Question & AnswerQ&A (DOE Department Circular No. DC2015-06-0008)
The main purpose of DOE Department Circular No. DC2015-06-0008 is to mandate all Distribution Utilities (DUs) to undergo a Competitive Selection Process (CSP) when securing Power Supply Agreements (PSAs) to ensure transparency, competition, and least-cost procurement of electric power supply.
Republic Act No. 9136, also known as the Electric Power Industry Reform Act of 2001 (EPIRA), mandates the Department of Energy to supervise the restructuring of the electric power industry.
The guiding principles for CSP are: (a) Increase transparency in the procurement process to reduce risks; (b) Promote competition in electric power supply procurement; (c) Ensure least-cost outcomes unlikely to be challenged; and (d) Protect the interest of the general public.
The Circular applies to any entity that owns, operates, or controls distribution systems in the main grid and off-grid areas, including Electric Cooperatives (ECs), Private Investor-Owned Distribution Utilities (PlOUs), Local Government Unit Owned-and-Operated Utilities (LGUOUs), Multi-Purpose Cooperatives authorized to operate electric power systems, entities authorized to operate within economic zones, and other authorized distribution entities.
All Distribution Utilities must procure Power Supply Agreements only through a Competitive Selection Process conducted by a Third Party recognized by the Energy Regulatory Commission (ERC) and the Department of Energy (DOE). In the case of Electric Cooperatives, the Third Party must also be recognized by the National Electrification Administration (NEA).
Aggregation refers to the wholesale demand and energy requirements of Distribution Utilities combined, specifically for their un-contracted demand or energy requirements, excluding those already covered by existing PSAs filed for approval.
Yes, CSPs for the procurement of PSAs must be conducted annually by the Distribution Utilities.
No, the Circular has prospective application only and does not apply to PSAs with tariff rates already approved or filed for approval by the Energy Regulatory Commission before the effectivity of the Circular.
The Department of Energy through the Electric Power Industry Management Bureau (EPIMB), together with the Energy Regulatory Commission (ERC), are responsible for monitoring compliance and enforcement of the provisions of this Circular.
The ERC may establish and impose fines and penalties on electric power industry participants who fail to comply with the Circular, pursuant to its powers under the EPIRA.