QUARTERLY PERFORMANCE REPORT

FY3 Q4 (July – Sept 2017)

AID-492-G-15-00002

28 October 2017

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Table of Contents

TABLE OF CONTENTS 2

ABBREVIATIONS 3

EXECUTIVE SUMMARY 4

I. PROGRAM DESCRIPTION AND OBJECTIVES 6

II. SNAPSHOT OF ACTIVITIES 8

III. PROGRAM COMPONENTS 9

A. RESEARCH 9

B. POLICY DEVELOPMENT AND ADVISORY 14

C. CAPACITY BUILDING 15

D. COMMUNICATIONS 23

E. CROSS-CUTTING 29

IV. PROGRAM MANAGEMENT 34

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1. CORE AND EXPANDED MANCOM MEETINGS

2. PARTICIPATION IN THE GCLA EVENT ORGANIZED BY THE USAID

3. NOMINATION FOR THE GAWAD PANGULO

4. SUSTAINABILITY OF EPDP

Annexes Annex 1 Performance Indicator Tracking Table (as of 30 September 2017) Annex 2a Transcript of Technical Working Group Meeting on Senate Bill 1290 Annex 2b Senate Bill 1574: An Act Establishing the Philippine Energy Research and

Policy Institute, Defining its Objectives, Powers and Functions, Providing Funds Therefor, and for Other Purposes

Annex 3a EPDP Comments and Suggestions on Senate Bill 1308 Annex 3b Senate Bill 1308 (draft as of 8 August 2017) Annex 3c Transcript of the Second Public Hearing on Senate Bill 1308: Energy

Procurement Act of 2016 Annex 4 Proposed course syllabus on Power Sector Economics Annex 5 Newsletter Volume 2 No. 3

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Abbreviations

ARDL CY COO CLHNS CSP DOE ECM EPDP ERC EWC FY GCLA IRR LNG LPG ManCom NEDA NEA NPC NREL ODC PCC PEMC

PFGE PWC PITT PSA RCOA RET RIG RPS SB TWG UPecon UPSE USAID VAT WB

Autoregressive distributed lag Calendar Year Chief Operating Officer Cebu Longitudinal Health and Nutrition Survey Competitive Selection Process Department of Energy Error Correction Model Energy Policy and Development Program Energy Regulatory Commission Energy World Corporation Fiscal Year Gender Collaboration, Learning and Adapting Implementing Rules and Regulation Liquefied Natural Gas Liquefied Petroleum Gas Management Committee National Economic and Development Authority National Electrification Administration National Power Corporation National Renewable Energy Laboratory Other Direct Costs Philippine Competition Commission Philippine Electricity Market Corporation Philippine Energy Research and Policy InstitutePartnership for Growth with Equity PricewaterhouseCoopers Performance Indicator Tracking Table Philippine Statistics Authority Retail Competition and Open Access Renewable Energy Target Regional Inspector General Renewable Portfolio Standards Senate Bill Technical Working Group UPecon Foundation University of the Philippines School of Economics United States Agency for International Development Value added tax World Bank

PERPI

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Executive Summary

EPDP continues to fulfill its mandate as a credible source of policy advice and an active partner on capacity building on energy topics for its government partners, the NEDA and the DOE. Having been recognized for its increasing expertise on energy research and policy, the demand for EPDP’s technical support and advice continues to grow. This signals the need for the continued implementation of EPDP and reflects the Program’s strong credibility in responding to the needs of its partners, whenever it has the comparative advantage to.

As a reliable source of policy advice, EPDP was invited by the Senate Committee on Energy to public hearings and technical working group meetings for two bills: Senate Bill 1308 (Energy Procurement Act of 2016) and Senate Bill 1290 (Philippine Energy Research and Policy Development Institute Act of 2016). During the first public hearing on the Energy Procurement Act of 2016, EPDP was requested to provide information on the experiences of other countries on competitive selection process in the energy sector. To provide this advice, EPDP conducted a scoping study and prepared a position paper that was presented during the second public hearing on 9 August 2017.

The Senate Committee on Energy also requested EPDP to share its experience on the implementation of the EPDP for Senate Bill 1290. The bill, submitted by Senator Sherwin Gatchalian, Chairman of the Senate Committee on Energy, on 15 December 2016, aims to institutionalize energy research, policy advisory and capacity building on energy. EPDP provided position papers and specific suggestions on the bill during consultations, public hearings and technical working group meetings to strengthen various aspects of the bill. Subsequently, Senate Bill 1574, an updated version of SB 1290, was submitted to the 17th Congress on 30 August 2017. The passage of the bill will lay the groundwork for systematizing and sustaining research, capacity development and policy advisory on energy in the country. The bill is up for second reading at the Senate.

EPDP strives to give policy advice that is founded on the results of thorough, critical and evidenced-based research. Accordingly, drafts of six of the nine planned EPDP research studies have been delivered this quarter. The studies dealt with efficiency of electric cooperatives, cost advantage of natural gas, forecasting of energy demand, effects of access to electricity on gender and welfare, and energy prices and consumption. Research results will undergo further review to ensure the soundness of policy recommendations.

In furthering policy advice and facilitating dialogue among experts, the EPDP, in partnership with the Philippine Competition Commission and the World Bank Group, is organizing the “Executive Seminar on Fostering Dynamic Competition in the Philippine Power Industry,” which will be held on 16-17 October 2017. The Executive Seminar aims to acquaint executives and key technical staff on the fundamental principles, applications, and policy issues on market power in the electricity industry and identify policy recommendations on how market power can be monitored and mitigated to enhance efficiency and encourage competition in the Philippine electricity market. To date, EPDP has received confirmation from about 40 executives and 50 technical staff from energy

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and related sectors.

This quarter also saw the increased support of the private sector in EPDP activities to provide a holistic understanding of the country’s electric power industry. As a key player in promoting competitiveness on energy, the private sector was featured in EPDP’s Lecture Series, which aims to provide a neutral platform for exchange of ideas involving energy experts and practitioners from academia, the government and the private sector. EPDP partnered with The Lantau Group, First Gen Corporation, and Aboitiz Power Corporation in conducting three lectures during the quarter. Top executives, delivered the lectures.

As part of the Program’s long-term capacity building efforts, EPDP supports academic activities in institutions of tertiary education to produce a pool of energy policy specialists and practitioners that the Philippine Government may tap in the future. The EPDP continued its efforts in providing input for the development of an academic program on energy in UPSE by providing support on curriculum review; integration of energy concepts in UPSE undergraduate and graduate courses (including the submission of syllabi on Power Sector Economics for consideration in the updating of the academic curriculum); and support to thesis and dissertation grants. These will a create a mechanism to strengthen the knowledge base on the energy sector and consequently sustain EPDP’s capacity development efforts.

Bridging research and policy gap in the energy sector necessitates longer period of implementation. Recognizing this, EPDP actively supports the Senate Committee on Energy on the development of the Senate Bill 1574 that will institutionalize independent, rigorous and multidisciplinary research through the creation of the Philippine Energy Research and Policy Institute (PERPI). Consistent with the EPDP mandate, PERPI will support the country in developing sound energy policies and legislation.

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I. Program Description and Objectives

The Energy Policy and Development Program (EPDP) is a four-year project whichstarted in November 2014 that aims to strengthen the capacity of the Philippinegovernment to formulate coherent and evidence-based policies and strategies forsustainable, reliable, and efficient use of energy resources and technologies. Itsupports the national government, in particular the National Economic andDevelopment Authority (NEDA) and the Department of Energy (DOE), in policyanalysis and formulation for the energy sector. EPDP is being implemented by theUPecon Foundation Inc. and is funded by the United States Agency for InternationalDevelopment (USAID).

EPDP’s approach to attaining its objective involves the following key initiatives (as depicted in Figure 1) that also represent EPDP’s four components: ● provide the technical foundation for policy development, capacity building, and

communications interventions through an energy research program. Thisentails setting up (i) an energy research program unit to support a mix of policyand operational research on energy and (ii) a data management and analysis unitto lay the groundwork for analysis of energy issues, as well as monitoring andevaluating the impact of energy policies. EPDP’s energy research program acts asthe foundational pillar for the other components – i.e., the technical basis forpolicy development, capacity building, and communication interventions;

● provide policy development and advisory, initially to NEDA and DOE–EPDP’score clients–including their attached agencies1 but can be expanded to includelegislators, if there is demand;

● support capacity building activities for NEDA and DOE and their attachedagencies, including other stakeholders in the national government (for examplethe legislators), and the private sector, as well as support for a pool of energyspecialists and practitioners;

● support communications activities to share energy-related research andactivities with stakeholders in the energy sector.

1 Energy Regulatory Commission (ERC), National Power Corporation (NPC), National Electrification

Administration (NEA), and Philippine Statistical Authority (PSA)

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This report covers EPDP’s performance in Quarter 4 (July-September 2017) of Fiscal Year 3 (FY 3). Section II is a snapshot of key activities. Section III details program component and other cross-cutting activities and achievements while Section IV dealt with program management activities and finances. The Annexes provide the supporting documents for this report, including the updated Performance Indicator Tracking Table (PITT) as Annex 1.

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II. Snapshot of Activities

Table 1 chronologically lists the activities of EPDP in Q4 with elaborations on these in the succeeding sections.

Table 1. EPDP Activities in FY3-Q4 (July-September 2017) Dates Activities Venue

3 July Preparatory Meeting on SB 1290: Energy Institute EPDP Office

5 July Technical Working Group (TWG) Meeting on Senate Bill (SB) 1290: Energy Institute

Senate of the Philippines

10 July Reading Session 4:

a) Electricity Externalities, Siting, and the EnergyMix

b) Comparison of Auction Schemes in DifferentCountries (Centralized vs. Decentralized)

EPDP Office

17 July Core ManCom meeting EPDP Office

21 July Expanded ManCom meeting EPDP Office

21 July Meeting with NEDA Secretary Ernesto Pernia UP Town Center

25 July Reading Session 5:

a) Distributional Effects of the Australian RenewableEnergy Target (RET)

b) Centralized and Decentralized Auction Schemes

EPDP Office

26 July Educational Trip to Energy World Corporation’s (EWC) Liquefied Natural Gas (LNG)

Pagbilao, Quezon

26 July Participated in the Audit Exit Conference Meeting U.S. Embassy, Roxas Boulevard, Manila

28 July Participated in the Gender Collaboration, Learning and Adapting (GCLA) Event

U.S. Embassy, Roxas Boulevard, Manila

4 August Participated in the 7th Meeting of the Partnership for Growth with Equity (PFGE) Technical Subcommittee for Infrastructure and Competitiveness

DTI International Building, Makati

8 August Organized Be EmPOWERed: UPSE Graduate Students’ Thesis and Dissertation Workshop

UP School of Statistics

9 August Served as resource speakers to the 2nd Public Hearing on SB 1308: Energy Procurement Act of 2016

Senate of the Philippines

15 August Core ManCom meeting UP School of Economics

16 August Participated in Energizing Economic Growth: The Role of Energy in the Philippine Economy organized by Albert Del Rosario Institute

F1 Hotel, Taguig

17 August Lecture Series 16: The Changing Economics of Inter-Fuel Competition in Southeast Asia by Mr. Mike Thomas, Partner at The Lantau Group

UP School of Economics

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22 August Participated in the Nuclear Energy Forum organized by the National Engineering Center (NEC), Engineering Research and Development for Technology(ERDT) and UP Engineering Research and Development Foundation, Inc. (UPERDFI)

Novotel, Quezon City

24 August Lecture Series 17: The Impact of Energy Access on Women’s Health, Labor, and Time Allocation by Dr. Marjorie C. Pajaron

UP School of Economics

30 August Expanded ManCom Meeting UP School of Statistics – Conference Room

31 August Participated in the USAID/Philippines Implementing Partners’ Meeting

U.S. Embassy, Roxas Boulevard, Manila

31 August Lecture Series 18: Natural Gas: Addressing the Energy Trilemma, and Powering our Energy Needs by Mr. Giles Puno, President and Chief Operating Officer of First Gen

UP School of Economics

5 September Reading Session 6: Western Renewable Energy Zones EPDP Office

8 September Meeting on the Executive Seminar with World Bank (WB) and Philippine Competition Commission (PCC)

PCC Office, Ortigas

13 September Core ManCom Meeting EPDP Office

14 September Lecture Series 19: Retail Competition and Open Access (RCOA) and the Power of Choice by Mr. Luis Miguel Aboitiz EVP and COO of the Corporate Business Group of Aboitiz Power Corporation

UP School of Economics

19 September Reading Session 7: Relevance of Market Power EPDP Office

III. Program Components

A. Research

During the last quarter of FY3, the Research Component continued to undertake data gathering and analysis for ongoing studies and was able to deliver six drafts of the nine planned research studies. Reading sessions, attended by EPDP fellows and the whole EPDP team, were also conducted to facilitate continuous knowledge and awareness building on different energy topics and issues. These activities all contribute to EPDP’s objective to provide evidence-based research and stimulate discussion on energy.

1. Research Studies

Delivered outputs: data gathering and analysis

Several research studies in the second round of research have made significant headway during the quarter. EPDP was able to mobilize support from the

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Department of Science and Technology (DOST)-National Academy of Sciences and Technology (NAST) and the Waseda University in conducting the study “Energy Conservation ‘Nudges’: Evidence from a Randomized Residential Field Experiment in the Philippines” by Drs. Ravago, Brucal, Tarui and Arimura. The status of the second round of research studies is indicated in Table 2.

Table 2. Status of the Studies Second Round of Research Research topic Research Fellows FIRST

DRAFT FINAL

PAPER AND POLICY BRIEF

REVISED PAPER & PB (after peer

review)

1. Towards an Economic Model of an Integrated Power System

Karl Jandoc Majah-Leah Ravago James Roumasset Kenmore Espinoza

2. Power Rates in the Philippines: Causes and Implications

Majah-Leah Ravago Arlan Brucal Shirra De Guia James Roumasset

3. Optimal Energy Mix for Power Generation in the Philippines

Romeo Balanquit Sarah Daway-Ducanes

4. Evaluative Study on the Services of Electric Cooperatives

Raul Fabella

5. Forecasting Philippine Sectoral Electricity Demand

Rolando Danao Geoffrey Ducanes

6. Regulatory Credibility, Institutions, and Contract Design in Natural Gas Exploration in the Philippines

Ramon Clarete

7. Energy Conservation “Nudges”: Evidence from a Randomized Residential Field Experiment in the Philippines

Majah-Leah Ravago Arlan Brucal Nori Tarui Toshi Arimura

8. The Links Between Gender, Renewable Energy, and Household Welfare:

Marjorie Pajaron

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Evidence from the Philippines

9. The Impact of Energy Prices on Consumption in the Philippines

Renato Reside

2. Reading Sessions

Delivered outputs: increased understanding of the energy sector

During the quarter, the Research team continued conducting reading sessions to learn from the experiences and practices of other countries. Four (4) sessions were carried out covering topics on renewable energy, auction schemes, and market power. Table 3 summarizes the topics that were discussed.

Table 3. Reading Sessions in Q4 Session Topic and Date of the Reading Session

10 July 2017 Reading Session 4: ● Electricity Externalities, Siting, and the Energy Mix ● Comparison of Auction Schemes in Different Countries (Centralized vs.

Decentralized)

Resource Materials

1) Welsch (2016) - Electricity Externalities, Siting, and the Energy Mix: A Survey 2) Bajay, S. (n.d.). Medium- and long-term energy planning in Brazil: How the

implementation of energy efficiency and renewable energy programs are being carried out.

3) Benedettini, S. (2013). "PJM and ISO-NE forward capacity markets: a critical assessment." Research Report Series n. 12.

4) BGS-Auction (2017). Overview. Retrieved from http://www.bgs-auction.com/bgs.auction.overview.asp#

5) Business Wire (2016). “ISO New England’s Wholesale Electricity and Capacity Markets Were Competitive in 2015.” Retrieved from http://www.businesswire.com/news/home/20160526006006/en/ISO-England%E2%80%99s-Wholesale-Electricity-Capacity-Markets-Competitive.

6) Cramton, P. (2015) Colombia Firm Energy Auction: Descending Clock or Sealed-bid? Retrieved from http://www.creg.gov.co/phocadownload/presentaciones/cramton-colombia-firm-energy-auction-format%20v0.pdf.

7) de Castro, L., M. Negrete-Pincetic, and G. Gross (2008). “Product definition for future electricity supply auctions: The 2006 Illinois experience." The Electricity Journal 21(7): 50-62.

8) De Virgilio, Brian (2006). "A discussion of the deregulation of the energy industry in illinois and its effects on consumers." Loy. Consumer L. Rev. 19 (3): 256. Retrieved from: http://heinonline.org/HOL/LandingPage?handle=hein.journals/lyclr19&div=19&id=&page.

