ERC to mandate ‘fixed bid price’ on power supply contracting of DUs

By Myrna M. Velasco – March 23, 2019, 10:00 PM
from Manila Bulletin

The Energy Regulatory Commission (ERC) is targeting to mandate “fixed bid price” in the tendering process that distribution utilities (DUs) will be carrying out on their supply procurements so they can efficiently serve captive customers or those end-users that cannot yet exercise “power of choice” on securing their electricity services.

ERC logo (Photo courtesy of www.erc.gov.ph)

That proposed rule is part of the modifications in the competitive selection process (CSP) to be instituted upon private distribution utilities and electric cooperatives on their power supply contracting.

As preliminarily stated by the ERC, the inclusion of a “fixed bid price”shall be integrated in the terms of reference for the supply procurement bidding that the power utilities must adhere to.

The new set of rules is still at deliberation phase and the industry regulator has been soliciting the inputs and comments of all affected and relevant stakeholders.

In a CSP or power supply tendering activity, the privately owned DUs and ECs would generally solicit offers or bids from power generators – and in past processes, the price of the DU-solicited capacity had not been fixed.

The fortified rules, as noted by the ERC, shall be applicable “to all DUs both on-grid and off-grid” – and shall serve as the guiding fiat to all DUs and power suppliers, to include the generation companies or the independent power producer administrators.

By reinforcing the rules on supply contracting, the ERC opined that such could foster “fair competition by providing equal opportunity to all relevant stakeholders and pursues to result in a reasonable and competitive pricing of generation rate to be charged to captive customers.”

Fundamentally, the captive customers are those in the segment that cannot directly contract their power supply requirement as the threshold of their consumption may not have reached yet the competitive lever of retail supply set by industry regulators.

And to toughen the “protective mechanism” for electricity consumers, the ERC is also advancing a provision on “default contracting” – that way, the end-users can be continually served with their electricity needs.

As asserted by ERC Chairperson Agnes T. Devanadera, the proposed rules modifications contain “new features or provisions that are meant to protect the consumers’ interests,” one key stipulation of such would be the “blacklisting” of industry players that will be in breach of rules.

The overarching target of the new rules shall also be to fast-track the approval of power supply agreements; and “to promote transparency in the selection and contracting of DUs while promoting competition among generation companies.”