Competitive Selection Process (CSP)

A mandatory policy requiring distribution utilities (DUs) and electric cooperatives (ECs) to procure power supply for their captive markets through competitive bidding, applying the least-cost principle to power supply contracting [PEP 2023-2050 Vol. I, p.40, 2023].

Legal Basis and Key Policy Issuances

• DC2023-06-0021 (30 June 2023) — “Prescribing the Policy for the Mandatory Conduct of the Competitive Selection Process by the Distribution Utilities for the Procurement of Power Supply for their Captive Market”: consolidated all prior CSP policies into a single streamlined framework; defines roles of DOE, ERC , and NEA ; includes CSP exemptions and DU obligations [PEP 2023-2050 Vol. II, pp.87–88, 2023]
• DC2022-06-0027 (20 June 2022) — “Providing the Guidelines for the Accreditation of Third-Party Auctioneer (TPA)”: allows DUs without a functioning Third-Party Bids and Awards Committee (TPBAC) to engage an independent TPA to conduct the CSP on their behalf [PEP 2023-2050 Vol. II, p.87, 2023]
• DC2021-09-0030 (24 September 2021) — major amendment to DC2018-02-0003: extended coverage to Power Suppliers; refined 5 CSP exemptions including 10 MW/5 MW embedded indigenous RE rule (§2.2.1.3); introduced Alternative Mode of Procurement (USP for New Technology, 25% cap); integrated EVOSS for TPBAC selection; established 180-day completion period; mandated TPA accreditation guidelines within 120 days → led to DC2022-06-0027; superseded by DC2023-06-0021
• DC2021-03-0003 (2 March 2021) — established the standardized DDP template and greater transparency requirements for DU planning [PEP 2023-2050 Vol. II, p.86, 2023]
• DC2018-02-0003 (1 February 2018) — original mandatory CSP policy for captive market procurement; substantive policy in attached Annex “A” (Sections 1–17); repealed DC2015-06-0008 §§3–4; superseded by DC2023-06-0021

Purpose

Power supply contracts by DUs directly determine the generation charges passed on to consumers — the largest component of the electricity bill. The CSP institutes competitive procurement to enforce the least-cost principle in supply contracting, intended to lower and stabilize electricity rates [PEP 2023-2050 Vol. I, p.40, 2023].

DC2023-06-0021 Key Provisions

CSP Exemptions

The following supply arrangements are excluded from mandatory CSP [PEP 2023-2050 Vol. II, p.88, 2023]:

• NPC servicing off-grid areas
• PSALM bilateral contracts from undisposed IPP assets
• DUs exercising the Opt-in Mechanism under the Green Energy Auction Program (GEAP)
• Embedded generating plants with contracted capacity < 10 MW
• Negotiated Emergency Power Supply Agreements (EPSAs) within 30 days of force majeure/fortuitous events
• New Power Providers (NPPs) with < 1 MW demand serving off-grid areas

DU Obligations

• Prepare and submit annual Distribution Development Plan (DDP) to DOE by 15 March each year
• Upload approved Power Supply Procurement Plans (PSPPs) to the CSP e-Portal by 30 June each year
• Publish bid documents for DOE/NEA certificate of conformity issuance

DOE CSP e-Portal

Launched December 2021: central hub for all DU CSP activities; provides public access to CSP policy issuances, DU profiles, demand/supply projections, and PSPPs by grid [PEP 2023-2050 Vol. II, p.86, 2023].

NEA Intervention Clause

DC2023-06-0021 §5 contains a mandatory takeover provision: if an electric cooperative cannot complete CSP one (1) year before its PSPP-scheduled procurement date, the NEA shall undertake or continue the CSP on the EC’s behalf [DC2023-06-0021, §5.5, 2023]. The NEA may mobilize its own staff plus staff of other ECs for this purpose, at no cost to the EC. No PSA may be submitted to the ERC for approval without a NEA-approved Board Resolution for PSA signing.

Conditional Repealing Clause

The four predecessor CSP circulars (DC2015-06-0008, DC2018-02-0003, DC2021-09-0030, DC2022-06-0027) are repealed only upon the effectivity of the ERC implementing guidelines, not upon effectivity of DC2023-06-0021 itself [DC2023-06-0021, §8, 2023]. DUs with ongoing CSPs or existing Certificates of Posting (COPs) continue under prior rules until the ERC guidelines take effect. This prevents a regulatory gap during transition.

