, so brownouts can be prevented.

“The DOE should shorten CSP, it cannot be six months because a typical bidding in LGU (local government unit) is about 45 days. So if they can lower down the time of the CSP to 45 days or even shorter, that would be the best case,” he said.

For players in the industry, however, they noted that the major problem is not even the timeframe – but this drifts back into realities that many power utilities, (primarily the ECs) cannot even afford to undertake their respective CSP or bidding processes on power supply procurements.

On top of that, the entire industry is also at a loss how to move forward with the CSP process from the SC verdict-favored 2018 CSP Circular of the DOE, because the crafting of guidelines stalled at its framework discussion phase with the ERC.

Until this time, the DOE cannot give categorical statement on when it can advance the bidding exercises for the affected PSAs – and what are the rules of the game that it shall be enforcing on the industry players.

But for the sake of harmonizing policy and regulatory frameworks and to provide quick fixes to the sector’s supply procurement snags, Gatchalian is recommending that the two agencies must synchronize actions and decisions moving forward.

“There’s still a big gap between DOE and the ERC and that needs to be resolved – what should be the role of the DOE and the ERC insofar as CSP is concerned,” he said.