MANILA -The Energy Regulatory Commission (ERC) may propose that distribution utilities and power suppliers skip the usual competitive selection process (CSP) for their long-term supply agreements spanning more than 10 years, as the agency works to address contentious items in the new CSP guidelines.
According to ERC Chair Monalisa Dimalanta, distribution utilities such as Manila Electric Co. (Meralco) can instead consider long-term contracting through the Department of Energy’s (DOE) other existing programs, including the Green Energy Auction Program (GEAP).
This comes after Meralco pointed out that the draft revised CSP guidelines penned by the ERC “could unreasonably favor” short-term projects and “adversely and significantly” affect financing for long-term projects that usually require long-term financing.
Guidelines for the conduct of CSPs, or the bidding process that power providers must undergo before supplying the electricity requirements of a distribution utility, have been under review by the ERC since the first quarter of the year, with the agency citing the need for stricter policies to ensure supply availability.
“The DOE policy, as you know, already has adopted an auction system for renewable energy. For long-term renewable energy, it’s the DOE’s Green Energy Auction Program that addresses that and [allows long-term contracting] for 20 years,” Dimalanta told reporters on the sidelines of Meralco’s Giga Summit event on Tuesday.
The official was referring to the DOE’s bidding program that aims to provide an additional market for clean energy in the country through a competitive electronic auction of renewable energy capacities.
Under the GEAP terms of reference, renewable energy supply must be delivered for 20 years. The draft of the new CSP guidelines, meanwhile, allow only a maximum 10-year contracting period for power supply agreements.
“What’s left would be the existing plants. So we said, if that’s the remainder of the suppliers we are looking at, maybe we don’t need the CSP as the mechanism for long-term contracting because it’s the DOE program that will address the long-term contracting for that,” Dimalanta noted, adding that the ERC was looking at options. INQ