Certificate of Conformity

Before publishing an Invitation to Bid, a DU must obtain a Certificate of Conformity (CoC) from DOE-EPIMB (or NEA for ECs), certifying that the contract quantity and cooperation period are consistent with the DU’s accepted PSPP. The CoC is issued within three (3) working days of complete documents and is valid for 45 calendar days [DC2023-06-0021, §§4.3–4.5, 2023]. All bid documents, bulletins, and CSP results must be posted on the DOE CSP e-Portal.

PSA Caravan

A joint DOE-ERC initiative launched November 2022 to assist DUs in rationalizing and optimizing existing power supply contracts through comprehensive PSA review for least-cost compliance [PEP 2023-2050 Vol. II, pp.88–89, 2023]:

Next step: extend PSA Caravan to rural regions to assist off-grid ECs with power supply contracting.

Third-Party Auctioneer (TPA) Accreditation (DC2022-06-0027)

DC2022-06-0027 (20 June 2022) prescribes the accreditation framework for Third-Party Auctioneers — independent private entities that conduct and manage the CSP on behalf of a DU when it has no qualified members to compose a TPBAC [DC2022-06-0027, §1, 2022-06-20].

Accreditation Categories

[DC2022-06-0027, §§2–4, 2022-06-20]

Qualification Requirements

An accredited TPA must [DC2022-06-0027, §2.1, 2022-06-20]:

• Be a private individual or corporation duly recognized in the Philippines
• Have actual experience in competitive bidding and sufficient knowledge of the PH power industry
• Possess comprehensive knowledge of the legal, technical, pricing, and regulatory framework of the PH electric power industry
• Have no criminal conviction, civil liability, or administrative finding for moral turpitude, graft, or unethical conduct in their field
• Disclose any prior or existing engagement, employment, or affiliation with any DU or power supplier

Independence requirement: Individual TPA members must not be employed by the DU, related within the fifth degree of consanguinity/affinity to any DU director or officer, or affiliated with any power supplier. Same rules apply to BOD/officers of corporate TPAs [DC2022-06-0027, §§3.1–3.2, 2022-06-20].

First 5 years: experience in any public bidding required. Re-accreditation (after 5 years): experience in handling a CSP specifically required [DC2022-06-0027, §4, 2022-06-20].

DOE Accreditation Portal

All accredited TPAs are published in the CSP E-based Portal on the DOE website for DU selection [DC2022-06-0027, §2.2, 2022-06-20].

DU Responsibilities

• May engage a TPA when no qualified TPBAC members available
• Signify intent to use TPA during DOE review of terms of reference
• Enter an Engagement Contract with the accredited TPA and submit it to ERC (copy DOE)
• Designate a Technical Working Group and Secretariat (via Board Resolution) to assist the TPA
• Engage a consumer representative as special observer (non-voting; absence does not invalidate proceedings if duly notified ≥5 working days prior)

[DC2022-06-0027, §8, 2022-06-20]

Remuneration

Agreed between DU and TPA. DU must find ways to minimize cost pass-through to consumers [DC2022-06-0027, §7, 2022-06-20].

Revocation Grounds

Accreditation may be revoked for: profile change leading to disqualification; Engagement Contract violation; gross negligence in CSP conduct (after ERC determination); criminal conviction or civil/administrative liability for moral turpitude [DC2022-06-0027, §6, 2022-06-20].

ERC Support

ERC must formulate accreditation submission, evaluation, amendment, and revocation procedures within 120 days of DC2022-06-0027’s effectivity [DC2022-06-0027, §9, 2022-06-20].

2015 Origin Framework (DC2015-06-0008)

DC2015-06-0008 (June 11, 2015, Secretary Petilla) is the founding mandatory CSP circular — the first DOE issuance requiring all DUs to procure power supply exclusively through competitive bidding. It is a thin 10-section circular; the detailed procedural framework was delegated to a 120-day joint ERC-DOE guideline that was never separately published (the mandate was absorbed into DC2018-02-0003’s Annex A) [DC2015-06-0008, §3, 2015-06-11].

Three Core Mandates

All CSPs under DC2015-06-0008 must observe [DC2015-06-0008, §3, 2015-06-11]:

1. Aggregation of un-contracted demand requirements (wholesale DU demand only — not Contestable Market demand under RCOA)
2. Annual conduct — CSP held each year
3. Uniform PSA template — to be jointly issued by ERC and DOE

These three features survive into all successor frameworks.

Third-Party Requirement (Origin)

CSP must be conducted through a Third Party recognized by ERC and DOE; for ECs, NEA recognition also required [DC2015-06-0008, §3, 2015-06-11]. No structural specifications (committee size, independence rules) were given — those came with DC2018-02-0003’s TPBAC framework and DC2022-06-0027’s TPA accreditation rules.

