A former party-list lawmaker has urged the Energy Regulatory Commission (ERC) to reject a controversial Department of Energy (DOE) circular mandating all distribution utilities (DUs) and electric cooperatives (ECs) to undertake competitive selection process (CSP) in securing their power-supply agreements.
Former Alyansa ng mga Grupong Haligi ng Agham at Teknolohiya para sa Mamamayan (Agham) Party-list Rep. Angelo Palmones said that DOE Circular 2015-06-0008, which being pushed by former Energy Secretary Carlos Jericho L. Petilla, may result to higher electricity rates.
He said the circular was issued purportedly without the benefit of public consultation. Petilla signed DOE Circular 2015-06-0008, which was released on June 30.
According to Palmones the circular mandates all electric cooperatives nationwide to forcibly enter into a bidding procedure for all their power contracts after the implementing rules are approved by the ERC, which is set within 120 days from effectivity of the circular.
“We fear that with this situation, electricity cooperatives will be forced by the DOE to bid for their requirements. This is an injustice and this circular has no legal leg to stand on. It is legally infirm on all aspects,” said Palmones, who is also president of Agham.
“We urge Energy OIC Zenaida Monsada to recall this circular and for ERC Chairman Vicente Salazar to reject DOE Circular 2015-06-0008,” Palmones added.
The former lawmaker, citing a news report, said that Agham members based in Central Luzon could have struck a better deal if they were not held down by the competitive selection process.
“The news report further stated that they should have been allowed to explore and negotiate directly with various suppliers to
ensure they got the price they wanted. With CSP, however, they were reportedly limited to the three gencos [generation companies] that bidded and the ECs had no control over their prices,” Palmones said.
He added that it seems the DOE wants to pull a fast one on the ERC without it taking responsibility in case this mechanism fails.
“Unfortunately for the ERC, since they will be the ones who will issue the implementing rules, the responsibility for any fiasco in case this fails will fall on them. Agham urges a total and unequivocal rejection of this flawed and anticonsumer circular. If needed, we will urge all our members to troop to the ERC and manifest their opposition to this circular,” Palmones said.
Earlier, the BusinessMirror reported that the DOE has asked the International Finance Corp., a member of the World Bank Group, to conduct a study on the said agency’s circular.
Resigned Petilla said the study would focus on “the rule drafting for CSP.”
The circular basically requires all DUs and ECs to bid out their power requirements—instead of entering into negotiate contracts with power producers—which, Petilla said, is a more transparent way to do it because it involves pass-through cost, meaning consumers are paying for it.
Petilla said he expects industry stakeholders to oppose this all the way to the courts. Under the circular, the bidding will be conducted by a third party duly recognized by the DOE and the ERC.