ERC set to release guidelines on power supply deals

By Alena Mae S. Flores – September 12, 2023, 5:27 pm
from manilastandard.net

The Energy Regulatory Commission (ERC) assured power stakeholders it will release the final guidelines on the competitive selection process (CSP) for power supply agreements by end of September 2023.

It said it would consider the concerns raised during the public consultations including the proposed fixed rates, power supply agreement contract term of 10 years and consistency with the Department of Energy policies.

The ERC said it is drafting the “implementing guidelines for the procurement, execution and evaluation of power supply agreements [PSA] entered into by distribution utilities for the supply of electricity to their captive market.”

“We’re targeting to release the revised draft within the week so we can have a pubcon [public consultation] again next week so that by end of September, we can finalize the guidelines,” ERC chairperson Monalisa Dimalanta said during the second day of the Giga Summit.

Dimalanta said the stakeholders pointed out that the CSP guidelines should be consistent with the DOE policy.

“When it’s policy, it should be DoE that should establish the policy, then ERC will enforce,” she said.

Meanwhile, Dimalanta said the ERC would revisit the fixed-rate proposal and look at a solution “that will be helpful to everyone.”

“The points of fixed pricing were very valid. We were thinking of RE (renewable energy) because RE has no fuel component,” she said.

Manila Electric Co. first vice president and head of regulatory management Ivanna dela Pena sent a letter to the ERC to explain that mandating a fixed energy price would result in higher cost to consumers.

He said it would drive power suppliers to factor in their offered rates the risk of non-recovery of costs, or not participate in the bidding because of such risks.

Meralco also proposed a contract term of 20 years, instead of 10 years under the ERC’s proposed guidelines.

“Based on experience, no greenfield project has a contract term of only 10 years, unless the developer and lender can arrange for recovery over such period only, which shorter recovery period translates to increase in electricity prices,” he said.