The government has waived the auction requirement for the Philippines’ first commercially developed nuclear power plant (NPP), allowing it to directly forge supply deals with distribution utilities (DUs).
In a landmark move, Energy Secretary Sharon Garin signed a department circular establishing a comprehensive framework for the integration of nuclear energy into the country’s power generation mix.
Under the circular, DUs are required to ensure a ready market for the available capacity of the pioneer nuclear power plant (NPP), which will be exempt from the conduct of a competitive selection process (CSP).
The CSP is a government-mandated bidding mechanism that requires DUs and electric cooperatives (ECs) to procure their power supply from generation companies offering the most cost-effective rates.
Consumer group National Association of Electricity Consumers for Reforms Inc. (Nasecore), however, expressed ‘grave concern’ on the CSP exemption of the pioneer NPP.
‘This provision is blatantly contrary to law and jurisprudence,’ Nasecore president Pete Ilagan said in a statement sent to The STAR, saying the move violates the Electric Power Industry Reform Act (EPIRA) and the Supreme Court rulings on CSP.
By allowing the power supply procurement without a CSP, Ilagan said the Department of Energy would ‘effectively (deny) consumers their legal right to least-cost power and undermine the regulatory safeguards that EPIRA established.’
Nasecore also warned that implementing the provision could lock consumers into costly long-term contracts and weaken transparency and public trust in the energy sector.
For the power supply contracts, the Energy Regulatory Commission (ERC) is mandated to establish a minimum 25-year term starting from the pioneer NPP’s commercial operation, with an option to extend for another 25 years.
‘Consumers deserve a power supply that is safe, lawful, affordable and procured through open and transparent bidding – not imposed by executive fiat,’ Ilagan said, urging Congress and the Judiciary to strike down the provision.
Energy Undersecretary Mario Marasigan, meanwhile, told The STAR the least-cost principle for nuclear integration could still be maintained even in the absence of competitive bidding.
‘Our (circular) provides that the ERC has to determine and promulgate a rate determination mechanism that will ensure viability of nuclear power generation, especially the pioneer project that may be contracted by DUs/ECs,’ Marasigan said.
‘The price-setting rules and guidelines will also consider the consumers,’ he said.