A new set of guidelines covering the competitive selection process (CSP) used in choosing power firms that supply distribution utilities should be out within the week, the Energy Regulatory Commission (ERC) said on Tuesday.
According to the ERC, the draft rules include, among others, revisions as to the term, duration and price of supply contracts.
This has particular relevance to the Manila Electric Co. (Meralco) who earlier rejected the proposal for fixed-rate power supply agreements, saying such contracts result only in higher cost to consumers.
According to Meralco, fixed price contracts only compel power firms to offer significantly higher rates to make up for the non-recovery of costs or opt out of the CSP altogether because of such risk.
This then violates the mandate for the ERC to find the least cost of power for consumers, goes the Meralco argument.
Consumer advocacy groups have since argued that fixed-rate PSAs effectively shield consumers from inordinate charges by power firms who like nothing more than passing on added costs to consumers.
Advocates also argue for greater consumer participation in the CSA which helps determine the supply pact contracted by distribution utilities.Meralco, in a letter to the ERC, said power supply agreements should also be allowed as long as 20 years so as to ensure the lowest possible cost to customers and additional power supply in the grid.
The company said experience show the absence of greenfield projects in power contracts of only ten years unless a developer and its lender can arrange a recovery program within that short period of time.
