Cayetano files resolution postponing Meralco bidding to address bias against Malampaya

PHILIPPINES, July 30 - Press Release
July 30, 2024

Cayetano files resolution postponing Meralco bidding to address bias against Malampaya

Senator Alan Peter Cayetano on Monday filed a resolution to postpone the bidding for Manila Electric Company's (Meralco) 600-megawatt and 400-megawatt power supply requirements until its terms of reference (TOR) are reviewed to ensure fairness in the selection of bidders and arrive at the true lowest cost for the supply of energy.

Cayetano introduced Senate Resolution 1090 on July 29, 2024 urging the Senate to call on Meralco to defer its competitive selection process (CSP), saying the current rules remain unclear and may put certain bidders at an advantage at the expense of power suppliers that use indigenous natural gas.

"The Terms of Reference (TOR) of CSP 1 and CSP 2 do not reflect the real preference afforded to indigenous natural gas and its full utilization," he wrote in the resolution.

Cayetano had initially raised these concerns during a public hearing by the Senate Committee on Energy on July 18, 2024 on the impending depletion of Malampaya gas and the country's transition to cleaner fuel sources.

During the hearing, he noted that Meralco appears to favor power generation companies that utilize imported coal.

In his resolution, Cayetano wrote that the Malampaya indigenous natural gas will be unutilized "if the indigenous natural gas-powered plants are not given a chance to fairly compete in CSP 1 and CSP 2."

This, he added, is "contrary to the policy and objectives of the EPIRA and Department Order No. 002023-10-0022 of transitioning to a clean energy mix."

Cayetano also criticized Meralco's TOR for treating the historical actual costs of non-fuel items as merely evaluative and non-binding.

According to the senator, this approach disadvantages indigenous natural gas suppliers by allowing bidders with other energy sources to submit bids with lower fuel costs, only to eventually pass on higher non-fuel commodity costs to consumers.

"The lack of clarity in the rules regarding TORs in the biddings will result in the underutilization of our indigenous natural gas [and] open the possibility of circumventing the distribution utilities' obligation to supply their captive customers in the least-cost manner," he wrote.

"The CSP must ensure fairness and competition in the bidding process so that only power suppliers offering the true least-cost supply will be contracted," he added.

Additionally, Cayetano noted that Meralco could influence the results of the bidding by altering the definitions of certain concepts in their TOR, such as "greenfield."

According to the Energy Regulatory Commission, "greenfield" refers to projects that are not yet existing, constructed, or financed. However, Meralco defined it as plants that are operational as of January 2020.

In the July 18 hearing, Cayetano said the Department of Energy and the Energy Regulatory Commission "should seriously consider stopping. It wouldn't cause too much delay clarifying all these rules and pending cases."

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Cayetano naghain ng resolusyon na nagpapaliban sa bidding ng Meralco para sa power supply requirement

Naghain ng resolusyon si Senador Alan Peter Cayetano nitong Lunes na nananawagang ipagpaliban ang bidding para sa 600-megawatt at 400-megawatt na power supply requirement ng Manila Electric Company (Meralco).

Aniya, kailangang suriin ang terms of reference (TOR) nito upang matiyak na ang mananalong bidder ay mapipili nang patas at tunay na may pinakamababang halaga ng supply ng kuryente.

Inihain ni Cayetano ang Senate Resolution 1090 nitong July 29, 2024 para himukin ang Senado na ipatigil muna sa Meralco ang competitive selection process (CSP) nito dahil ang kasalukuyang tuntunin nito ay malabo at hindi patas para sa mga power generation company na gumagamit ng indigenous natural gas.

"The Terms of Reference (TOR) of CSP 1 and CSP 2 do not reflect the real preference afforded to indigenous natural gas and its full utilization," pahayag ni Cayetano sa resolusyon.

Una nang inihayag ni Cayetano ang nasabing isyu sa isinagawang pagdinig ng Senate Committee on Energy nitong July 18, 2024 tungkol sa napipintong pagkaubos ng Malampaya gas at sa layuning paglipat ng bansa sa mas malinis na fuel source.

Sa pagdinig, pinuna ng senador ang tila pag-pabor ng Meralco sa mga power generation company na gumagamit ng imported coal.

Punto ni Cayetano sa kanyang resolusyon, hindi magagamit ang Malampaya indigenous natural gas kung ang mga katutubong natural gas-powered plants ay hindi bibigyan ng patas na pagkakataon para makipagkumpitensya sa CSP 1 at CSP 2.

Salungat aniya ito sa patakaran at layunin ng EPIRA at Department Order No. 002023-10-0022 na paglipat sa isang malinis na energy mix.

Binatikos din ni Cayetano ang TOR ng Meralco sa pagtrato sa historical actual cost ng mga non-fuel items bilang evaluative lamang at hindi binding.

Ayon sa senador, hindi ito patas para sa mga indigenous natural gas suppliers dahil pinapayagan nito ang mga bidder na may iba pang pinagkukunan ng enerhiya na magsumite ng mas mababang bid, at kalaunan ay bawiin ang mataas na halaga ng non-fuel commodity sa pamamagitan ng mataas na singil sa consumers.

"The lack of clarity in the rules regarding TORs in the biddings will result in the underutilization of our indigenous natural gas [and] open the possibility of circumventing the distribution utilities' obligation to supply their captive customers in the least-cost manner," aniya.

"The CSP must ensure fairness and competition in the bidding process so that only power suppliers offering the true least-cost supply will be contracted," dagdag niya.

Dagdag pa rito, binanggit ni Cayetano na maaaring maimpluwensyahan ng Meralco ang resulta ng bidding sa pamamagitan ng pagbago sa kahulugan ng ilang mga konsepto sa kanilang TOR, tulad ng "greenfield."

Ayon sa Energy Regulatory Commission, ang "greenfield" ay tumutukoy sa mga proyektong hindi pa umiiral, naitatayo, o pinopondohan. Pero para sa Meralco, ang "greenfield" ay tumutukoy sa mga planta na umaandar na simula Enero 2020.

Sa pagdinig noong July 18, sinabi ni Cayetano na dapat seryosong isaalang-alang ng Department of Energy at ng Energy Regulatory Commission ang paghinto ng bidding. Hindi aniya magdudulot ng labis na pagkaantala kung lilinawin ang lahat ng panuntunang ito at ang ilan pang mga nakabinbing kaso.