The Energy Regulatory Commission (ERC) said the one plant, one rate policy for power supply agreements (PSAs) may become a fixture in power supply contracts if proven effective in lowering power rates and clearing backlogs.
Under the one plant, one rate policy, a power plant which has pending PSAs will be given a uniform power rate to simplify competitive selection process (CSP) proceedings with multiple distribution utilities (DUs) and electric cooperatives (ECs).
ERC said it started the one plant, one rate policy to clear its backlog on decisions, with pending PSAs to be issued in the course of the year to undergo the said approach. A three-month observation period will also be conducted to benchmark the program.
The regulatory body said that such move is parallel to what has been suggested by AKO BICOL Party List representative Elizaldy Co, during a budget hearing last week.
Co asked ERC if it can implement a benchmarking of prices per power plant technology to streamline the process of competitive selection process and assure low rates for consumers.
“The one plant, one rate policy is the approach adopted by the Commission to resolve the pending PSAs in our backlog, many of which have already expired. We evaluate the cost components of a generation plant to set its base rate. We then use that base rate to compare it with the rate in the PSAs it has with various DUs that are still pending with us and we adjust based on inflation and similar indices to account for the different supposed dates,” said ERC chair Monalisa Dimalanta, in a message to reporters over the weekend.
“This makes the rates for the same plant across various PSAs uniform except for inflation adjustment and granting the CSP requirements are all complied with, will then be adopted by the Commission for approval of the PSAs,” Dimalanta said.
ERC emphasized that Co’s proposed benchmarking of prices is similar to the one plant, one rate policy “to a certain extent.”
“(Co) proposes that the resulting bids per technology or type of plant for the previous year, based on global prices, can be used ad benchmark rates per type of plant that will participate in CSPs for the current year. We will study this as our moving-forward measure, considering previous studies on benchmarking commissioned by the ERC in prior years but were not adopted,” Dimalanta added.
Under current CSP rules, a DU may only sign a PSA with a generation company after receiving at least two qualified bids from generation companies and will only be allowed to have direct negotiations with other power suppliers only after at least two failed bidding procedures.
