Consumer groups split on competitive selection circular

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Consumer groups are divided on a Department on Energy (DOE) circular that would make it mandatory to implement a competitive selection process (CSP) for distribution utilities (DUs).

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The DOE and the Energy Regulatory Commission (ERC) are supposed to issue the CSP guidelines by October 27 after conducting public consultations with various stakeholders.
The National Association of Electricity Consumers for Reforms Inc. (Nasecore) supports the CSP scheme while CitizenWatch, independent network of citizen rights advocates, warns that the scheme could cause power rates to go up.

Nasecore welcomes the DOE measure, viewing it as a “pro-active effort” of the department and a positive development that would give life to some provisions of the Electric Power Industry Reform Act (EPIRA).

The group cited Section 2(b) of EPIRA, which mandates the DOE to “ensure the quality, reliability, security, and affordability of the supply of electricity, and Section 23 of the law, which states that “a distribution utility shall have the obligation to supply electricity in the least cost manner to its captive market, subject to the collection of retail rate duly approved by the ERC.”

The CSP was mandated through the DOE’s Department Circular 2015-06-0008, which requires competitive bidding between DUs and generation companies in the sale of electricity via the mediation of a third party expert.

Although it welcomes the move, Nasecore proposed that the circular also include the transmission utility together with all the DUs.

“DOE Circular 2015-06-0008 becomes timely in addressing the twin problem of power shortages and high cost of power,” Nasecore said in a position paper submitted to the DOE.

Nasecore also supports the DOE’s position that the adoption and endorsement by the ERC is a “clear way of establishing a level playing field that will usher in true competition to set in.”

CitizenWatch disagrees with this view. According to the group, CSP will not work in an environment where there are not enough power generation players and will be prone to abuse, resulting in higher cost of electricity.

Because of this, CitizenWatch urged the DOE to suspend implementation of the circular and called on the government agency to “confront the real root of the country’s perennial energy woes.”

“An unintended effect of this new process is burdening the already overburdened consumers with additional power costs,” said Wilford Wong, secretary general of CitizenWatch.

The group also expressed misgivings on the provision regarding the selection of third party experts.

“It’s so specific that it can restrict the participation of experts that may have experience in other forms of competitive selection,” it said.

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