ERC swamped with requests for exemption from CSP supply contracting

by Myrna Velasco – February 13, 2016

from Manila Bulletin

The policy was primarily packaged as one that is good for the electric cooperatives (ECs), but now many of these power utilities are in the front row seeking exemptions from the competitive selection process (CSP) on their supply contracting – primarily for bilateral deals already negotiated and signed prior to the November 6, 2015 cut-off date.

On the list given to media by the Energy Regulatory Commission (ERC), it is apparent that many of those seeking to be spared from the CSP process are electric cooperatives.

These include the Philippine Rural Electric Cooperative Association, Inc. (PHILRECA); the Association of Mindanao Rural Electric Cooperatives Inc. (AMRECO); Agusan del Norte Electric Cooperative, Inc.; some electric cooperatives in Leyte and the Bicol region; Abra Electric Cooperative for its short-term supply contract on a request done through the Department of Energy (DOE); Negros Occidental Electric Cooperative; and some from the off-grid areas like Langogan Power Corporation and Palawan Electric Cooperative.

ERC chairman Jose Vicente B. Salazar told reporters that power generators like San Miguel Energy Corporation (SMEC) and GNPower are also in the roster in regard to their negotiated supply contracts with ECs.

“Some of them are asking for exemptions, but we did not grant. San Miguel Energy Corporation (SMEC) asked for exemption; GNPower asked for exemption for contracts it entered into (with ECs) … meaning, they negotiated prior to November 6. They’re asking for exemption from the CSP so they could execute these contracts,” he said.

The ERC chief expounded that the option they have directed the power generators and ECs to undertake will be to subject the specified contracts to Swiss challenge – or a bidding round in which they must invite other parties to match or surpass the existing offers.

“No revisions as of now (on the CSP) … the November 6 effectivity date is still there. No exceptions but we issued a resolution two or three weeks ago that for contracts entered into prior to November 6 but not filed, we will allow them to undergo Swiss Challenge,” Salazar noted.

He qualified that these would be applied specifically to contracts that have already been “negotiated, executed and signed but not filed prior to November 6.”

For the off-grid areas, ERC Commissioner Josefina Patricia M. Asirit said they cannot also be exempted primarily because their operations are supported by subsidies being collected from the consumers.

“Even off-grid, they should also be part of the CSP… especially off-grid because they are recipient of the universal charge and I think there was a plea before on offers of power supply contracts for off-grid areas,” she stressed.

Renewable energy (RE) developers will likewise need to undergo CSP process when entering into bilateral supply contracts with distribution utilities.

Salazar asserted “there is no exemption for RE so they should do CSP for contracts because we did not make any distinction.”