The Energy Regulatory Commission (ERC) is embracing the one plant, one rate rule as the basis for the approval of power supply agreements (PSAs) seeking ERC approval.
Under the concept, a power plant with pending PSAs is given a uniform rate that holds true across the different distribution utilities and electric cooperative, and has the added benefit of simplifying the competitive selection process (CSP) with multiple DUs and ECs.
The regulator acknowledged it has used the concept to clear its backlog of pending PSAs and allowed themselves a three-month observation period to benchmark the program.
According to the ERC, the concept is parallel to a proposal by AKO BICOL Party List legislator Elizaldy Co at the budget hearing of the Department of Energy and attached agencies.
“The one plant, one rate policy is the approach adopted by the Commission to resolve the pending PSAs in our backlog, many of which have already expired. We evaluate the cost components of a generation plant to set its base rate. We then use that base rate to compare it with the rate in the PSAs it has with various DUs that are still pending with us, and we adjust based on inflation and similar indices to account for the different supposed dates,” said ERC chair Monalisa Dimalanta, in a message to reporters.
“This makes the rates the same for plants across various PSAs uniform except for inflation adjustment, and granting the CSP requirements are all complied with, will then be adopted by the Commission for approval of the PSAs,” Dimalanta said.
The ERC emphasized the Co proposed benchmarking of prices is similar to the one plant, one rate policy.
“(Co) proposes that the resulting bids per technology or type of plant for the previous year, based on global prices, can be used as benchmark rates per type of plant that will participate in CSPs for the current year. We will study this as our moving-forward measure, considering previous studies on benchmarking commissioned by the ERC in prior years but were not adopted,” Dimalanta added.
Under CSP rules, a distribution utility may only sign PSAs with generation companies only after calling for and receiving at least two qualified bids and will only be allowed to have direct negotiations with other power suppliers only after at least two failed bidding procedures.
