Meralco to comply with DOE directive

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POWER distribution giant Manila Electric Co. (Meralco) has toned down its opposition against the Department of Energy’s (DOE) competitive selection process (CSP) and has assured that it will comply with the scheme.

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Meralco chairman Manuel Pangilinan said that since the CSP has already been implemented after getting the green light from the Energy Regulatory Commission (ERC), all they can do is comply with it.

“We will follow the guidelines of the ERC,” Pangilinan told reporters on the sidelines of a Meralco book launch on Wednesday night.

At the same time, Pangilinan said he was amenable to having a third party mediate in the sale of electricity, saying that “it’s a fair step to take.”

The CSP, which was issued by the Department of Energy (DOE) through Department Circular 2015-06-0008, mandates competitive bidding between distribution utilities (DUs) and generation companies in the sale of electricity through the mediation of a third-party expert.

Under the CSP, a distribution utility can only enter into a power supply agreement (PSA) with a generation company after complying with the requirements of the process.

The requirement is for a DU to 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.

Prior to its implementation, Meralco had warned that the CSP would ultimately result in “increased generation charges” to the detriment of consumers because it does not promote the interest of the public.

It had argued that CSP also violates the right of the DUs to choose the manner on they will comply with their least cost obligation under the Electric Power Industry Reform Act (EPIRA) and their franchises.

In approving implementation of the CSP in the procurement of power supply by DUs, the ERC said it would bring transparency to the manner by which DUs buy electricity from power generators.

The ERC explained that the CSP assures that such supply is bought and passed on to consumers at the least possible cost.

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.

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