DoE updates competitive bidding process circular

By Jordeene B. Lagare November 30, 2020
https://www.manilatimes.net/2020/11/30/business/business-top/doe-updates-competitive-bidding-process-circular/802973/

THE Department of Energy (DoE) is changing the rules governing the competitive bidding that provides an alternative for power distributors to source electricity.

To recall, in February 2018, the DoE promulgated a circular on the competitive selection process to obtain power supply for their customers at the least cost.

More than two years later, the agency is making updates to Department Circular 2018-02-0003 titled “Policy for the Competitive Selection Process in the Procurement by the Distribution Utilities of Power Supply Agreement for the Captive Market.”

Under the draft circular, a distribution utility (DU) may secure power supply from a generation company (genco) through a transparent and competitive bidding or alternative mode of procurement to meet its entire or a portion of the electric power requirements.

Power distributors may resort to other methods of procurement “to only in highly exceptional cases provided for in this circular.”

In particular, a DU shall consider an unsolicited proposal by a genco only when all of the following conditions exist: the proposal is in accordance with the distributor’s latest power supply procurement plan (PSPP) for the current year duly reviewed by the DoE and posted on the agency’s Competitive Selection Process (CSP) web portal, and that there is no ongoing bidding, starting with the publication of invitation to bid.

The resulting PSA will not result in over contracting on the part of the DU in terms of both capacity and energy requirements as indicated in the distributor’s current-year distribution development plan (DDP) and the contracted capacity shall not exceed 10 percent of the DU’s peak demand.

Besides that, the proposed generation cost indicated in the unsolicited proposal must not be higher than the lowest approved generation tariff for same or similar technology in the area; it shall deliver significant benefits to the captive consumers of the DU both in terms of reliability improvement and no increase in the average true cost of generation rate to the DU; and it involves no subsidy.



Once a power distributor accepts an unsolicited proposal, it shall be subjected to either Swiss challenge or best and final offer system.

In the case of Swiss challenge, other gencos are given until 60 days to match the original proposal upon the issuance of an invitation to bid.

If a comparative bid/proposal is superior than the proposal submitted by the original proponent, the original proponent shall have the right to match such price proposal within 30 working days from receipt of a notification from the third party bids and awards committee (TPBAC)/third party auctioneer (TPA) of the result of the comparative bid.

On the other hand, if the original proponent fails to match the price proposal of the comparative proponent within the specified period, the PSA shall be awarded to the comparative proponent.

If the original proponent matches the price proposal of the comparative proponent within the specified period, the PSA shall immediately be awarded to the original proponent.

Under the best and final offer system, this process involves multiple rounds of tendering that shall be concluded in one day.

In this system, which the original proponent is given the advantage of automatically participating in the final round.

Stakeholders are given until December 15, 2020 to submit to the Energy department their comments and recommendations on the draft rules.