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9) Engie (2016). Understanding the Capacity Market. 10) Energias de Portugal (2009). Brazilian Electricity System. Retrieved from

http://www.edp.pt/en/sectordeenergia/sistemaelectricobrasileiro/Pages/default_new.aspx.

11) Forster, S., & A. Amazo (2016). Auctions for Renewable Energy Support in Brazil: Instruments and lessons learnt.

12) T. J. Hammons (2011). Market Mechanisms and Supply Adequacy in the Power Sector in Latin America, Electricity Infrastructures in the Global Marketplace, (Ed.), ISBN: 978-953-307-155-8, InTech. Retrieved from: http://www.intechopen.com/books/electricity-infrastructures-in-the-global-marketplace/market-mechanismsand-supply-adequacy-in-the-power-sector-in-latin-america.

13) Harbord, D. (2016). CREG Expert Panel on Colombian Energy Market Reform. Retrieved from http://apolo.creg.gov.co/Publicac.nsf/52188526a7290f8505256eee0072eba7/536e4d4ad166cd5a052580420070e8d0/$FILE/Circular069-2016%20Anexo2.pdf.

14) International Energy Agency (2013). Renewable Energy Auctions in Developing Countries. Retrieved from https://www.iea.org/policiesandmeasures/pams/panama/name-157636-en.php.

15) International Energy Agency (2013). Renewable Energy Auctions Analysing 2016 Executive Summary. Retrieved from http://www.irena.org/DocumentDownloads/Publications/IRENA_REAuctions_summary_2017.pdf.

16) LaCasse, C. (2002). Auctions and Procurement: New Directions. Retrieved from: www.nera.com/content/dam/nera/publications/archive1/5524.pdf.

17) Lopez, B. (2017). Panama reports 46 MW of new large-scale solar capacity. Retrieved from https://www.pv-magazine.com/2017/03/14/panama-reports-46-mw-of-new-large-scale-solar-capacity-for-2016/.

18) Mastroprieto, P., C. Batle, L. Barroso, & P. Rodilla (2016). The Evolution of Electricity Auctions in South America. Energy Sources, Part B: Economics, Planning, and Policy.

19) Maurer, L. and L. Barroso (2011). Electricity Auctions: An Overview of Efficient Practices.

20) Melo, E., E. Neves, & A. Costa (2009). The New Governance Structure of the Brazilian Electricity Industry: How Is It Possible To Introduce Market Mechanisms?

21) Moreno, R., L. Barroso, H. Rudnick, S. Mocarquer, B. Bezerra (2010). Auction approaches of long-term contracts to ensure generation investment in electricity markets: Lessons from the Brazilian and Chilean experiences. Energy Policy 38, pp. 5759-5769.

22) Negrete-Pincetic, M.,and G. Gross (2007). "Lessons from the 2006 Illinois electricity auction." Bulk Power System Dynamics and Control-VII. Revitalizing Operational Reliability, 2007 iREP Symposium. Retrieved from: http://gross.ece.illinois.edu/files/2015/03/2007-Aug-Lessons-from-the-2006-IL-Electricity-Auction.pdf.

23) Orme, B. (2016). Understanding the UK’s Capacity Market.

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24) Perrotti, F. (2006). Overview of The New Jersey Default Service Policy: Basic Generation Service. Retrieved from: pubs.naruc.org/pub/53761871-2354-D714-5193-B5F43E809050.

25) Rose, J., G. Katsigiannakis, J. Ghosh, and H. Pande (2017). “ISO-NE FCA 11 Auction Results and Future Expectations.” ICF White Paper.

26) Roy, P. (2016). Market Information: Chile. Retrieved from https://www.marsdd.com/wp-content/uploads/2015/07/AEC_GG_CHILE_REPORT_FINAL_Dec2016.pdf.

27) White, D., M. Chang and B. Fagan (2016). 2016 BGS Auction Review: An Analysis of Utility Differences. Retrieved from: www.synapse-energy.com/sites/default/files/BGS-Auction-Review-2016-16-030.pdf

Session Topic and Date of the Reading Session

25 July 2017

Reading Session 5:

Distributional effects of the Australian Renewable Energy Target (RET) Centralized and Decentralized Auction Schemes

Resource Material

Cludiusa, J. et. al (2014) Distributional effects of the Australian Renewable Energy Target (RET) through wholesale and retail electricity price impacts

Session Topic and Date of the Reading Session

5 September 2017 Reading Session 6: Western Renewable Energy Zones

Resource Materials

1) Pletka, R. & Finn, J. (2009). Western Renewable Energy Zones, Phase 1: QRA Identification Technical Report. Subcontract Report, NREL/SR-6A2-46877

2) Mills, A., Phadke, A., & Wiser, R. (2011). Exploration of resource and transmission expansion decisions in the Western Renewable Energy Zone initiative. Elsevier, Energy Policy 39, 1732–1745

3) Hurlbut, D. (2009). Transmission Development Zones for Renewable Energy Resources (Powerpoint presentation)

4) Hein, J. (2011). Western Renewable Energy Zones (Powerpoint presentation)

Session Topic and Date of the Reading Session

19 September 2017 Reading Session 7: Relevance of Market Power

Resource Material

Kaplow, L. (2017). On the Relevance of Market Power. Harvard Law Review, 130 (5).

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B. Policy Development and Advisory

EPDP continues to support the Philippine Government in crafting evidence-based policies and strategies by providing input to the Senate Committee on Energy on Senate Bill 1290 (Philippine Energy Research and Policy Institute Act of 2016) and Senate Bill 1308 (Energy Procurement Act of 2016). Below are the details of EPDP’s input. 1. Technical Assistance on Senate Bill 1290 (Philippine Energy Research and Policy

Development Institute Act of 2016) as part of the Technical Working Group Delivered outputs: Position paper on the bill; presentation of comments, suggestions and proposed revisions at the Technical Working Group Meeting on July 5

Senate Bill 1290 (An Act Establishing the Philippine Energy Research and Policy Development Institute, Defining its Objectives, Powers and Functions, Providing Funds Therefor, and for Other Purposes) was submitted on 16 December 2016 at the first regular session of the 17th Congress of the Senate of the Philippines. A public hearing was then conducted on 31 May 2017 to gather initial comments and suggestions on the bill. Following the first public hearing, the committee organized a technical working group meeting on 5 July where each section of the bill was discussed. A transcript of the TWG meeting is included as Annex 2a.

The TWG members were generally supportive of the initiative to set up the energy institute, expressing that this will provide independent research and the necessary policy support to the government on energy matters.

Following the TWG meeting, an updated version of SB 1290, incorporating input from the meeting, was prepared by the committee. The updated version, Senate Bill 1574, was submitted by the Committees on Energy, Science and Technology, and Finance

Senator Sherwin Gatchalian, Chairperson of the Senate Committee on Energy, led the TWG Meeting on SB 1290, 5 July 2017.

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with Senator Gatchalian as author at the 2nd regular session of the 17th Congress on 30 August 2017. The updated version is included as Annex 2b. This can also be accessed through https://www.senate.gov.ph/lisdata/2660922874!.pdf

2. Technical Assistance on Senate Bill No. 1308: An Act Institutionalizing Reforms in the Procurement by Distribution Utilities of Supply for the Captive Market (Energy Procurement Act of 2016) as resource persons during the Second Public Hearing

Output: Research on auction schemes in selected countries and position paper presented at the second public hearing on SB 1308

The Senate Committee on Energy organized the second public hearing on the competitive selection process (CSP) to review the latest version of the Energy Procurement Act of 2016, which incorporates input from the first public hearing (1 March 2016) and technical working group meeting (3 April 2016). During the first hearing, the EPDP was requested to provide insights on experiences of other countries on auction schemes. In response to the request of the Committee to share auction schemes, the EPDP conducted a scoping study of practices in selected countries to effectively provide advice to the Committee. The scoping study and EPDP’s position paper were presented at the second public hearing held on 9 August 2017. EPDP’s comments were submitted to the Committee for reference (Annex 3a). An updated draft of the SB 1308 is indicated as Annex 3b and a transcript of the second public hearing is also included as Annex 3c.

C. Capacity Building

EPDP continues to strengthen the capacity of the Philippine government and the academe on energy-related programs and issues. Under short-term capacity building, the Component is preparing for its upcoming executive seminar slated on 16-17 October. The seminar, organized in partnership with the Philippine Competition Commission (PCC) and the World Bank Group, aims to build better understanding

EPDP’s presentation during the Second Public Hearing on SB 1308 or the Energy Procurement Act on 9 August 2017.

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among high-ranking government officials on fostering dynamic competition in the Philippine power industry. The seminar supports EPDP’s mandate to strengthen the capacity of the GPH to formulate coherent and evidence-based energy programs and policies. For long-term capacity building, the Component provided support to the following:

● curriculum review; ● incorporating energy topics in three economic courses; ● development and submission of proposed syllabus on Power Sector Economics

for graduate and undergraduate levels to UPSE for consideration in the revised curriculum;

● first round of thesis grants for students pursuing energy-related research; ● workshop for UPSE undergraduate and graduate students and subsequently

providing grants to three MA students pursuing theses on energy under the second round of thesis grants; and

● partial travel support to Mr. Kenmore Espinoza, EPDP Research Assistant and UPSE PhD student, to participate in the Colorado School of Mines Summer Program.

A. Long-Term Capacity Building

1. Incorporating energy topics into economics courses Outputs: energy-related topics incorporated into two undergraduate courses and one graduate course (First Semester, Academic Year 2017-2018)

For this quarter, three (3) courses—ECON 199 (Seminar) and ECON 198 (Energy Economics and Policy) for BS Economics undergraduate students and DE 291 (Growth, Poverty, and Institutions) for Master of Development Economics—incorporated energy-related topics to enrich students’ knowledge on the current challenges and developments in the energy sector. Aside from the regular class lectures, these lectures will feature energy practitioners and specialists from government agencies to discuss regulatory policies on the energy sector. These practical experiences will complement academic discussions. In ECON 199, students pursuing energy-related research will have the opportunity to work on their theses with guidance from EPDP fellows and other energy scholars. Such efforts contribute to EPDP’s long-term goal to promote interest in energy topics and encourage more students to study energy to achieve a critical mass of scholars that specialize on energy policy.

2. Curriculum Review

Under its long-term capacity building program, EPDP has started developing an academic and policy program specific to the energy sector for UPSE. These include

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the integration of energy concepts in UPSE undergraduate and graduate courses, special class lectures on energy, class conferences, training courses, and educational visits. Aside from these activities, EPDP recognizes the need to sustain its capacity building initiatives long after the program has ended. Hence, EPDP extended its support to the ongoing curriculum review (phase 1) of the undergraduate (BS Economics and BS Business Economics) and graduate (MA, MDE, PhD) programs of UPSE, which is in response to the University’s directive to implement the outcome-based education (OBE) framework. EPDP’s earlier efforts will be inputs to the curriculum review, which is done in two phases.

Phase 1. Delivered Output: Final Report on the Curriculum Review of UPSE Graduate Programs (MA Economics, PhD in Economics, and Master in Development Economics) Curriculum review phase 1 determined the relevance, appropriateness, and responsiveness of the UPSE curriculum to the academic needs of undergraduate and graduate students. This was done by determining program outcomes/goals, curriculum mapping, and identifying areas to improve the curriculum. The final report on the UPSE undergraduate curriculum review was submitted in Q3, while the final report on the graduate curriculum review was completed and submitted this quarter. The review indicates that majority of the courses did not specify learning outcomes or indicators of competence, which are supposed to be part of the course objectives so that these can be assessed at the end of the course. Despite this limitation, a survey among graduate students revealed that the courses have equipped them with the appropriate skills and tools related to the course topics. The report recommended that graduate courses explicitly state expected learning outcomes in the revised curriculum to enable an effective and systematic evaluation of course objectives.

Phase 2. Output: Proposed/Revised UPSE Curriculum Design (ongoing)

This phase covers the process of revising the UPSE undergraduate and graduate curriculum design based on the findings and recommendations indicated in the final report for phase 1. Activities for this phase include: (1) mapping of the new curricula; (2) preparation of syllabi; (3) writing of curriculum design reports; (4) submission of the proposed curricula to the University Council; and (5) University Council presentation of approved curriculum design. Phase 2 is expected to conclude by the end of January 2018 and will be implemented in school year 2018-2019. While the outcome of the curriculum review is beyond EPDP’s control, this effort is geared to formally embed energy-related topics and courses in UPSE’s undergraduate and graduate curricula, which will enhance the sustainability of EPDP’s capacity-building program. In line with the objectives of curriculum review phase 2, the syllabi for the course Power Sector Economics–Economics 173 (undergraduate) and 276 (graduate)—is proposed to be included in the revised curriculum. The courses provide an

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overview of the economic, technological, and political factors that shape the energy industry, the business models that emerge, and the policies governments use to regulate the industry, with particular application to the Philippines. The course will use specific examples regarding power generation, transmission and distribution in the Philippines and elsewhere with regard to cost, reliability, and environmental effects.

3. Submission of draft theses under the first round of thesis and dissertation grants Delivered outputs: Two draft theses on forecasting Philippine electricity demand Two of the three thesis grantees have submitted their draft studies. Ms. Pia Medrano and Mr. Angelo Santos are on their final stage of research and have submitted their drafts while Mr. Ricardo Ang III will be presenting his findings prior to the finalization of his thesis. Mr. Ang submitted his thesis draft last quarter.

The two papers will be presented at the 55th Philippine Economic Society (PES) Annual Meeting and Conference on 8 November 2017 at Novotel Hotel, Araneta Center, Cubao. The inclusion of these papers in the conference signifies acceptable quality of the researches undertaken. a) Draft of “Forecasting Philippine Commercial Electricity Demand” by Ms. Pia

Medrano

Ms. Medrano’s paper aims to analyze commercial electricity demand in the Philippines through the use of structural break analysis and error correction models (ECM) with regime and trend shifts. These shifts pertain to events, among other factors (e.g. changes in technology, economic structure, policy, lifestyle, etc. that drive electricity demand), in Philippine history. These events may have significant and underlying relationships with electricity demand such as the end of the Philippine power crisis in 1997 and the post-oil crisis shock in the 1970s.

b) Draft of “Forecasting Residential Electricity Demand in the Philippines” by Mr. Angelo Santos

This study examines the factors that influence residential electricity consumption in the Philippines. It estimates the relationship between residential electricity consumption and household income, electricity price, and temperature by using autoregressive distributed lag (ARDL) and ECM. The models can be used to forecast residential electricity consumption.

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4. Be emPOWERed: Workshop on potential thesis and dissertation topics Delivered output: Workshop conducted, EPDP support to MA thesis and PhD studies and potential research topics identified

Under the long-term capacity development component of the Program, the EPDP conducted “Be empowered,” a research workshop for undergraduate and graduate students from the UP School of Economics to discuss potential thesis and dissertation topics on energy economics and resource and environmental economics. Dr. Majah-Leah Ravago, EPDP Program Director, together with EPDP fellows Dr. Rolando Danao and Dr. Raul Fabella, shared pointers on conducting credible research, potential data sources and available information from EPDP. The students were also guided on the coverage of their studies given the limited timeframe for the conduct of the studies.

EPDP Program Director Dr. Majah Ravago, together with EPDP fellows Dr. Rolando Danao and Dr. Raul Fabella, presented potential thesis and dissertation topics on energy economics and resource and environmental economics during the “Be emPOWERed” energy research workshop on 8 August 2017.

Undergraduate and graduate students from the UP School of Economics were present at the “Be emPOWERed” energy research workshop hosted by EPDP on 8 August 2017.

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5. Second round of thesis and dissertation proposals Delivered output: Three thesis proposals approved for the second round of research

Following the Be emPOWERed workshop on potential thesis and dissertation grants, a second call for thesis and dissertation proposals was circulated by the UPSE through the Graduate Admission and Fellowships Office. The following thesis proposals were approved for this quarter: a) Understanding the Factors that Affect the Performance of Electric

Cooperatives in the Philippines by Joshua Anthony Gapay

Low quality electrical services have been a problem in the Philippines for decades and contribute to stunted growth particularly for rural areas. While electric cooperatives play an important role in improving access to electricity in rural areas, several factors affected their performance from 1997 to 2012. Depending on data availability, the study will also compare the performance of private distribution utilities against electric cooperatives and the effect of privatization on ECs’ performance. The study also aims to estimate the opportunity cost to society when ECs are not performing well.

b) The Economic Impact of Electric Cooperatives on Households and Firms in the Philippines by Donna Faye Bajaro

Several studies have been done on electric cooperatives in the Philippines but a review of the existing literature shows limited studies done on the impact of electric cooperatives on households that they serve and on firms operating within their franchise areas. This research aims to analyze the impact of electric cooperatives on households and firms to provide an evidence-based study for the policy makers. The research will use the 2011 Household Energy Consumption Survey (HECS) dataset, the 2015 World Bank Enterprise Survey dataset, and the list of distribution utilities in the Philippines by NEA. Ordinary Least Square (OLS) and logit regressions will also be used for this research.

c) Does Quality of Electricity Matter? Household-Level Evidence from the

Philippines by Vanessa Mae Pepino

Several studies have been done on energy access and development as well as electrification and welfare but only a few discuss electricity quality and welfare in the Philippines. This study aims to examine the distributional impacts of electricity quality on Filipino households using a two-stage simultaneous model using cross-sectional data from the 2004 and 2011 Household Energy Consumption Survey. The study seeks to analyze the effects of electricity quality on the welfare of households by looking at the impact of blackouts, fluctuations, and low voltages on the income of different household groups. The study hopes to provide evidence to support the provision of reliable electricity to households especially in marginalized areas.

