ERC shuns representation in CSP proceedings of DUs

Published November 17, 2019, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

The Energy Regulatory Commission (ERC) is repudiating proposals for it to assign or send observer-representative in the competitive selection process (CSP) for power supply agreements (PSAs) being underwritten by the country’s distribution utilities and electric cooperatives.

ERC logo(Photo courtesy of
ERC logo(Photo courtesy of

In its correspondence to the Department of Energy (DOE), ERC Chairperson Agnes T. Devanadera stipulated “it is not prudent for (ERC’s) representative to be present as an observer during CSP proceedings.”

The DOE has been sending representatives as “observers” in the CSP undertakings of the DUs; but the regulatory body shuns that particular route noting that its objectivity may eventually be compromised or construed for biases when it evaluates the PSA applications of these power utilities and generation companies.

“Considering that the PSA that will be signed following the CSP proceedings will be eventually filed with the ERC, the presence of our representative might give the impression that the Commission has given its stamp of approval on the resulting PSA,” the ERC chief expounded.

She qualified the ERC has concerns that while the CSP is considerably a step prior to the regulatory proceedings on evaluation and approval of PSAs, such may already “create a perception that the entire CSP proceedings was done in compliance to all applicable rules and may no longer be assailed during the hearing for the application for the PSA approval.”

In the competitive procurement of supply for the PSAs to be underwritten, the relevant DU and GenCo counter-parties will still need to file their power supply contracts for the approval of the ERC.

To comply with such process, the ERC requires certification from the DOE or any other form of communication confirming that a CSP process indeed happened for specified PSAs being lodged with the Commission. A CSP is a competitive auction on power supply that shall be procured by DUs, such as that of Manila Electric Company.

The DOE, however, indicated that instead of it being required to submit certification, the ERC shall instead deploy its own representative into these CSP exercises.

But Devanadera maintained such proposition may trigger a notion of “impartiality in the conduct of the hearings and eventual resolution of the case in question.”
The ERC acknowledged that the presence of its representative had been raised as a recurrent concern during public hearings on the approval processes for PSAs, but this is not a sphere that the regulatory is inclined to concede to.

As stated by Devanadera, “the ERC, acting as a quasi-judicial body in hearing applications for approval of PSAs, must comply with the basic tenets of due process.”

She further qualified the ERC “must not only act impartial but must also appear impartial and accord every duly recognized interested party the opportunity to scrutinize the entire CSP process during hearings.”

Devanadera stressed “the presence of ERC representatives during CSP proceedings has serious implications,” hence she emphasized that “it is our position that we should not act as an observer during the DUs’ CSP proceedings.”