The International Chamber of Commerce Philippines (ICCP), the national committee of the World Business Organization, supports the mandatory implementation of the Competitive Selection Process (CSP) in the energy sector saying this is good for investors, ensures greater competition, power supply security and competitive tariffs.
The circular issued by the Department of Energy (DOE) on Mandatory CSP on June 2015 requires distribution utilities and cooperatives to purchase their power supply through the CSP instead of negotiating them directly with generation companies.
In a statement, ICCP Chairman Francis Chua said CSP is beneficial to consumers because it goes beyond lowering the cost of electricity.
It is called CSP to cover methods of competition to find least cost power from alternative but qualified sources and feasible technologies.
This likewise addresses issues of conflict of interest where price negotiated by distribution utilities and related generators are ultimately borne by electric consumers.
It can include competitive bidding, competitive canvassing (Request for Proposals or RFPs), and if those competitive sourcing fail, and as a last resort, direct negotiations.
It will give the government through the DOE and the Energy Regulatory Commission (ERC) a sustainable degree of check and balance in determining the capacity, energy and service that will be contracted, and the opportunity for these government agencies to infuse a holistic strategy in energy mix, locational, environmental, and technological choices instead of just leaving them at the whim of the related company generators.
By opening the generation market, Chua said, it will further invigorate sustainable investments in power development and assure long-term power supply for the country at competitive rates.
It will encourage the introduction of more efficient technologies and harness the entrepreneurial ingenuity of the private sector for the benefit of consumers.
A mandatory CSP will provide government agencies including the National Electrification Administration (NEA) a mechanism to assist these electric cooperatives in power planning and energy mixing.
The process can be further improved by scheduling a regular bidding period for baseload and reserve capacity based on 100 percent of aggregated projected demand and standardized Power Supply Agreement (PSAs).
“This approach ensures a well-coordinated supply, reserves and demand forecast; strengthens the market power of smaller DUs by aggregating their demand; and, makes investment in power generation more attractive to investors inducing greater competition that could lead to power supply security and competitive tariffs,” said the ICCP concluded.
