ERC warns of power shortage with SC ruling on PSAs

The Energy Regulatory Commission (ERC) warned of dire implications for the power industry if the Supreme Court decision requiring competitive bidding for all power supply agreements (PSAs) is implemented.

According to the ERC, the SC ruling could lead to power supply shortage, affecting millions of consumers.

The ERC is currently collating actual inventory of the PSAs affected by the blanket order of the High Court, which was announced only through its Public Information Office (PIO).

Based on initial findings of the commission, close to 100 contracts are covered by the SC decision, ERC chairperson Agnes Devanadera said in a briefing yesterday.

“As we see from the SC statement, the period covered dates back to June 30, 2015,” she said, noting some of which have already lapsed and others are still being implemented.

In the circular issued by the Department of Energy (DOE), the agency mandated all distribution utilities to conduct competitive selection process in securing PSAs effective June 30, 2015.

But this was set aside when the ERC issued a resolution on Oct. 20, 2015 stating that DUs may adopt any accepted form of CSP pending formal process from the regulator.

The resolution also directed DUs to comply with the CSP policy starting Nov. 7, 2015, but this was deferred further to April 30, 2016 to allow a transition period for power players.

ERC commissioner Catherine Maceda said the SC decision would have massive implications, both positive and negative.

“It will really affect the supply scenario considering the problems we have now during the summer season. You can just imagine if suppliers are asked to stop supplying due to the SC decision,” she said.

There will also be costrecovery implications because some of the PSAs have already been implemented and have already lapsed.

“There will be implications on collections because, based on the SC statement, the cost recovery is based on the result of CSP, which will happen after the fact the plants are already delivering service for the past three years,” Maceda said.

“All these plants operated on the assumption they will be paid under a certain rate based on a prior approval of the ERC,” she said.

The only positive effect of the SC decision is that transparency will further be promoted in the power industry, she said.

Devanadera, however, said the commission is still waiting to receive the actual SC decision, which has yet to be released, to check the details and nuances of the order.

“I cannot believe that the SC will go for something disastrous. If we do a strict and literal implementation of what we’ve read in parts…

It will affect millions of people. This will be a real acute shortage in supply,” she said.

The ERC will be presenting to the SC all the supply and cost implications of its directive.

On Thursday, the ERC summoned the concerned electric power industry stakeholders and required them to submit information that will enable the agency to assess the possible impact of the SC decision.

The power regulator required them to submit details of the procurement process of the contracts affected, including supporting documents; list of existing major/critical loads to be affected, other local/locational circumstances to be considered in relation to supply stability, actual monthly amount paid for the contracts involved, actual historical customer profile (from June 2015 to December 2018) and projected supplydemand scenario (2019 to 2026) by May 15.