DOE hastens power supply competitive biddings

In compliance to SC ruling

By Myrna M. Velasco – May 20, 2019, 10:00 PM
from Manila Bulletin

To comply with a recent verdict of the Supreme Court (SC), the Department of Energy (DOE) is finding ways how it can fast-track the conduct of competitive selection process (CSP) or bidding on the power supply contracting of distribution utilities (DUs) so brownouts can be prevented.

As it stands today, DOE Director Mario C. Marasigan noted that based on their assessment “it could take six months up to one year for CSP to be completed” (including an allowance for failed biddings) – but that does not include yet the required timeframe of approval of the Energy Regulatory Commission (ERC) on the power supply agreements.

“We are assessing the impact of the decision, so our priority right now is to ensure that brownouts will not happen,” he stressed.

The high court ruling has effectively invalidated 90 PSAs or power supply deals – both covering capacity off-takes (buyers) from power facilities that are already operating and those that have yet to be built.

Marasigan noted they are intently scrutinizing all the contracts that have been affected by the judicial ruling – and how the DUs could immediately secure supply and have their contracts immediately approved in case theirs are invalidated or have already expired.

For now, the DOE opined that what has been clear from the SC decision is for the DOE’s Circular on CSP to be followed, without it needing to wait anymore for suggested framework or rules by the ERC.

Nevertheless, Marasigan qualified that “we still need to sit down with the ERC to compare notes – and make sure that what we have in the list as affected contracts will be the same as what they also have in their list.”

The facets being evaluated, he emphasized, include the contracts that are due to expire or have expired; the PSAs for power facilities that are already operating; and the supply contracts that have been underwritten with power projects yet to be implemented – like the case of the seven PSAs of the Manila Electric Company.

The energy official said they are still at the process of assessing all the contracts, so they cannot give a definitive number yet as to how many DUs will likely be stricken by the high court ruling or how many are in the brink of facing near-term power interruptions.

As expressly stated in the SC decision, the CSP Circular of the DOE issued in 2018 “shall apply to all prospective PSAs,” hence, the department is making sure that it can concretize the policy in the most immediate term so it can prevent unwanted power interruptions for consumers.

The SC further noted that all the 90 PSAs affected by the ruling “must undergo CSP” in accordance with the Circular issued by the energy department last year.
Essentially, the nullified PSAs not just covered the Meralco contracts, but for array of other private power utilities and electric cooperatives servicing consumers all over the country.