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6. Participation of Mr. Kenmore Espinoza in the Colorado School of Mines Summer Program

Delivered Output: participation of Mr. Espinoza in the Colorado School of Mines

Summer Program

Mr. Kenmore Espinoza, EPDP Research Assistant and UPSE PhD student, participated in the Colorado Technology Primer for Economists and Social Scientists on 31 July-4 August in Colorado, Golden City, USA. The weeklong program, which was held at the Colorado School of Mines, consisted of seven lectures by staff members of the National Renewable Energy Laboratory (NREL), a U.S. federal laboratory dedicated to research of renewable energy and energy efficiency technologies. It aimed to provide students and industry professionals with interdisciplinary studies, ranging from engineering to social science, understanding of electricity distribution systems, and the interface of technology and policy. As part of the Program’s long-term capacity development, EPDP provided partial travel support to Mr. Espinoza to augment the travel grant awarded by the Colorado School of Mines.

Mr. Espinoza (2nd row, 2nd from the left) joined the participants of the Summer Program for a quick tour in Colorado during the weeklong workshop, August 2017

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B. Short-Term Capacity Building

1. Engagements with private sector stakeholders Delivered outputs: Educational trip hosted by the Energy World Corporation (EWC) in their Liquefied Natural Gas (LNG) Terminal; EPDP fellows and staff informed on the concepts, principles and operations of a liquefied natural gas (LNG) terminal

Upon the invitation of the Energy World Corporation (EWC), EPDP fellows and staff visited the EWC’s liquefied natural gas (LNG) terminal in Pagbilao, Quezon on 26 July 2017. EPDP was welcomed by Project Director Mr. Wong Kin Pok and Project Coordinator Mr. John Anderson who shared with the group an overview of the LNG terminal project, EWC’s objective of bringing LNG to Asia, their vision for LNG in the Philippines, current project developments and their plans for the next few years. The Pagbilao terminal is the first LNG terminal in the country and is intended to act as a hub for onward distribution of LNG throughout the Philippines.

A site tour led by Mr. Wong, Mr. Anderson and Executive Committee Member Mr. Reynaldo Cabacungan followed the orientation. An open forum was also held as part of the site visit. The team was joined by EWC Managing Director and CEO Mr. Stewart Elliott, Executive Director Mr. Brian Allen, Mr. Wong, Mr. Anderson, Project Administrator Engr. Diana Dabu, and Technical Assistant Ms. Annaliza Catabay for the open forum. The EWC’s website contains more information and is accessible through this link http://www.energyworldcorp.com/index.html

The cost of site and technical visit was covered by the EWC as cost share to EPDP.

EWC Project Coordinator Mr. John Anderson accompanied the EPDP Fellows and staff during the site tour on 26 July 2017.

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2. Executive Seminar on Fostering Dynamic Competition in the Philippine Power Industry

Output: Preparation for the executive seminar (on-going)

EPDP is on its final stage of preparation for the Executive Seminar on Fostering Dynamic Competition in the Philippine Power Industry, which will be held on 16-17 October 2017 in collaboration with the PCC and the World Bank Group. High-ranking government officials will participate in the executive session and lectures on the first day, which will focus on understanding local and international policy issues on electricity markets. Representatives from the academe and the private sector have also been invited to the second day to learn more about the technical aspects of monitoring competition in the power sector. Given the budget cut, the EPDP was able to mobilize resources from its partners in fulfilling its mandate. For this Seminar, the PCC and World Bank will be providing a cost share of around $28,000, which covers the transportation, daily subsistence allowance and professional fees of speakers.

D. Communications

This quarter, the Communications Component continued its social media and website activity while assisting other components in preparing for upcoming events. The Communications Component already reached its fiscal year targets and will continue to strengthen online presence especially in promoting program activities and supporting EPDP stakeholders, website users, and energy researchers. With this objective, the component started recording Lecture Series sessions regularly this quarter so videos can be available to stakeholders and researchers at any time.

1. EPDP Website and Resource Center

From July to September, EPDP products—consisting of working papers, policy briefs, newsletters, presentations, and activity materials like syntheses and speeches—on the EPDP website were downloaded a total of 236 times. This FY3, a total of 1071 downloads were recorded, which exceeds the 600 downloads target for FY3 by 78.5%.

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Google Analytics shows that, from 1 October 2016 to 30 September 2017, the EPDP website has had 4147 users and 20,273 page views (Figure 2 above). 4147 users exceed the target of 2500 by 66% for this fiscal year. Meanwhile, the database download counter (Figure 3 below), installed on 19 April 2017, counted 102 unique users until 30 September 2017.

Figure 1. The EPDP website can be accessed through http://www.upecon.org.ph/epdp/

Figure 2. EPDP Website Google Analytics data covering 11 May 2016- 30 September 2017

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2. Communications-specific products and activities

Delivered outputs: newsletter, social media updates/posts

Newsletter vol. 2 no. 3 was released in July 2017 through the program’s website and Facebook page. It was also emailed to about 1000 recipients in EPDP’s mailing list. The newsletter can be found at http://www.upecon.org.ph/epdp/communications/. In addition to the website, the Component continuously maintains and manages the social media accounts of EPDP, expanding the potential reach of EPDP to include those that are not captured by the mailing list or are more accustomed to social media. Through these platforms, more stakeholders are informed about products and activities across the various EPDP components.

Figure 3. EPDP Databank Google Analytics data covering 19 April - 30 September 2017

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Energy-related content in local news is also monitored regularly by the Component. Relevant content is sent via email to EPDP fellows, researchers, research assistants, and USAID partners weekly.

Figure 4. EPDP Facebook account at https://www.facebook.com/energypolicyanddevelopmentprogram/

Figure 5. EPDP Facebook Likes on 1 April 2017 and on 30 June 2017

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3. Communications Support The Communications Component continually supports other components through the photo documentation of activities; composition, design, and production of collaterals such as posters, banners, certificates, and invitations; social media and online promotion of activities and products; post-activity updates on social media; and writing, proofreading, and/or copy editing of products and report contents. For quarter 4, the Component documented five EPDP activities (including four lectures and a research workshop for students) and copyedited reports, internal documents, and letters.

4. EPDP in the News

In line with the Program’s objective to promote public awareness on energy policy issues, the EPDP occasionally invites the media to program activities. EPDP has been has been generating interest in its activities as can be seen in several articles related to topics discussed in EPDP events.

a) Philippine Star | “First Gen eyes other LNG solutions for fuel needs” by Danessa Rivera (4 September 2017)

This article talks about First Gen’s plans to expand liquefied natural gas solutions for the country’s energy requirements as discussed by Mr. Giles Puno at the EPDP Lecture Series session they hosted on 31 August, “Natural Gas: Addressing the Energy Trilemma and Powering Our Energy Needs.” The article can be accessed at: http://www.philstar.com/business/2017/09/04/1735472/first-gen-eyes-other-lng-solutions-fuel-needs

b) Business World Online | “Cronyism in Renewable energy, gas sectors?” by

Bienvenido Oplas, Jr. (7 September 2017)

In the article, Mr. Oplas also writes about his thoughts on Mr. Puno’s lecture. Contrary to Mr. Puno’s views, Mr. Oplas poses ideas for coal use and how it is “cronyist” to want incentives from the government for LNG. “Government taxes should apply to all technology,” according to him. The article can be accessed at: http://bworldonline.com/cronyism-renewable-energy-gas-sectors/

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5. Upcoming Activities a) Website and Databank Maintenance and Monitoring

The Component continues updating the website to keep it a timely, relevant, and comprehensive resource. The same will be done for the databank, in collaboration

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with the Research Component. Website monitoring also continues as the number of users and number of downloads from the website are some indicators of the program’s relevance.

b) Communications support Delivered outputs: photo documentations, collaterals, copy edited materials

Support from the component will continue, with more effort on working collaboratively and efficiently given the depleted resources. The Component will also assist in making EPDP’s research papers available online through more platforms.

E. Cross-Cutting

1. EPDP Lecture Series Outputs: lectures (delivered), expertise in the field of energy research (continuous)

The EPDP provides a neutral platform for facilitating an open exchange of ideas and insights on critical topics in the energy sector by gathering energy experts and practitioners from different sectors through the EPDP Lecture Series. After hosting lectures by representatives from the government and the academe, the EPDP partnered with the private sector in conducting the Lecture Series to get their perspectives on the power sector for a holistic understanding of the country’s electric power industry. Three (3) private sector lectures were conducted and sponsored this quarter by The Lantau Group, First Gen Corporation, and Aboitiz Power Corporation. After the lectures, the private sector also hosted refreshments to allow interaction among the participants. The private sector’s cost-share covers refreshments after the lecture, the time spent by the executives in the preparation and delivery of the lectures, as well as the participation of staff from the private sector in the lecture series. The willingness of the private sector to co-host their respective lecture series also indicates a recognition of the Program’s credibility on providing a neutral venue for discussion of energy policy issues and concerns. Such partnership contributes to attaining EPDP’s objective of building capacity in the energy sector. A lecture featuring an EPDP study was also conducted this quarter. Dr. Marjorie Pajaron presented the results of her paper entitled “The Impact of Energy Access on Women’s Health, Labor, and Time Allocation.”

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The key points of the lectures are further discussed below while Table 4 summarizes the lecture ratings.

Table 4. Summary of Ratings of EPDP Lecture Series

Key Areas The Lantau Group

Dr. Marjorie Pajaron

First Gen Corp Aboitiz Power Corp

Overall Rating 4.33 (Very Good)

4.00 (Very Good)

4.43 (Very Good)

4.32 (Very Good)

Achievement of Objectives

4.30 4.29 4.42 4.32

Relevance and Usefulness

4.35 4.14 4.52 4.28

Content and Delivery

4.24 4.34 4.47 4.35

Administrative and Logistical and Arrangements

4.33 4.14 4.49 4.23

a) EPDP Lecture Series 16: “The Changing Economics of the Inter-Fuel

Competition in Southeast Asia” by Mike Thomas, Partner at The Lantau Group

On 17 August 2017, Mr. Mike Thomas, a Partner at The Lantau Group, gave a lecture on "The Changing Economics of Inter-Fuel Competition in Southeast Asia." Using the quantitative framework for utilities (QUAFU) market model, the Lantau Group used the Philippine case in their model to understand the dynamics of the market, and Mr. Thomas discussed the future of LNG (liquefied natural gas) fuel in the Philippines. Mr. Thomas cited three key factors that will trigger market shift from one fuel to another: economic triggers, infrastructure triggers, and policy and regulatory triggers. The lecture also highlighted the advantages of natural gas over coal, mainly attributing to the increasing supply and consequent decreasing prices of LNG in the international markets. LNG is also considered to be more efficient and reliable in supplying peaking and mid-merit requirements due to its flexibility. Mr. Thomas concluded that the LNG value proposition is improving but this would still depend on the three key factors aforementioned. 47 participants (21 male and 26 female) from the government, the academe, and the private sector attended the lecture. Mr. Thomas' presentation can be accessed at http://www.upecon.org.ph/epdp/wp-content/uploads/2017/08/EPDP-Lecture-Series-Mr.-Thomas-The-Lantau-Group-17-Aug.pdf

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b) EPDP Lecture Series 17: “The Impact of Energy Access on Women's Health, Labor, and Time Allocation” by Dr. Marjorie Pajaron, Assistant Professor at the UP School of Economics

On 24 August 2017, Dr. Marjorie Pajaron, Assistant Professor at the UP School of Economics, presented her study on the impact of energy access on women’s health, labor, and time allocation. She emphasized that access to cleaner energy improves women’s health. Dr. Pajaron likewise discussed the use of particular energy variables such as electricity, kerosene and liquefied petroleum gas (LPG) as cooking fuel, and electricity or kerosene as lighting fuel and how they affect the allocation of time on child care, working from home, and working outside. She concluded that modern access to energy and more efficient use of cooking fuel increase the likelihood of a mother working for pay and engaging in micro-enterprises or self-employment. The study used data from the Cebu Longitudinal Health and Nutrition Survey (CLHNS) and recommended further research be done using nationally represented datasets, taking into consideration other significant factors that could affect health, labor outcome and time allocation. This lecture was attended by 31 participants (13 male and 18 female) from the government, the academe, and the private sector. Information on Dr. Pajaron’s presentation can be accessed at http://www.upecon.org.ph/epdp/ls-pajaron-presentation/.

Mr. Mike Thomas of The Lantau Group gave a lecture titled "The Changing Economics of Inter-Fuel Competition in Southeast Asia" on 17 August 2017.

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c) EPDP Lecture Series 18: “Natural Gas: Addressing the Energy Trilemma, and Powering Our Energy Needs” by Giles Puno, President and COO of First Gen

On 31 August 2017, Mr. Giles Puno, President & COO of First Gen, gave a lecture titled "Natural Gas: Addressing the Energy Trilemma and Powering Our Energy Needs." Mr. Puno tackled what low cost power means in relation to the country's energy mix and highlighted other country cases that the Philippines can learn from. Moreover, he highlighted the competitiveness and predictability of electricity coming from geothermal plants and explored the shift towards renewable energy. Ultimately, Mr. Puno emphasized the need for a diversified plan and holistic thinking in order to address the country's energy trilemma. There were 58 participants (24 male and 34 female) from the government, the academe, and the private sector who joined this lecture. Information on Mr. Puno’s presentation can be accessed at http://www.upecon.org.ph/epdp/wp-content/uploads/2017/09/First-Gen-EPDP-Presentation-8-31-2017.pdf

Dr. Marjorie Pajaron, Assistant Professor at the UP School of Economics, presented her study on the impact of energy access on women’s health, labor, and time allocation as part of the EPDP Lecture Series held in Encarnacion Hall, UP Diliman on 24 August 2017.

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d) EPDP Lecture Series 19: “RCOA and the Power of Choice” by Luis Miguel Aboitiz, EVP and COO of Aboitiz Power Corporation On 14 September 2017, Mr. Luis Miguel Aboitiz gave a lecture entitled "RCOA and the Power of Choice." Mr. Aboitiz discussed the benefits of RCOA, financial contracts and hedges, advantages of contestable customers, and current RCOA issues. To realize the benefits of EPIRA and RCOA, Mr. Aboitiz mentioned that the Regulator and the Supreme Court should clarify retail electricity supplier (RES) licensing issues affected by the temporary restraining order and allow voluntary contestability of customers below 1MW. There were 78 participants (40 male and 38 female) from the government, the academe, and the private sector in this lecture. The presentation can be accessed through http://www.upecon.org.ph/epdp/wp-content/uploads/2017/09/2017.09.13-RCOA-The-Power-of-Choice-EPDP.pdf

Mr. Giles Puno, President and COO of First Gen, gave a lecture entitled "Natural Gas: Addressing the Energy Trilemma and Powering Our Energy Needs" on 31 August.

Mr. Luis Miguel Aboitiz, EVP & COO of Aboitiz Power Corp, gave a lecture entitled "RCOA and the Power of Choice" on 14 September.

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IV. Program Management

1. Core and Expanded ManCom Meetings

For this quarter, three core and two expanded Management Committee (ManCom) meetings were held to discuss the progress of implementation and provide guidance on the timely resolution of implementation challenges. In its 30 August meeting, the expanded ManCom identified core activities for FY4 and unprogrammed activities in case USAID commits additional fund for its FY4 operations. The workplan and budget will need to be finalized given the changes in the U.S. State Department’s development priorities.

The progress of EPDP’s implementation is contained in the regular quarterly performance reports submitted to USAID. The Program submitted its FY3-Q3 Report to the USAID on 28 July 2017.

