To clarify conflicting interpretations on policies involving the procurement of an Emergency Power Supply Agreement (EPSA), the National Electrification Administration (NEA), together with the Department of Energy (DOE) and the Energy Regulatory Commission (ERC), conducted a consultative meeting with the affected Electric Cooperatives (ECs) at the HES Auditorium, NEA Building, Diliman, Quezon City, on Friday, 16 June 2023.
According to the ERC Advisory issued on 07 June 2023, EPSAs shall be immediately implemented and filed with the ERC. The latest lowest approved generation tariff for the same technology in comparable areas as posted in the ERC website will be the applicable rate which can be passed through to consumers while the EPSA is still pending approval. Once the ERC has evaluated and approved the agreement, the definitive price issued will be the one that is passed on to consumers. ECs can also negotiate a higher or lower tariff than the ERC-approved tariff for each technology available in the area against the EPSA rate, provided that it can be proven to the ERC that it is the least competitive rate or will benefit consumers.
ERC Chairperson Monalisa Dimalanta elaborated that if there is no similar technology available in the area, ECs should refer to the nearby or surrounding regions with the same specific technology (i.e., coal, diesel, hydroelectric, etc.). The ERC will then decide if it is the same technology and give approval for the rates. ECs raised concern on the approval timeframe of the EPSA which may have adverse impact on the cash flow once adjustment will be effected. Admin Almeda may request the Philippine Independent Power Producers Association, Inc. (PIPPA) to allow breathing space for the ECs and not to charge interest for this purpose. They can also inquire from Landbank for a working capital loan to cover the difference between the latest ERC-approved rate and the actual EPSA rate. NEA and ERC will draft a standardized template for EPSA applications to mitigate the longer periods of review.
All ECs affected by the Supreme Court decision on Alyansa Para sa Bagong Pilipinas, Inc. (ABP), et al., vs ERC, et al. (G.R. No.: 2276703 May 2019); those operating under ineligible power supply contracts as determined by ERC; or experiencing a deficit in the power supply requirement while undergoing the competitive selection process or under an emergency situation, may accept EPSA offers from the Generation Companies (GenCos), including those they previously had contracts with, and provided that such GenCo offers the lowest rate.
Ineligible power supply contracts or those power supply agreements entered into by the ECs with the power supplier but were not approved by the ERC, shall have the NPC-Time of Use (TOU) as applicable rates.
In the case of over-contracting, Admin Almeda requested ERC Chairperson Dimalanta to intervene as the Regulator may possibly act within its authority for the possible reduction of power supply through amendment or cancellation of the subject agreement with the concerned power supplier. ERC also remarked that GenCo power billing should only be limited and corresponds to the energy as consumed by the ECs.
The consultative meeting aims to clear out policy matters on Power Supply Agreements (PSAs) with existing legal concerns and identify ECs that require emergency procurement of power supply. ###
