ERC assessing power supply deals affected by SC decision

Some distribution utilities (DUs) may lose fraction of their contracted supply as a result of the Supreme Court (SC) decision mandating all power supply agreements (PSAs) from June 30, 2015 to go through competitive selection process (CSP) or bidding.

It has to be noted that out of the 93 PSAs covered by the high court ruling, significant number of contracts filed from the prescribed timeframe had already been approved by the Energy Regulatory Commission (ERC) and were already enforced. The industry count had been at least 60 contracts, but the ERC said this is still being validated.

If such PSAs will be invalidated as a result of the high court’s verdict, a number of DUs and electric cooperatives (ECs) will be losing part of their contracted supply portfolio.

And for the generation companies affected, they may opt to trade their capacity in the Wholesale Electricity Spot Market (WESM) which may not be a very promising prospect given the spiky pricing trends in the spot market at this point.

ERC Chairperson Agnes T. Devanadera said they are taking “the necessary plans

and measures to pre-empt and mitigate possible implication of the Supreme Court decision.”

She added that meetings with the Department of Energy (DOE) and affected entities such as the DUs, generation companies (GenCos) and other power stakeholders are being carried out this week “to jointly address the issues at hand.”

The ERC chief indicated they “will be doing everything within (the Commission’s) legal mandate to protect the consumers relative to the impact of the SC decision.”

For Energy Secretary Alfonso G.Cusi, he sees the high court ruling’s upholding of the DOE Circular on CSP issued in 2015 as one that will promote transparency in supply procurement of the power utilities, primarily on the aspect of pricing.

“The DOE will continue to push for the conduct of the CSP,” he said, adding that such “would ensure the transparency in the signing of power supply contracts, and more importantly ensure that they will be at least cost for the benefit of our consumers.”

Cusi added the recent development ushered in by the judicial verdict “would help us evaluate how we could facilitate bringing in new capacities into the grid.”