The Energy Regulatory Commission (ERC) is proposing a new framework requiring prior review of Terms of Reference (TOR) for Competitive Selection Processes (CSP) before distribution utilities and the System Operator can publish invitations to bid for power supply deals.

The proposed rules are intended to curb anti-competitive practices and ensure that power supply procurement is conducted at the least cost for consumers.

A CSP is the bidding process used to procure power supply, while the TOR sets the rules, requirements, and parameters that interested bidders must follow.

By reviewing TORs before an invitation to bid is published, the ERC said it aims to prevent procurement rules that could exclude legitimate bidders or favor certain suppliers.

“We are setting the rules of the game earlier in the process to ensure that competition is genuine and not merely procedural,” ERC Chairperson and CEO Atty. Francis Saturnino C. Juan said.

“By reviewing the TOR upfront, we help prevent anti-competitive design and ensure that procurement outcomes truly reflect the least-cost for consumers,” he added.

Under the proposed framework, no distribution utility or the System Operator may proceed with bid publication without first submitting its TOR for ERC review.

The entity must secure a TOR Certificate of Compliance or obtain deemed approval upon the lapse of the prescribed review period before publishing an invitation to bid.

The proposed rules also require a sworn Least-Cost Justification Statement from the president or general manager of the distribution utility or System Operator.

The statement must attest that the TOR parameters do not, whether by design or unintentionally, exclude or discourage legitimate competitors from joining the CSP.

The ERC said its substantive review will apply a five-part regulatory test covering price, competition, design, deliverability, and consumer or grid-user impact.

In plain terms, the review will check whether the bidding terms support real competition, can deliver the required supply, and are likely to result in the least cost for consumers or grid users.

After evaluation, the ERC may approve the TOR, approve it subject to revisions, or disapprove it if it is inconsistent with least-cost principles, contrary to existing laws, or contains signs of anti-competitive design.

The proposed framework sets five working days for completeness review and up to 20 calendar days for substantive evaluation.

The substantive review period may be extended once for up to 10 calendar days under justified circumstances. If the prescribed review period lapses, the TOR will be deemed approved.

However, the ERC said approval of a TOR will not prevent the Commission from later reviewing or acting on a CSP found to contain anti-competitive elements that were not reasonably apparent at the time of approval.

The ERC said the proposal reflects a forward-looking regulatory approach that moves beyond compliance and toward proactive oversight of power procurement.

The proposed rules will be posted on the ERC website on July 10, with comments accepted until July 24. A virtual public consultation is scheduled on July 31.

Can earlier ERC review of bidding terms help ensure more competitive and least-cost power supply contracts for consumers?

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