PCC, ERC discuss changes to green energy auction price setting

THE Philippine Competition Commission (PCC) and the Energy Regulatory Commission (ERC) are studying changes to the auction transparency rules for the Green Energy Auction Program (GEAP), citing the need to ensure fairness in the process.

In a statement on Thursday, the PCC said a dialogue between the two agencies on March 17 evaluated the results of its competition impact assessment of the GEAP.

The competition regulator explored the possibility of keeping caps undisclosed in order to reduce the risk of collusion and encourage competitive pricing.

However, the ERC said that price-setting mechanisms should remain transparent.

The discussions also focused on how green energy auction reserve (GEAR) prices are determined, amid concerns that the selection of representative plants should accurately reflect evolving market conditions to encourage participation, it said.

The ERC noted that while it utilizes a discounted cash flow model with over 40 parameters, the methodology is designed to be transparent while reflecting maturing technology costs.

This would help prevent over-recovery and protect consumers from inefficiencies, it said.

ERC Chairman Francis Saturnino C. Juan said success in these auctions is measured by both price outcomes and the ability of GEAR prices to yield reasonable rates for end-users, while also ensuring that subscribed projects materialize.

The dialogue also looked into the current per-grid auction framework, which may limit bidder participation due to geographic segmentation.

“Chairperson Juan explained that such segmentation is needed in order for power development planning to prevent grid instability and avoid excessive transmission of capital expenditures that would arise if projects were concentrated in a single region,” the PCC said.

The PCC and ERC’s review of the GEAP seeks to ensure that institutional safeguards are in place to ensure market fairness. — Beatriz Marie D. Cruz