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DOE formally seeks Meralco’s action on CSP

With no new power projects

Published

By Myrna M. Velasco

With no new power projects reaching “committed capacity” stature yet under the Duterte administration, Energy Secretary Alfonso G.Cusi has formally directed power utility giant Manila Electric Company (Meralco) to finally undertake competitive selection process (CSP) for its long-term supply portfolio.

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)

To strengthen this mandate, Cusi called Meralco President and CEO Ray C. Espinosa and its Senior Vice President William S. Pamintuan on Thursday (June 13) for “coordination meeting” on how the utility firm can accelerate its conduct of a CSP or competitive bidding on power supply agreements.

“The DOE and Meralco agreed that the latter should expedite the conduct of their CSP to ensure continued power supply in Luzon,” a statement from the Secretary’s office has stipulated.

Cusi stressed “there must be no delays in the implementation of CSP for Meralco and for other distribution utilities and electric cooperatives,” with him emphasizing that “we must act fast because demand continues to grow and we want to be ready to supply the needs of a growing market to ensure that the country will maximize its growth potential.”

Meralco’s move on the CSP is crucial because it supplies more than 60-percent of end-users in the biggest power grid of Luzon, with its total customer base of 6.6 million.

All distribution utilities, including Meralco and the electric cooperatives nationwide, are mandated to procure their power supply through a CSP or competitive bidding – and such policy was reinforced following the issuance of a recent ruling by the Supreme Court.

Nevertheless, for many DUs, their main complaint is the “unclear framework” on how they shall carry out the bidding process – as even the DOE has not fleshed this out yet for them.

If the DOE cannot expeditiously and efficiently carry out the CSP for the DUs, the Duterte administration will be leaving a legacy of power crisis. This leadership’s challenge is to have projects firmed up and it does not necessarily have enough time leeway. Notably, most of the plants just recently completed and under construction are still to the credit of the past administration.

With the wobbly supply conditions of Luzon grid and as key proposed projects had been affected by the SC verdict on the CSP, the energy department is basically going back to square one in terms of enticing capital for additional power capacities.

Many of the proposed projects are still “indicative,” meaning, there is no certainty yet that they will reach construction phase – as such have yet to undergo financial closing and will still have to engage their respective engineering, procurement and construction (EPC) contractors.

Previously, the DOE had aligned the 1,200-megawatt Atimonan and 600-MW coal-fired power projects of Meralco PowerGen as “committed projects,” but hopes of them reaching immediate construction phase had been dashed following the high court’s decision.

On undertaking CSP, Cusi said “we want to ensure accountability from power providers that supply is available and that they are ready for any eventuality, which is their responsibility as a player in the commodities sector.”

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