2. Participation in the GCLA Event organized by the USAID

Two representatives from EPDP participated in USAID’s Gender Collaboration, Learning and Adapting (GCLA) event on 28 July 2016 at the U.S. Embassy, Manila. The workshop was facilitated by USAID/Philippines Gender Specialist Ms. Bernadette Cariaga and USAID/Regional Development Mission for Asia’s (USAID/RDMA) Senior Regional Gender Advisor Dr. Kai Spratt, who discussed gender mainstreaming in USAID-funded programs. Participants shared the successes and challenges of mainstreaming gender considerations in their respective programs. Suggestions were made on how USAID can improve its initiatives on gender mainstreaming through continuous training of project staff and a conscious effort to incorporate gender considerations in program design, among others.

3. Nomination for the Gawad Pangulo

EPDP was nominated for the Second UP Gawad Pangulo: Award for Excellence in Public Service. Administered by the Office of the Vice President for Public Affairs (OVPPA) of the University of the Philippines, the award is anchored on UP’s mandate to “lead as a public service university by providing various forms of community, public, and volunteer service, as well as scholarly and technical assistance to the government, the private sector, and civil society while maintaining its standard of excellence.”

The Program passed the first screening and interviews with EPDP partners were conducted on 19 and 25 September. DOE Director Jesus Tamang of the Energy Utilization and Management Bureau (EUMB) and NEDA Director Roderick Planta of

35

the Investment Programming office (Infrastructure) were interviewed by the OVPPA. A deliberation among the judges will follow and a winner will be announced by the end of November. EPDP’s nomination will also increase awareness among UP constituents of the Program’s activities and achievements. This is important in rallying support to sustain program operations.

5. Sustainability of EPDP

The energy sector is dynamic and multi-dimensional, which requires a continuous process of research, policy advice and capacity development. While EPDP’s efforts are gaining recognition, the project will need more time to facilitate the transition into a permanent institution. In pursuing program sustainability, two measures are being done.

a) Energy Institute. As part of sustainability measures, EPDP actively supports theSenate Committee on Energy in the development of Senate Bill 1574 to establishthe Energy Institute. The Committee has requested EPDP to provide resourcepersons during the first public hearing and the technical working group meetingto review the bill.

Section 16 of the Bill also indicates the need for the Institute to promulgate the necessary implementing rules and regulations (IRR), within sixty 60 days from its effectivity. The EPDP is ready to assist the Institute in preparing the draft IRR, in anticipation to the request from the Senate Committee on Energy.

b) Development of proposal for parallel funding. Due to the budget cut, a proposalfor parallel funding was prepared and submitted to NEDA. Continuous updatingand networking is being done to follow up on the proposal and identify otherpotential funders.

Annex 1. Performance Indicator Tracking Table (PITT) for FY3 (as of 27 October 2017) Indicators in red fonts are new standard USAID indicators

Year Value Target Rationale (With Budget Cut)* Planned (With Budget

Cut)*

Q1 Q2 Q3 Q4

Indicator G: Number of laws, policies, regulations, or standards to enhance energy sector governance formally proposed, adopted or implemented as supported by USG assistance

Y: EG.7.3-1 Number FY2 (2015-2016)

2 new administration may need more time to assess the issues and decide on policies to adopt; EPDP still to build relationships with the new heads of agencies;

0 0 1 0 0 1

Indicator PP: Number of EPDP-supported research outputs that served as inputs to draft government plans/policy frameworks/implementation guidelines/administrative procedures

N: Custom Number FY2 (2015-2016)

2 new administration may need more time to assess the issues and decide on policies to adopt;EPDP still to build relationships with the new heads of agencies

1 0 1 0 0 1

Indicator SP1: Number of EPDP-supported research outputs with NEDA, DOE and other relevant GPH agencies commitment to utilize in the formulation, implementation and monitoring & evaluation of energy-related policies, breakdown by:

N: Custom completed EPDP studies are already available but EPDP still to build relationships with the new heads of agencies

0 0 2 1 3

a) Demand-driven outputs - Research N: Custom 0 0 2 0 2b) Demand-driven outputs - Just in-time N: Custom 0 0 0 1 1c) Supply-driven outputs N: Custom 0 0 0 0 0

Indicator SP1-O1.1 Number of government requests received for EPDP policy research support or technical assistance

N: Custom Number FY2 (2015-2016)

51 limited ability to seek out technical assistance needs of GPH due to budget cut; EPDP still to build relationship with the new heads of agencies; GPH already previously conveyed requests

30 6 4 42 0 52

Indicator SP1-O1.2 Number of key priority areas (KPAs) cumulative coverage out of 5 identified KPA in the approved research agenda

N: Custom Number FY2 (2015-2016)

3 maintain KPAs so as not to spread limited resources too thinly

3 3 3 3 3 3

Indicator SP1-O1.3: Number of research studies on energy fields or climate change supported by EPDP

N: Custom Number FY2 (2015-2016)

15 programmed research based on budget for FY3 9 9 5 0 0 14

Indicator SP2.1: Number of institutions with improved capacity to assess or address climate change risks supported by USG assistance

Y EG.11-2 11 5 0 12 0 0 12

a. national governmental Y EG.11-2a 0 5 0 11 0 0 11

Total Actual for FY3

FY3 ACTUAL (Quarterly)

limited resources to accommodate all interested agencies in training courses

Logical Framework Narrative Summary and Indicators

USAID Standard Indicator? Y=Yes/

N=No

Unit of Measure

Baseline FY3

Goal: Decision-making environment to support cost-effective and clean energy development improved

Project Purpose: GPH capacity to formulate coherent and evidence-based policies and strategies for cost-effective and environmentally-sound energy development strengthened

Sub-Purpose 1: Improved GPH capacity to guide and inform energy-related policy and practice through enhanced research

Sub-Purpose 1 Output 1: Institutional platform to provide evidence-based advice and inputs to energy policy and strategies is established

Sub-Purpose 2: Increased capacity of GPH to undertake and sustain coherent and evidence-based energy policy & decision-making

Number FY2 (2015-2016)

4 3

Number FY2 (2015-2016)

36

Year Value Target Rationale (With Budget Cut)* Planned (With Budget

Cut)*

Q1 Q2 Q3 Q4

Total Actual for FY3

FY3 ACTUAL (Quarterly)

Logical Framework Narrative Summary and Indicators

USAID Standard Indicator? Y=Yes/

N=No

Unit of Measure

Baseline FY3

b. subnational governmental Y EG.11-2b 0 0 0 1 0 0 1c. others Y EG.11-2c 0 0 0 0 0 0Indicator SP2.2 Number of institutions with improved capacity to address other energy issues as a result of USG assistance

N: Custom Number FY2 (2015-2016)

20 limited resources to accommodate all interested agencies in training courses

5 0 12 0 0 12

Indicator SP2-01.1: Number of people trained in clean energy supported by USG assistance

Y EG.12-1 37 50 0 35 0 0 35

a. male Y EG.12-1a 17 25 0 17 0 0 17b. female Y EG.12-1b 20 25 0 18 0 0 18Indicator SP2-01.2: Number of people trained in technical energy fields supported by USG assistance

Y EG.7.3-2 123 50 0 35 0 0 35

a. male Y EG.7.3-2a 64 25 0 17 0 0 17b. female Y EG.7.3-2b 59 25 0 18 0 0 18Indicator SP2-O1.3: Percentage of capacity building participants that find the training/workshop “relevant” and/or “satisfactory”

N: Custom Percentage FY2 (2015-2016)

82.41% (relevant); 100%

(satisfactory)

85% N/A 61.3%

(relevant

) 96.77%

(satisfactory)

0 0 61.3% (relevan

t) 96.77% (satisfac

tory)

Indicator SP2-O2.1: Number of faculty or teaching staff whose qualifications are strengthened through EPDP/USG-supported tertiary education program, breakdown by:

N: Custom 74 40 18 26 22 18 84

a. Male N: Custom 47 24 12 16 14 12 54b. Female N: Custom 27 16 6 10 8 6 30Indicator SP2-O2.2: Number of students or energy practitioners whose qualifications are strengthened through EPDP/USG-supported program, breakdown by:

N: Custom, a variant of the above indicator to capture students and energy

446 105 47 195 120 173 535

a. Male N: Custom 209 42 27 83 59 87 256b. Female N: Custom 237 63 20 112 61 86 279c. Sector: private sector N: Custom 88 20 16 34 9 72 131d. Sector: academe N: Custom 268 60 18 131 98 64 311e. Sector: government N: Custom 90 25 14 30 13 37 94f. Specialization: clean energy N: Custom 67 10 0 4 0 0 4g. Specialization: climate change N: Custom 11 5 0 33 0 9 42

based on a scaled down FY3 work plan due to budget cut; no conference programmed

based on a scaled down FY3 work plan due to budget cut

based on 2 programmed capacity-building activities with 25 participants each

based on 2 programmed capacity-building activities with 25 participants each

Sub Purpose 2 Output 2: Partnership with other institutions in place

FY2 (2015-2016)

FY2 (2015-2016)

Number FY2 (2015-2016)

Sub-Purpose 2 Output 1: Increased training of GPH officials and staff in the use of research/analytical tools for energy policy planning & decision-making

FY2 (2015-2016)

Number

Number

Number

Number

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Year Value Target Rationale (With Budget Cut)* Planned (With Budget

Cut)*

Q1 Q2 Q3 Q4

Total Actual for FY3

FY3 ACTUAL (Quarterly)

Logical Framework Narrative Summary and Indicators

USAID Standard Indicator? Y=Yes/

N=No

Unit of Measure

Baseline FY3

h. Specialization: other energy N: Custom 372 90 6 156 120 164 446Indicator SP2-O2.3: Number of energy-related educational activities supported by EPDP, breakdown by:

N: Custom 16 based on a scaled down FY3 work plan due to budget cut

17 3 8 7 3 21

a. clean energy N: Custom 2 0 0 0 0 0b. climate change N: Custom 1 0 1 0 0 1c. other energy N: Custom 14 3 7 6 3 19Indicator SP2-O2.4: Number of education program/subjects/modules that incorporated energy-related topics as a result of USG assistance

N: Custom Number FY2 (2015-2016)

5 5 0 2 1 3 6

Indicator SP3:Number of presentations in national & international conferences/seminars or citations in media, public and legislative discussions of EPDP-supported research outputs.

N: Custom Number FY2 (2015-2016)

41 based on a scaled down FY3 work plan due to budget cut

17 9 10 3 2 24

Indicator SP3-O1.1: Number of research outputs developed with EPDP assistance published in peer-reviewed journals

N: Custom Number FY2 (2015-2016)

0 not priority 0 0 0 0 0 0

Indicator SP3-O1.2: Number of EPDP-supported researchers and staff participating in local and international energy-related conferences, training or fora, breakdown by

N: Custom FY2 (2015-2016)

66 selected participation in local and international conferences, training, fora

20 23 23 2 0 48

a. Male N: Custom 34 12 7 10 0 0 17b. Female N: Custom 32 8 16 13 2 0 31

Indicator SP3-O2.1: Number of EPDP-led conferences/stakeholder fora/roundtable discussions held, breakdown by specific stakeholders targeted,

N: Custom based on a scaled down FY3 work plan due to budget cut

2 2 2 1 0 5

a. government decision makers N: Custom 1 2 0 0 0 2b. private sector N: Custom 0 0 0 0 0 0c. others - multi-sector N: Custom 1 0 2 1 0 3Indicator SP3-O2.2: Number of stakeholders that participated in conferences/stakeholder fora/roundtable discussions, breakdown by:

N: Custom based on a scaled down FY3 work plan due to budget cut

80 65 252 32 0 349

a. Male N: Custom 48 36 126 19 0 181b. Female N: Custom 32 29 126 13 0 168c. Sector: Government N: Custom 40 65 58 10 0 133d. Sector: Private N: Custom 30 0 33 1 0 34e. Sector: Others N: Custom 10 0 161 21 0 182

Number FY2 (2015-2016)

249

Subpurpose 3 Output 1: Increased exposure of researchers to scientific community; researchers are increasingly informed regarding developments in the energy sector

Number

Subpurpose 3 Output 2 Increased engagement with stakeholders for raising awareness and building understanding

Number FY2 (2015-2016)

8

Sub-purpose 3: Increased capacity to share results of energy-related and complementary economic research

Number FY2 (2015-2016)

38

Year Value Target Rationale (With Budget Cut)* Planned (With Budget

Cut)*

Q1 Q2 Q3 Q4

Total Actual for FY3

FY3 ACTUAL (Quarterly)

Logical Framework Narrative Summary and Indicators

USAID Standard Indicator? Y=Yes/

N=No

Unit of Measure

Baseline FY3

Indicator SP3-02.3: Number of EPDP products downloaded or requested

N: Custom Number 2016 10 newly installed application captures the downloads of products in the website

600 193 (as of 31

Decembe

r 2016)

696 (as of

Mar 31, 2017)

834 (as

of 30 Jun 2017)

1071 (as of

30 Sep

2017)

2794

Indicator SP3-02.4: Number of private stakeholders that served as a technical resource to EPDP-supported activities

N: Custom Number FY2 (2015-2016)

24 based on a scaled down FY3 work plan due to budget cut

5 1 2 2 3 8

Indicator SP3-02.5: Number of cumulative website visitors

N: Custom Number FY2 (2015-2016)

1318 newly installed google analytics can capture unique visitors

2500 2,234

(as of 31

Dec 2016)

3352 (as

of Mar 31, 2017)

4134 (as of 30 Jun 2017)

5335(as of

30 Sep

2017)

5335

Indicator SP3-02.6: Number of platforms for distribution of EPDP products

N: Custom Number FY2 (2015-2016)

5 No more mass media 4 4 4 4 4 4

* Budget for FY3 at $385K

Notes: Indicators are for the entire program period. For the definitions/details, please refer to the Performance Monitoring and Evaluation Plan (PMEP) and Performance Indicator Reference Sheet (PIRS).

39

SEVENTEENTH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES

Second Regular Session

]

]

]

SENATE

S.B. No. 1574

:,-�

• · rr,: · Ill , 1 • • • n 1 ,

'17 AUG 30 P3 :42

RECEl\i ..... _-42-

Prepared and submitted by the Committees on Energy, Science and Technology, and Finance with Senator Gatchalian as author thereof

AN ACT

ESTABLISHING THE PHILIPPINE ENERGY RESEARCH AND POLICY

INSTITUTE, DEFINING ITS OBJECTIVES, POWERS AND FUNCTIONS,

PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the

Philippines in Congress assembled:

1 SECTION 1. Title. - This Act shall be known as the 'Philippine Energy

2 Research and Policy Institute Act of 201 7".

3

4 SECTION 2. Declaration of Policy. - It is hereby declared the policy of th

5 State to nsure energy security, equity, and sustainability. Towards this end

6 it is also the policy of the State to enhance knowledge in recent developments

7 and scientific breakthroughs in the field of energy; identify key policy areas,

8 issues, and challenges in the country's energy sector; and formulate

9 multidisciplinary r search-based policies and strategies for the cost-effective

10 use of nergy resourc s towards environmentally-sound energy development.

11

12 SECTION 3. Establishment of the Philippine Energy Research and Policy

13 Institute. - Pursuant to the national policy of enhancing the country'

14 capability for energy research and policy development, there is hereby

Annex 2b. Senate Bill 1574: The Philippine Energy Research and Policy Institute Act of 2017

40

1 tablished in th University of th Philippines (UP) Diliman, a Philippin

2 Energy R search and Policy Institute, hereinafter referred to a th Institut .

3

4 SECTION 4. Objectives of the Institute. - The objectives of the Institute are:

5 a) To conduct p rtin nt policy research on energy issu s and ensure th

6 coordination and timely dissemination of results to key governm nt

7 agencies to guide policy and decision-making processes;

8 b) To provide timely technical assistance to the government on energy

9 issues needing policy direction and advice;

10 c) To contribute strategic assistance to the government on energy policy

11 issues and other r lated matters;

12 d) To promote collaborative and multidisciplinary n rgy research and

13 policy d v lopm nt among the academe, and public and private

14 stakehold rs;

15 e) To establish mechanisms for the dissemination and utilization of

16 re earch and policy development outputs;

17 f) To create and administer training program and provide fellowship

18 grants int nd d to build th capacity of government agencies, public and

19 private energy takeholders, and the academe including graduate and

20 post-graduate students; and

21 g) To serve as a medium in bringing together local and international exper s

22 in the fi ld of energy through local and international linkage .

