The Department of Energy (DOE) is requiring power distributors to create a third party auctioneer to undertake competitive selection process (CSP) in securing power supply deals.
“We will issue an advisory to the DUs this week. They will now have to create a TBAC (Third Party Bids and Awards Committee), come out with a template of power procurement plan which states the requirement for bidding,” DOE assistant secretary Redentor Delola said.
The agency will write distribution utilities (DUs) to clarify how to undergo a standardized competitive bidding to secure power supply agreements (PSAs).
This advisory followed questions and clarifications from distribution companies on DOE’s “Policy for the CSP in the procurement by the Distribution Utilities (DUs) of PSA for the Captive Market.”
The circular, DOE said, addresses the need to create a specific CSP policy for all DUs and ECs in the country that would define “a clear, transparent and fair supply procurement process to promote competition and greater private sector participation in the provision of adequate generation capacity.”
The circular also seeks to promote competitiveness in the sector, allowing eligible and qualified generation companies a level playing field to participate in the CSP.
This will specify the technical, economic, and other parameters – baseload, mid-merit and/or peaking, amount of energy to be delivered, type of fuel or resource, etc.
The energy department has already asked the Energy Regulatory Commission (ERC) to create a template for PSAs for the use of all electric power industry participants.
ERC will also create and impose fines or penalties for non-compliance with the new CSP policy.
The CSP policy was implemented on April 30, 2016.
While both DUs and ECs are required to undertake competitive bidding in order to secure PSAs with power generating companies, there are no specific guidelines in conducting the CSP under the current mechanism.