“The Competitive Selection Process or CSP is a government-mandated
bidding to ensure that only Power Suppliers that offers least cost supply will be contracted by a Distribution Utility to protect consumers against high power rates”, said Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga.
Zaldarriaga added that the CSP, as approved by the DOE and ERC, is an open and transparent bidding, where consumers of electricity are allowed to observe.
“We would like to emphasize that Meralco strictly follows the requirements of CSP prescribed by the government, which includes securing prior approval from the Department of Energy (DOE) of our Power Supply Procurement Plan and the corresponding Terms of Reference (TOR) for every CSP. In the case of our 1800MW and 1200MW CSPs, the TORs also considered suggestions of the Energy Regulatory Commission (ERC) Chairperson before they were published,” Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga said.
To further ensure transparency and fairness, CSP observers, including the DOE and consumer groups, witness the submission and opening of bids. The proceedings are also streamed live.
In addition, the TOR ensures a level playing field for all generation companies participating in the bidding because all the rules apply to all bidders without exception, and all bidders are required to include all their costs in their bid offers for purposes of determining the lowest and winning bid. No hidden costs are allowed to be charged to consumers under Meralco CSPs. Since the TORs require prior approval of DOE, tailor fitting to favor a particular generation company is prohibited. Meralco’s TORs promote competition by ensuring that more generation companies are able to participate and offer competitive rates, while at the same time encouraging entry of new or greenfield power plants to replace old and unreliable power plants.
“Any generation company can submit offers for these CSP. While we prioritize power plants using indigenous fuel as required by DOE, we ensure that it will not violate our least cost mandate under the law. There is no preferential treatment and Meralco always awards the contracts to the lowest compliant bidder,” Zaldarriaga reiterated.
In its recently completed CSP for its 1,200-MW baseload requirement, Meralco awarded the power supply agreement to South Premiere Power Corporation after it submitted the lowest offer of P7.0718 per kWh.
It bested the P7.1006 per kWh offer of the joint venture of Limay Power Inc. and San Roque Hydropower Inc. for 150MW capacity; and First Natgas Power Corporation’s bid of P8.4489 per kWh.
First Natgas, which uses the indigenous Malampaya gas for the San Gabriel power plant, was deemed non-compliant as the offer went beyond the reserve price set for the bidding.
“Awarding the contract to a generation company that submitted the highest and non-compliant bid clearly violates the law and existing regulations. Even ERC found that our CSP for the 1200MW has complied with all legal requirements when it issued a Provisional Authority,” Zaldarriaga said.
For Meralco’s 600-MW requirement, eight companies, including First Gas Power Corp. and First NatGas Power Corp. that sources fuel from Malampaya, expressed interest to submit offers.
The other generation companies are Mariveles Power Generation Corp., Masinloc Power Co. Ltd., GNPower Dinginin and Therma Luzon, Inc., Southwest Luzon Power Generation Corp. and Quezon Power (Philippines) Limited Co.
“Just like all our other CSPs, we are hoping that all these companies will submit their offers to maximize competition. This will allow us to secure the best bid and least-cost supply that will really benefit our customers. We emphasize that Meralco does not amend the rules or TORs for our CSP to favor one generation company or limit competition because that is obviously discriminatory and anti- competitive.” Zaldarriaga said.
All resulting PSAs will also have to undergo review and approval process of the ERC prior to implementation.