Republic of the Philippines


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ERC to Ensure Least Cost in the PSAs Entered into by DUs

The Energy Regulatory Commission (ERC) will ensure that the Distribution Utilities (DUs) that entered into a Power Supply Agreement (PSA) with a Generation Company have opted for the least cost offer during the bid process.  

News reports ascribed that the ERC was being urged to confirm whether the Manila Electric Company’s (MERALCO) recent conduct of competitive selection process (CSP) indeed resulted and was awarded to the least cost bidder.

“At the moment, we cannot as yet determine or confirm whether the proposed rate in the MERALCO PSA adverted to was indeed the least cost.  But once the subject MERALCO PSA application has been filed, the ERC will conduct a thorough evaluation to ensure that the proposed rate in the PSA is the least cost”, ERC Chairperson and CEO Agnes VST Devanadera averred.  

The Supreme Court affirmed its decision in July 2019 requiring all PSAs that have been submitted to the ERC from June 30, 2015 need to undergo the CSP.  The CSP is a form of competitive public bidding for the purchase of electricity by the Distribution Utilities (DUs).  The CSP requirement in the power sector is primarily aimed at ensuring a fair, reasonable, and cost effective generation charge for consumers, under a transparent power sale mechanism between the Generation Companies and the DUs.  The CSP was promulgated for the protection of the consuming public.  

“We will require the submission of pertinent documents from the Distribution Utilities that will show proof that the CSP that they have undertaken in securing their power supply from the Generation Companies adhered to the “least cost” principle”, Chair Devanadera concluded.


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