23

24 SECTION 5. Functions and Powers of the Institute. - The Institute's

25 functions and powers hall include but not be limited to:

26 a) Formulating and conducting research and developm nt on energy, public

27 policy issue in energy markets, and other pressing issues and problems,

28 all backed by rigorous empirical evidence;

29 b) Establishing research and policy development programs and capacity-

30 building trainings on nergy;

31 c) Providing common research support facilities while maxmuzmg th

32 utilization of its expert support staff;

33 d) Enhancing th ma ters and doctoral pool of res arch rs and faculty in

34 the field of n rgy;

41

1 e) Establishing local and foreign linkages m energy research and policy

2 dev lopment;

3 f) Serving as the repo itory of all energy-related re earche and tudie to

4 be generated by the Institute as well as academic, public, and private

5 groups, organization , and institutions;

6 g) Proposing and allocating its annual budgetary resources while optimizing

7 resource generation and utilizatioil'

8 h) Investing its funds in uch undertaking as it may deem wise or nece ary

9 to carry out its objectives, with due consideration to existing guidelines

10 on investing government funds in coordination with the Bureau of

11 Treasury; and

12 i) Receiving and managing grants, aid, donations or any kind of assistance

13 for achieving its objectives, in accordance with the rules and regulations

14 of UP.

15 The Advisory Council may give additional powers and functions to the

16 Institute Provided: That it shall be in accordance with th objectives of the

17 Institute as stated in this Act.

18

19 SECTION 6. Organizational Structure. - The Institute shall be headed by an

20 Executive Director who shall report directly to the Advisory Council. The

21 Institute shall be supported by a Management Committ e and Research

22 Fellows in carrying out its functions.

23

24 SECTION 7. The Executive Director. - The Executive Director shall be a

25 recognized xpert in energy research and policy development and shall have a

26 strong organizational management background. The UP Board of Regents shall

27 appoint the Executive Director upon the recommendation of the UP President

28 60 days after the promulgation of this Act: Provided, That uch Executive

29 Director shall serve for a term of five (5) years which can be renewed for

30 anoth r five (5) y ar .

31

32 SECTION 8. Functions and Powers of the Executive Director.- The

33 Executiv Director of the Institute shall:

42

1 a) Exercise administrative and supervisory functions over the planning,

2 implementation, and evaluation of the policie , programs, and projects of

3 the Institute;

4 b) Implement and enforce policies, decisions, orders, rules and regulations

5 adopted by the Advisory Council;

6 c) Recommend to the UP Board of Regents, upon endorsement of the

7 Advisory ouncil, th creation of divisions and sections of the Institute

8 including the position classification and compensation plan of its

9 employees;

10 d) Recommend to the UP Board of Regents, upon endorsement of the

11 Advisory Council the appointment of the Management Committee

12 members, research fellows, officers and employees of the Institute;

13 e) Recommend to the Board of Regents, upon recommendation of the

14 Advisory Council, the overall budget of the Institute;

15 f) Within the limits of the authority delegated to him by the Advisory

16 Council, execute contracts, incur obligations, acquire and di po e of

17 assets, and deliver documents on behalf of the Institute; and

18 g) Exercise such other powers and functions and perform such other duties

19 as may be authorized or assigned by the Advisory Council.

20

21 SECTION 9. Advisory Council of the Institute. - There shall be an Advisory

22 Council of the Institute to be composed of the following:

23 a) Chancellor of UP Diliman as the Chairperson;

24 b) Dean of the UP College of Engineering;

25 c) Dean of the UP College of Law;

26 d) Dean of the UP College of Science;

27 e) Dean of the UP School of Statistics·

28 f) Dean of the UP School of Economics; and

29 g) One (1) other member who is a recognized expert in energy research and

30 policy development to be appointed by the UP Board of Regents upon

31 recommendation of the UP President.

32 The Ex cutive Director shall concurrently serve as a non-voting

33 M mber-S cretary of the Advisory Council. The Chancellor of UP Diliman, and

34 the Deans of the College of Engineering, College of Law, College of Science,

43

1 chool of tatistics, and chool of Economics shall serve in an ex-officio

2 capacity. The one other member shall serve for a term of two (2) years.

3

4 SECTION 10. Functions and Powers of the Advisory Council. -The Advisory

s Council shall:

6 1. Determine the general direction and priorities of the Institute m

7 accordance with this Act;

8 2. Determine research and policy areas for study and investigation by the

9 Institute based on its evaluation of the energy policy landscape including

10 the needs and demands of the country and the people;

11 3. Provide advice to the Institute on any matt r relating to the development

12 of a research and/ or policy area and the administration of research and

13 policy programs;

14 4. Provide advice to the Institute on matters relating to the position

15 classification and compensation plans of the employ s of th Institute

16 in coordination with the Department of Budget and Management;

17 5. Endorse to the UP Board of Regents the recommended divisions and

18 sections of th Institute including the position cla sification and

19 comp nsation plans of its employees;

20 6. Endorse to the UP Board of Regents the recommended Management

21 Committee members, research fellows, officers and employees of the

22 Institute·

23 7. Endorse to the UP Board of Regents the Institute's overall budget as

24 recommended by the Executive Director

25 Generate resources and obtain logistical and financial support for the

26 programs and component units of the Institute: Provided That in so

27 doing, no conflict-of-interest exists with the objectives of this Act and the

28 functions of the Institute;

29 9. Monitor and review all the activities and operations of the Institute as

30 implemented by the Executive Director; and

31 10.Authorize and/or assign additional powers, functions, and duties to the

32 Executive Director in accordance with the objectives of this Act.

33

34

44

1 SECTION 11. Appointment of Faculty and Staff. - The human resource

2 complement of the Institute shall be organized and set-up by the Executive

3 Director in accordance with the provisions of this Act, the existing rules and

4 regulation of UP, and upon approval by the UP Board of Regents.

5

6 SECTION 12. Public Access. - The public and other energy institutions shall

7 have access to the research finding , facilities, and other r ourc of the

8 Institute, as provided in the implementing rules and regulations of this Act:

9 Provided, it is in accordance with Section 13 of thi Act.

10

11 SECTION 13. Confidentiality. - The Institute shall not disclose any

12 proprietary and/ or confidential data and other resources unless prior consent

13 of the ource or owner of such data and resources has been obtained by the

14 requesting party.

15

16 SECTION 14. Endowment Fund. -An Endowment Fund is hereby established

17 for the support of the Institute, including the purchase of research equipment

18 and facilitie , compen ation and honoraria to researchers, whether in

19 government service or oth rwise, and such other necessary expenses to carry

20 out the purpose of this Act.

21 The Institute is authorized to accept into its Endowment Fund any

22 contributions, donations, bequests, grants, and loans from domestic and/ or

23 foreign sources, government appropriations and other incomes accruing from

24 the operations of the Institute, for purposes of executing its mandate and

25 functions: Provided, That in so doing, no conflict-of-interest exists with the

26 objectives of this Act and the functions of the Institute.

27 For the organizational and op rational requirements of the Institute,

28 there is hereby appropriated out of the General Appropriations Act, the sum of

29 Two Hundred Million Pesos (P200,000,000.00) for the initial operating fund of

30 the Institute. Thereafter, an annual amount of Two Hundred Million Pesos

31 (P200,000 000.00) will be appropriated from the G neral Appropriations Act to

32 upport the research, policy development, and training programs of the

33 Institute. This amount will be assessed annually and increased, if necessary,

45

.------------- - - - ------------ ---

1 ba ed on the annual financial plan approved by the UP Board of Regents and

2 submitted to th Department of Budget and Management.

3

4 SECTION 15. Tax Exemptions. - Th Institute shall be ntitled to all the tax

s xemption enumerated under ection 25 of Republic Act o. 9500 or the

6 University of the Philippines Charter of 2008.

7

8 SECTION 16. Implementing Rules and Regulations. - Within sixty 60 day

9 from the effectivity of this Act, the Institute, in consultation with its Advisory

10 Council and subj ct to the approval of the Board of Regents, shall promulgate

11 the nece sary implementing rule and regulations of this Act.

12

13 SECTION 17. Separability Clause. - If, for any reason, any provision of this

14 Act is declared to be unconstitutional or invalid, the oth r provisions hereof

15 which ar not affected thereby hall continue to b in full fore or ffect.

16

17 SECTION 18. Repealing Clause. - All laws, decrees, orders, rules and

18 r gulations or parts th reof which are inconsistent with or contrary to the

19 provisions of this Act are hereby repealed, amend d or modified accordingly.

20

21 SECTION 19. Effectivity. - Thi Act shall take effect fifteen (15) days after its

22 publication in at least two (2) national n wspapers of general circulation.

Approved.

46

47

EPDP’s Preliminary Research Materials, Comments and Suggestions on SB 1308

Contents:

1) Full powerpoint presentation2) Consolidated comments and suggestions on SB 13083) Preliminary researches on selected centralized anddecentralized auction schemes

Prepared by the Energy Policy and Development Program

9 August 2017

The contents or opinions expressed here are the sole responsibility of the EPDP team and do not necessarily reflect the views of United States Agency for International Development (USAID) or the United States Government or the UPecon Foundation, Inc. Any errors of commission or omission are that of the EPDP team and should not be attributed to either USAID or UPecon Foundation.

Annex 3a. EPDP's comments on SB 1308

08/09/2017

48

Comments, suggestions and clarifications on Senate Bill 1308

EPDP Team

2nd Public HearingAugust 9, 2017

Disclaimer: The comments and suggestions were developed by the EPDP team only and do not necessarily reflect the views ofUnited States Agency for International Development (USAID), the United States Government or the UPecon Foundation, Inc.Any errors of commission or omission are ours and should not be attributed to either USAID or UPecon Foundation, Inc.

1

Centralized DecentralizedOngoing

New Jersey, US (15 years)Simultaneous descending clock (reverse auction)

Chile (10 years)

Combinatorial

New England, US (14 years)Simultaneous descending clock/two-sided

PeruPhase 1: 2006 – 2009

(3 years): First price sealed bid

Phase 2: 2009 - Present(7 Years): Pay-as-bid

Brazil (12 years)Hybrid: descending clock and then pay-as-bid

Colombia (9 years); Descending clock

United Kingdom (3 years)Descending clock

Annulled Illinois, US (1 year)Simultaneous descending clock (reverse auction)

Preliminary review of CSPs in other countries

2

08/09/2017

49

INDICATORS/INDICESCOUNTRIES

Phils Brazil Chile Colombia Peru UK USClassification by Income

Lower middle

Upper middle

HighUpper middle

Upper middle

High High

Macroeconomic (year 2016)

Pop’n (in million) 103.32 207.65 17.91 48.65 31.77 65.64 323.13 GDP (constant 2010 US$)(in billion)

284.48 2,248.11 269.00 366.16 193.48 2,730.70 16,865.60

GDP (current US$ ) (in billion)

304.91 1,796.19 247.03 282.46 192.09 2,618.89 18,569.10

GDP per capita(constant 2010 US$) 2,753.35 10,826.27 15,019.63 7,525.86 6,089.40 41,602.98 52,194.89 GDP per capita (current US$) 2,951.07 8,649.95 13,792.93 5,805.61 6,045.65 39,899.39 57,466.79

Notes: * Scores ranging from 1 to 7, higher average score means higher degree of competitiveness, ** Scores ranging from -2.5 to 2.5, with higher values corresponding to better outcomes

Sources: World Bank and World Economic Forum

Macro-economic indicators for selected countries and the Philippines

3

ENERGY-RELATED INDICATORS*

COUNTRIES

Phils Brazil Chile Colombia Peru UK US

Electricity generation (kWh per capita)** 772.21 2,892.08 4,184.22 1,462.59 1,469.00 5,200.18

13,558.37

Electricity consumption (kWh per capita)

632.81 2,591.80 3,811.54 1,127.86 1,285.02 4,822.90 12,210.36

Installed electricity capacity (mW) 17,951.00 135,023.71 20,235.66 15,529.60 11,305.30 94,387.30

1,081,414.25

Renewables share in electricity production (%)

25.64 72.90 43.52 70.01 51.67 20.99 13.54

Rate of electricity transmission-distribution losses (%)

10.30 15.12 7.01 12.28 11.22 8.16 6.15

Residential prices (US$ cents per kWh -taxes incl.)

13.91 14.96 11.30 11.53 10.33 22.11 10.31

Industrial prices (US$ cents per kWh - taxes incl.)

9.59 12.10 7.75 11.00 5.96 13.32 5.79

Notes: * Available data in 2014** Electricity generation per capita = electricity production (in 2014) / total population (in 2014); Sources: Enerdata and World Bank

Energy-related indicators for the selected countries and the Philippines

5

08/09/2017

50

Information covered by the Case Studies

1. Background2. Parties to the Auction3. Auction Procedure4. Results5. Pros and Cons

6

Centralized Pros Cons

More efficient for fostering competition “Seems” more complex

Increase competition and international interest (since a larger demand is auctioned, thus attracting more bidders)

Possibility of collusion when competition is weak

Allow small distribution companies to benefit from economies of scale, which might result in cheaper contracting

Tranche-based products undermine aggregation of information (Illinois)

Mitigate the market power that some gencos can use when negotiating with each disco individually in a situation with high market concentration

Many components of electricity supply are combined into a single product; it becomes hard to understand what factors are driving the auction results(New Jersey)

Include a few standardized products, likely attract a larger number of participants for each product

Pros and cons of auction schemes

7

08/09/2017

51

Decentralized

Pros Cons

Allows generators to have many possibilities for which they can bid, i.e. generators can simultaneously present different bids (volume and price) for various types of contracts according to their preferences (risk, supply period, etc.).

Contracts cannot be standardized (i.e. contracts are not similar)

Pros and cons of auction schemes

8

EPDP recommends the following considerations in designing an effective auction mechanisms:

1. Simplicity of process• Acceptability of the process to the

participants

2. Costs• Costs should not be passed on to the

consumers

9

08/09/2017

52

A. Case studiesCentralized Auction

Schemes

10

Case Study 1: Centralized AuctionIllinois, US

Auction Scheme

Product Info Instrument

Simultaneousdescending clock auction (reverse auction: sellers are bidders)

Annulled

• Differentiated in terms of:1. distribution company2. customer class3. duration of the contract

(17-41 months)• Specified in terms of

tranche which is a certainpercent of the demand

Short and mid-term contracts (tranche contracts)

Sources: Maurer and Barroso (2011), Negrete-Pincetic and Gross (2007) 11

08/09/2017

53

Parties involved1. Two-buyers: regulated distribution companies-

Ameren and ComEd) and 21 sellers(generators who are also bidders)

2. Auction Manager: NERA Economic Consulting• Independent entity involved in the design,

the implementation and the management ofthe auction)

3. Auction monitor: reviews the auction resultsand gives recommendations to the IllinoisCommerce Commission (ICC)

4. ICC: determines whether or not to approve theoutcomes of the auction

Sources: Negrete-Pincetic and Gross (2007), De Virgilo (2006), de Castro, Negrete-Pincetic and Gross (2008) 14

Results

• Immediately following the power auction, energycost increases estimated to take effect onJanuary 2, 2007 were 22-26 percent for ComEdcustomers and 40-55 percent for Amerencustomers.

• The auction was not considered a success andannulled a year after the auction took place.

Sources: Maurer and Barroso (2011), Negrete-Pincetic and Gross (2007), De Virgilo (2006), de Castro, Negrete-Pincetic and Gross (2008)

The dominant characteristic of the Auction results is the uniformly high prices for all the products.

20

08/09/2017

54

Case 2. Centralized Auction: New Jersey, US

Auction Scheme Product Info Instrument

Simultaneous descending clock auction(reverse auction)

On-going

• Smaller and mid-size customers – atranche is equal to100 MW of peakload/ three-yearperiod

• Large customers- atranche is equal to75 MW of peak load/for only one year

Full-requirementcontract

Sources: Maurer and Barroso (2011), LaCasse (2002) and Perrotti (2006) 21

Parties involved1. EDCs or Electric Distribution

Companies (buyers)2. Electric generation suppliers (sellers

who are also the bidders)3. Regulatory Commission4. NERA- Auction manager, consulting

firm hired by the Commission to reviewthe design and implementation of theauction

Source: Maurer and Barroso (2011) 22

08/09/2017

55

Results• This auction mechanism has been successful ever

since it first started• Over the last three auctions, the results for the BGS

Residential Small Commercial Product (RSCP)category have generally been declining slightlyfollowing the downward trend in wholesale naturalgas prices, but the variation has increased.

• The BGS CIEP auction results have been fairly stableboth in aggregate and by utility over the last severalyears. PSE&G prices were in line with the other utilitiesin the previous auctions, but increased in 2016.

Source: White, Chang and Fagan (2016)27

B. Case studiesDecentralized Auction

Schemes

30

08/09/2017

56

Decentralized Auction: Case 1Chile

Auction Scheme

Product Info Instrument

Combinatorial auctions

On-going

Although generators trade two products in the market- energy and capacity- competition is only set in terms of energy, so generators compete by offering a volume and price of energy. Nevertheless, the final contract includes volumes and prices of both energy and capacity.

Forward contract

Source: Maurer and Barroso (2011); Mastropietro, et al. (2016) 31

ProcedureParties involved• The distributors themselves can organize their process to

simultaneously auction their net demand. The process,however, is subject to the supply auctioning regulator,Comision Nacional de Energia (CNE).

