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ERC’s competitive selection rules expected in 30 days

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THE Energy Regulatory Commission (ERC) expects to issue within 30 days its final rules on competitive selection process (CSP), a scheme that chooses the lowest-cost power for consumers, including a provision on replacement power that will require the generation companies to shoulder the cost of unscheduled plant outages.

“Hopefully, in 30 days,” ERC Commissioner Catherine P. Maceda told reporters when asked about how soon the regulator could issue the rules in the face of the continuing legislative hearings on the deficient power reserves in the Luzon grid ahead of the May 13 midterm elections.

She said the ERC has a draft of the CSP rules, which is in the final stage of completion.

Attached in the rules is a template for a power supply agreement (PSA), which has a provision on replacement power.

“It’s almost ready,” she added. “There’s a template contract already.”

Ms. Maceda said given the recent hearings and the inputs from stakeholders, the ERC will revisit its draft CSP rules, and possibly hold another round of public consultations.

At present, not all the PSAs that went through ERC approval have a provision on replacement power, an issue that was highlighted in the Senate hearings, with Senator Sherwin T. Gatchalian pointing out that there is no disincentive for power generation companies whose plants go on an unscheduled shutdown. He also questioned the slow pace at which the power plants go back online after an outage.

Some PSAs between generation companies and distribution utilities have a provision on replacement power. That provision calls for the utility to buy power from the wholesale electricity spot market when the generator is unable to deliver because of an outage. Market prices are driven by existing supply and demand, and could be higher than the contracted prices under PSAs. The additional cost may be passed on to consumers.

Ms. Maceda said the ERC might need one or two en banc meetings to finalize the CSP rules, plus another special commission meeting for the same purpose.

The urgency of coming up with the rules comes at a time when the ERC is in the thick of inspecting power plants that shut down in March and April, resulting in rotational brownouts in some areas in Luzon, including Metro Manila.

Ms. Maceda said the commission is awaiting the submission of data from the power generation companies on the plant shutdowns, which it will validate with its own data.

“We have our own data in-house. What we are doing is ibabangga ito sa data ng PEMC (validate this against the data of the Philippine Electricity Market Corp). Can anyone manipulate the data? No, because we have our own,” she said.

She said the ERC was awaiting the submission of complete data from PEMC, the governance arm of the electricity spot market.

“How can you regulate when you don’t know the state of affairs,” she said. “We impose the necessary sanctions, if necessary and after due process. The due process is always important.”

For now, she said the position of the commission is allegations that some market players made money out of the unscheduled plant shutdowns are “just allegations.”

“Those are just allegations and until we have the proof, which is essentially the data, hard data, then nobody can say that there was gaming in the market. It’s as simple as that,” she said. — Victor V. Saulon

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