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DOE drawing up template for competitive biddings

DOE drawing up template for competitive biddings

MANILA, Philippines — The Department of Energy (DOE) will come out with a standard template for power distributors to conduct competitive biddings to avoid issues and ensure the least cost of electricity.

DOE Secretary Alfonso Cusi said the agency is currently working on a competitive selection process (CSP) template to be followed by all distribution utilities (DUs) and electric cooperatives (ECs).

This stemmed from Manila Electric Co. (Meralco)’s plan to proceed with its second round of its CSP for 1,200-megawatt (MW) greenfield capacity without changing the terms of reference (TOR) suggested by the DOE.

“They are a private entity and we have our CSP rules. So to avoid these problems, we are coming up with a CSP template,” Cusi said.

“I wanted the Meralco CSP to be open because they are the DU and at the same time owner of the generation plant,” he said.

Among the DOE’s suggestions is to allow all power plants to participate in the bidding, and allow plants to contract or sell only a part of its capacity to the DU.

The suggestions were made after the CSP for the 1,200-MW greenfield capacity was declared a failed bidding as only Atimonan One Energy Inc. (A1E), a unit of Meralco Powergen Corp. (MGen), submitted its offer.

The energy chief said Meralco could proceed with its competitive bidding as the CSP template being drafted by the DOE would be prospective.

“I don’t need to approve it if they want to publish it, they can do it as long as they say that their CSP is not approved by DOE,” Cusi said.

The Power for People Coalition (P4P) expressed support for the DOE’s call for Meralco to change its rules to give more flexibility for power suppliers bidding for its energy needs, while at the same time pushing for the inclusion of renewable energy (RE) sources in the power distributor’s energy mix.

“We welcome the announcement of Secretary Cusi calling on Meralco to change its terms of reference for its CSP. However, we are not happy that the changes he asks for will just allow more coal-fired power plants to participate, instead of taking the opportunity to obey President Duterte’s directive to have more renewable sources available to Filipinos,” said P4P convenor Gerry Arances.

Meanwhile, the Institute for Climate and Sustainable Cities (ICSC) said the open and transparent bidding for power supply contracts should be followed not only by Meralco, but also by all other DUs and ECs to ensure Filipinos affordable and reliable electricity.

In a statement, ICSC senior policy advisor Pedro Maniego said allowing both existing and new power plants of all sizes to join the bidding of power requirements allows getting the least cost of electricity for consumers.

“This open and transparent approach of bidding through the CSP will provide not only the big generation companies (gencos), but also small RE firms the opportunity to bid for portions of the power requirements of the distribution utilities,” he said.

This echoes Sen. Sherwin Gatchalian’s call on the need for an open and transparent bidding in Meralco’s CSP in line with the policy under the Electric Power Industry Reform Act (EPIRA).

The EPIRA calls for transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability.

“In adherence to the prescribed spirit of free and fair competition, both existing and new power plants should be allowed to join Meralco’s upcoming bidding for a 1,200 MW power supply agreement (PSA),” Maniego said.

The official said consumers would benefit from the participation of the RE companies, because electricity costs from RE sources continue to fall.

“RE companies’ participation in the bidding, if allowed and successful, will reduce the country’s dependence on power plants that run on traditional and carbon-intensive fossil fuels, such as coal,” Maniego said.

Currently, the Philippines imports approximately 75 percent of its coal requirements.

Maniego, who is also the former chairman of National Renewable Energy Board, also pushed for the division of Meralco’s supply requirement into smaller sizes and to allow stacking of bids, as proposed by Cusi.

This, he said, would likewise foster the desired competitive structure envisioned in EPIRA.

“Secretary Cusi’s instruction, once applied on all CSP, would give small power generation companies an opportunity to bid and win portions of large supply requirements. Without stacking, only one bidder and one price for the entire capacity will win, which would exclude small RE companies that can offer less expensive electricity at firm prices over the life of the supply agreement,” he said.

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