Rules of auction• Distributors must be 100% contracted all the time, at least

for the next 3 years.• Distributors must contract their energy through auctions.• Each distributor auctions its consumption requirements

according to its own criteria (i.e. auction design is freelydecided by each distributor).

Source: Moreno et al. (2010)32

08/09/2017

57

Results• Average winning price was US$ 47.6/MWh, the lowest

price since tenders started nearly a decade ago.• The recent Chile energy auctions saw the lowest cost

of solar in the world, at US$ 29.1/MWh.• Following this tender, the government estimated

energy bills will go down by 20% from 2021onwards.

• Major winners in the recent energy auction includesEndesa Chile (only conventional source of powergeneration awarded in this tender), Acciona (Spain) andWPD (Germany).

Source: Roy (2016)39

Decentralized Auction: Case 2Peru

Auction Scheme Product Info Instrument

First-price sealed bid for singleproduct, and pay-as-bid auction for multiple units of same product

On-going

• First-pricesealed bidauction:concession ofpower plants

• Pay-as-bidauction: mid-and long-termenergy contracts

Forwardcontract

Source: Maurer and Barroso (2011); Mastropietro, et al. (2016) 40

08/09/2017

58

Parties and ProcedureParties involved1. Auction Regulator/s: The Ministry of Energy and Mines determines

the total energy to be auctioned and sets quotas for each energytype while OSINERGMIN (government agency) is the regulator forregular auctions.

2. Generators as bidders3. Distributors

Procedure/principles of the Peruvian electricity auction system are:Distributors design and manage their own auctions (including the selection of the demand to be contracted and the auction mechanism), but the process is subject to general approval and supervision by the regulator (i.e.OSINERGMIN) and should follow the specific guidelines set forth in the regulations.

Source: International Renewable Energy Agency (2013)41

Results• February 2016: Peru held its fourth

renewable energy auction since 2010, settingrecord-low wind and solar energy prices forLatin America at the time. Grenergy (Spain)offered a bid of USD 36.8/MWh for wind, andEnel Green Power (Italy) a bid forUSD 47.9/MWh for solar PV.

Source: International Renewable Energy Agency (2017)46

08/09/2017

59

Centralized DecentralizedOngoing

New Jersey, US (15 years)Simultaneous descending clock (reverse auction)

Chile (10 years)

Combinatorial

New England, US (14 years)Simultaneous descending clock/two-sided

PeruPhase 1: 2006 – 2009

(3 years): First price sealed bid

Phase 2: 2009 - Present(7 Years): Pay-as-bid

Brazil (12 years)Hybrid: descending clock and then pay-as-bid

Colombia (9 years); Descending clock

United Kingdom (3 years)Descending clock

Annulled Illinois, US (1 year)Simultaneous descending clock (reverse auction)

Preliminary review of CSPs in other countries

47

Specific Comments and Suggestions on

the SB 1308 v2

48

08/09/2017

60

EPDP’s position on SB 1308

EPDP supports SB 1308 and the effort to institutionalize the

Competitive Selection Process

49

Section 5: General Principles (a)

• “Distribution utilities shall determine the volume ofpower demand they shall put forward for sale through aCSP: Provided, That it shall be at least 70% of theirtotal power demand requirement”

• Clarify:

• Will the remaining 30% be procured through theWESM or through bilateral contracts?

• What was the rationale for choosing 70%?

50

08/09/2017

61

Section 5(b)

• “Distribution utilities shalldetermine the schedules of theirrespective CSPs”

Clarification:

• Will there be several CSPs foreach DU and/or for each product?

51

Section 5(g)

“The Third Party Auctioneer shall be entitledto recover its just and reasonable costs aswell as a reasonable return in its operations”

Suggestion:

a) The IRR should have detailed guidance on the“just and reasonable costs and reasonablereturn in its operations”.

b) If the cost is passed on to the consumer, ithas to be unbundled.

52

08/09/2017

62

Section 5(k)

“Each CSP shall be completed

within a reasonable period of time”

Suggestion:

a) The term reasonable should be specified(i.e., 60 days as indicated in Section 7 (e )or 1 day as indicated in Section 14)

53

Section 6

“Distribution utilities and demandaggregators shall put forward, as theirproduct, a volume of power demand for sale.Generation companies and wholesaleaggregators shall tender a bid for the productoffered.”

Suggestion: a) Clarify if the meaning of the word sale

means for procurement.

54

08/09/2017

63

Section 8. Third Party AuctioneerThe Third Party Auctioneer shall initially the be the Market

Operator: Provided, That three (3) years from the

effectivity of this Act, the ERC shall review the

performance of the Market Operator according to a

monitoring and evaluation framework incorporated in the

CSP Rules.

Suggestions:

• If the Market Operator will contract out the process,

clarify the remuneration process/considerations.

• Performance review should also include a review of the

auction procedure.55

SECTION 11. Standardized Contracts

Include as part of the particular conditions the aspect on risk sharing

56

08/09/2017

64

SECTION 12. Pre-Qualification

“The ERC shall then forward the reserve priceto the Third Party Auctioneer on the day ofthe competitive bidding: Provided, That theThird Party Auctioneer is prohibited fromdisclosing the reserve price to any party untilthe confirmation of the results.”

Clarification:

• Are results referred to in the last sentence theresults of the Auction?

• If the reserve price is unknown to theparticipants of the auction, they may bid abovethe reserve price? 57

SECTION 14. Competitive Bidding

“All eligible generation companies and/or wholesale aggregators shall participate in the competitive bidding through a software-based platform provided by the Third Party Auctioneer: Provided, That the actual bidding shall not exceed one (1) day.”

Clarify:

• Is the 1-day bidding referring only to 1 DUand not for all DUs?

58

08/09/2017

65

SECTION 17. Exemptions from Competitive Selection Process

“A distribution utility may be exemptedfrom a CSP on the basis of forcemajeure or an emergency.”

Clarification:

• What happens if the ERC finds that therate is flawed? Can a Swiss Challenge bedone?

59

Salamat Po!

60

66 Consolidated comments, suggestions and proposed revisions on SB 1308 by EPDP (as of 8 Aug 2017)

Consolidated Comments, Suggestions and Proposed Revisions on Senate Bill 1308 (as of 8 August 2017)

Section Provision as indicated in the updated Bill EPDP Comments and Suggestions

SECTION 1. Title This Act shall be known as the “Electricity Procurement Act of 2017”.

SECTION 2. Declaration of Policy.

It is hereby declared the policy of the State to ensure the quality, reliability, security, and affordability of supply of electric power. To protect public interest as it is affected by the rates and services of distribution utilities while the country has not yet transitioned to full retail competition, the State recognizes that a Competitive Selection Process in the procurement of Power Supply Contracts by distribution utilities engenders transparency, enhances security of supply, and ensures stability of electricity prices to captive consumers.

SECTION 3. Scope and Application

This Act shall apply to any distribution utility or any other entity that owns, operates, or controls one or more distribution systems in the main grid and off-grid in the procurement of supply for their captive market, the matter in which the procurement is to be undertaken, the review process to be required, and the timelines to be observed in such processes.

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SECTION 4. Definition of Terms

For purposes of this Act, the following terms shall be defined as stated below: Provided, That other terms used in this Act but not defined herein shall be understood to mean the way they are defined in Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 and its Implementing Rules and Regulations:

a) Bid – the offer of a price by a generation company or a wholesaleaggregator during the CSP bidding to serve the power demand volumeput forward for sale by a distribution utility or a demand aggregator:Provided, That the price shall be the generation charge per kilowatt hourwhich must be inclusive of all costs that will be passed on or charged bythe generation company or wholesale aggregator including but notlimited to the following:

i. capital recovery fee,ii. fixed operations and management fee,iii. variable operations and management fee,iv. fuel cost which can be, at the option of the distribution utility and as

stated in the Invitation to Bid, a fixed price, or based on anindependent source of forecast of fuel prices, or derived from aformula provided in the Invitation to Bid;

v. start-up cost,vi. replacement capacity cost,vii. line rental cost, andviii. all other costs as may be included by ERC as part of the computation

of the generation charge.

1) We suggest this section to includedefinitions of the following:

a. Product as indicated in Sec 6, Page 6,line 14, if it is power for bidding

b. Positive verification as indicated inSection 16, line 28, if this means thatthe bidding is compliant to the rulesand regulations of the bidding

c. Negative verification, similar sectionas above, line 32 page 11

2) Minor suggested edits:

a. Line 4, page 5 change the wordunder to undertake

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b) Captive Market – refers to the electricity end-users who do not have thechoice of a supplier of electricity, as may be determined by the EnergyRegulatory Commission, in accordance with Republic Act No. 9136 or theElectric Power Industry Reform Act of 2001.

c) Competitive Selection Process (CSP) – refers to a process wherein adistribution utility or a group of distribution utilities, on their own orthrough a Demand Aggregator, undertake a transparent and competitiveprocurement of Power Supply Contracts, in accordance with theprovisions of this Act.

d) Demand Aggregator – refers to a person or entity registered with theEnergy Regulatory Commission, engaged in consolidating the powerdemand of distribution utilities for the purpose of subjecting it to a CSP:Provided, That demand aggregators serve as mere representatives ofdistribution utilities in the CSP and do not have the legal personality toenter into a PSC on behalf of the distribution utilities;

e) Department of Energy (DOE) – refers to the government agencycreated pursuant to Republic Act No. 7638 or the Department of EnergyAct of 1995, and whose functions were expanded by Republic Act No.9136 or the Electric Power Industry Reform Act of 2001;

f) Distribution Utility – refers to any electric cooperative, privatecorporation, government-owned utility, or existing local governmentunit which has an exclusive franchise to operate a distribution systemincluding those whose franchise covers economic zones;

g) Energy Regulatory Commission (ERC) – refers to the regulatory bodycreated pursuant to Republic Act No. 9136 or the Electric Power IndustryReform Act of 2001;

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h) EPIRA – refers to Republic Act No. 9136, otherwise known as the ElectricPower Industry Reform Act of 2001;

i) Electric Cooperative – refers to a distribution utility organized pursuantto Presidential Decree No. 269, as amended, or as otherwise provided inthe EPIRA;

j) Generation Company – refers to any person or entity authorized tooperate facilities used in the generation of electricity;

k) Invitation to Bid – refers to the invitation for generation companies andwholesale aggregators to submit a bid for a volume of power demand putforward for sale by a distribution utility or a group of distributionutilities, or a demand aggregator which includes, but shall not be limitedto, the following information:i. Eligibility requirements,ii. Date, time, and place of submission of eligibility requirements,iii. Date of pre-bid conference,iv. Description of the load requirement,v. Contract period: Provided, That is shall not be greater than

five (5) years,vi. General conditions of the PSC,vii. Specific conditions of the PSC, andviii. Such other necessary information deemed necessary by the Third

Party Auctioneer.

l) Market Operator – the operator of the Wholesale Electricity SpotMarket established by the DOE pursuant to the EPIRA;

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m) Power Supply Contract (PSC) – refers to a contract between ageneration company or a wholesale aggregator and a distribution utilitywhereby the latter purchases electricity from the former: Provided, Thatthe contract resulted from a CSP: Provided further, That the CSP has been confirmed by the ERC as having complied with all requirements andprocedures in accordance with this Act and the CSP Rules;

n) Power Supply Procurement Management Plan (PSPMP) – refers to adistribution utility’s assessment of a variety of its demand side andsupply side resources, pursuant to and consistent with its DistributionDevelopment Plan resulting to a comprehensive power supplyprocurement schedule to meet customer electricity demand whileensuring an optimal supply mix for its captive market;

o) Reserve Price – refers to the price set by ERC as a ceiling for eachparticular CSP;

p) Third Party Auctioneer – refers to the entity mandated to under theCSP as described in Section 8 of this Act; and

q) Wholesale Aggregator – refers to any person or entity, other than ageneration company, issued a Certificate of Registration by ERC to sellelectricity to Distribution Utilities by combining generation capacities ofGeneration Companies.

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SECTION 5. General Principles

CHAPTER II COMPETITIVE SELECTION PROCESS

Subject to all the other provisions of this Act and the CSP Rules, all CSPs shall be governed by the following principles:

a) Distribution utilities shall determine the volume of power demand theyshall put forward for sale through a CSP: Provided, That it shall be at least70% of their total power demand requirement;

b) Distribution utilities shall determine the schedules of their respective CSPs;

c) Distribution utilities can only undertake a CSP if it is in conformity withtheir approved PSPMPs;

d) The Third Party Auctioneer shall be the sole body that coordinates andconducts all CSPs;

e) The Third Party Auctioneer shall procure and manage a secure software-based platform for the bidding component of the CSP;

f) The Third Party Auctioneer shall be liable for any negligence or abuse inthe conduct of the CSP;

g) The Third Party Auctioneer shall be entitled to recover its just andreasonable costs as well as a reasonable return in its operations;

h) The Third Party Auctioneer shall be regulated by the ERC;i) All CSPs shall have uniform requirements and procedures;j) All CSPs shall have standardized forms, documents, and contracts;k) Each CSP shall be completed within a reasonable period of time;

We suggest the following:

1) Under (a) Page 5 line 22, the wordshould be procurement, not sale

• Clarify if the 30% of the powerdemand will be procured throughthe WESM or through bilateralcontracts.

2) Clarify under (b) if there will be severalCSPs for each DU and/or for eachproduct

3) Under (g) it may good to clarify underthe IRR the remuneration for theThird Party Auctioneer and provide a more accurate guidance on the “just and reasonable costs and reasonable return in its operations.

If the cost is passed on to the consumer, it has to be unbundled to show how it will affect the retail price

4) Under (h), clarify if the regulation to bedone by the ERC will include theregulation/identification of the “just and reasonable costs”?

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l) Each CSP shall have an undisclosed reserve price as determined by the ERC;m) The power of review of ERC shall be limited to verifying whether each CSP

has complied with all procedures and requirements as specified in this Actand the CSP Rules;

n) PSCs can only be entered into as a result of a CSP; ando) Distribution utilities, generation companies, wholesale aggregators, and

other signatories to the PSC shall be liable for all provisions in the saidcontract.

5) Under (k) Page 5, line 39: Each CSP shall be completed within reasonable periodof time. The term reasonable should bespecified (i.e., 60 days as indicated inSection 7 (e) or 1 day as indicated inSection 14.

6) Under (m) Page 6 line 3: “the power ofreview of ERC” should be changed to thepower of review by the ERC…”

SECTION 6. Participants The participants to the CSP are duly-registered distribution utilities, demand aggregators, generation companies, and wholesale aggregators. Distribution utilities and demand aggregators shall put forward, as their product, a volume of power demand for sale. Generation companies and wholesale aggregators shall tender a bid for the product offered.

Section 6, Page 6, line 14: Replace the word sale to procurement since distribution utilities and demand aggregators are the ones who will buy/procure.

SECTION 7. CSP Rules The CSP Rules, which shall serve as this Act’s implementing rules and regulations, shall be formulated by ERC in coordination with DOE and NEA and in consulation with all stakeholders within sixty (60) days from the promulgation of this Act. The CSP Rules shall include but shall not be limited to the following matters:

a) Rules governing the Third Party Auctioneer including but not limited to:i. Detailed scope of work,ii. Bonds and guarantees,iii. Costs and return recovery mechanisms,iv. Monitoring and evaluation framework,v. Prohibited acts, andvi. Fines and penalties;

1) Clarification: Page 6, line 24 (a): Why isthere a need for bonds and guaranteesby the Third Party Auctioneer?

2) Minor edit highlighted in yellow

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b) Rules for registration of all CSP participants with the Third Party Auctioneer;c) Rules for registration of demand aggregators;d) Rules for certification of wholesale aggregators;e) Detailed procedure and timeline for a CSP: Provided, That it shall comply

with Section Chapters II and III of this Act: Provided further, That a CSP shallnot exceed sixty (60) days from the advertisement of the invitation to biduntil the verification of ERC;

f) Rules for determination of the reserve price for a CSP;g) Standardized contents of an Invitation to Bid;h) Standardized general conditions of a PSC: Provided, That it shall comply

with Section 11 of this Act;i) Guidance in the preparation of the particular conditions of a PSC: Provided,

That it shall comply with Section 11 of this Act;j) Procedure and requirements for reconsideration and complaints in

accordance with Sections 13 and 18 of this Act;k) Procedure and requirements for negotiated PSCs by distribution utilities in

accordance with Section 17 of this Act; andl) Other such rules, procedures, and requirements that will ensure the

effective implementation of this Act.

