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High court affirms power supply agreements need to go through competitive selection

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THE SUPREME COURT (SC) affirmed its decision requiring all power supply agreements which distribution utilities submitted to the Energy Regulatory Commission (ERC) from June 30, 2015 to undergo competitive selection process (CSP).

In a July 23 resolution, the SC denied “with finality” the motion for reconsideration filed by the ERC and Panay Energy Development Corporation on the high court’s initial May 3 decision on the matter.

“(T)he basic issues raised therein have been passed upon by this court and no substantial arguments were presented to warrant the reversal of the questioned decision,” it read.

The SC, acting on the November 2016 petition of consumer group Alyansa Para sa Bagong Pilipinas, Inc., ruled on May 3 that the ERC “committed grave abuse of discretion amounting to lack or excess of jurisdiction” when it “unilaterally postponed” the effectivity of the CSP requirement under the Department of Energy’s (DoE) Circular No. DC 2015-06-0008 issued in 2015.

ERC resolution 13 in October 2015 and 1 in March 2016 postponed effectivity of the auction requirement by 305 days from June 30, 2015 to April 29, 2016.

The SC said 90 power deals were submitted for ERC approval from April 16 to 29, 2016, noting that many of them had terms spanning more than 20 years.




The May 3 decision, penned by Associate Justice Antonio T. Carpio, said ERC’s delegated authority “is limited to implementing or executing competitive selection process in accordance with the 2015 DoE circular.”

The DoE in June urged power distribution utilities to comply with the Supreme Court’s decision requiring CSP on their PSAs.

The ERC, through the Office of the Solicitor-General, last month asked the court to overturn its decision.

The commission argued that it did not commit grave abuse of discretion in issuing the two resolutions since it has “quasi-legislative powers” to issue rules and regulations.

It also noted that the 2015 DoE circular on CSP which was supposed to take effect on June 30, 2015 could not be enforced at that time since there were no implementing guidelines, among other reasons.

ERC also said the PSAs filed during the period of the effectivity of the resolutions complied with the 2015 ERC CSP Guidelines.

ERC also said that 11,949,688 residential customers, 1,144,842 commercial customers and 21,909 industrial customers will be affected the SC’s ruling.

“Declaring as void the 153 PSAs filed during the period starting 30 June 2015 to 29 April 2016, or only 99 PSAs that were filed during the same period which did not comply with the CSP requirements, has serious implications on these customers’ access to electricity,” ERC said in its appeal.

ABOITIZPOWER READY TO PARTICIPATE
Aboitiz Power Corp. has formally expressed interest to participate in the competitive bidding for the supply of energy being called for by Manila Electric Co. (Meralco), the country’s largest power retailer.

“We submitted letters of intent for two — the brownfield and the mid-merit,” Emmanuel V. Rubio, AboitizPower chief operating officer, told reporters after the ceremonial signing of the company’s retail electricity supply contract with SM Prime Holdings, Inc.

Meralco has invited bidders keen on supplying energy to the utility under three separate notices and to be conducted under a CSP.

For power supply from the “brownfield” power plant, or one that is already existing, Meralco sought 1,200 megawatts (MW) for Dec. 26, 2019-Dec. 25, 2029. Bids will be accepted until Sept. 9.

For the mid-merit power, which can be supplied by power plants with ability to adjust output as demand for electricity fluctuates throughout the day, Meralco sought 500 MW under a five-year contract. Bids will be accepted until Sept. 11.

“The mode, we’re still evaluating the details of the bid,” he said, adding that the company was also looking into the terms of reference given by Meralco.

Asked about his comments on the contract terms given by Meralco, Mr. Rubio replied: “It is concerning.”

“It’s a long-term contract. The fuel [cost] is almost not a pass-through. It’s a 24/7 supply. It’s something new and there are risks.”

“We have the capacity and we have the assets if we do decide to participate later on,” Mr. Rubio said.

He said AboitizPower did not express interest in the third Meralco bid invitation for another 1,200 MW because “we believe that, in the terms of reference put forward, we won’t be able to comply with those terms.”

“It’s not really the technology but the timelines.”

On the retail electricity segment of the business, AboitizPower has signed up SM Prime Holdings, Inc. as a customer as it will supply electricity to 15 of the property developer’s facilities.

The two sealed the partnership in a ceremonial signing at Conrad Manila in Pasay City on Aug. 7, with SM Prime entering into a retail electricity supply (RES) contract with AboitizPower for an initial 50-110 MW for three years.

“With our continuous expansion in the coming years, we need a power supplier that will enable us to support our existing and future partners with reliable and cost-effective power. We believe that AboitizPower, with its extensive power generation assets, can provide what we are looking for,” SM Prime Holdings President Jeffrey C. Lim said.

AboitizPower has a portfolio of renewable energy and thermal power plants located across the country. It currently has a net sellable capacity of 4,471 MW.

Thursday saw AboitizPower shares give up 1.95% to end P35.25 each. — Vann Marlo M. Villegas and Victor V. Saulon

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