Gatchalian seeks bill on ‘competitive’ power cost

by Alena Mae S. Flores – January 08, 2017 at 07:25 pm
from Manila Standard Today

Sen. Sherwin Gatchalian is pushing for a legislation that will standardize the competition selection process for distribution utilities and electric cooperatives.

“In our consultations, it is a very good mechanism to bring competition to the grassroots level, especially the ECs. This is one way to harmonize everything,” Gatchalian said.

Gatchalian, who heads the Senate Committee on Energy, said a standardized CSP would promote “fair play and transparency.”

“What’s important is standardization and transparency because we don’t want any cloud of doubt in the PSA (power supply agreement),” he said.

He said the legislation would be complementary with the Energy Regulatory Commission regulation on CSP “so we will make sure the law is broad, it covers the necessary framework but the details.”

“We will make sure they have flexibility so in the future, so that if there will be new technology or mechanism, they can adjust,” Gatchalian said.

ERC earlier said the CSP for the procurement of supply of distribution utilities would ultimately result in lower power costs.

ERC chairman Jose Vicente Salazar said the CSP, or bidding out the power requirements of distribution utilities and electric cooperatives, had clear goals-lower the cost of power and transparency.

“The process has clear goals. First, to bring down the cost of power. Two, to make sure that the process with which power distributors buy the electricity they sell to end-users is transparent,” Salazar said.

Under the CSP, all distribution utilities are required to conduct an open and competitive process in selecting the power generating company that will sell the output to the so-called captive markets.

Under this process, the PSA can be awarded only after a successful transparent and competitive selection process.

The ERC will determine that a CSP has been successfully done when the distribution utility receives at least two  qualified bids from generation companies.

Direct negotiation with a supplier may only be resorted to after at least two failed CSPs.

“Lower electricity costs also means the transformation of the Philippines into a more attractive destination for foreign direct investments,” Salazar said.

“The CSP has been put into effect on April 30, 2016. Effectively, all power supply agreements executed on or after that date shall be required, without exception, to comply with the provisions of the CSP Resolution,” he said.