Why Not Hold CSP Biddings Now to Assure Future Power Supply?

David Celestra Tan, MSK
8 November 2016

They are doing it again to electric consumers! There is a concerted effort to make the public believe that we are running short of power supply and that the current projects, specially by MVP Group and Meralco, need to be approved and permitted through the express lane. Like Scarecrows and pumpkin heads! Of course, power shortage can become a self-fulfilling prophecy.

It might be recalled that Meralco signed seven (7) midnight power supply contracts purportedly with various power generators that turned out to be all majority owned by its own subsidiary Meralco PowerGen. Not that they are bashful about announcing it. Most of the 3,551mw were signed only on April 26, 2016, five (5) months and 20 days AFTER the original CSP deadline of November 6, 2015 and filed with the ERC on April 29, 2016, just beating the new extension given by the ERC of April 30, 2016. The contracts with five different companies have similar language and pricing formula and obviously came from one template. Signed on the same day!

Meralco is claiming urgency and scaring the people about power shortages and brownouts. The truth is of the 3,551mw only 70mw (2%) is coming on line this year 2016. Meralco’s previous 440mw San Buenaventura coal project in Mauban is scheduled for 2018. That’s two years from now. And Most of about 3,500mw will come on line in 5 to 7 years yet. It takes only 3 to 4 years to build those coal power plants. We still have one year to go through an honest to goodness competitive bidding.

But no one seems to be interested in truly subjecting the power generation sector to open bidding, an essential to bringing least cost power to consumers and opening the sector to more independent investors, foreign and local. The government itself is apathetic to it. ERC moved its CSP implementation by five (5) months! If not stopped those 3,551 of midnight contracts will tie up Meralco’s captive consumers and cornering 90% of the energy needs of Meralco for the next 25 years. No real benefit of competitive generation rates.

Subjecting this to bidding will:

1) settle once and for all the least cost difference between self-negotiated and truly competitive bidding

2) self-dealing is minimized and harmful monopolization, cartelization, abuse of market power and anti-competitive behavior are controlled.

3) the generation sector will be opened to truly independent power generators and investors and thus better assuring the continued development of the power supply and the introduction of competitive approaches and emerging technologies and energy to the sector.

The true cost of the negotiated sister company power supply go beyond the initial price that is published. It is also in the fine print of the terms and the administration of contracts whose effective cost are also passed on to the consumers.

All these things will promote the public interest and would certainly be good for the country’s business competitiveness.

We have yet to hear from the new DOE on whether it is committed to bringing true competition to the power generation sector and treat the electric consumers better.

All the contracts are for coal and so there goes any pretentions of the government to even influence the energy mix of the country, much less a true commitment to climate change.

The MVP Group is trying to argue that they are the ones who can assure least cost for consumers. And that they have “aggressively negotiated competitive power deals with power generators” without mentioning that those power companies are their own Meralco PowerGen. Can you imagine Meralco squeezing the best power price from itself? Who are we kidding?

A Challenge to Meralco and the DOE and ERC

To settle all arguments on competitive power and how that can be achieved better, by “aggressive negotiation” with sister companies or by truly open bidding, why don’t we hold even one pilot biddings now?

A decent sized of 300mw coal to be located in Luzon, administered by an independent third party, where only the truly independent power generators can participate. (Meralco’s chosen partners in the seven (7) midnight contracts have been compromised and should not be allowed to participate in this pilot project intended to show truly independent bidders can result to better rates) or the bidding can just assure there would be a minimum of three independent bidders in the mix).

There are still independent bidders that may not be hopelessly compromised. Ayala Group, TeamEnergy of Japan, AES of USA, Kepco of Korea, Filinvest of the Gotianuns, GN Power, PeakPower of the Ng Family, First Gen of the Lopez Group, Energy World of Australia, TransAsia. Other Japanese, Korean, Singaporean, French and Canadian companies looking to participate in power generation.

True Competitive Bidding not Swiss or Price Challenge

By bidding, we don’t mean the swiss or price challenge type that the MVP Group wants because that type is a sham competitive bidding. It is rigged in favor of the supposed “unsolicited proponent” specially if it is the subsidiary of Meralco and MVP Group. It doesn’t even comply with the true wordings of the BOT law that allowed such unsolicited proposals. We are just plain games with the public.

The bidding process could take a maximum 12 months. Way enough time to build plants within 4 to 5 years.

How about it sirs?

MATUWID NA SINGIL SA KURYENTE CONSUMER ALLIANCE INC.
Matuwid.org – See more at: http://matuwid.org/why-not-hold-csp-biddings-now-to-assure-future-power-supply/#sthash.AYJW53TT.dpuf

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