Meralco urged to open 2nd CSP to all power plants

MANILA, Philippines — Manila Electric Co. (Meralco) should open the second round of its competitive selection process (CSP) to all power plants – whether old or new – to truly allow competition and get the least cost of power for consumers.

Department of Energy (DOE) Secretary Alfonso Cusi expressed his surprise with Meralco’s position on the CSP, but said he has to verify Meralco’s stand first.

“I don’t like to say anything until I validate what they really meant. I was surprised to hear it from the news, so I need to validate,” he said.

Earlier this week, Meralco announced it would proceed with the second round of its CSP for 1,200-megawatt (MW) greenfield capacity with relaxed rules, but would not oblige all of the suggestions made by the DOE regarding changing the terms of reference (TOR) of the competitive bidding.

Among the DOE’s suggestions is to allow all power plants to participate in the bidding and allow plants to contract or sell only a part of its capacity to the distribution utility (DU).

The suggestions were made after the first CSP for the 1,200-MW greenfield capacity was declared a failed bidding with only Atimonan One Energy Inc. (A1E), a unit of Meralco Powergen Corp. (MGen), submitting an offer.

The energy secretary stood his ground and said Meralco should follow the direction the agency has given for a successful CSP.

“We encountered a problem in the CSP in 2016. So we have to untangle all those problems. Now that CSP has resumed, we want it to be really a competitive selection. I don’t like to tweak it to favor anybody. So all plants should be able to participate to get the best price. That’s the objective of the CSP: build capacity, promote competition,” Cusi said.

The same sentiment was echoed by Sen. Sherwin Gatchalian, who chairs the Senate Committee on Energy, who stressed that the CSP should be fair and transparent to yield to the lowest electricity price.

“All possible power plants, regardless of whether it is brownfield or greenfield, should be allowed to participate and compete in the CSP. This is the only way to ensure the lowest price of electricity for consumers,” he said.

“In the end, electricity being procured by all utilities will eventually be 100 percent passed on to the consumers. Hence, an open, transparent, and fair CSP by Meralco is for the best interest of the consumers,” the lawmaker said.

Meanwhile, Bayan Muna chairman Neri Colmenares urged the DOE not to allow the bidding of Meralco’s 1,200-MW power supply agreement (PSA) with Meralco.

“Any approval of the DOE and the ERC of bidding procedures that are not independent and fair practically tramples on the judicial and statutory requirements that distribution utilities must provide electricity to consumers at the least cost, and should result in judicial sanctions. The DOE must, therefore, stop the bidding and the ERC must deny approval of the same unless consumers are assured of an independent bidding process that ensures the cheapest supply of electricity to the consumers,” he said.

Colmenares said the bidding terms are favorable to A1E, which is owned by Meralco.

“The bidding terms that are favorable to one bidder and disadvantageous to others practically negates the bidding and does not assure cheaper rates for the people,” he said.