DOE declares moratorium on CSP exemption

The Department of Energy (DOE) will no longer issue “certificates of exemption” (COEs) on the competitive selection process (CSP) requirement for distribution utilities’ (DUs) supply procurement underpinned by their power supply agreements.

In an advisory issued on April 3 this year, Energy Secretary Raphael P. M. Lotilla emphasized that the moratorium is being enforced given the ongoing process of crafting a new policy that “aims to rationalize and streamline the conduct of CSP.”

“The DOE hereby suspends the issuance of the COE-CSP on this ground upon the effectivity of this Advisory,” the advisory stated. “In the alternate, the DU and the power supplier shall jointly file their emergency power supply agreement (EPSA) before the ERC (Energy Regulatory Commission) for its approval,” it added

The advisory will take effect immediately upon posting on the DOE website and will remain in effect until revoked or a new policy governing the CSP has been promulgated by the DOE.

The advisory likewise specified that “for COE-CSP applications with complete requirements filed with the DOE before the effectivity of this moratorium, the DOE shall continue to process the same under the existing policy.”

For applications with incomplete requirements but filed prior to the moratorium, the DOE qualified that these would still be processed “provided the remaining requirements are completed during the period of this moratorium.”

The department further prescribed that “the DOE will suspend the review of the TOR for the USP until the promulgation of the new CSP policy.”

For the EPSAs to be filed for ERC’s evaluation and approval, the energy department stipulated that such must “comply with all of the conditions” set forth under the existing CSP rules.

It is worth noting that recent supply procurements of relevant distribution utilities, including that of Manila Electric Company (Meralco), had been accorded with COEs on undertaking CSP -primarily for its capacity replacements on PSAs that had been affected by Court rulings.

The DOE similarly noted that it is currently reviewing the terms of reference (TOR) on the submission of unsolicited proposal (USP) “to ensure a smooth transition” to the anticipated issuance and implementation of a new CSP Circular.

CSP refers to a bidding process that the DUs will need to carry out in their PSA-underpinned supply sourcing. This activity has been mandated to be administered by a third party bids and awards committee.