MANILA - The Energy Regulatory Commission kicked off the demand aggregation process or Competitive Selection Process (CSP) for distribution utilities (DUs), a government press release said.

ERC chairman Jose Vicente Salazar said yesterday that the implementation comes after a period of study and consultation with concerned industry players and stakeholders of over two years.

He noted the studies and consultations for CSP started in Feb 2013.

Salazar confirmed in a text message that the implementation of CSP will be mandatory, requiring all DUs to use CSP for their power requirements. Thus, avoiding bilateral negotiations, the press release said.

The CSP is a policy that aims to lower the price of power generation, through a bidding process. It requires distribution utilities, such as the Manila Electric Company (Meralco), to aggregate their power demand and bid it out to generation companies.

With the policy, the distribution utilities could demand for a lower rate and automatically reject expensive offers as the policy mandates the least-cost of electricity.

CSP also avoids separate negotiated bilateral agreements that are much expensive when combined.

The commission said yesterday a DU could only enter into a power supply agreement with a generation company after complying with the process.

The ERC added a DU must have at least two qualified bids from generation companies.

However, the commission stressed DUs could contract their power requirements through bilateral negotiations after at least two failed CSPs.

Salazar said the CSP promotes transparency and the interest of the consumers.

“The process has come to a convincing conclusion that the CSP will promote transparency and competition as it advances the welfare and interest of consumers,” he said.*PNA

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