Move to exempt AS deals from CSP nixed

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LAWMAKERS have rejected the suggestion of the Department of Energy (DOE) to temporarily exempt the conduct of a Competitive Selection Process (CSP) for the procurement of ancillary service (AS) or power reserves.

Instead, they want the DOE to fast-track the CSP guidelines on AS for new contracts and conversion of non-firm AS contracts to firm contracts.

“I don’t support that exemption. What we want is transparency. Accelerate instead of exempt. The best case is for DOE and ERC  [Energy Regulatory Commission] to sit down,” said Senate Energy Committee chairman Win Gatchalian.

Energy Secretary Alfonso Cusi said during the committee hearing—the second called in response to the recent unscheduled brownouts—that “under extreme measures” his office could grant exemptions to CSP to hasten the procurement of power reserves.  “This is just to make sure that we will have the power reserve when we need it. We can issue certain exemptions up to a certain period, but that does not mean we will longer conduct CSP,” said Cusi.

This argument caught the ire of other senators. Senators Nancy Binay and Risa Hontiveros said the proposed CSP exemption is “bothering.”

“The CSP rule is there so the guidelines must be there already and yet we hear exemption from the DOE, and the ERC is waiting for the DOE to issue a policy. Before you issue a policy, the data must all be there,” said Hontiveros.

Gatchalian noted “loopholes” and “lack of details” in the existing CSP policy issued by the DOE. “There are a lot of important things that the DOE and ERC need to iron out as soon as possible.”

NGCP committed

The ERC has already directed the National Grid Corporation of the Philippines (NGCP) to conduct a competitive bidding for all AS contracts. The NGCP, for its part, has committed to do it.

However, the ERC raised concerns during the hearing. It said that under existing CSP rules crafted by the DOE, the competitive bidding takes 180 days. Lawmakers, however, want to shorten this to 30 days to immediately help plug the power deficit in the Luzon grid.

“We already gave instructions to NGCP to come up with new contacts and finish the CSP within 30 days. May we have from DOE something written because we can’t refer to existing rules, which take 180 days, and not be able to address the emergency. The DOE has the power to issue CSP rules. We want to have clear rules with no ambiguity and within the 30-day timeframe,” said ERC chairman Agnes Devanadera.

She pointed out that under a competitive bidding, a committee has to be formed and approved by the DOE. Thereafter, the CSP terms of reference must also be approved prior to the conduct of the CSP. “Under existing CSP, these must be undertaken in 180 days. So, we are asking the DOE now to put into writing all details for the CSP for AS,” said the ERC chief.

Cusi assured her and senators the guidelines would be promulgated within the month.

Gatchalian stressed that the conduct of a CSP for AS procurement, saying this is a best practice to assure robust competition and transparency.  “I believe we will get the best price if the AS contracts are subject to CSP. We will even get below the estimated 28 centavos per kilowatt hour level shown earlier because competition via CSP will definitely bring down prices,” he said.

Gatchalian: Give contingency plans

Meanwhile, Gatchalian also pressed Cusi to submit by next week a clear road map of contingency measures for looming brownouts to avert a repeat of the disruptions from May 31 to June 2 that derailed operations of businesses struggling to reopen after the lockdowns and imperiled the cold storage of Covid vaccine supplies.

“I am concerned right now because a lot of things are at stake…and we are not getting a clear picture of what the [players] plan to do to avert brownouts,” Gatchalian said, presiding  as chairman of the Senate Energy Committee hearing.

Cusi promised to comply even as he lamented that power companies, in turn, have yet to fulfill firm commitments to ensure power reserves, adding that “rotational brownouts would not happen” if only stakeholders complied.

“We want to hear from regulators at the succeeding Senate hearing next week how they intend to ensure compliance with commitments to avert crippling brownouts stunting economic activities and inconvenience to consumers,” said Gatchalian.

For her part, Senator Nancy Binay shared concerns on the need for long-term solutions to a power supply shortage, as earlier sought by a Senate Resolution filed by Senator Emmanuel Pacquiao, even as Binay cited reports that eight plants are on track to go online. Also at the hearing, Pacquiao reminded Cusi to promptly resolve power supply problems to ensure brownouts are not frequently repeated.

Pacquiao prodded Cusi to accept responsibility and not pass the blame to others.

The senator assured Cusi this was “nothing personal” between them, adding it was just meant to ensure consumers can rely on a steady power supply, especially since millions of students and workers have been forced by the pandemic to do their chores from home.

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