The Department of Energy (DOE) will be rescinding its order mandating the conduct of joint competitive selection process (CSP) for the electric cooperatives (ECs) in their aggregated procurement of capacities from gas-fired power facilities.

According to Energy Undersecretary Sharon S. Garin, “the order has to be rescinded because there are some problems in implementing it – that’s based on feedback that NEA (National Electrification Administration) had given us.”

She explained that in the case of the electric cooperatives (ECs), “it’s difficult to aggregate their demand – because each one of them has different standing financially; and even with their contracts, they have different expiration dates – some would lapse in one to two years; while there are some that are expiring in 10 years.”

Garin reiterated “there is a general leaning on the part of the DOE to rescind it, or we might just amend or issue the same order with the same thought – but the end goal there is really to ensure a market for gas.”

In October last year, the energy department has issued Department Order No. DO2023-10-0022 which prescribes sourcing of power supply by the distribution utilities (DUs) and the ECs from the generating facilities that have been feeding on either indigenous gas or liquefied natural gas (LNG).

The DOE order primarily stipulated “the joint conduct of a CSP to meet the aggregated demand requirements of DUs relative to the available and potential indigenous and imported natural gas supply.”

The department opined that the joint CSP was seen providing “ample leverage to DUs – particularly the ECs, in terms of: availability, by ensuring that power supply from transition fuel is made accessible to all based on need or requirement.”

And on the facet of pricing, the DOE stated that the joint auction had been intended to “provide a uniform rate among all covered DUs through a wider base by contracting the supply from natural gas power plants.”

The DOE emphasized that there is a need for the creation of niche market for gas in the country’s energy mix, following the 15-year extension of Service Contract 38 to stretch the production life cycle of the Malampaya gas field.

In a separate advisory that the DOE issued on October 11, 2023, it similarly prodded all the other DUs in the Luzon grid “to conduct the necessary and appropriate CSP – either aggregated or separate, for sourcing of portion of their electricity requirements from natural gas-fired power plants to meet their demand requirements in accordance with the available supply of natural gas.”

Garin specified there is no mandatory percentage of capacity that the DUs will have to procure from the gas plants; and since the issuance of the DOE had just been an advisory, the goal is merely to “encourage” capacity utilization from the gas-fed generating assets.