DOE to clarify supply procurement rules
By Myrna M. Velasco – August 28, 2022, 8:00 PM
from Manila Bulletin
The Department of Energy (DOE) will issue clarificatory guidelines that will demarcate its mandate and specify the role of the Energy Regulatory Commission (ERC) in the conduct of competitive selection process (CSP) for the power supply agreements (PSAs) of distribution utilities.
“We are looking at what is really fully covered by the mandate of the regulatory agency, the ERC; and what is properly the policy which is covered by the DOE’s mandate,” Energy Secretary Raphael P. M. Lotilla said.
He thus noted that “we will be issuing clarifications on this particular point in order to guide the public and the private sector.”
The energy department has not given direct response yet to queries on whether or not PSA renegotiations are allowed, especially if the parties concerned has not gone through the approval of the DOE first and the winning offer in the original contract was set on a “fixed cost, lowest price” rule.
This developed as Lotilla acknowledged that the ongoing plea for a rate hike on the PSA of Manila Electric Company (Meralco) and SMC Global Power Holdings Corporation of the San Miguel group serves as a test case as to how the DOE and the ERC will sort out CSP policy as well as rules adjustments moving forward.
“Definitely, there are lessons to be learned from the current situation that we have; as I have emphasized, I would not want to pre-empt the ERC and they are studying these issues intently,” the energy chief pointed out.
On that score then, he indicated that “we will be clarifying those matters which ones should properly be within the mandate of the Department of Energy because the CSP rules are also stated in broad terms — and what would properly fall under the mandate of the ERC, and learning from the current experience, what particular or additional guidelines or rules the ERC can issue regarding the conduct of CSP.”
The energy chief added “I am confident that the ERC will come out with proposed solutions in due time.”
The CSP refers to an auction exercise that shall be carried out by private distribution utilities and electric cooperatives, as a compliance process before they can enter into new power supply deals with generation companies.
That policy was originally instituted by the DOE in 2018; and was sanctioned by a Supreme Court ruling rendered in May 2019.
Since then, the energy department had issued several guidelines to govern DUs and power generation companies on the PSAs that they will enter into – including the conditions or circumstances on when ‘emergency procurement of electricity supply’ would be warranted.
