The Department of Energy (DOE) remains firm on its stance that the controversial Competitive Selection Process (CSP) policy should be mandated on all distribution utilities (DUs) and electric cooperatives (ECs).
DOE Officer in Charge Zenaida Monsada said that the CSP must not be implemented on a voluntary basis, saying the circular was not crafted that way.
“For as long as that is the circular then the guidelines should be amenable to that,” Monsada said when asked to comment on Manila Electric Co. (Meralco) view that securing power-supply contracts via auction should be voluntary.
Monsada said that if the DOE circular’s intention is to enforce it voluntarily then “the circular must be changed.” However, this is not the case, she pointed out.
The DOE, she said, is aware of some DUs’ disapproval on the CSP. The Meralco has publicly stated that the CSP would best work if implemented voluntarily.
“Let’s cross the bridge when we get there. There are no formal oppositions yet. We hope that the guidelines will address those concerns,” Monsada added.
Without the implementing rules and regulations (IRR), the DOE circular on CSP could not be enforced. It is the Energy Regulatory Commission (ERC) that will craft the guidelines.
The DOE on June 30 issued a department circular that requires all DUs and ECs to bid out their power requirements instead of entering into negotiated contracts with power producers or power-generation companies.
The ERC is expected to issue the IRR on October 27. However, this is only a working target. “This is the target date. Best efforts. I hope that the ERC will issue the rules by then,” Monsada said.
The ERC would still have to conduct public hearings on this.
The DOE circular states that all DUs shall procure power supply agreements only through CSP conducted through a third party duly recognized by the ERC and the DOE.
Though it is mandatory, Monsada said the implementation could be carried out in phases. “It’s not as if it will be implemented immediately,” she said, clarifying that the CSP is mandatory but its enforcement is gradual.
Last week ERC commissioners said they will “act more prudent” in dealing with the CSP.
Meralco, a DU that sources majority of its power requirements through bilateral contracts, is against the mandatory implementation of CSP.
“Our view is it doesn’t promote the best interest of consumers. It’s a nice concept, an attractive concept, but do it on a voluntary basis,” Meralco President Oscar Reyes earlier commented.
Meralco officials said the CSP scheme is unfair because only the DUs and ECs are mandated to comply but not the generation companies. “What if the participating gencos [generation companies] are flippers or those that are not serious? How can the DUs, such as us, get the best rate for our consumers in such cases,” they lamented.
When asked if Meralco would volunteer to adopt the CSP, Reyes said the most appropriate model for Meralco would be “a mix of bilateral, voluntary CSP, and WESM [Wholesale Electricity Spot Market].”
Reyes pointed out that different utilities have different requirements. “Will the template for CSP fit everyone? Are we sure that all gencos that will participate are serious? We are only mindful of what’s best for the consumers.”