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Energy body’s revised circular on bidding process for power deals hit

/ 06:00 PM September 25, 2019

MANILA — Bayan Muna partylist Rep. Carlos Zarate on Wednesday criticized the revised Department of Energy (DOE) circular, claiming it would defeat the May 2019 Supreme Court decision ordering all power supply agreements of distribution utilities to undergo bidding or a competitive selection process.

Zarate said DOE’s Department Circular 2018-02-003 is against the interest of power consumers and against the High Court ruling as it allows distribution utilities (DUs) to handpick the members of the five-man Bids and Awards Committee (BAC) for power deals.

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He noted that the previous DOE circular—Circular 2015-06-008 issued in 2015—required a third party, recognized by the DOE and Energy Regulatory Commission (ERC), to supervise the bidding for the power deals, ensuring that the bidding process and its terms of reference were not totally controlled by the distribution utilities.

“What will happen is, the Supreme Court decision mandating a Competitive Selection Process (CSP) would be rendered meaningless. It’s the consumers who will lose at the end of the day. Do you agree Mr. Sponsor?” Zarate asked the DOE budget sponsor, Appropriations Committee vice chair and Zamboanga City 2nd district Rep. Manuel Jose Dalipe.

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“Yes Mr. Speaker. Actually the DOE is reviewing that circular because as manifested by the honorable gentleman, it appears that way,” Dalipe replied.

Zarate further noted that the revised DOE circular changed the composition of the supposed third party BAC, which opens the process to manipulation since three out of the five members of the committee are required to come from the DUs.

“Why the sudden change? The change is not just procedural but very substantial,” Zarate said. “The DOE and ERC would be relegated to being mere observers. The DUs will run the CSP. That’s what we are worried about.”

Zarate added that the SC-ordered CSP is meant to ensure that consumers only pay for the least cost of power.

However, he claimed, the DU-appointed third party BAC undermines the independence and fairness of the PSA bids.

“The provisions of the first circular aren’t like that. The DOE and ERC had the power to choose a true independent third party,” Zarate said.

“Yes we will look into that, we will look for improvements and we will take note of that,” Dalipe assured.

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“We hope soon because the DUs, especially Meralco is now conducting CSPs,” Zarate said, noting Meralco had already conducted three CSPs.

Zarate said Meralco published the opening for bids with the following schedule:

– July 29, 2019: Deadline for expression of interest deadline

– August 9, 2019: Meralco pre-bid conference

– September 10, 2019: Meralco deadline for the submission of bids

“As for this particular greenfield project, only one bidder can pass.

And you know what company is this? The Atimonan One. The Atimonan One is 100 percent owned, or a subsidiary of Meralco. See Mr. Sponsor? That’s the problem with the new CSP guidelines that you released,” Zarate said.

Atimonan One is one of the seven Meralco-linked DUs that have pending PSAs for coal-powered plants before ERC.

The House of Representatives, through a resolution filed by Zarate, conducted an inquiry on these PSAs last year.

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TAGS: Bidding process, Congress, Department of Energy, News, power sale agreements, power sector
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