THE Energy Regulatory Commission (ERC) has expressed confidence that the controversial Competitive Selection Process (CSP) it recently approved will work effectively.
“As of now, let’s give this new mechanism a chance. Based on our assessment, it’s going to work,” ERC Chairman Jose Vicente Salazar said.
The ERC has already issued the implementing guidelines (IG) on CSP, which was created through Circular 2015-06-0008 issued by the Department of Energy (DOE).
The circular mandates all distribution utilities (DUs) to hold a CSP in securing power supply agreements (PSA).
One of the CSP’s salient provisions is for the ERC and the DOE to appoint a third party that will manage the bidding.
Under the IRR, the third party shall be composed of a team of foreign and/or national experts with vast experience in open and competitive bidding.
They should have acted as auction design advisor and auction manager in at least five separate successful auctions for power-supply contracts of electric utilities, preferably in other countries that have implemented auctions, such as Chile and Brazil.
The third party must also be equipped with comprehensive knowledge of the legal and regulatory framework of the Philippine electric power industry.
The policy also states that every November 30 of each year, the DOE and ERC shall select a third party for the following year’s auction.
A request for proposals (RP) to all interested parties to qualify as the third party will be issued no later than September 1 of each year.
Among the tasks of the third party are to develop a CSP design for the power-supply agreements (PSAs), develop bidders’ qualification criteria, draft and propose the CSP rules, develop and propose the PSA template, and manage the conduct of the CSP up to the award and execution of the PSAs.
For the DUs, they are required to secure their PSAs in advance of their requirements under long-term contracts.
Salazar said DUs have nothing to worry about as long as they comply with the requirements set in the IRR.
“There is a very wide latitude of digression on the part of the DUs on how they will undertake it as long as they comply with our rules and timelines as stated in the rules,” said Salazar.
To address some concerns, Salazar said they will hold a tripartite meeting regularly with the DOE and the Philippine Electricity Market Corp.