New Congress to look into power shortage

THE next Congress will look into warnings of a power shortage caused by the Supreme Court ruling requiring distribution utilities to implement a competitive selection process for their power supply agreements (PSA), a senator overseeing the chamber’s energy committee said.

Sen. Sherwin T. Gatchalian said he estimates that the ruling has upended 3,000 megawatts’ worth of power projects, which require a signed and approved PSA before the proponent can obtain financing.

He said there is a need to explore other mechanisms to speed up power project approvals to make up for the project delays.

“May remedy tayo diyan (we have a few remedies) via EVOSS (Energy Virtual One-Stop Shop), CEPNS (Certificates of Energy Projects of National Significance) so tignan natin (let us see) how these two mechanisms can improve the pace of the construction of power plants,” Mr. Gatchalian told reporters at a roundtable discussion Tuesday night in Makati City.

The Energy Regulatory Commission (ERC) has warned that the Supreme Court’s decision requiring competitive bidding for all PSAs will lead to a power supply shortage that would affect millions of consumers.

The competitive selection process policy, delayed for years by the ERC, will cover PSAs filed on or after June 30, 2015. The ruling also means that all cost recovery will retroact to the effectivity of the new contract but in no case earlier than June 30, 2015.

The ERC is currently preparing its reply to the SC decision while inventorying the PSAs affected by the ruling.

Earlier this year, a series of power outages hit several parts of Luzon. Business leaders have warned that the power crisis may continue next year due to policy barriers that delay putting up much needed power projects.

Mr. Gatchalian, the head of Senate’s energy committee, said such claims are “very valid” warnings.

“Dapat wala tayong red at yellow alert kasi hindi ’yan magandang signal sa business sector dahil part ng requirement nila eh stable electricity… (the business sector requires stable electricity and considers red and yellow alerts a negative signal) especially if you want to attract foreign investors,” he added.

He said the incoming Congress will also review the implementation of the Electric Power Industry Reform Act (EPIRA) of 2001, adding that the legislature will require a forecast of the energy supply in the next three years.

“Part of the discussions (will involve) updates to EPIRA. Did EPIRA deliver adequate power supply now and will it in the future?” Mr. Gatchalian said.

EPIRA or Republic Act 9136 aimed to liberalize the power sector with at least three core provisions: deregulation and demonopolization of the power generation sector, creation of the Wholesale Electricity Spot Market, and liberalization and demonopolization of electricity distribution via Retail Competition and Open Access.

“So, pagbukas ng Congress (when Congress opens), we will dedicate a hearing to the deliverables of ERC at DoE (Department of Energy) when it comes to the accountability of gencos (generating companies) and ask them for a forecast for the next three years,” Mr. Gatchalian added. — Janina C. Lim