Petilla shrugs off criticisms vs competitive selection rule

MANILA, Philippines - Former Energy Secretary Carlos Jericho Petilla dismissed criticisms against the so-called Competitive Selection Process (CSP), a landmark regulation he issued prior to leaving his post.

Contrary to insinuations the CSP would jack up electricity rates, Petilla said prices have in fact gone down in Regions 1 and Region 3 because of competitive bidding.

“Electricity rate in Region 1 is P3.12 per kilowatt hour and in Region III, it’s P3.20 per kWh. This is because of competitive bidding,” Petilla told The STAR yesterday.

On the other hand, the power rate in the supply agreement recently entered into by Manila Electric Co. and affiliate Quezon Power costs P4.20 per kwh.

“These are concrete examples. These are not hypothetical situations,” Petilla said.

The circular mandates all distribution utilities in the country to go through competitive bidding in securing their power supply agreements. This is different from the existing bilateral arrangements.

All CSPs undertaken by the distribution utilities must increase the transparency needed in the procurement process in order to reduce risks, promote and instill competition in the procurement and supply of electric power to all electricity end-users.

The Energy Regulatory Commission has yet to issue the implementing rules and regulations of the circular.

 David Celestra Tan, co-convenor of Matuwid na Singil sa Kuryente Consumer Alliance and founder of the Philippine Independent Power Producers Association, said it is only now that the government is finally taking steps to protect consumers.

 “Meralco’s residential and commercial electric consumers have been paying the highest rates since the passing of the Epira Law of 2001. Big parts of that are the sweetheart power supply deals that the government allowed Meralco to negotiate with sister company generators. Now 15 years later and six energy secretaries and four ERC Chairmen, the government is finally taking steps to protect consumers from similar burden and create competition for the pass on generation charges to the captive electricity customers,” Tan said.

He said competitive bidding would indeed result in fairer and more reasonable rates.

“This is good for the consumers and for the country. There should be no argument on this truth and reality,” he said.

He said the CSP would also be good power generation investors because it would open the generation market instead of being closed to only the affiliates and majority owned projects of distribution utility owners.

Petilla said the CSP should be mandatory because it makes power price setting transparent. He noted that electricity rates are paid by consumers.