LAOAG CITY, Ilocos Norte: Senator Sherwin Gatchalian is pushing for the immediate passage of a measure institutionalizing reforms in the energy sector and in the procurement supply for a captive market by distribution utilities (DU).
Introduced by the senator is Senate Bill (HB) 1380 which seeks to institutionalize the Competitive Selection Process (CSP) to enhance competition and transparency in the industry.
A CSP should be required for all uncontracted and unregulated demand of the captive market to enhance competition, Gatchalian noted.
“A true competition will result in low electricity prices,” Gatchalian said in his message during the two-day Energy Regulatory Commission’s Continuing Regulatory Education for Stakeholdres (CREST) at Ilocandia Resort Hotel here on Thursday.
He said a centralized CSP, which should be conducted by a third party auctioneer, has better results than a decentralized system based on recent studies.
Gatchalian cited how Chile decentralized its system with DUs as auctioneers that resulted in higher electricity prices before 2015. When the country shifted to a centralized system, with the government as auctioneer, prices were lower at P1.46 per kilowatt hour (kWh) compared to its initial experiences.
In the Philippines, with the DUs as auctioneers resulted in much lower rates of P3.32-P4.09 per kWh or 25-35 percent lower that P5.00-P6.30 per KWh.
A competitive selection process can be undertaken in line with approved Power Supply Procurement Management Plan of each DU.
Gatchalian said under a centralized CSP, power supply agreements, contracts and forms should be standardized for the sake of transparency.
“These and other information related to the CSP, should be available to the public through an online electronic portal,” Gatchalian he added.
He said this is the spirit behind the Electric Power Industry Reform Act (EPIRA) of 2001 or Republic Act (RA) 9136.
Under the EPIRA, state policy ensures the quality, reliability, security and affordability of the electricity supply.
Gatchalian said the Department of Energy (DOE) has recognized the use of a competitive process to cultivate private sector participation in the generation sector.
In 2004, the first CSP was mandated in National Power Corporation-Small Power Utilities Group (NPC-SPUG) areas. However, the scope of the CSP was extended to all DUs in procuring their respective power supply agreements in 2015.
“I believe that the immediate passage of the measure institutionalizing CSP is all towards the enhancement of the security of supply and ultimately the attainment of optimal generation charges for the consumer,” Gatchalian added.