Law Summary
DOE’s Supervisory and Regulatory Role
- Oversee restructuring of the electric power industry per EPIRA and DOE Act of 1992.
- Ensure reliability, quality, and security of electric power supply.
- Promote private investment and renewable energy development.
- Encourage reforms for efficiency and cost reduction in distribution utilities (DUs).
- Develop policies and incentives to assure adequate power capacity including reserves.
- Formulate necessary rules and regulations to implement EPIRA objectives.
Obligation and Responsibilities of Distribution Utilities (DUs)
- Required to supply electricity in least-cost manner to their captive market.
- Forecast, assure, and contract for power supply to fulfill obligations.
- Un-contracted energy requirements present investment opportunities.
- Transparent contracting protects end-users from spot market price volatility.
Competitive Selection Process (CSP) Policy Adoption
- CSP mandated for all DUs in securing Power Supply Agreements (PSAs).
- CSP ensures secure and stable electricity pricing long-term.
- Principles guiding CSP include transparency, competition, least-cost outcomes, and protection of public interest.
Scope and Entities Covered
- Applies to all entities controlling one or more distribution systems in main grid and off-grid areas.
- Includes Electric Cooperatives (ECs), Private Investor-Owned Utilities (PlOUs), LGU-owned utilities, multi-purpose cooperatives, economic zone operators, and other authorized entities.
Standard Features and Procedures of CSP
- PSAs must be procured only via CSP conducted by third parties recognized by ERC and DOE (also NEA for ECs).
- CSP involves:
- Aggregation of un-contracted demand requirements.
- Annual conduct.
- Use of uniform PSA terms and conditions template issued by ERC and DOE.
- ERC and DOE to issue guidelines within 120 days detailing demand aggregation and third party accreditation processes.
- Aggregation refers to wholesale demand of DUs, excluding contestable market demand under RCOA.
- Un-contracted demand defined as energy and capacity not yet procured or approved.
Supplemental Guidelines for Efficiency and Transparency
- ERC, coordinated with DOE, to issue additional guidelines to enhance CSP transparency and promote private participation.
- Guidelines ensure CSP outcomes align with EPIRA policies.
Non-Retroactivity Clause
- Circular applies prospectively and does not affect PSAs with tariffs already approved or filed before circular’s effectivity.
Monitoring, Enforcement, and Compliance
- DOE’s Electric Power Industry Management Bureau (EPIMB), alongside ERC, will monitor CSP compliance and PSA provisions.
- ERC empowered to impose fines and penalties for non-compliance to enforce the Circular.
Legal and Administrative Provisions
- Circular does not amend or repeal existing laws, rules, mechanisms, or contracts.
- If any provision is invalidated, remaining provisions remain effective.
- Circular effectivity upon publication in two newspapers; remains until revoked.
Issuance and Implementation
- Issued by DOE Secretary Carlos Jericho L. Petilla.
- Represents integral part of power sector reform agenda to ensure reliable, affordable, and transparent power supply contracting.