DOE-ERC policy tug-of-war snags approval of Meralco PSAs

By Myrna M. Velasco – October 9, 2019, 10:00 PM
from Manila Bulletin

Power utility giant Manila Electric Company (Meralco) and its counter-party generation companies (GenCos) in the recently signed power supply agreements (PSAs) are ready to file their joint applications, but the ongoing policy tug-of-war between the Department of Energy (DOE) and Energy Regulatory Commission (ERC) is seen impairing any expectation of fast or timely deliberations and approval of the power supply deals.

Until now, Meralco and the six PSAs it inked with the winning GenCos in its competitive selection processes (CSPs) last month had not been filed yet with the ERC, because the regulatory body won’t accept the filings unless there is certification from the DOE that the utility firm had indeed undertaken the requisite CSP exercises.

Three (3) PSAs were signed with the energy firms of San Miguel and PHINMA Energy groups for baseload capacity of 1,200 megawatts that shall be delivered to Meralco’s load network starting December 26 this year; and three (3) more PSAs were inked with San Miguel, PHINMA Energy and First Gen of the Lopez group for its 500MW mid-merit capacity requirements that will also start delivery in December.

Nevertheless, prior to the filing of the joint petitions of the CSP-underpinned PSAs, ERC Chairperson Agnes T. Devanadera had raised to the attention of Energy Secretary Alfonso G. Cusi that the regulatory body will require DOE’s certification before it will accept the filings of the DUs for PSA approvals.

“In order to comply with the Supreme Court decision in the APB (Alyansa Para Sa Bagong Pilipinas Inc) case, the ERC shall only accept and review applications for approval of a power supply agreement (PSA) that contain a certification from the DOE attesting to the PSA’s compliance with DOE Department Circular No. DC2018-02-003,” Devanadera has stated in her correspondence to the energy chief.

When asked on this ERC requirement, however, DOE Director Mario C. Marasigan said “we are looking for the basis of the certification, but at the moment, we find none.”

Until such deadlock between the two agencies is resolved though, the PSAs signed by Meralco with the GenCos will be confronted with uncertainties as to when they can file the applications and seek approvals for such.

The costs of the PSAs cornered by Meralco in its recent CSPs had been lower than the previous contracts it had underwritten, hence, these are seen resulting in billions of savings for consumers over the stretch of the PSAs.

It was gathered that during the Meralco CSPs carried out by a third party bids and awards committee (TPBAC), officials from the DOE sat as observer in the process – and those who attended included Undersecretary Jesus Posadas, Assistant Secretary Robert Uy and Power Bureau Director Marasigan.

The TPBAC indicated that it also invited ERC officials to participate as “observer” in the CSP activities, but the regulatory body did not reply to the invitations and had not sent anyone to observe in the auction process.

According to Meralco, all the six PSAs that it attempted to file last September 18 already complied with the requisite publication requirements.