Press statement by Atty. Pedro H. Maniego Jr.
Senior Policy Advisor, Institute for Climate and Sustainable Cities
Former Chairman, National Renewable Energy Board
Adviser and Former Chairman, UP Engineering Research and Development Foundation
Sen. Sherwin T. Gatchalian’s call on the need for an open and transparent bidding in Meralco’s competitive selection process is totally in line with the policy under the Electric Power Industry Reform Act (EPIRA) of ensuring “transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability.”
In adherence to the prescribed spirit of free and fair competition, both existing and new power plants should be allowed to join Meralco’s upcoming bidding for a 1,200-megawatt power supply agreement (PSA).
Department of Energy Secretary Alfonso G. Cusi’s proposal to divide the Meralco supply requirement up for bidding into smaller sizes and to allow stacking of bids will likewise foster the desired competitive structure envisioned in EPIRA.
Secretary Cusi’s instruction, once applied on all competitive selection processes (CSP), would give small power generation companies an opportunity to bid and win portions of large supply requirements. Without stacking, only one bidder and one price for the entire capacity will win, which would exclude small RE companies that can offer less expensive electricity at firm prices over the life of the supply agreement.
The issue transcends Meralco’s CSP rules, since the impact is long term and could cover a generation of Filipinos, as cautioned by recently retired Supreme Court Justice A. Carpio in his ponencia on the CSP. Not only Meralco but all of the country’s 16 privately-owned distribution utilities (DUs) as well as all 119 electric cooperatives, should allow both existing and new power plants of all sizes to join the bidding of their power requirements in order to get the least cost of electricity.
This open and transparent approach of bidding through the CSP will provide not only the big generation companies (gencos), but also small renewable energy (RE) firms the opportunity to bid for portions of the power requirements of the distribution utilities.
Regarding the perceived undue advantage and lack of reliability of brownfield plants, the terms of the PSAs penalizing failure to meet contractual obligations can be strengthened to prevent and penalize possible gamers.
Consumers will benefit from the participation of the RE companies, because electricity costs from RE sources continue to fall, as evidenced by historical data and studies.
RE companies’ participation in the bidding, if allowed and successful, will reduce the country’s dependence on power plants that run on traditional and carbon-intensive fossil fuels, such as coal.
Right now, the Philippines imports approximately 75% of its coal requirements. While fossil fuel prices are subject to fluctuations in the world market and tend to go up over the long term, RE sources utilize indigenous resources and/or consume no fuel.
In deciding for the best alternative for a secure, stable and affordable energy future for our country, let us afford the highest importance to sustainable development and mitigating climate change.