The Energy Regulatory Commission (ERC) issued advisory to relevant industry stakeholders that it will be holding new round of public consultations on the guidelines underpinning the competitive selection process (CSP) policy being enforced on the distribution utilities (DUs) and electric cooperatives (ECs) for their procurement of power supply.

The CSP edict refers to the requirement to conduct a competitive bidding when DUs and electric cooperatives will underwrite power supply agreements (PSAs) with generation companies (GenCos) or power providers in building up their supply portfolio.

“The Commission will issue a revised draft of the CSP guidelines that will then be subjected to another round of public consultation before finalizing the guidelines,” the regulatory body announced.

The ERC added that it already notified the Department of Energy (DOE) last August 25 on “the 
necessity to consider the comments of stakeholders and the need to revise the draft CSP guidelines further.” There are no fixed dates yet on the targeted ERC consultations.

It was in June this year when the DOE released its revised Circular on the CSP policy, and that primarily laid down all the measures that the DUs shall be complying with when they auction PSAs for their supply sourcing.

As designed, a competitive auction for the power supply deals had been mandated by the energy department -  that way, the private DUs and ECs could procure supply on a ‘least cost’ basis, that in turn will also be reflected as a cheaper tariff pass-on in the electric bills of consumers.

The enforcement of a CSP policy in power supply contracting was also upheld in a Supreme Court ruling that was rendered in 2019.

The ERC explained that while it already carried out focus group discussions (FGDs) and had solicited comments and inputs from relevant stakeholders, it will still need to widen its public consultations prior to the finalization of its CSP guidelines so it can prescribe a regulatory framework fitting to the evolving needs of the restructured electricity sector.

“Given the nature of the comments and the intention of the Commission to give due weight to the same, the Commission is compelled to conduct a thorough review and revision of the draft CSP guidelines, the regulatory body stressed.

It is the ERC’s mandate to approve the rates arising from CSP processes undertaken by the DUs and ECs, hence, it would need to establish concrete and clear guidelines on the processes to be adhered to in the filing of rate applications, as well as on the evaluation and approval processes that the covered industry players will have to wade through.

In the CSP policy set forth by the DOE, it fleshed out several exemptions on the PSA bidding requirement – including the sale or provision of power supply by state-run firms National Power Corporation and Power Sector Assets and Liabilities Management Corporation.

The opt-in mechanism or sourcing of renewable energy (RE) capacity under the green energy auction (GEA) administered by the energy department shall also be spared from the CSP exercise.

Generation plants embedded within the franchise area of a DU are also freed from the CSP process, as long as the contracted capacity will not exceed 10 megawatts; and exemption also applies to power providers in off-grid areas with less than 1.0MW of demand.

For negotiated emergency power supply agreements (EPSAs), it was prescribed that these will be filed with the ERC within 30 days after the occurrence of force majeure or fortuitous events, “without need of any prior clearance or certification from the DOE and shall have a maximum and non-extendible period of one year from its execution.”