LAOAG CITY—Sen. Sherwin T. Gatchalian, who chairs the Committee on Energy, is pushing for the immediate passage of a measure that will institutionalize reforms in the energy sector, particularly in the concern of procurement by distribution utilities (DUs) of supply for the captive market.
Senate Bill (SB) 1380 introduced by Gatchalian seeks to give mandate for the Competitive Selection Process (CSP) in order to enhance reasonable competition and transparency in the energy industry.
He said, for competition, a CSP should be required for all uncontracted and unregulated demand of the captive market.
Speaking at the opening of a two-day assembly of industry stakeholders organized by the Energy Regulatory Commission (ERC) at the Fort Ilocandia Resort Hotel here on April 20, Gatchalian said “a true competition will result in low electricity prices”.
However, the Bulacan solon said a centralized CSP, which should be conducted by a third-party auctioneer, has better results compared to a decentralized system based on recent studies.
Citing international electricity rates, particularly with Chile, when it decentralized the industry’s procurement system with DUs as auctioneer, Gatchalian said such system resulted in higher prices before 2015.
But he said when the country shifted to a centralized system with the government as auctioneer, prices were lower at P1.46 per kilowatt-hour (kWh) compared to its initial experiences.
He said in the Philippines the experience is the DUs with auction is much lower than those without auction resulting in reduced rates, from P5.00 to P6.30 per KWh to P3.32 to P4.09 per kWh, or 25 percent to 35 percent.
Gatchalian said the CSP can only be undertaken if it is in accordance with the approved Power Supply Procurement Management Plan of each DU.
Emphasizing transparency, Gatchalian said under a centralized CSP, power-supply agreements, contracts and forms should be standardized for ease of review and comprehension.
“These and other information related to the CSP should be available to the public through an online electronic portal,” he said. “This is the spirit behind the Electric Power Industry Reform Act [Epira] of 2001, or Republic Act [RA] 9136,” he said.
Under the Epira, or RA 9136, it is the State’s policy to ensure the quality, reliability, security and affordability of the supply of electric power, to ensure transparent and reasonable prices of electricity in the regime of free and fair competition and full public accountability, and to protect the public interest as it is effected by the rates and services of electric utilities and other providers of electric power.
Gatchalian said the Department of Energy (DOE) has for a long period of time recognized the use of a competitive process to cultivate private-sector participation in the power-generation sector.
In 2004 the first CSP was mandated in National Power Corp.-Small Power Utilities Group (NPC-SPUG) areas. However, the scope of the CSP was extended to all DUs in procuring their respective power-supply agreements in 2015.
Gatchalian said the DOE and the ERC then released a joint resolution entrusting to the latter the responsibility of issuing the appropriate regulations to implement the CSP and pending the issuance of such regulations, ERC has allowed DUs to conduct CSPs on their own, subject to the review of the regulatory body.
He said he expects the bill to go on priority lane at the resumption of Senate sessions on May 2.
“I believe the immediate passage of the measure institutionalizing CSP is all toward the enhancement of the security of supply and ultimately the attainment of optimal generation charges for the consumer,” Gatchalian said.
Image credits: Nonie Reyes