By Komfie Manalo
The competitive selection process, or CSP, is a government-mandated bidding to ensure that only power suppliers that offer the least cost supply will be contacted by a distribution utility to protect consumers against high power rates", said Meralco vice president and head of Corporate Communications Joe R. Zaldarriaga.
Zaldarriaga added that the CSP, as approved by the Department of Energy (DOE) and the Energy Regulatory Commission (ERC), is open and transparent bidding, and electricity consumers can observe it.
"We would like to emphasize that Meralco strictly follows the requirements of CSP prescribed by the government, which includes securing prior approval from the DOE of our power supply procurement plan and the corresponding terms of reference (TOR) for every CSP. In the case of our 1800MW and 1200MW CSPs, the TORs also considered suggestions of the ERC chairperson before they were published," Zaldarriaga said.
To further ensure transparency and fairness, CSP observers, including the DOE and consumer groups, witness the submission and opening of bids. The proceedings are also streamed live.
In addition, the TOR ensures a level playing field for all generation companies participating in the bidding because all the rules apply to all bidders without exception, and all bidders are required to include all their costs in their bid offers to determine the lowest and winning bid.
Under Meralco CSPs, consumers are not allowed to be charged hidden costs. Since the TORs require prior approval of DOE, tailor-fitting to favor a particular generation company is prohibited. Meralco's TORs promote competition by ensuring that more generation companies can participate and offer competitive rates while at the same time encouraging the entry of new or greenfield power plants to replace old and unreliable power plants.
"Any generation company can submit offers for these CSPs. While we prioritize power plants using indigenous fuel as required by DOE, we ensure that it will not violate our least-cost mandate under the law. There is no preferential treatment, and Meralco always awards the contracts to the lowest compliant bidder," Zaldarriaga reiterated.
In its recently completed CSP for its 1,200-MW baseload requirement, Meralco awarded the power supply agreement to South Premiere Power Corporation after it submitted the lowest offer of P7.0718 per kWh.
It bested the P7.1006 per kWh offer of the joint venture of Limay Power Inc. and San Roque Hydropower Inc. for 150MW capacity and First Natgas Power Corporation's bid of P8.4489 per kWh.
First Natgas, which uses the indigenous Malampaya gas for the San Gabriel power plant, was deemed non-compliant as the offer went beyond the reserve price set for the bidding.
"Awarding the contract to a generation company that submitted the highest and non-compliant bid violates the law and existing regulations. Even ERC found that our CSP for the 1200MW had complied with all legal requirements when it issued a Provisional Authority," Zaldarriaga said.
Eight companies, including First Gas Power Corp. and First NatGas Power Corp., which sources fuel from Malampaya, expressed interest in submitting offers for Meralco's 600-MW requirement.
The other generation companies are Mariveles Power Generation Corp., Masinloc Power Co. Ltd., GNPower Dinginin and Therma Luzon, Inc., Southwest Luzon Power Generation Corp., and Quezon Power (Philippines) Limited Co.
"Just like all our other CSPs, we hope all these companies will submit their offers to maximize competition. This will allow us to secure the best bid and least-cost supply to benefit our customers. We emphasize that Meralco does not amend the rules or TORs for our CSP to favor generation company or limit competition because that is discriminatory and anti-competitive." Zaldarriaga said.
All resulting PSAs will also have to undergo an ERC review and approval process before implementation.
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