ERC bats for ‘rate flexibility’ in supply deals
By Myrna M. Velasco – February 17, 2023, 10:23 AM
from Manila Bulletin
The Energy Regulatory Commission (ERC) said it will opt for “rate flexibility” in the power supply agreements (PSAs) that distribution utilities (DUs) will be underwriting with generation companies (GenCos), once they win capacities in the conduct of competitive selection process (CSP) by the power utilities.
The ERC chief opined that the rates arising from the CSP shall “allow for more flexibility for the commercial environment to come up with the least cost.”
The CSP-awarded PSAs had recently ignited controversies following the conundrum faced by fixed-price power supply contracts that had been mandated in the CSPs carried out during the tenure of the previous administration.
CSP is a bidding process that the DUs will have to undertake before they could procure capacities to cover their supply requirements. In turn, such capacity purchases will be used to service their customers.
According to Dimalanta, the ERC and Department of Energy (DOE) are currently discussing possible fine-tuning or amendments that shall be incorporated in the CSP guidelines.
While details on the proposed policy modifications are fleshed out, the chief regulator emphasized that what is certain at this stage is for the ERC to keep its hands off when it comes to the rates that shall be set in the auction of capacities to be contracted by the DUs via the CSP’s precept.
“The standards will be set, the way to meet the standards will not be mandated. On the rates, (the ERC) will not interfere in that,” she stressed.
When asked if the CSP-tied capacity contracting would still be technology agnostic, Dimalanta noted “that’s what we are revisiting now, because the push now is really not just for RE (renewable energy); but also more indigenous.”
She expounded that the aim of the CSP is “to increase our energy security,” although she qualified that decision on that facet will have to be sorted out by the DOE.
Apart from rate flexibility and technology parameters, Dimalanta stated that the main driver for the review of the CSP policy would be “to streamline the process, make it more efficient for DUs – for example to their clearances, to get their approvals and also for our process to be faster.”
On the regulatory approval, in particular, the ERC chief narrated that many PSAs gathered dust for years before these were even acted upon by the Commission.
“So that’s what we’re discussing with DOE – we are demarcating what should be taken on their side; and what we should be doing on our side; that way, we don’t have duplication of work and for approvals to be issued faster also for these PSAs,” Dimalanta enthused.
