Distribution Utilities Told: Forge Bilateral Power Supply Contracts
To guarantee that they would not fall short of their future electricity supply, the Energy Regulatory Commission (ERC) has directed the distribution utilities (DUs) to already start finalizing bilateral power supply contracts.
On the strength of Resolution No. 21, the regulatory body resolved that there is a dire need for DUs to enter into future bilateral power supply contracts with power producers even at this early stage to make certain that the customers they serve and the country would not be stricken by another round of power outages.
Even with the much-anticipated commercial operation of the Wholesale Electricity Spot Market (WESM) next year, the ERC opined that it remains paramount that bilateral contracts are in place because they remain as the best shield from capacity shortages.
In fact, by all intents and purposes, WESM is mainly being positioned to cater to imbalances in the market, or those that would account for the non-contracted capacity.
The mandate of the Electric Power Industry Reform Act (EPIRA) is clear that the distribution utilities are required to enter into transition supply contracts (TSCs) with the National Power Corporation, to ensure continued electric service to their customers pending the ongoing implementation of policy reforms for the entire power industry, including the privatization of the generation assets of the National Power Corporation.
It was prescribed that the TSCs shall be in force one year after the implementation of open access and retail competition.
Given the delays in the privati-zation process, of which 70-percent asset divestment is a crucial precondition to open access, it was noted that it may take an even longer time before any genuine competition could reign in the market place. (MMV)
The sense of such scenario, according to the industry regulator, gives higher level of burden for the DUs to initially serve the needs of the consumers; since direct sourcing of supply from preferred power producers, primarily for the big-ticket players may yet take a little longer. …