Government starts talks with TransCo bidders

Energy Secretary Raphael P. M. Lotilla has confirmed the start of talks between the government and prospective bidders for some $3 billion worth of National Transmission Corp. (TransCo) assets.

While declining to identify the interested parties, Lotilla said those that have previously signified interest to join the bidding for the country’s transmission highway are "still very much into it".

But said "there are also new ones" that have expressed interest to participate in the TransCo bidding, he added.

Lotilla welcomed reports that the Singapore Power Corp., the sole bidder in the previous two auctions of TransCo, intends to partner with several local investors including businessman Raul T. Concepcion.

"Singapore Power may enter as a technical partner," he said. Earlier reports said Singapore Power put in the back burner its plan to bid for the TransCo assets after what was described as government’s "dilly-dallying" on the privatization of the company.

The Energy Regulatory Commission (ERC) released recently a document that embodies the ERC’s initial position on the price control arrangements that will apply to the customers during the second regulatory period. The final draft is expected to be released on July this year.

The document, called draft determination, describes the ERC’s initial evaluation of TransCo’s application for a revenue reset that is based on its merits, as well as on the evidence presented in support thereof during the public hearings held prior to this issuance.

ERC chairman Rodolfo B. Albano, Jr. said the draft ruling will not yet affect the rates of TransCo as this will only allow the stakeholders to comment on the draft.

"The draft determination is not a final determination or resolution of the application. It was released to afford other stakeholders an opportunity to comment on the ERC’s views before a final determination is made. As such, the said draft determination will have no effect on the rates charged by TransCo to its customers," Albano said.

The final determination will be issued by the ERC after the termination of the presentation of documentary evidence and testimonies by all parties during the public hearings and only after the ERC has conducted a complete evaluation thereof.

"The ERC assures all stakeholders that it is fairly and equitably handling TransCo’s application. The ERC will always remain in the middle, balancing the interests of all stakeholders during the course of evaluation to determine the true cost of service provided by TransCo," the ERC chief said.

On Sept. 22, 2005, the ERC received the application of transCo and the Power Sector Assets and Liabilities Management Corporation (PSALM) for revenue reset for TransCo and any of its future concessionaire on the second regulatory period covering the years 2006 to 2010.

The rate application of TransCo and PSALM is based on the transmission wheeling rates guidelines (TWRG), a performance-based rate-setting (PBR) methodology promulgated by the ERC.

The TWRG sets the tone for predictability and stability of ERC’s regulatory policies. The paradigm shift in rate making is well-timed as the government is now focusing on the privatization of the transmission sector.