The Department of Energy ("DOE") has issued Department Circular No. 2023-06-0021 ("Circular") prescribing the policy for the mandatory conduct of the Competitive Selection Process ("CSP") for the procurement of power supply by Distribution Utilities ("DU") for their captive market. The streamlining of the conduct of the CSP was made to ensure the efficient, timely, and transparent procurement of power supply.
The Circular applies to all DUs, which is consistent with the mandate to supply electricity in the least costly manner subject to the collection of retail rate duly approved by the Energy Regulatory Commission ("ERC"). As a rule, all power supplied under bilateral contracts shall be procured through the CSP. However, in specific instances, the conduct of the CSP shall not be required. These instances include, among others:
- the provision of power supply by the National Power Corporation in off-grid areas prior to the entry of new power providers or under emergency circumstances;
- power supply procured by any DU exercising the Opt-In Mechanism under the Green Energy Auction Program; and
- supply to any DU from any generating plant embedded in its franchise area utilising renewable energy resources subject to contract capacity requirements.
As mandated by the Circular, ERC and the National Electrification Administration shall issue the guidelines for the conduct of the CSP and evaluation of power supply agreements. ERC published on 3 October 2023 the implementing guidelines on the conduct of the CSP. This will take effect in the fourth quarter of 2023.
