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San Miguel welcomes CSP, vows to bid on all offers

Posted on September 17, 2015

By Juzel L. Danganan

MANILA, Sept. 17 (PNA) – San Miguel Corp. has welcomed the Competitive Selection Process (CSP), which backs the lowest offer price for electric cooperatives and distribution utilities (DUs) by avoiding bilateral agreements.

”Then good, everyone can join in biddings… We’ll bid on everything — if there’s some who wants to buy power — we’ll join,” SMC president and chief operating officer Ramon Ang told reporters.

Ang also said the company had already proven that it offered competitive prices, noting it had set a benchmark in the power industry after signing an agreement with the Central Luzon Electric Cooperatives Association (CLECA) to supply 300 megawatts (MWs) at Php 3.20 per kilowatthour (kWh) for 20 years.

”This will be the benchmark now, everyone that will sell electricity, even for Meralco the Energy Regulatory Commission (ERC) will insist on Php 3.20 per kWh,” he said.

Ang noted CLECA, which comprises Aurora, Nueva Ecija, Pampanga, Tarlac and Zambales, formerly purchased its electricity for Php 8-9 per kWh.

He also said the lower electricity prices would also encourage investments in the areas.

Ang said SMC would source the capacity from its near operational 300-MW Limay power plant in Bataan, which is under its subsidiary SMC Global Power Holdings Corp.

He further bared that many DUs in Visayas and Mindanao approached SMC and made inquires after its Php 3.20 per kWh deal with CLECA, adding it was far from the prevailing rate in Mindanao at Php 8-9 per kWh.

CSP impacts the offered rates for electricity consumers through the aggregated capacity auctions, by bulking the many DUs demands and approving the lowest offers.

Through CSP, the market for generation companies is contained, while lowering the offered bidding prices, since if the company loses on a bid it has no other choice but to sell through the Wholesale Electricity Spot Market (WESM), where there is greater risk of not being called to provide power.

It avoids many bilateral agreements, which is the current and prevailing contracts signed for power capacities. With that, each bilateral-agreement usually has different rates, making electricity prices more expensive when combined. (PNA)

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