DOE enforces moratorium on direct power connection applications

By Myrna M. Velasco – April 19, 2019, 10:00 PM
from Manila Bulletin

The Department of Energy (DOE) is enforcing a three-month moratorium on the processing and evaluation of application for direct power connections to the grid of big-ticket electricity customers.

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)

Energy Secretary Alfonso G. Cusi stipulated that “the moratorium is being executed to give way to the ongoing review by the DOE of Department Circular 2018-08-0025.”

That specified Circular refers to the rules governing the review and evaluation of direct connection applications of industrial, commercial and other electricity end-users qualified for direct connection.

The energy chief specified “the moratorium shall be in effect for a period of 90 days from its posting.” Based on the posting at the energy department’s website, the reckoning timeframe starts March 22, 2019, hence, that is expected to stay until June 21 this year.

Cusi qualified that “during this period, all new applications received by the DOE shall be held in abeyance and will be evaluated only upon promulgation of the updated guidelines.”

Further, the energy chief stressed that “all requests or motions for consideration on matters already acted upon by the Direct Connection Review Committee shall be processed in accordance with the existing rules and guidelines.”

A directly connected customer would refer “to an industrial or bulk electricity end-user, which is supplied through the grid or sub-transmission assets.”

At the energy department, the Direct Connection Review Committee is the unit tasked to carry out evaluation, processing and approval of applications for direct connection.”

As a matter of industry rule and as prescribed by the DOE, “the privilege of direct connection shall only be afforded to high demand, energy intensive electricity end-users which investments are critical to propel economic activities that significantly benefit the locality in terms of investment, job creation, tax generation, among others.”

The term of direct connection often correspond to the period set forth in the power supply agreement (PSA) and transmission supply agreement (TSA) entered into by an end-user which has been granted the privilege of direct connection – but without prejudice to the acquisition by the franchised distribution utility of the connection or sub-transmission facilities.

Even in the regime of retail competition and open access (RCOA), these directly connected customers can maintain their power supply procurements from preferred generators or suppliers – provided that they pay the corresponding wheeling charges for their sourced power capacity.