DOE to issue circular on auction of power requirements of utilities

MANILA, Philippines - The Department of Energy (DOE) is coming out with a circular that would help ensure and accelerate the quality, reliability and affordability of the supply of electric power by auctioning the electricity requirements of distribution utilities (DUs).

In a draft circular, the DOE said the so-called Demand Aggregation and Supply Auctioning Policy introduces rules on the auctioning of baseload and peaking requirements of DUs.

The DOE said demand aggregation and supply auctioning program in the electric power industry would help achieve greater private sector participation in the generation sector, with an end view of ensuring adequacy of electric power supply in each of the franchise areas served by the DUs and greater transparency in the electricity rates and charges.

Under the policy, the DOE will create a multi-agency auction committee that will conduct a yearly auction of the baseload and peaking requirements of DUs.

A policy introduced by Energy Secretary Carlos Jericho Petilla, the proposed auctioning would help ensure that electricity demand is met with adequate and proper power supply contracting by the DUs. It would also help ensure that end users are protected from unnecessary exposure in the volatility of spot prices in the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.

“All directly connected customers may participate in the auction by sourcing their demand and energy requirements through the auctions that will be executed,” the DOE said in the draft circular.

The DOE said in order to ensure the timeliness in the execution of the auction result, the policy shall adopt and use the Auction Power Supply Agreement Template to be developed by the DOE in consultation with the Energy Regulatory Commission (ERC).

“In pursuit of promoting renewable energy in the power sector, the policy shall comply with percentage of (RE) generation in the supply mix of the distribution utilities in compliance to Republic Act 9513 or the RE Law and as may be promulgated by the DOE,” the DOE said.

All DUs are mandated to participate in the auction through procurement of their uncontracted baseload requirements and at least 50 percent of their intermediate and peaking requirements, the DOE said.

The DUs may aggregate their uncontracted demand requirements and have these offered in the auction.