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SECTION 8. Third Party Auctioneer

The Third Party Auctioneer shall intially the be the Market Operator: Provided, That three (3) years from the effectivity of this Act, the ERC shall review the performance of the Market Operator according to a monitoring and evaluation framework incorporated in the CSP Rules. Should the ERC find that the Market Operator did not substantially meet the performance targets in the monitoring and evaluation framework and/or it has been found guilty of neglience and/or abuse, it may procure a new Third Party Auctioneer in compliance with all laws and IRRs related to government procurement. In this case, the ERC shall determine the contents of the bidding documents for the new Third Party Auctioneer in accordance with this Act and the CSP Rules: Provided, That the Third Party Auctioneer shall be a team of private individuals or a private corporation duly recognized in the Philippines, with no direct or indirect interest in any generation company and/or distribution utility, having vast experience in competitive bidding and a comprehensive knowledge of the electric power industry, and a demonstrated ability to manage and conduct the CSP: Provided, further, That the performance of the new Third Party Auctioneer, and any other Third Party Auctioneer thereafter, shall be reviewed by the ERC every three (3) years.

1) If the Market Operator will contract outthe process, clarify the remunerationprocess/considerations.

2) Page 7, line 19 on review ofperformance should also include areview of the auction procedure

3) Minor edits are highlighted in yellow.

SECTION 9. Preliminary Matters

After the promulgation of the CSP Rules, all present and future participants in the CSP shall register in accordance with Section 7 of this Act: Provided, that such registration will serve as the contract between the Third Party Auctioneer and the CSP participant with regards to their respective duties, responsibilities, guarantees, and liabilities.

Afterwhich, all CSP participants shall undergo training in accessing and using the CSP software-based platform to be utilized by by the Third Party Auctioneer.

1) Section 9, Page 8, line 2 on futureparticipants. Suggest that future bereplaced by word prospective.

2) Minor edits are highlighted in yellow.

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SECTION 10. Power Supply Procurement Management Plan.

Every distribution utility shall prepare and submit its PSPMP to the DOE as part of its annual submission of the Distribution Development Plan, and undertake a cost-benefit analysis of the power supply requirements for its captive market taking into consideration, among others, prevailing price in the market, energy demand forecasting, load matrix, and existing DOE policies, including but not limited to the Power Development Plan, the National Renewable Energy Plan, the Renewable Portfolio Standard, and Retail Competition and Open Access.

The PSPMP shall be updated annually and approved by the Board of Directors of the distribution utility and submitted to DOE on or before the 15th of March. In the case of electric cooperatives, the submission shall include the NEA: Provided, That NEA shall provide the necessary assistance to electric cooperatives to equip them in the creation of their respective PSPMPs.

DOE, with NEA in the case of electric cooperatives, shall endorse the submitted PSPMP within sixty (60) days from receipt to ERC and the Third Party Auctioneer. For purposes of transparency, the endorsed PSPMPs shall be posted by the DOE in the electronic portal as provided for under Section 20 of this Act. 26 The contents of the PSPMP shall include but shall not be limited to the following information:

a) Planning and acquisition period and schedule;b) Demand forecast, forecasted load profile, and load duration curve;c) Additional resource requirements, if applicable;d) Resource acquisition plan, if applicable;e) Demand side management programs, if applicable;f) Mandated renewable energy quota pursuant to the Renewable Portfolio

Standards under the Renewable Energy Act, if applicable; andg) Any additional information that DOE, in consultation with ERC, may

require

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SECTION 11. Standardized Contracts.

All contracts, forms and documents used during the CSP shall be standardized and unified. The ERC, in consultation with stakeholders, shall develop generic forms, standard bidding documents, and standard PSCs subject to the provisions of this Section. Standard PSCs shall have general conditions and particular conditions. The general conditions refer to the portion of the contract which provides for terms generally applicable to all PSCs, such as but not limited to:

a) Definitions and interpretations;b) Obligations and deliveries;c) Event of default;d) Dispute resolution;e) Scope of work;f) Representation and warranties;g) Replacement power;h) Default;i) Bond and guarantees;j) Treatment of taxes and other governmental charges; andk) Penalties for delay, non-performance of contract, and breach of

confidentiality.

1) Include as another consideration afterline 34 the provision on risk sharing.

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The particular conditions refer to the conditions of specific application to the demand needs of distribution utilities and the project-specific clauses in the contract such as but not limited to:

a) Load requirement;b) Contract period: Provided, That is shall not be greater than five (5)

years;c) Price per kWh equal to the winning bid of the CSP;d) All costs included in the winning bid;e) Peso conversion methodology;f) Method of procurement of fuel, if applicable;g) Form and method of payment;h) Availability declaration, nomination, WESM offers, and general dispatch;i) Power plant source;j) Installed, net, and dependable capacity;k) Allowable number of scheduled and unscheduled shutdowns;l) Target commercial date of operation of the power plant, if applicable;

andm) Minimum energy offtake, if applicable.

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SECTION 12. Pre-Qualification.

The Third Party Auctioneer shall annually make a provisional schedule of all CSPs in the next three (3) years based on the schedule and information contained in the PSPMPs of all distribution utilities. All distribution utilities shall inform the Third Party Auctioneer at least three (3) months before its scheduled CSP in order to decide on the following matters:

1. Whether or not the distribution utility will aggregate its demand withother distribution utilities, and if so whether it will be represented by ademand aggregator;

2. Specific details and conditions of the Invitation to Bid, PSC, and othernecessary forms and documents;

3. Schedule of the entire CSP; and4. Other matters as the distribution utility and the Third Party Auctioneer

deem necessary.

Upon finalization of the specific details and conditions of the Invitation to Bid, PSC, and other necessary forms and documents, the Third Party Auctioneer shall submit all documents to the ERC at least one (1) month before the scheduled CSP for a determination of the reserve price. The ERC shall then forward the reserve price to the Third Party Auctioneer on the day of the competitive bidding: Provided, That the Third Party Auctioneer is prohibited from disclosing the reserve price to any party until the confirmation of the results.

1) Clarify on page 10, line 29 (Section 12)if the “results” referred to in the lastsentence means the results of theAuction. If the reserve price isunknown to the participants of theauction, does this mean that they canbid above the reserve price?

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SECTION 13. Qualification

The qualification period starts with the advertisement of the invitation to bid. It shall be followed by the pre-bid conference and any other process indicated in the CSP Rules. It shall end with the elibility screening.

During the qualification stage, the Third Party Auctioneer determines who is eligible to participate in the competitive bidding based on the Invitation to Bid, PSC, and other forms and documents.

Participants who are considered ineligible and disqualified may seek a reconsideration from the Third Party Auctioneer within five (5) calendar days from release of the results of the eligiblity screening which must be acted upon by the Third Party Auctioneer within three (3) calendar days.

1) Minor edits are highlighted in yellow.

SECTION 14. Competitive Bidding

All eligible generation companies and/or wholesale aggregators shall participate in the competitive bidding through a software-based platform provided by the Third Party Auctioneer: Provided, That the actual bidding shall not exceed one (1) day.

1) Clarification: Is the 1-day biddingreferring only to 1 DU and not for allDUs?

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SECTION 15. Confirmation and Verification.

On the same day of the actual bidding, the Third Party Auctioneer shall issue an bidding report containing the results and as confirmed by the observers in compliance with Section 19 of this Act: Provided, That such report shall include the list and details of all bids offered including the ERC-determined reserve price.

Within five (5) calendar days from the date of actual bidding, the Third Party Auctioneer shall submit a comprehensive report to the ERC on the CSP as well as documentary requirements to support the same: Provided, That the comprehensive report shall include the details of each stage of the CSP.

Within ten (10) calendar days from receipt of the comprehensive report, the ERC shall issue a verification to the Third Party Auctioneer, the distribution utility concerned, and the winning generation company or wholesale aggregator whether the CSP has complied with all procedures and requirements as stated in this Act and the CSP Rules.

Upon receipt of a positive verification, the distribution utility and the winning generation company or wholesale aggregator can sign the PSC: Provided, That a copy thereof shall be provided to the ERC.

1) Suggestion: As indicated in comments onSection 4, verification should be defined.

2) Minor edits are highlighted in yellow.

SECTION 16. Non-Verification

Upon receipt of a negative verification, the entire CSP shall be repeated: Provided, That the ERC shall impose fines and penalties on the Third Party Auctioneer: Provided further, That the ERC, motu poprio or upon complaint, may initiate an investigation against the Third Party Auctioneer for alleged negligence or abuse in the CSP: Provided finally, That this is without prejudice to any civil or criminal case against the Third Party Auctioneer.

1) Comment: Non-verification/negativeshould be clearly defined as indicated incomments on Section 4.

2) Suggestion on the wording of this section.“Upon receipt of a negative verification, theentire CSP shall be repeated: Provided,That the ERC shall impose fines andpenalties on the Third Party Auctioneerupon confirmation of violation of CSP Rules as indicated in Section 7”.

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SECTION 17. Exemptions from Competitive Selection Process

A distribution utility may be exempted from a CSP on the basis of force majeure or an emergency: Provided, That it has filed the necessary petition before the ERC, and the latter has found reasonable evidence to support the occurrence of a force majeure event or the existence of an emergency: Provided further, That such an emergency is not a result of the distribution utility’s negligence or willful act in order to be exempted from the CSP. A distribution utility shall start negotiating its PSC once ERC has issued its CSP exemption certificate. In cases of CSP exemption, ERC shall exercise its rate-making and review power over the negotiated PSC.

1) Clarification: What happens if the ERCfinds that the rate is flawed? Can a SwissChallenge be done?

SECTION 18. Negligence and Abuse.

Any allegation of negligence and/or abuse on the part of the Third Party Auctioneer at any stage of the CSP shall be filed with the ERC within five (5) calendar days from the occurrence of the said act/s: Provided, That this is without prejudice to any civil or criminal case against the Third Party Auctioneer: Provided further, That no temporary restraining order shall be issued against an ongoing CSP as it is imbued with public interest.

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SECTION 19. Observers CHAPTER III :TRANSPARENCY

The Third Party Auctioneer shall, in all stages of the CSP, ensure that there shall be present at least one (1) observer from the DOE, ERC, and in the case of electric cooperatives, the NEA: Provided, That the said person/s do not have any direct or indirect interest in the PSCs subject to CSP. The observers shall:

a) Confirm the bidding results of the CSP;b) Submit a independent report on the CSP to the ERC within five (5)

calendar days from the date of the actual bidding; andc) Keep in strict confidence all information acquired by virtue of the

proceedings while the CSP is still on-going.

Any observer who commits a breach of confidentiality shall be subject to the administrative disciplinary action under this Act, without prejudice to any civil or criminal action.

1) Minor edits are highlighted in yellow.

SECTION 20. Electronic Portal

The ERC shall develop a portal which shall serve as the primary source of information on the CSP: Provided, That the ERC shall ensure the integrity, security, and confidentiality of all documents submitted through the portal.

In all stages of the CSP, the Third Party Auctioneer shall ensure that information from generation companies and distribution utilities shall be posted in the electronic portal to ensure equal access of information to the CSP participants.

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SECTION 21. Confidentiality

CHAPTER IV PROHIBITED ACTS AND PENALTIES

Prior to their official release, no aspect of the documents used in any CSP shall be divulged or released to any prospective generation company, distribution utility, or any other person or entity having direct or indirect interest in the PSAs subject of CSP.

1) Comment: PSAs are referred to as PSCsin the other sections.

SECTION 22. Administrative Offenses.

The following acts, when committed by a government official and/or employee, shall be considered administrative offenses:

a) Breach of confidentiality as provided under Section 19 and 21 of thisAct; 32

b) Willful acts which delay the operationalization of the CSP; and 33c) Failure to comply with the mandated timelines prescribed to perform

specific acts defined under this ActSECTION 23. Administrative Penalties.

Any person found guilty of the Act 2 stated in Sec. 22 (a), on the first offense shall be suspended from service for six (6) months and one (1) day to one (1) year without pay, and on the second offense shall be dismissed from service and shall be perpetually disqualified from re-employment in any government agency or instrumentality.

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Any person found guilty of the Act stated in Sec. 22 (b), on the first offense shall be suspended from service for six (6) months and one (1) day to one (1) year without pay, and on the second offense shall be dismissed from service and shall be perpetually disqualified from re-employment in any government agency or instrumentality.

Any person found guilty of the Act stated in Sec. 22 (c), on the first offense shall be reprimanded, on the second offense shall be suspended from service for one (1) to thirty (30) days, and on the third offense shall be dismissed from serviceand shall be perpetually disqualified from re-employment in any governmentagency or instrumentality.

SECTION 24. Transitory Provision

CHAPTER V FINAL PROVISIONS

Pending the creation and effectivity of CSP Rules, the existing ERC Resolution requiring a CSP shall continue to apply.

SECTION 25. Separability Clause.

If, for any reason, any provision of this Act is declared to be unconstitutional or invalid, the other sections or provisions hereof which are not affected thereby shall continue to be in full force or effect.

SECTION 26. Repealing Clause.

All laws, decrees, orders, rules and regulations or parts thereof which are inconsistent with or contrary to the provisions of this Act are hereby repealed, amended or modified accordingly.

SECTION 27. Effectivity This Act shall take effect fifteen (15) days after its publication in at least two (2) national newspapers of general circulation.

Approved.

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Consolidated Case Studies on Competitive Selection Process in

selected countries

Compiled by the Energy Policy and Development Program as

part of the review for Senate Bill 1308 (2 August 2017)

The contents or opinions expressed here are the sole responsibility of the EPDP team and do not necessarily reflect the views of United States Agency for International Development (USAID) or the United States Government or the UPecon Foundation, Inc. Any errors of commission or omission are that of the EPDP team and should not be attributed to either USAID or UPecon Foundation, Inc.

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CENTRALIZED AUCTION SCHEME

Illinois, US (annulled 1 year)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

SchemeSimultaneousdescendingclock auction(reverseauction)

Instrument Short andmidtermcontracts(tranchecontracts)

• Differentiated interms of distributioncompany, thecustomer class andthe duration of thecontract

• Specified in terms oftranche

• 17-41 months

• In a full-requirementcontract, the sellerhas to follow ×percent (i.e. his/hertranche) of thechronological load ateach point in timeover a specifiedcommitment period.

• Each of the productsat the auction had atarget number oftranches.

Parties involved• Two-buyers (regulated distribution

companies- Ameren and ComEd) and21 sellers (generators who are alsobidders)

• Auction Manager- NERA EconomicConsulting (an independent entityinvolved in the design, theimplementation and the managementof the auction)

• Auction monitor (has the mission toreview the auction results and to giverecommendations to the IllinoisCommerce Commission (ICC))

• ICC (determines whether or not toapprove the outcomes of the auction)

Prior to the beginning of the auction• The Auction Manager, in consultation

with the utilities and ICC staff,determine the original maximum priceoffered.

Auction Proper• Auction Manager announces a price

for the products offered• Bidders then determine the number of

tranches that they will be able toprovide at the set prices.

• If excess tranches are bid during around, meaning that the supplyexceeds the demand, then the price for

• The 2006 Illinoiselectricity auction wascompleted after 39rounds, with 21 sellersbidding on it. From the21 registered bidders, 16won tranches in some ofthe products.

• The initial prices were104 $/MWh for the largeand 100 $/MWh for thesmall to mediumcustomers of Amerenand ComEd.

• The results of theauction producedwholesale electricityprices of $64.77/mwh fora 17-month contract forAmeren verses awholesale price of$63.96/mwh for a 17-month contract forComEd.

• The dominantcharacteristic of theAuction results is theuniformly high prices forall the eight products.The prices in the IllinoisElectricity Auction wereconsiderably higher thanthe average prices in the

Has a complex set ofrules with the purposeof stimulatingcompetitiveness,facilitating transparencyand avoiding marketfailures

• The productdefinition in theIllinois auctionmade it verydifficult for biddersto price the load-followingobligation.

• The tranche-product definitionis unnatural andcannot capture thesalientcharacteristics ofelectricity.

• The load, by itsvery nature, israndom and theload forecastshave uncertainty.

• The ruleconcerning thefreedom to submitoffers withdifferent allocationamong theproducts allowsthe sellers toformulatestrategies thatmay effectivelymanage theseller’s ability to

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that product is reduced in the nextround of the auction.

• The Auction Manager reduces theprice based on a given percentage ofthe previous price and announces thenew price for each product in the nextround

• Prices start high in the auction and asthe supply bids exceed the demand,the price of electricity graduallydecreases as the auction progresses.The prices continue to drop until thesupply equals the demand

Some other important rules:• For each set of products from a

distribution company, each seller is notallowed to bid more than the load cap

• The sellers can switch tranchesbetween products

• The decrement in the price of aproduct is a function of the oversupplyof such a product.

MISO and PJM for theIllinois locations.

• The auction was notconsidered to be asuccess. A year after theauction took place, itwas annulled.

