Date
Published 08/22/2019
Power-supply agreements
(PSAs) affected by the Supreme Court decision may apply for a temporary
exemption before the Department of Energy (DOE).
Based on an advisory
issued by the agency, the affected distribution utilities (DUs) may
exercise the provisions in Sections 2.2.2 and 2.2.4 of Department Circular (DC)
2018-02-0003, subject to the limitations stated therein—specifically for not
more than one year—during which time the DU must conduct the competitive
selection process (CSP) for its long-term power supply.
“DUs with PSA
that have been invalidated by the SC decision can apply for CSP exemption as
provided in the 2018 DC. The exemption will only be for one year,” DOE
Assistant Secretary Redentor Delola said, adding that the one-year exemption
will assure the DU of steady supply for one year while a CSP is being conducted
to replace the contracts affected by the SC decision.
During the
one-year exemption, the rate shall not be higher than the latest Energy
Regulatory Commission-approved generation tariff for the same or similar
technology in the area. “It has to be lower than the approved rate of the same
technology in the area,” stressed Delola.
The DOE said that
affected DUs that will apply for CSP exemption shall submit documents in
support of their application, including but not limited to Board Resolutions, a
copy of the negotiated PSA and supply and demand scenario showing impact of the
SC decision on its supply profile.
The application for CSP
exemption must also be accompanied by an updated Power Supply Procurement Plan
of the concerned DU.
The SC decision
requires all PSAs forged after June 30, 2015, to undergo CSP.
The CSP requires
DUs to hold competitive bidding for their supply requirements as against
securing power deals via bilateral contracts. This is meant to ensure
transparency and fair competition.
The SC decision stemmed
from allegations that the ERC gave due preference to Meralco by extending the
deadline for compliance of CSP.
The ERC appealed the SC
ruling. However, this was denied recently.
The ERC said it would
file a Motion for Clarification on how to implement the SC decision.
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