PEMC eyed as 3rd party CSP power contracting auctioneer

By Myrna M. Velasco – February 22, 2017, 10:01 PM

from Manila Bulletin

The Philippine Electricity Market Corporation (PEMC), operator of the Wholesale Electricity Spot Market (WESM), is being designated as the third party auctioneer in the competitive selection process (CSP) of power supply contracting by the distribution utilities.

This is a key provision in the legislative measure lodged by Senate Committee on Energy Chairman Sherwin T. Gatchalian, with him noting that such will be a significant component to institutionalize the CSP scheme of supply procurement by the consumer-servicing power utilities.

“In our proposal, the aim is to standardize the PSAs (power supply agreements), and to standardize the CSP,” he explained, stressing that with the current shifting pace of how the CSP is conducted, “many parties are being turned off to join the auction process.”

“If there are parties or DUs that would want to undertake CSP, PEMC can act as third party auctioneer…it will have to craft the TOR (terms of reference), do the website posting and invite as many bidders as possible…this is to make sure that the conduct of the CSP is fully-independent,” the senator said.

He added that under current practice, DUs undertaking CSPs would often tailor-fit the bidding terms to what their preferred generation companies could offer, which in essence, tilts what could have been desired as level playing field.

PEMC is seen as the most convenient recourse for a third party to do the auction because it is already an existing entity, thus, there is no need to add another layer in the industry’s chain, according to the lawmaker.

For PEMC’s propounded CSP role, Gatchalian’s legislative bill sets forth that “within 60 days after the close of a competitive bidding, the third party auctioneer shall prepare a CSP monitoring report and submit it to the ERC (Energy Regulatory Commission) as part of its CSP review process.”

After five years, should the Department of Energy (DOE) determine that PEMC as third party auctioneer had not been effective, “it may procure a new third party auctioneer in compliance with all laws and IRRs (implementing rules and regulations) related to government procurement.”

When that happens, it was recommended that the energy department shall be the one to establish the terms of reference for the engagement of a new third party auctioneer.

It was qualified though that the CSP third party “shall be a team of private individuals or a private corporation duly recognized in the Philippines, with no direct or indirect interest in any generation company and/or distribution utility.”

That entity must also have “vast experience in competitive bidding, comprehensive knowledge of the electric power industry and a demonstrated ability to manage and conduct the CSP while complying with the terms of reference and other additional qualifications provided for in the CSP framework.”