THE Department of Energy (DOE) is drafting guidelines focused on key provisions of the Competitive Selection Process (CSP), particularly those on aggregation and third-party mediation.
“We are already drafting the guidelines. We are looking at the circular issued by [former]Secretary Carlos Jericho Petilla,” Energy Secretary Zenaida Monsada said.
The CSP requires the holding of a competitive bidding between distribution utilities (DUs) and generation companies in the sale of electricity through the mediation of a third-party expert.
Under the implementing circular, CSPs for the procurement of power supply agreements of all DUs should observe aggregation for un-contracted demand requirements. The term aggregation as used in the circular refers to the wholesale demand and energy requirements of DUs.
Monsada said that once the guidelines are completed, these will be submitted to the Energy Regulatory Commission (ERC) for final approval.
She clarified that since the CSP has already been implemented, “all power supply agreements (PSAs) that were filed before November 4 are okay.” Those that were filed after November 4 will be subject to the regulations that are being drawn up.
“We are preparing the implementing guidelines as necessary pursuant to the circular issued by Secretary Petilla, which includes the third party [provision]but, it’s really up to the ERC as regulator on how or what they see fit,” she said.
Implementation of the CSP in the procurement of power supply was earlier approved by the ERC as it would improve transparency in the manner by which DUs buy electricity from power generation firms.
According to the ERC, the process assures that power supply is bought and passed on to consumers at the least possible cost.
Under the CSP, a DU may execute a power supply agreement with a generation company only after successfully complying with requirements.
A DU must openly call for and receive at least two qualified bids from generation companies. The DU is not barred from entering into a contract for power supply.
The CSP further requires that direct negotiations with other power suppliers be entered into only after at least two failed CSPs.
With the implementation of the CSP, the ERC will no longer allow the filing by DUs of applications for PSA approval without compliance with the CSP requirements.