ERC issues rules on power supply contracting
By Alena Mae S. Flores – October 8, 2023, 8:50 pm
from manilastandard.net
The Energy Regulatory Commission (ERC) issued guidelines to govern power supply contracting of distribution utilities (DUs) after a series of public consultations.
“The release of these CSP guidelines marks a significant step towards ensuring transparency, accountability, and competitiveness in the supply of power in the least-cost manner to the DU’s captive market,” the ERC said in a statement over the weekend.
It said the competitive selection process (CSP) guidelines complies with the regulatory support to meet the objectives of the 2023 Department of Energy CSP policy.
The regulator said the CSP guidelines reinforce the obligation of the DUs to determine whether least cost could be met by either financial power supply agreements (PSAs) or physical PSAs.
Financial PSAs (not power plant-specific) should set out a tariff structure that will be fixed for the duration of the contract term, while for physical PSAs (plant-specific), the tariff structure and cost-components should be clearly provided by the DUs in the terms of reference (TOR).
The guidelines also streamlined the process for the procurement of one-year emergency power supply agreements (EPSAs), with more robust timelines for evaluation to meet the emergency power needs of DUs.
The ERC said the CSP guidelines also provide for clear compliance parameters for situations that are exempted from the CSP requirement.
It provided comprehensive checklists of pre-filing requirements for PSAs procured through CSP or exempted from such CSP, as well as PSA templates prescribing minimum standards for both physical PSAs and financial PSAs.
The ERC set the maximum contract terms or duration for different kinds of PSAs: up to one year for EPSAs, 10 years for financial PSAs, 15 years for physical PSAs and 20 years for PSAs involving renewable energy (RE) plants.
“The periods are intended to align with the covered periods under the Distribution Development Plans (DDPs) of DUs and in recognition of the RE targets set by the DOE,” the regulator said.
The CSP guidelines also provide that PSAs submitted to the ERC for approval will be reviewed on two levels: the first level (process review) is to determine compliance with the CSP guidelines, and the second level (substantive review) is to determine the PSA’s reasonableness in terms of tariff, costs, risk allocation, and other contractual terms
It also provides DUs with a dedicated protest mechanism for issues involving the conduct of the CSP. DUs are also afforded remedies such as blacklisting of suppliers in case a winning bidder frustrates the process or fails to deliver the DU’s supply requirements after signing the PSA.
