Bidding ordered for power utilities’ supply deals | Inquirer Business

Bidding ordered for power utilities’ supply deals

/ 12:32 AM November 07, 2015

The Energy Regulatory Commission (ERC) is ready to start implementing the Competitive Selection Process (CSP) policy requiring distribution utilities (DUs) to conduct bidding for the uncontracted electricity demand in their respective franchise areas.

In a resolution published in newspapers over the weekend, the ERC said the future power supply agreements (PSAs) of distribution utilities—including those under negotiation or those executed but not yet filed with the ERC—must first comply with CSP rules before the same would be accepted by the ERC. Existing PSAs as well as those already on file or undergoing hearing are exempted.

Under the resolution, a distribution utility must source its uncontracted requirements from generators via CSP. Only after two failed CSPs may a distribution utility contract power supply through bilateral or direct negotiations.


A CSP is considered to have failed if the distribution utility got zero or only one proposal, and if competitive offers of prospective suppliers failed to meet the requirements prescribed under the terms of reference prescribed by the ERC’s distribution utility bids and awards committee.


The implementing rules on the ERC resolution are under process. In the meantime, distribution utilities may refer to the country’s national procurement laws for guidance on the forms of competitive bidding.

ERC chairperson Jose Vicente B. Salazar said in a statement that the move aims to make transparent the manner by which distribution utilities buy electricity from power generators. He added that the CSP assures that such supply is passed on to consumers at the least possible cost.

The requirement is for a distribution utility to openly call for and receive at least two qualified bids from generation companies with which the utility is not barred from entering into a contract for power supply.

The CSP further requires that direct negotiations with other power suppliers be entered into only after at least two failed CSPs.

Once the implementation of the CSP begins, the ERC will no longer allow the filing by distribution utilities of applications for PSA approval without compliance with the CSP requirements.

Salazar said the resolution “removes all uncertainties on how the CSP will be implemented by the ERC and paves the way for a regime of greater transparency and competition in the power supply procurement processes in the industry.”


He explained that the ERC’s move to implement the CSP “comes after a period of study and consultation with concerned industry players and stakeholders of over two years”.

Salazar pointed out that the study and consultations on CSP started back in February 2013. He also said that there should be no more delays in its implementation to ensure that the distribution of power supply in the country remains stable.

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“The process has come to a convincing conclusion that the CSP will promote transparency and competition as it advances the welfare and interest of consumers,” he said.

TAGS: Business, competitive selection process, energy regulatory commission

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