ERC junks request of electric co-ops, power company for CSP exemption

by Lenie Lectura – February 13, 2016

from Business Mirror

THE Energy Regulatory Commission (ERC) has rejected the request of electric cooperatives (ECs) and a power company to be exempted from the implementation of the Competitive Selection Process (CSP).

“They requested for exemption. These are the ones that haven’t agreed yet on the terms of the contract prior to the issuance of the November 6 resolution. There is no exemption to be given because the resolution that we issued last November is very clear,” ERC Commissioner Jose Vicente Salazar said.

The ERC issued last year a re-solution that mandates all distribution utilities (DUs) and ECs to conduct a bidding in securing their power requirements instead of entering into a negotiated sale.

This, Salazar said, is aimed at promoting transparency in the purchase of electricity by the DUs from power generators.

On the list provided by the ERC, the Philippine Rural Electric Cooperative Association Inc. , the Association of Mindanao Rural Electric Cooperatives Inc., Agusan del Norte Electric Cooperative Inc., Negros Occidental Electric Cooperative and Palawan Electric Cooperative have asked for an exemption from the CSP.

The list also indicated that SMC Global Power is seeking the same exemption from the CSP.

Eastern Visayas ECs, meanwhile, requested to draw power from GN Power Ltd. Co.

“GN Power also asked the same. Most of them were about to agree on the terms of the contract after the resolution was issued. That’s why they are seeking exemption,” the ERC chief said.

The resolution clearly stated that all power-supply agreements (PSAs) that were filed before November 4 are not subject to the CSP rules.

Salazar reiterated that the commission is not initiating any changes to amend the CSP. “As far as we are concerned, this is our official position. People expect that we will amend it or fine-tune it. If you look at the rules, it’s very general, but the objective is very clear,” Salazar said.

Salazar added the CSP, which raised numerous concerns among industry players on its implementing guidelines, “assures that such supply is bought and passed on to consumers at the least possible cost.”

The resolution, however, did not endorse the delegation of a third-party to conduct a CSP. The third party role was cited under the Department of Energy (DOE) circular DC 2015-06-0008.

However, Energy Secretary Zenaida Monsada is pushing for the creation of a third party. “We are preparing the implementing guidelines pursuant to the circular issued by [former] Secretary Petilla, which includes the third party [provision] but, it’s really up to the ERC as regulator on how or what they see fit,” she said earlier.

Carlos Jericho Petilla is the former energy secretary that signed the CSP policy. “We are already drafting the guidelines. We are looking at the circular issued by Secretary Petilla,” said Monsada, who added that once the guidelines are completed, these will be submitted to the ERC for final approval.

In reaction to Monsada’s statement, Salazar said the ERC has a “very good relationship with the DOE.”

But should there be any changes in the future, Salazar said this would have to be taken up by the ERC, the DOE and the Philippine Electricity Market Corp. (PEMC), operator of the country’s trading floor for electricity.

“We, at the ERC, have already issued the rules on the CSP. We usually have meetings with the the DOE and PEMC. We will probably take it up during one of the meetings. So far, this is our official position. If this will change, we should be conscious of the needs of the industry, conscious of the position of others,” Salazar said.

Salazar said the ERC resolution “removes all uncertainties on how the CSP will be implemented by the ERC and paves the way for a regime of greater transparency and competition in the power-supply procurement processes in the industry.”

He said the CSP underwent study and consultations with concerned industry players and stakeholders for over two years.