Non-Retroactivity

PSAs with tariff rates already approved or filed for ERC approval before DC2015-06-0008’s effectivity are exempt from the CSP mandate [DC2015-06-0008, §5, 2015-06-11].

Original CSP Policy — Historical Baseline (DC2018-02-0003)

DC2018-02-0003 (February 1, 2018, Secretary Cusi) established the first consolidated mandatory CSP policy for DU captive market procurement. Superseded by DC2023-06-0021 (June 2023). The substantive policy was in Annex “A” (Sections 1–17).

Governing Principles (Annex A Section 1)

Five governing principles [DC2018-02-0003, Annex A §1, 2018-02-01]:

1. Transparency — wide dissemination of bid opportunities, open to all GenCos
2. Competitiveness — equal opportunity for all eligible and qualified GenCos
3. Least cost — DU must meet Captive Market demand at any given time at least cost
4. Simple and streamlined — specific to each DU’s DDP, including supply parameters (baseload/mid-merit/peaking, fuel type, technology, environmental standards, timing)
5. Accountability — in procurement process and PSA implementation

CSP Exemptions (Annex A Section 2)

The following warrant a Certificate of Exemption (issued within 10 working days) [DC2018-02-0003, Annex A §2, 2018-02-01]:

1. DU-funded grant/donation projects (DU equity ≤30% of total project cost; taxes excluded from project cost)
2. Emergency power (negotiated procurement): cooperation period ≤1 year; rate ≤latest ERC-approved generation tariff for same/similar technology; ERC must evaluate within 60 working days
3. GOCC-mandated supply for off-grid areas prior to entry of New Power Providers (NPPs)
4. PSALM bilateral contracts for undisposed generating assets and IPP contracts per EPIRA

TPBAC Structure (Annex A Section 5)

The DU Board of Directors establishes an independent Third Party Bids and Awards Committee (TPBAC) of 5 members: 3 from the DU (technical officer, competitive-bidding-experienced officer, plus one of: lawyer/finance officer/technical person) and 2 from captive customers (not directly or indirectly affiliated with the DU). For Electric Cooperatives, member-consumers not employed by the EC qualify. BOD may only serve as observer. Chair and Vice Chair elected by TPBAC members [DC2018-02-0003, Annex A §5.1, 2018-02-01].

Aggregated DUs may form a Joint TPBAC under MOA with the same 5-member structure proportionate to participating DUs [DC2018-02-0003, Annex A §5.3, 2018-02-01].

The TPBAC TWG (technical/legal/financial personnel) handles eligibility screening, bid evaluation, and post-qualification. The TPBAC Secretariat maintains all CSP records [DC2018-02-0003, Annex A §§5.2–5.4, 2018-02-01].

TPA Alternative (Annex A Section 6)

In lieu of the TPBAC, the DU may engage a Third Party Auctioneer (TPA) with competitive bidding experience and electric power industry knowledge, not connected to any power industry players. The ERC was directed to issue TPA accreditation guidelines within 60 days of this Policy’s effectivity [DC2018-02-0003, Annex A §6.3, 2018-02-01]. This mandate was eventually implemented via DC2022-06-0027 (TPA accreditation guidelines, June 2022) and consolidated into DC2023-06-0021.

CSP Procedure (Annex A Section 8)

8-stage process: DU submits PSPP/DIS/load flow to DOE → preparation of Bid Documents (TOR + ITB) → Publication (ITB posted on DOE E-based portal + NEA website + newspaper once weekly for 2 consecutive weeks) → Pre-bid Conference → Bid Evaluation (legal/technical/financial) → Receipt and Opening of Bids → Post-qualification → Award and joint ERC filing within 5 working days of PSA signing [DC2018-02-0003, Annex A §8, 2018-02-01].

Completion target: CSP must be completed within 5 months from ITB publication to ERC filing [DC2018-02-0003, Annex A §8.10, 2018-02-01].

Failed CSP → Direct negotiation: Allowed only after at least 2 failed CSPs with no outstanding disputes. A CSP is “failed” if: (a) no bids received, (b) only one GenCo submitted, or (c) all offers were non-responsive [DC2018-02-0003, Annex A §9, 2018-02-01].

ERC Regulatory Mandates (Annex A Section 12)

Within 60 days of effectivity, ERC to: develop a PSA template for power industry participants; develop rules and procedures to address CSP disputes; impose administrative sanctions for non-compliance [DC2018-02-0003, Annex A §12, 2018-02-01].

