Meralco no longer pursuing case vs power supply bidding

By Danessa O. Rivera – December 4, 2015 – 12:00am

from The Philippine Star

MANILA, Philippines – The country’s largest power distributor Manila Electric Co. (Meralco) will no longer pursue a legal case against the implementation of the competitive selection process (CSP) that directs all distribution utilities (DUs) and electric cooperatives (ECs) to conduct bidding for power supply deals.

“I think, as far as I recall, we will follow the guidelines of the ERC (Energy Regulatory Commission),” Meralco chairman Manuel V. Pangilinan told reporters during the Meralco book launch Thursday night.

The company also lauded the removal of the third-party component in the bidding process, which was opposed by numerous industry players.

Pangilinan welcomed the power regulator’s decision to take out the third party, saying “it’s a fair step to take.”

Last Nov. 4, the ERC issued the go-signal for DUs and ECs to conduct the controversial competitive bidding to generation companies to secure supply contracts for their captive markets.

However, power distributors will be allowed to enter into direct negotiations or bilateral contracts only after two failed auctions. A failed bidding occurs when only one or there are no bidders, or when offers failed to meet requirements.

The ERC also ordered the bidding will be conducted by a generation company, instead of a third party.

ERC chairman Jose Vicente B. Salazar had said generation companies can undertake the process as long as they follow rules.

Meralco has been an ardent opposer of the CSP because it passes on the pricing to power generators, which does not promote the best interest of consumers.

Pangilinan earlier said the policy is illogical because generation companies will have the power to price electricity rates.

While the CSP is an attractive concept, Meralco president Oscar S. Reyes had also noted a mandatory, one-size-fits-all process will not ensure cost competitiveness of the least power cost for end-users.

The CSP policy was issued by former Energy Secretary Carlos Jericho Petilla before vacating his post last July 10.

In the circular, he said the policy aims to make the power purchase process transparent and to bring down prices as what was the goal supposedly of the Electric Power Industry Reform Act of 2001 (EPIRA).