ERC imposes cap on rates in emergency power deals
By Lenie Lectura – June 9, 2023
from Business Mirror
The Energy Regulatory Commission (ERC) has capped the power rates in emergency power supply agreements (EPSAs) entered into by distribution utilities (DUs) and power generation companies.
EPSAs are forged on account of force majeure or fortuitous events cited in a 2021 department circular of the Department of Energy (DOE). All EPSAs are subject to ERC approval.
“The EPSA shall be immediately implementable, and the rates to be charged shall be capped at the lowest ERC-approved generation tariff for the same technology in comparable areas, as posted on the ERC’s official website. The said rates shall apply until the ERC issues its approval of the EPSA,” the agency said in a notice.
The ERC reminded the DUs that the EPSA shall be immediately filed, upon signing and effectivity thereof, for approval. The rates and EPSA terms and conditions, as approved by the ERC, will then apply retroactively for the entire term of the EPSA.
Also, the ERC said the procurement of emergency power supply will not be entitled to any form of subsidy, including the universal charge for missionary electrification (UC-ME) for small power utilities group (SPUG) areas.
Earlier, the DOE imposed a moratorium on the issuance of the Certificate of Exemption (COE) from the conduct of competitive selection process (CSP), pending the issuance of a new CSP policy.
The DOE, ERC, and the National Electrification Administration are currently drafting a new CSP policy that aims to rationalize and streamline the conduct of CSP, particularly the issuance of COE-CSP, and the review of the terms of reference for unsolicited proposals, among others.
In the alternative, the DU and the power supplier will jointly file their EPSA before the ERC for its approval.
The Manila Electric Co. said the execution of the EPSA will help shield electricity consumers from volatile and potentially higher generation costs in the Wholesale Electricity Spot Market, which is historically recorded during the dry season when power demand spikes.
