ERC pre­scribes ‘lock-down pe­riod’ on all power sup­ply con­tracts

Manila Bulletin - - Business News - By MYRNA M. VE­LASCO

It will no longer be easy for flip­pinggen­er­a­tion com­pa­nies to un­load ca­pac­i­ties that they have tied to power sup­ply agree­ments (PSAs) be­cause the En­ergy Reg­u­la­tory Com­mis­sion (ERC) shall soon be pre­scrib­ing “lock down” pro­viso on con­tracts.

In the draft rules is­sued by the reg­u­la­tory body to rel­e­vant stake­hold­ers, it is ex­pressly stated that “the win­ning bid­der shall not be al­lowed to sell and/or as­sign the con­tract to any other en­tity.”

The only ex­cep­tion, ac­cord­ing to the ERC, is if it has “given ap­proval and de­ter­mi­na­tion of the as­signee or buyer’s le­gal, tech­ni­cal and fi­nan­cial el­i­gi­bil­ity.”

Be­yond the com­pet­i­tive se­lec­tion process (CSP) via for­mal com­pet­i­tive bid­ding which is the method of power sup­ply con­tract­ing be­ing in­sti­tuted for DUs, the ERC will also be al­low­ing sub­mis­sion of un­so­licited pro­pos­als from GenCos based on the pub­lished re­quire­ment of spec­i­fied power util­i­ties.

DUs could re­fer to pri­vately owned power util­i­ties such as the Manila Elec­tric Com­pany (Mer­alco), Visayan Elec­tric Com­pany (VECO), Davao Light & Power Co., Ca­gayan Elec­tric Power and Light Com­pany Inc. and oth­ers; as well as the coun­try’s over-a-hun­dred elec­tric co­op­er­a­tives.

In an un­so­licited ten­der, the ERC has pre­scrip­tions for ca­pac­ity cap as stip­u­lated in the draft rules.

“The con­tracted ca­pac­ity sub­ject of the un­so­licited pro­posal shall not ex­ceed 10-per­cent of the DUs to­tal an­nual peak de­mand,” the ERC has em­pha­sized.

Ad­di­tion­ally, the reg­u­la­tor laid down that “the un­so­licited pro­posal is made pub­lic and sub­jected to com­pe­ti­tion,” stress­ing fur­ther that “when a distri­bu­tion util­ity re­ceives an un­so­licited pro­posal for the sup­ply of elec­tric­ity, the DU shall then pub­lish and in­vite third par­ties to match or im­prove it.”

The ERC spec­i­fied that “for an un­so­licited pro­posal to be con­sid­ered by the DU, the pro­po­nent has to sub­mit a com­plete pro­posal – which shall in­clude a cover let­ter, fea­si­bil­ity study which should in­di­cate rel­e­vant as­sump­tions; com­pany pro­file; the draft con­tract which ad­heres to the min­i­mum terms pro­vided and other doc­u­ments that are needed even if pro­pri­etary in na­ture.”

On Swiss chal­lenge, the ERC in­di­cated that the bids and awards com­mit­tee (BAC) “shall pub­lish the in­vi­ta­tion for com­par­a­tive pro­pos­als af­ter re­ceipt of the no­ti­fi­ca­tion from the orig­i­nal pro­po­nent that the lat­ter ac­cepts all the terms and con­di­tions” – and such must be ex­plic­itly stated in its let­ter of ac­cep­tance.

It was sim­i­larly es­tab­lished that “the dead­line for sub­mis­sion of com­par­a­tive pro­pos­als shall not be ear­lier than 60 days from the date of the last pub­li­ca­tion of the in­vi­ta­tion for com­par­a­tive pro­pos­als.”

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