2021 CSP Amendments (DC2021-09-0030)

DC2021-09-0030 (September 24, 2021, Secretary Cusi) made extensive amendments to DC2018-02-0003, introducing two new procurement tracks and significantly expanding the exemption framework. Superseded conditionally by DC2023-06-0021.

Expanded Scope — Power Suppliers Added (§2.1)

Coverage was extended from DUs alone to DUs and Power Suppliers in the procurement of electric power supply. The principle of technology neutrality was also added — PSAs shall be procured through CSP consistent with technology neutrality [DC2021-09-0030, §1, 2021-09-24].

Refined CSP Exemptions (§2.2.1)

DC2021-09-0030 refined the exemption categories from 4 to 5, with key changes [DC2021-09-0030, §1, 2021-09-24]:

COE-CSP issued within 30 calendar days of complete requirements.

Note: §2.2.1.3 is the provision cited in DC2022-02-0002 §7.2(b) as the CSP exemption applicable to embedded Biomass WTE facilities.

Alternative Mode of Procurement — USP for New Technology (§8.B)

DC2021-09-0030 introduced a second procurement track for Unsolicited Proposals (USPs) restricted exclusively to New Technology (novel technology not yet commercially operating in the Philippines at effectivity) [DC2021-09-0030, §7, 2021-09-24]:

• Capacity cap: USP may not exceed 25% of the DU’s peak demand for the year of required commercial operations
• Conditions: USP submitted before any on-going CSP for the same requirement; no over-contracting; no subsidy in resulting PSA
• Evaluation: TPBAC reviews within 7 days → BOD confirms eligibility → detailed negotiation within 30 days → if acceptable, DU submits draft TOR to DOE within 5 days
• Competitive Challenge: DOE reviews → TPBAC prepares Comparative Bid Document (14 days) → 30-day challenge period → TPBAC declares lowest comparative bid → Original Proponent has 15 days to match; if matched: OP wins; if not: lowest bidder wins
• PSA signed within 30 days of award; jointly filed with ERC

EVOSS Integration for TPBAC Selection (§5.5)

TPBAC selection approval was moved onto EVOSS. DUs must submit the following via EVOSS before TPBAC/TPA approval [DC2021-09-0030, §4, 2021-09-24]:

• Letter to DOE Secretary (attention: Usec for Power and EPIMB Director)
• Selection process for 2 captive customer representatives (criteria, qualifications, documentary requirements)
• Board Resolution approving the selection process
• MOA for Aggregated DUs with Joint TPBAC

Failure to comply with additional document requests within 3 calendar days terminates the application.

TPA 120-Day Mandate (§6.3)

DC2021-09-0030 mandated the DOE to issue TPA accreditation guidelines within 120 calendar days of effectivity [DC2021-09-0030, §5, 2021-09-24]. This was fulfilled by DC2022-06-0027 (June 20, 2022).

Completion Period Extended to 180 Days (§8.7)

Each CSP shall be completed within 180 calendar days from posting/publication of Invitation to Bid until award and PSA signing — up from the 5-month target in DC2018-02-0003. Non-observance subjects the DU to ERC penalties [DC2021-09-0030, §7, 2021-09-24].

Protest Mechanism (§13)

DC2021-09-0030 formalized a three-level escalation path [DC2021-09-0030, §11, 2021-09-24]:

No protest shall stay or delay the CSP; protests must be resolved before any award is made.

AS-CSP: A Separate CSP for the System Operator

DC2021-10-0031 (October 2021) prescribes a parallel CSP regime for the System Operator’s procurement of Ancillary Services (AS), distinct from the DU captive-market CSP [DC2021-10-0031, §1.5, 2021]. Key differences:

The term “TPBAC” therefore refers to two institutionally distinct bodies — the DU’s bidding committee (DU CSP) and the SO’s independent procurement committee (AS-CSP). Context determines which is meant. See Ancillary Services (AS) for the AS-CSP framework.

Related Consumer Protection Measures

FIT-All Suspension

The ERC suspended collection of the Feed-in Tariff Allowance (FIT-All) — a basic charge on all on-grid consumers — to ease the burden of high electricity costs [PEP 2023-2050 Vol. II, pp.88–89, 2023]:

Bill Shock Loan Program

Launched 14 April 2023 by the ERC and Land Bank of the Philippines (LBP): protects consumers from unforeseen increases in electricity bills by enabling DUs to implement staggered billing whenever price increases of 10–15% occur. The LBP’s loan facility allows DUs to fulfill contractual supplier obligations while spreading consumer payment over time. As of 2023, one DU has availed of the program [PEP 2023-2050 Vol. II, p.89, 2023].