News Update: DOE releases circulars, Agus-Pulangui rehabilitation
The Department of Energy (DOE) has recently released Department Circular No. DC2018-02-0003, published on 9 February 2018. Titled “Adopting and Prescribing the Policy for the Competitive Selection Process [CSP] in the Procurement by the Distribution Utilities of Power Supply Agreement [PSA] for the Captive Market,” it has a particular focus on outlining the CSP for PSAs in captive markets for grid and off- grid areas.
- Exempted from the CSP are Government Owned and Controlled Corporations (GOCCs).
- The creation of a Third Party Bids and Awards Committee (TPBAC) by the DU, where its board of directors will designate five members of which “three (3) members will come from the [Distribution Utility] DU and two (2) members will come from the captive customers that are not directly or indirectly related/affiliated to the DU.”
- “In lieu of the TPBAC…the DU may opt to engage a Third Party Auctioneer (TPA) to conduct and manage its CSP…The TPA shall be a team of private individuals or a private corporation duly recognized in the Philippines with experience in competitive bidding and with sufficient knowledge in the electric power industry.” This is provided, however, that said TPA is not in any way connected “any electric power industry players” and that it “shall have representation from the consumers as provided for in this Policy.”
- “The ERC shall provide the guidelines for the accreditation of TPAs within 60 days upon the effectivity of this Policy.”
DOE also released Department Circular No. DC2018-02-0002, published on 4 February 2018. Under the title “Adopting Policies for the Effective and Efficient Transition to the Independent Market Operator for the Wholesale Electricity Spot Market,” its emphasis is on formation of an Independent Market Operator (IMO) for the Wholesale Energy Spot Market (WESM), as well as the guidelines and regulation relevant to it over the transition period.
- “The IMO shall be an independent entity, formed separate from [the Philippine Electricity Market Corporation (PEMC)], and incorporated as a private corporation under the Corporation Code of the Philippines. No electric power industry participant, nor any of their subsidiaries,affiliates, stockholders, directors, officers or their relatives within the fourth degree of consanguinity or affinity shall hold any interest, whether directly or indirectly, in the IMO. In performing its functions as the Market Operator, the IMO shall allocate resources to enable it to operate the integrated WESM and retail market on a non-profit basis.”
- The IMO Board “shall be comprised of at least five (5) members whose composition and specific qualifications are approved by the DOE.”
Meanwhile, it’s recently been reported that the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) has been shortlisting “prospective institutions for transaction advisor” for the planned PHP 54 Billion rehabilitation of the Agus-Pulangui hydro complex in Mindanao.
- According to DOE Undersecretary Felix William Fuentebella, there are at least five firms being considered. These include the “International Finance Corporation (IFC) of the World Bank Group, Asian Development Bank (ADB) and a Japanese institution.”
- “Fuentebella indicated that decision will likely be rendered within the quarter on the advisor’s selection while timeline on the rehabilitation of the hydro assets would be firmed up within this year.”
- “On the project’s funding, Fuentebella indicated that China financing “might not be the only option,” adding that such has also been part of the discussion at PSALM Board.”
- Despite having “extremely de-rated” capacities, the Agus-Pulangui facilities still yield PHP 8-10 Billion in annual operating income for PSALM.