The Energy Regulatory Commission (ERC) today announced that it will commence the implementation of the Competitive Selection Process (CSP) in the procurement of power supply by distribution utilities (DUs) for their captive markets.
ERC Chairman Jose Vicente B. Salazar said that the move aims to make transparent the manner in which DUs buy electricity from power generators. He added that the CSP assures that such supply is bought and passed on to consumers at the least possible cost.
Chairman Salazar further noted that under the CSP, a DU may execute a power supply agreement (PSA) with a generation company only after successfully complying with the requirements of the process.
The requirement is for a DU to openly call for and receive at least two qualified bids from generation companies with which the DU is not barred from entering into a contract for power supply.
The CSP further requires that direct negotiations with other power suppliers be entered into only after at least two failed CSPs.
Once the implementation of the CSP begins, the ERC will no longer allow the filing by DUs of applications for PSA approval without compliance with the CSP requirements.
According to Chairman Salazar, the resolution “removes all uncertainties on how the CSP will be implemented by the ERC and paves the way for a regime of greater transparency and competition in the power supply procurement processes in the industry”.
He explained that the ERC’s move to implement the CSP “comes after a period of study and consultation with concerned industry players and stakeholders of over two years”.
Chairman Salazar pointed out that the study and consultations on CSP started back in February 2013. He also said that there should be no more delays in its implementation to ensure that the distribution of power supply in the country remains stable.
“The process has come to a convincing conclusion that the CSP will promote transparency and competition as it advances the welfare and interest of consumers,” he added.
Resolution No. 13, Series of 2015