Government seeks comments on draft CSP rules
By Lenie Lectura – November 30, 2020
from Business Mirror
The Department of Energy (DOE) is soliciting comments from industry stakeholders on a draft circular (DC) that seeks to amend some provisions of the Competitive Selection Process (CSP) policy.
“The DOE, through the Electric Power Industry Management Bureau, hereby requests interested parties and stakeholders for comments and recommendations on the draft DC entitled ‘Amending Certain Provisions of and Supplementing DC2018-02-0003 on the CSP in the Procurement by the Distribution Utilities of Power Supply Agreement for the Captive Market,’” it said.
The agency will hold three public hearings on December 1, 3 and 7 before participants turn in their comments not later than December 15.
The draft circular focuses on three issues: exemption of embedded generators with maximum cap of one megawatt (MW); introduction of other alternative mode of procurement; and prescribed documentary requirements for CSP exemption.
Among the three, the provisions on the treatment of unsolicited proposals could raise issues among distribution utilities (DUs) and bidders. DOE Electric Power Industry Management Bureau director Mario Marasigan, however, assured that the proposed amendments are meant to “fast-track CSP process and ensure timeliness of procurement.”
The DOE has prescribed requisites for unsolicited proposals. It states that a DU shall consider such proposal by a power generation company (GenCo) only when there is no on-going CSP; the power supply agreement (PSA) will not result in over contracting; the contracted capacity shall not exceed 10 percent of the DU’s peak demand; the proposed generation cost must not be higher than the lowest ERC approved generation rate; and the proposal involves no subsidy.
If these are met then the DU will evaluate the proposal within 14 days from the time the DU acknowledges it. If the DU accepts the proposal then it shall submit this to the DOE.
After which, the unsolicited proposal would be declared as the original proponent and the DU will then commence the preparation of the bid terms and documents.
The DOE said that if an unsolicited proposal is accepted, this shall be subjected to either a Swiss Challenge or Best and Final Offer System (BAFO).
Under the Swiss Challenge, other GenCos shall have 60 days to offer their bids. If the counter proposal is better, the original proponent shall have the right to match it within 30 days.
In case the original proponent fails to match it, the PSA will be awarded to the comparative proponent. If the original proponent matches the price proposal, the PSA shall be immediately awarded.
If the DU receives more than one unsolicited proposal, it could reject all proposals or bid out the requirement as a solicited proposal.
BAFO, meanwhile, is determined by multiple rounds of tendering, in which the original proponent is given the advantage of automatically participating in the final round.
In the first round, bids will be evaluated and ranked. If the original proponent has the lowest bid, the PSA shall be awarded to it. Otherwise, the lowest bidder is selected in the first round.
After which, the lowest bidder and the original proponent shall proceed to the second round and provide their best and final offers. The bidder with the lowest offer shall be awarded the PSA.
The Manila Electric Co. (Meralco) is preparing its comments and will submit to the DOE any concerns for consideration. It will also participate in the public consultations, it added.
