Meralco urges voluntary implementation of CSP

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POWER distribution giant Manila Electric Co. (Meralco) is pushing for a voluntary implementation of the competitive selection process (CSP) in securing power supply agreements (PSAs).

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Meralco president Oscar Reyes expressed belief that the intended benefits of CSP will be maximized if its implementation will be voluntary.

He said Meralco will continue to work with key industry stakeholders in encouraging private investment in power generation.

Meralco wants the CSP be applied where such may be of value or useful.

This includes rational clusters of small distribution utilities (DUs) who individually, because of their size, operational characteristics or financial standing, cannot secure contracts with the best prices and terms for their end-users.

The Department of Energy (DOE) has issued a circular that mandates all distribution utilities to produce PSAs only through a competitive selection process to ensure the reliability, quality and security of electric power.

The DOE’s landmark circular, known as the Demand Aggregation and Supply Auctioning Policy (DASAP) in the electric power industry, primarily aims to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability.

In its circular, the DOE mandates the increase in transparency needed in the procurement process in order to reduce risks. It also promotes and instills competition in the procurement and supply of electric power to all electricity end-users.

In issuing the circular, the DOE reiterated the government’s policy stating that all DUs must take cognizance and assume full responsibility to forecast, assure and contract for the supply electric power within their respective franchise areas to meet their obligations particularly to their captive market.

“The uncontracted energy requirements of DUs provide the window of opportunity for the existing and prospective private investors to contract these out and invest in additional power generation capacities, both conventional and renewable energy (RE),” said the DOE.

According to the DOE, adequate and proper power supply contracting through a transparent procedure ensures electricity demand is met while electricity end-users are protected from unnecessary exposure to the volatility of spot prices in the Wholesale Electricity Spot Market (WESM).

The DOE has conducted a series of nationwide public consultations on the proposed policy on competitive procurement of electricity supply for all electricity end-users.

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