ERC chief seeks revamp of supply auction rules

MANILA, Philippines — The top executive of the Energy Regulatory Commission is pushing for a key amendment to the competitive selection process (CSP) guidelines to speed up the approval of power supply deals.

ERC chairman and CEO Francis Saturnino Juan has called for a review of the current method used to approve power supply agreements (PSAs), saying the agency should instead honor the results of the CSPs.

“The issue is our insistence on using the old methodology, the cost-based review of the rates or the stipulated rates in the PSA, even though that’s not the outcome of the CSP,” Juan told a recent ERC meeting.

“Perhaps it is high time that we engage the stakeholders on a possible amendment to our existing guidelines,” he said, implying that the current method could be violating the rules set by the Department of Energy.

Under a DOE circular, distribution utilities are required to procure all power supply through a “transparent, competitive and timely conduct” of CSPs to ensure electricity is delivered to end-users at the least cost.

The CSP is then awarded to the generation company that offers the lowest rate, with the resulting PSA submitted to the ERC for approval.

Juan, however, said the ERC has been evaluating the PSAs based on the actual costs incurred by the supplier, which, he said, disregards the lowest calculated responsive bid (LCRB) from the auction.

“That reflects our position—that even if a CSP is conducted, we don’t care about the outcome because we still have the final say when it comes to setting the rates,” he pointed out.

As such, the ERC chief is proposing that the ERC approve the LCRB of resulting PSAs from CSPs that are compliant with the guidelines and show no signs of anti-competitive behavior.

The move, he said, could improve the efficiency of approving power supply deals in line with efforts to resolve the ERC’s longstanding backlog and encourage more investments in the sector.

“The result of that is lower prices for our distribution utilities and for our consumers,” Juan emphasized.

Currently, the country’s energy regulator has around 5,000 pending cases awaiting resolution.

These cases include PSAs, dispute resolutions, unreleased show cause orders, rate reset and capital expenditure applications.