DOE alters consumer representation in CSP contracting for DUs

By Myrna M. Velasco – January 4, 2019, 10:00 PM
from Manila Bulletin

The Department of Energy (DOE) has modified the representation of a “consumer intermediary” in the third party bids and awards committee (TPBAC) relative to the conduct of competitive selection process (CSP) on power supply contracting of the distribution utilities (DUs).

The department qualified that it changed the specification for a consumer representative because of “the possible non-availability of the specified professionals,” which in the process may hamper the conduct of a CSP on the power utilities’ procurement of power supply.

It stressed that such dilemma will likely transpire especially in the conduct of competitive bidding on supply contracting of power utilities serving the off-grid areas.

That as a given, the DOE thus liberalized the selection of a contingent from the consumer-segment – essentially prescribing that the representative shall be a “captive customer preferably with knowledge/experience in the fields of accounting, economics, finance, law and engineering.”

The other requirement will be for that consumer-representative to have knowledge and experience in competitive public bidding.

The propounded TPBAC for the CSP process of DUs will comprise of five representatives including a lawyer; a finance officer or an accountant; two officers of the concerned DU and one DU officer or employee knowledgeable in procurement rules, including international competitive bidding procedures.

The mandate on CSP is anchored on intent of requiring the DUs – including giant players like the Manila Electric Company (Meralco), “to procure least cost electricity supply” for their captive customers.

Captive customers are those segment of end-users – chiefly residential and marginal commercial end-users – that cannot exercise yet their power of choice on their electricity supply – thus, they will need to remain under the service provision of their franchised distribution utilities.

As decreed by the DOE, the CSP shall provide “a clear, transparent and fair supply procurement process that will promote competition and greater private sector participation in the provision of adequate generation capacity to meet the demand in the captive market.”

The CSP Circular issued by the DOE further set out the parameters on when Swiss challenge shall be accepted as a ‘competitive bidding paradigm’; and when emergency procurement of supply shall be exercised by specified distribution firms.

As defined, an “emergency power” shall refer to the power supply required by a DU in the event that its actual electricity supply “falls below its load demand due to force majeure and fortuitous events or other analogous circumstances that are beyond the control of the DU and such shortfall cannot be addressed through any reasonable means within a month.”

The energy department qualified though that such declaration of “emergency in supply procurement” be subject to its final determination.