1. Demand Aggregation and Supply Auctioning Policy (DASAP)
January 2015

2. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Aggregation of DUs
DOE should reconsider criteria for aggregation i.e., do not group good performing DUs with the not-so-good performing DUs as there is a tendency that the GenCo will offer a higher price
(Sarah Fairhurst, AES Philippines, Inc., First Gen Corp., PIPPA)
Note: From the Series of Public Consultations and Written Submissions to DOE

3. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Exemption from DASAP
Should not be limited to the First Year Auction only (MERALCO, CEPALCO)
DUs should be given exemption so long as the DU is able to demonstrate that it has adequate and sufficient power supply contracting (MERALCO, CEPALCO)
DASAP should exclude existing groups that have done prior aggregation and procurement of capacity. (ISECO, AMRECO, FDC Utilities)
Does a DU have the right not to join in the grouping given that there might be delay in forming the group and said DU needs the supply right now? (SOCOTECO II)
Note: From the Series of Public Consultations and Written Submissions to DOE

4. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
ERC Approval/Role
Need to issue rules and guidelines on the validation on the consistency of (pre- or post-) auction process and the resulting PSAs (SNAP)
Issue a resolution (for scrutiny by relevant participants) on the automatic approval / guidelines on the treatment of the Auction Results and Awards (SNAP)
If ERC is an observer during the conduct of the Auction Process, then the conduct of the public hearing will be duplication.
Note: From the Series of Public Consultations and Written Submissions to DOE

5. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Contract Term
Remove the 3-year limit on existing generating facilities as short-term contracts expose the generators to greater risk and, hence, lead to higher prices (SNAP)
Limiting the contract is discriminatory for power plants built and operated prior to this Circular, whose valuable lives are up to 25 years. (Aboitiz Power, MERALCO, KEPCO SPC Power Corp., First Gen Corp., Global Power)
It effectively discourages any investment for the improvement of existing generators (First Gen Corp.)
Note: From the Series of Public Consultations and Written Submissions to DOE

6. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Mandatory Participation of DUs
Mandating a uniform design of the competitive power supply procurement process may not necessarily bring about and guarantee the benefits envisioned in securing power supply. Each regional association of DUs require a different design and management strategy of the bidding process because the power supply requirements and conditions of delivery differ significantly. (USAID COMPETE Project)
DASAP contradicts the DOE through DC No , requiring DUs to take cognizance and assume full responsibility to forecast, assure and contract for the supply of electric power in their respective franchise areas to meet their obligations as a DU. (CEPALCO)
Note: From the Series of Public Consultations and Written Submissions to DOE

7. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Auction Committee Composition
Remove Government agencies like DOJ-OFC, NEDA, and DTI-BOI and include representatives from the Institute of Corporate Directors, Truth Commission of the European Chamber, as well as industry participants like DUs and GenCos (DORELCO, AMRECO/SIARELCO, EAUC, Vivant Corp.)
ERC and PEMC should also be members of the Auction Committee (MERALCO)
Roles of Auction Committee
The Notice-of-Award should be issued by the procuring entity, which in this case, are the DUs, CC, RES and DCCs; not the Auction Committee. (Vivant Corp., AMRECO/SIARELCO)
Note: From the Series of Public Consultations and Written Submissions to DOE

8. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Resulting Bid Price
Can ERC still change the rate that resulted from the auction? Will the contracts be rescinded or will the generators be forced to sell at lower prices? This situation has already happened in the past. (SNAP, SMC Global)
Instead of looking at the price, DOE should recommend criteria to determine if the winning bid price is the least cost option which will be the basis of ERC approval (SMC Global)
If there is a certain ceiling, most of the price will be fixed at the ceiling price. Instead of ceiling price, there should be a starting price, the winner will be the lowest bidder. (PEMC)
Note: From the Series of Public Consultations and Written Submissions to DOE

9. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Demand Requirement for Auction
The proposal to procure at least 50% of peaking requirement allow less than 100% contracting that is inconsistent with the proposed policy’s objective to guarantee the adequacy of power supply to meet all short to long-term demand at all times. (Edna Espos)
Responsibilities of DOE/ERC
Conduct of a competitive power supply procurement process is neither part of DOE’s mandate nor assigned to DOE by the EPIRA (USAID COMPETE Project)
Note: From the Series of Public Consultations and Written Submissions to DOE

10. Major Comments/Suggestions on DASAP
DASAP FEATURES
COMMENTS/SUGGESTIONS
Auction PSA Template
PSA Template is useful, but different types of plants may need different types of contract, and different DUs requires different contract provisions. (Sarah Fairhurst)
Least Cost Supply
It may not be a competitive bidding and not the least cost option if only 1 GenCo bided out for an aggregated DUs. (CANORECO)
Bid Security
Needs ERC approval for the cost of bid security and prudential if it will be the DUs who will put up bid security. (PEMC)
Voluntary Participation of Gencos
GenCos should be made mandatory participants (MERALCO, CASURECO II, SUKELCO, DORELCO)
Note: From the Series of Public Consultations and Written Submissions to DOE

11. REQUIREMENTS PRIOR TO THE AUCTION DATE
Agency
Preparation of Terms of Reference (TOR) to include the bid documents, bid procedures, bid evaluation criteria, conversion of bid security into performance bond, etc.)
DOE
Firming up and validating capacity requirements of each DUs
NEA timeline for coming up with methodology on aggregating ECs demand
NEA
Finalization of Auction PSA Template
DOE, ERC
Development of software and procurement of hardware

12. End of Presentation Demand Aggregation and Supply Auctioning Policy (DASAP)
January 2015