The Energy Department said Monday it issued guidelines on competitive selection process and asked the Energy Regulatory Commission to come out with a template for power supply agreements.
The department issued DOE circular DC 2018-02-0003 adopting and “prescribing the policy for the CSP in the procurement by distribution utilities of power supply agreement for the captive market.”
“The ERC shall develop a PSA template that shall be used by electric power industry participants within 60 days effectivity of this policy,” the department said.
The circular, signed by Energy Secretary Alfonso Cusi, was issued due to the need to formulate a specific CSP policy for all distribution utilities, defining a clear, transparent and fair supply procurement process to promote competition and greater private sector participation in the provision of adequate generation capacity.
The circular also aims to promote competitiveness by extending equal opportunity to eligible and qualified generation firms to participate in the CSP.
It said the CSP should be a simple, streamlined and efficient procurement process applicable to the requirements of each distribution utility.
The requirements will specify the technical, economic and other parameters, whether baseload, mid-merit and/or peaking, the amount of energy delivered, type of fuel, among others.
The department said all PSAs needed to be procured through CSP, subject to certain exemptions.
Meanwhile, Senator Sherwin Gatchalian pushed for the passage of Senate Bill No. 1653, otherwise known as the Electricity Procurement Act of 2018 – a measure which proposes the implementation of a competitive, transparent and uniform electricity procurement process that is poised to save consumers as much as P13 billion annually in electricity charges.
Gatchalian, the chairman of the Senate energy committee and principal sponsor of the measure, said generation charge, which makes up about half of the costs shouldered by consumers in their monthly electricity bills, had long been the product of negotiated contracts between distribution utilities and generation companies.
He said this process often gave rise to “allegations of sweetheart deals and raised concerns about how the prices of contracts unduly favor generation companies at the expense of the consumers.”