Competitive Selection Process operationalizes the principles of transparency, accountability, and fairness

Contrary to the usual notions, transparency, accountability, and good governance are concepts that are not confined to the public sector. It is not only governments that must be transparent. Private corporations, especially those engaged in businesses that have to do with public trust, must also be upfront about their processes every step of the way.

Energy security is an area in which these principles apply. With the growing population and rising demand for electricity, it is critical to explore alternative sources of energy to meet consumer needs. Electricity is a basic need and utility, providing stability to individuals, businesses, and the nation. It enables individuals to thrive in their respective activities and businesses to operate efficiently. Energy companies must always be mindful of their role in the economic life of the nation.

Achieving energy security is one of the main thrusts of the administration. We are aware that the Philippines has one of the highest costs of electricity in our region. This has hampered our growth in the past and has prevented investments from coming in. As we work toward lowering our energy costs and finding a stable and reliable supply to power our collective needs, we bear in mind that our objective is to make low-cost electricity available across the country — even in geographically isolated and disadvantaged areas.

Securing energy comes in different phases. There is generation, transmission, and distribution. The closest and most immediate to consumers is the business of power distribution through distribution utilities. For Metro Manila and its neighboring areas, for instance, the dominant Distribution Utility (DU) is Meralco which enters into power supply agreements with power generation companies. Meralco then distributes the power from these suppliers to individual homes.

At every step, the objective is to provide better service through reliable supply and low costs and ensuring that price fluctuations are kept to a minimum if not eliminated altogether.

But how does Meralco know from which power supplier it should get its electricity?

The Energy department prescribes a process called Competitive Selection Process, or CSP. This is a process wherein a power supplier is selected to supply electric power requirements to a DU such as Meralco. This process is in keeping with Section 2 of Republic Act No. 9136 or the Electric Power Industry Reform Act. The provision declares that it is the policy of the State “to ensure the quality, reliability, security, and affordability of the supply of electric power; to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market; and to protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power,” among others.

In the CSP, the DUs make transparent their process of selecting which power suppliers to choose so that they can provide the best price to their customers. This is a customer-centric approach that puts the customer’s needs front and center in making the procurement decision, letting only transparency and fairness determine the result of the bidding process.

The CSP has ensured the transparent and efficient contracting of power supply agreements from diverse energy sources for the baseload power requirements of approximately 7.7 million Meralco customers using coal and mid-merit renewable energy sources like liquefied natural gas (LNG).

Thus, this approach not only reduces the risks of supply shortages, which can arise from various factors such as geopolitical tensions or market volatility, but also ensures the availability of reliable power to meet the country’s growing energy needs.

According to procedures being enforced by the Department of Energy and the Energy Regulation Commission, the process is conducted in a hybrid format. There are attendees both in-person and online, as the process is streamed live. The bidders are present, of course, and so are representatives of the Department of Trade and Industry-accredited consumer groups, community representatives, and civil society organizations. All of them act as observers.

Yesterday, Oct. 1, was the most recent round of Meralco’s CSP. It featured the bid submission and bid opening of the 400-MW supply of prospective bidders. Six power generation companies participated in the bidding. They were First Gas Power Corp., First Natgas Power Corp., FDC Misamis Power Corp., GNPower Dinginin Ltd. Co., Masinloc Power Co. Ltd., and Sual Power, Inc.

The aim of the CSP is to secure a 15-year Power Supply Agreement/s for Meralco’s mid-merit requirement due to start on Aug. 26 next year. The results will undergo the review and approval process of the Energy Regulatory Commission before any agreements are implemented.

Transparency and accountability are fundamental pillars of governance that both the Government and the private sector must not only uphold but actively embody in their functions. By consistently practicing these values, it fosters a culture of integrity and earns the trust and confidence of the people they serve. Without this foundation, true progress and public faith become impossible, making transparency and accountability non-negotiable for sustainable and ethical operations in any sector.

With CSPs in motion, these principles are taken to heart to guarantee energy security and to ensure that all consumers will reap the economic benefits of reliable and stable power services at the least cost.

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.