By Juzel L. Danganan
MANILA, July 7 (PNA) — The Department of Energy (DOE) has ordered distribution utilities (DUs) to add a provision penalty on power supply agreements (PSAs) for generation companies that fail to supply power capacity.
”All DUs shall ensure that PSAs entered into with a generation company shall contain a provision for allowances and penalties to clearly define the responsibilities and obligations of the generation company in case the delivery of electric supply is not fulfilled due to delays in the commercial operation and/or occurrence of any forced outages,” the DOE said in Circular 2015-06-0009 released Monday.
The DOE noted the penalty provision should amount to the cost of the replaced power.
The DOE further requires the provision for allowance and penalties for the delay of commercial operations and forced outages are consistent with Energy Regulatory Commission (ERC) decisions under the PSA rules.
Annual allowance outages, on the other hand, were required not to exceed the number of days allowed by the PSA rules.
Aside from the power-generation related requirements, the DOE also said distribution utilities should consider a provision, on their PSAs, that will automatically reduce contracted quantities due to the possible migration of its contestable customers, who have a power consumption of 1 Megawatts (MWs), within their franchise area.
The move comes as the DOE earlier revealed plans of implementing the Retail Competition and Open Access (RCOA) by next year, which will allow contestable customers to choose their power source from the Retail Electricity Suppliers (RES) and not depend on the distribution utilities.
With the new provision requirements, the DOE said DUs could renegotiate certain provisions of existing PSAs to comply with the standard terms set by the ERC.
The Electric Power Industry Management Bureau (EPIMB) will monitor the compliance of the DUs to the circular.
The ERC was also tasked to exercise its powers and functions in imposing existing fines or penalties on power industry players for not complying with the circular.
The DOE further stressed if a certain section of the Circular is found invalid, then other provisions will remain implemented. (PNA)