The Energy Regulatory Commission (ERC) has issued updated guidelines on the conduct of competitive selection process (CSP) for the procurement of power supply of distribution utilities (DUs) and electric cooperatives.
Under the CSP, a DU may only sign a power supply agreement (PSA) with a generation company after calling for and receiving at least two qualified bids from generation companies.
It will be allowed to directly negotiate with other power suppliers only after at least two failed bidding procedures.
In the updated guidelines issued Friday, the ERC reinforced the obligation of DUs to determine whether least cost can be met by either financial or physical PSAs.
Financial PSAs are not power plant-specific and must set out a tariff structure that shall be fixed for the duration of the contract term.
Physical PSAs are plant-specific so the tariff structure and cost-components must be clearly provided by DUs in their terms of reference.
The ERC also streamlined the process for the procurement of emergency PSAs (EPSAs), with more robust timelines for evaluation to meet the emergency power needs of DUs while also providing clear compliance parameters for situations that are exempted from the CSP requirement.
Amid the changes, the regulatory body said it will provide comprehensive checklists of pre-filing requirements for PSAs procured through CSP or exempted from the CSP as well as PSA templates prescribing minimum standards to facilitate stakeholder compliance with the new framework.
The ERC also set a maximum contract duration for different kinds of PSAs: up to one year for EPSAs, 10 years for financial PSAs, 15 years for physical PSAs and 20 years for PSAs involving renewable energy plants.
The updated CSP guidelines also state that PSAs submitted to the ERC for approval will now be reviewed on two levels, with the first level involving process review to determine compliance while the second level is a substantive review to determine the PSA’s reasonableness in terms of tariff, costs, risk allocation and other contractual terms. – Jed Macapagal
