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Manila Bulletin devider Business devider ERC reaffirms rule on immediate implementation of EPSAs with provisional approval

ERC reaffirms rule on immediate implementation of EPSAs with provisional approval

Published Sep 3, 2024 07:35 am

At A Glance

  • Distribution utilities would often resort to emergency PSAs if there is sudden surge in their demand that are not covered in their existing PSAs – and that is a typical occurrence during the peaky summer months.<br> 

The Energy Regulatory Commission (ERC) has reaffirmed that the distribution utilities (DUs) can already implement tariff pass-on for capacities procured via emergency power supply agreements (EPSAs) even without securing provisional regulatory approval.

In an advisory issued by the ERC, it stipulated that “emergency power supply agreements (EPSA), pursuant to Section 2.3.5 of DC2023-06-0021, shall be immediately implemented without need of a provisional authority from the Commission.”

Nevertheless, the regulatory body emphasized that the EPSAs must still be filed “for final approval within the period provided under the ERC CSP (competitive selection process) guidelines.”

It qualified that the filing period in seeking final regulatory approval shall be “within 30 calendar days after the occurrence of the force majeure/fortuitous events,” and that can be done “without need of any prior clearance or certification from the DOE.”

Emergency power supply procurements had been mandated to have a “maximum and non-extendible period of one year from its execution.”

Distribution utilities would often resort to emergency PSAs if there is sudden surge in their demand that are not covered in their existing PSAs – and that is a typical occurrence during the peaky summer months.

The reference to DC2023-06-0021 in the ERC advisory has been the Circular of the Department of Energy (DOE) that was issued in June 2023, which mandates the conduct of competitive selection process (CSP) or bidding for capacity procurements that shall be underwritten with PSAs for their captive market.

Considered as ‘captive market’ in the deregulated power sector would be the segment of consumers that will continue to be served by franchised power utilities because they cannot exercise ‘power of choice’ yet within the prescribed threshold in the retail power market.

“The EPSA shall be immediately implemented to address the emergency, subject to conditions to be defined by the ERC,” the industry regulator stated.

The agency similarly conveyed that “the procurement of emergency power supply shall not be entitled to any form of subsidy.”

Power supply situation in the country – especially for Luzon and Visayas grids – has been recurrently teetering on the edge, hence, EPSAs are expected as saving grace when private distribution utilities and electric cooperatives would need immediate supplement to their capacity contracting.

Related Tags

Department of Energy (DOE) power supply agreements competitive selection process Energy Regulatory Commission (ERC) emergency procurements
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