• Immediately followingthe power auction,energy cost increasesestimated to take effecton January 2, 2007 were22-26 percent forComEd customers and40-55 percent forAmeren customers.

handle theuncertainties.

• Tranche-basedproductsundermineaggregation ofinformation

• High prices wereobserved.

Sources: Maurer and Barroso (2011); Negrete-Pincetic and Gross (2007); De Virgilio (2006); de Castro, Negrete-Pincetic and Gross (2008)

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CENTRALIZED AUCTION SCHEME

New Jersey (on-going 15 years)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

Auction SchemeSimultaneousdescendingclock auction(reverseauction)

Instrument Full-requirementscontract

• Bids are made forthe right to serve fullrequirementtranches of load,equal to roughly 100MW of peak load forthe smaller and mid-size customers,and 75 MW of peakload for the largercustomers.

• In the case of thesmaller and mid-sizecustomers, eachyear the EDCsprocure one-third ofthe load for a three-year period.

• In the case of largercustomers, thesupply term is onlyone year.

Parties involved

• EDCs or Electric DistributionCompanies (buyers)

• Electric generation suppliers (sellerswho are also the bidders)

• Regulatory Commission (hires theconsulting firm to review the designand implementation of the auction.)

• NERA- Auction manager (consultingfirm hired by the Commission to reviewthe design and implementation of theauction)

• Third party (who conducts the actualauction)

Auction proper

• The Auction proceeds in rounds. In around, the Auction Managerannounces a price for each EDC.

• Bidders bid by providing the number oftranches that they are willing to servefor each EDC at the prices announcedby the Auction Manager. No bidder canbid and win more tranches than theload cap, which is established eitheron a statewide or on an EDC-specificbasis.

• If the total number of tranches bid isgreater than the number of tranchesneeded for an EDC, the price for thatproduct is reduced for the next round.

• Bidders are provided with the nextround prices and a measure of excesssupply remaining in the Auction. In thenext round, bidders are given anopportunity to bid again.

• This auction mechanismhas been successfulever since it first started.

• The first BGS auctionwas completed inFebruary 2002, whenNew Jersey utilitiespurchased 17,000 MWfor 12-month contractsstarting in August of thesame year.

• The auction finishedafter 73 rounds, fromFebruary 4 to February13, 2002, where 21bidders offering 29,600MW of supply competedfor the opportunity toserve 17,000 MW ofload. 15 winners wereselected and the totalvalue of the auction wasUS$4 billion.

• Final auction prices werelow and the full volumewas procured.

• The New Jersey centralpurchasing arrangementhas been consideredvery successful, andother states have adoptor are about to adopt it.

• Over the last threeauctions, the results forthe BGS ResidentialSmall CommercialProduct (RSCP)

• Efficient. BGS issupplied by lowest-cost suppliers

• Leads to lowestpossible prices forBGS supply

• Leads to BGSprices that reflectmarket forces

• Risk is borne bythose who canmanage it at lowestcost

• Leads to moreaggressive biddingbecause oftransparency

• Attracts morebidders andminimized post-auction challenges

• No allegations ofunfair favoritismtowards thesebidders

• Could also beemployed insituations wherethere is nomandatory retailcompetition

One of the problemswith the BGS auctionprocess is that manycomponents ofelectricity supply arecombined into a singleproduct so that itbecomes hard tounderstand whatfactors are driving theauction results

89

• Prices that tick down in a rounddecrease by a decrement; adecrement is a given percentage of theprevious price.

• Bidders holding the final bids when theAuction closes are the winners

• Once the Auctions have concluded,the Board renders a decision on theAuction results within two businessdays. If the Board approves theAuction results, winning bidders havethree business days to execute thestandard statewide BGS SupplierMaster Agreement and to post anyrequired security.

Others

• Tranches were designed in order tominimize the risk for the suppliers, butwinners are responsible for the risk ofthe demand profile, i.e., variations indemand associated with normalfluctuations in business activities andweather.

• Self-dealing is allowed, and at leastthree of the winning bidders wereaffiliates of the buyer.

category have generallybeen declining slightlyfollowing the downwardtrend in wholesalenatural gas prices, butthe variation hasincreased.

• The BGS CIEP auctionresults have been fairlystable both in aggregateand by utility over thelast several years.

Sources: Maurer and Barroso (2011); BGS-Auction (2017); LaCasse (2002); Perrotti (2006); White, Chang and Fagan (2016)

90

CENTRALIZED AUCTION SCHEME

United Kingdom (on-going 3 years)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

Auction Scheme Descendingclock auction

InstrumentCapacitycontracts

• Existing generatorsand demand-sideresponders will beoffered one-yearcapacity agreementsat the clearing price

• Longer termagreements (15years) are availablefor new plant

• Three-yearagreements areavailable forrefurbished plant

Parties involved • System Operator (i.e. National Grid)

runs the prequalification process andthe auction. It carries out an annualsecurity of supply analysis and advicesthe amount of capacity needed for thereliability standard to be met.

• Government (Secretary of State)decides on the amount of capacity tobe auctioned.

• Bidders - New and existinggenerators, embedded generators,combined heat and power, demandside responders, electricity storage,interconnectors

Pre-auction process

• The target capacity, which is theamount to be auctioned, is firstdetermined about 4 years and 6months before the delivery year.

• Subsequently, all the resources thatare eligible to participate in theCapacity Market must go through theprequalification process. Theresources are called Capacity MarketUnits (CMUs).

• The CMUs that pre-qualify will thenenter into a descending clock, pay asclear auction which is held four yearsahead of the delivery year.

Auction Proper

• In each round the auction price isbounded by the bidding round pricecap and the bidding price floor andeach participant has two choices;

• There have been twomain auctions so far,held in December 2014and 2015. Theseresulted in the award of£2.8bn in subsidies,mainly to existing powerstations.

• UK’s first electricityauction was held inDecember 2014 fordelivery in 2018/19 andprocured 49.3GW ofcapacity at a price of£19.40kW/year – muchlower than the pre-auction estimations.

• Second CapacityAuction was held inDecember 2015 fordelivery in 2019/20 andprocured 46.4GW ofcapacity at a price of£18/kW/year, even lowerthan the previousauction.

• The results of theCapacity Auctionsshowed that theCapacity Market is notcompatible with thedecarbonisation targetsof the power sector,because except fromsubsidizing coal plants, ithas also opened themarket for carbon

• Encouragesufficientinvestment inreliable capacity(both supply anddemand side) tosecure futuresupplies ofelectricity.

• It provides valuableassured revenuefor investors in anynew generationplant by offeringfixed monthlypayments togenerators.

• It also incentivizesdemand-sideresponders tomake capacityavailable when it isneeded most.

• In both 2014 and2015 CapacityAuctions, theclearing price wasvery low.

• Providescontinuingsubsidies to fossilfuel generators,and highlypolluting dieselplants.

• Two contradictorypolicies workingagainst oneanother – thecarbon price floorpenalizes coal-fired powerstations at thesame time as thecapacity marketrewards them.

• The model doesnot considerbidding strategiesthat deviate fromthese principles,for examplewithholdingcapacity toincrease prices.There is a risk thatcapacity paymentscould exceedthose modelled byDECC, leading tohigher consumerbills.

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either to stay in the auction or exit theauction.

• If participants want to exit the auctionthey need to submit exit bids for theirCMUs.

• If the participant chooses to continueto the next round it means he is willingto accept a lower price than the pricefloor of the current round

• As the price descends in each roundand participants submit exit bids, thetotal capacity remaining in the auctiondecreases with price.

• The auction ends at the bidding roundwhere the supply curve intersects thedemand curve, meaning the totalcapacity remaining in the auction isequal to the capacity demanded.

• All the participants that have notsubmitted an exit bid above theclearing price will be winners of theauction and all receive capacityagreement at the clearing price.

• A secondary auction takes place oneyear ahead of the delivery year whichenables CMUs that were not ready forthe T-4 auction to participate in theCapacity Market.

intensive generationsuch as diesel.

• The Capacity Markethas failed to attract anynew efficient gas plantsand it is paying coal tostay open longer that itwould have otherwise,despite governmentspledge to phase out coalgeneration.

Sources: Maurer and Barroso (2011); Engie (2016); Orme (2016); Yiakoumi and Rouaix (2016)

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CENTRALIZED AUCTION SCHEME:

New England, US (on-going 14 years)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

Auction SchemeSimultaneousdescendingclock auction/two-sidedauctions

InstrumentCapacitycontracts/supply anddemandresources

• The new capacityhave a choice of anextendedcommitment periodranging from one tofive years. That is,new capacity canhave an N-yearcommitment, wherethe supplier choosesan N between oneand five years at thetime of qualification.

• Existing capacityparticipates in theauction each yearand has a one-yearcommitment.

Parties involved

• ISO is responsible for administration ofits capacity market. It conducts thedescending clock auction (“ForwardCapacity Auction”).

• Bidders - Existing generation, newgeneration, existing demand, newdemand, existing import capacity andnew import capacity resources.

Key features

• In practice, for each one-year capacitycommitment period, a ForwardCapacity auction is conducted toprocure the Net Installed CapacityRequirement (NICR) of the NewEngland Balancing authority area.

• The primary capacity auction is heldthree years before the delivery year.

• Both new and existing capacityresources are paid the same marketclearing price the first year, providedthere is sufficient competition and anadequate supply. The price paid tonew capacity after the first year isindexed for inflation.

• In the FCM, import-constrained zones,sometimes referred to as “loadpockets”, can have higher prices ifneeded, in order to attract a sufficientamount of new resources. Export-constrained zones can have lowerprices if they have too much capacity

• Before the auction, the ISO determinesthe minimum capacity required in eachzone and in the system for the firstyear of the commitment period.

• ISO-NE has conductedtwo forward capacityauctions (FCAs) to date(2011) for thecommitment periods of2010/2011 and2011/2012, achieving itsobjective of attractingand retaining thecapacity needed to meetthe region’s ICR for thefirst two commitmentperiods.1

• The first FCA (FCA #1)was conducted inFebruary 2008 for thecapacity commitmentperiod of June 1, 2010through May 31, 2011with a clearing price of4.5 (US $/KW month).The second FCA (FCA#2) was conducted inDecember 2008 for thecapacity commitmentperiod of June 1, 2011through May 31,2012with a clearing price of3.6 (US $/KW month).

• According to the 2015Annual Markets Report,wholesale powermarkets in New Englandoperated competitivelybringing lower averagepower prices thatreflected the drop in the

• The three-yearplanning periodfacilitates theparticipation of newcapacity resourcesand fosterscompetition amongnew proposals.

• One of the mostinteresting resultsof the first twoauctions was thelarge volume ofdemand-resourcecapacity thatcleared in eachauction.

• This limits thepotential for marketpower in thecapacity andelectric energymarkets whileenhancingeconomicefficiency.

• Locational pricesignals provideincentives for newresources to belocated where andwhen new capacityis needed.

• The mostinteresting aspectof the FCM in NE isthat it treats supply

• More complex,less familiar

• Typical difficultiesin engagingdemand torespond to prices

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• A simultaneous descending clockauction is used to determine thecapacity clearing prices and capacitysuppliers for each zone. A startingprice for the auction, which is twice thecost of new entry (CONE), is specifiedbefore the auction begins.

• The auction clearing price is used toupdate the CONE in subsequentauctions.

• The product procured is a call optionbacked by a physical resource. Thecall option represents a financialcontract that entitles the buyer of theoption to receive from the seller anypositive difference between the spotmarket price and a predeterminedreference price, known as the strikeprice, for each MW purchased underthe option contract.

price of natural gas. Theaverage real-time priceof wholesale electricenergy in 2015 fell bymore than a third, ormore than $22 permegawatthour (MWh), to$41.00/MWh as a resultof natural gas prices thatwere 41% lower thantheir 2014 average. Theprices of both naturalgas and wholesalepower were the lowestsince 2012.

• On February 6th, 2017ISO-NE conducted itslatest Auction (FCA 11)for the June 1, 2020through May 31, 2021period. (FCA) 11capacity prices clearedat $5.30/kW-mo, higherthan the historicalaverage, but lower thanthe previous auction.ICF believes that theprices are close to thelowest expected levels.

and demandresources on alevel-playing-fieldbasis, thusparticipating in thesame auctionprocesses.

• Increases welfare

• Mitigatesanticompetitivebehavior

Sources: Maurer and Barroso (2011); Benedettini (2013); Business Wire (2016); Rose et al. (2017)

94

CENTRALIZED AUCTION SCHEME

Brazil (on-going 12 years)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

Auction Scheme

Hybrid schemewherein phase1 operates asa descending-clock auction,while phase 2consists of afinal pay-as-bidround for thewinners ofphase 1

Instrument

Forward(hydro) andoption(thermal)

• Existing energy auctions-energy

delivery 1 year aheadand contract durationsfrom 5-15 years.

• New energyauctions-energy

delivery 5 or 3 yearsahead, with durationsof 15 and 30 years forthermal andhydropower plants,respectively.

Parties involved

• The auction process is led by the NationalElectricity Regulatory Agency (ANEEL)under the guidelines of the Ministry ofMines and Energy (MME). An auctioncommittee undertakes the main auctiontasks, which are distributed amongdifferent institutions. Once an auctionconcludes, the winning generatorcompanies sign contracts directly withdistribution companies.

• Comercializacao de Energia Eletrica(CCEE), which is regulated by ANEEL,manages long-term bilateral contractsamong generators and distribution utilitiesand the settlement of contractualdifferences for all market agents.

Prior to the auction, two parameters are

defined and kept undisclosed:

• “Total demand” – maximum amount ofenergy that will be contracted from allproducts

• “Demand parameter” – used to force aminimum level of competition. If thedemand parameter is equal to 1.5, itmeans that the total volume of the bidsmust be at least 50% higher than theauctioned volume.

Ceiling price: The Ministry of Mines and

Energy (MME) sets the price ceiling of the firststage prior to the start of the auction.

In phase zero, bidders first confirm the quantity

of electricity (in GWh per year) they are willingto commit at the auction’s ceiling price(disclosed in advance). This quantity cannot berevised in later rounds, even as the offeredprice decreases.

In two auctions in April andSeptember 2016, Brazilcontracted more than 200 MWof small hydro and almost200 MW of biomass at anaverage price of BRL198.59/MWh (USD 57.4/MWh).A third auction exclusive to windand solar projects had beenscheduled for December butwas cancelled, mainly inexpectation of a continuedeconomic slowdown and poweroversupply. The country has alengthy experience with bothtechnology-neutral andtechnology-exclusive renewableenergy auctions.

• The contract auctionmarket is organizedby the government asa centralized scheme,carried out jointly tosatisfy the total loadincrease. Theobjective of the jointauction is to allowsmaller distributioncompanies to benefitfrom economies ofscale in the newenergy-contractingenvironment.

• All technologiescompete jointly in theregular new energyauctions.

• The governmentdoes not interferewith the demandforecasts, which aredirectly declared bydistributioncompanies, nordoes it takeownership for theenergy contracts.

• The governmentdoes not interferewith the contracts,nor does it providepaymentguarantees.

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Phase 1 starts with a high price expected to

create excess supply so bidders indicate howmuch they are willing to supply at this price. Theauctioneer then lowers the price until thedesired supply level is met, plus a certainmargin to keep competition among bidders whopassed the first stage.

In phase 2, remaining bidders offer a final

sealed price, which cannot be higher than theprice disclosed in the first stage. The clearingprice is determined when supply equalsdemand, and the winners are those whose bidsoffered lower prices than the clearing one.

Pricing rule: Pay-as-bid

Two types of contractual arrangements:

• Energy (quantity) contracts are standardfinancial forward contracts. The revenueearned by the generator/seller is theproduct of the amount of energy contracted(MWh) by the winning bid (R$/MWh). Thisamount is adjusted annually by the CPIinflation. Differences between the amountcontracted in the auction and the energyproduced are settled at the spot price.

• In contrast, availability contracts are energycall options that grant the successful biddera fixed revenue payable in 12 monthlyinstalments in addition to a variable amountif the power plant is dispatched (that is,whenever the spot price exceeds theenergy strike price). The variable portion ofthe revenue is also determined in theauction with fuel costs being ultimatelycovered by the distribution companies.

Generally speaking, energy quantity contractsare used for the allocation of energy from hydropower plants and availability contracts are usedto allocate energy from thermal, wind and (morerecently) solar power plants. For each auction,the government defines how much of theelectricity being procured is to be supplied bydifferent fuel sources and the type of contracts(quantity versus availability) per fuel source.

Sources: Bajay (n.d.); Barroso et al. (n.d.); Forster and Amazo (2016); International Renewable Energy Agency (2017); Mastropietro, et al. (2016); Maurer and Barroso (2011); and Ministryof Mines and Energy (2015)

96

CENTRALIZED AUCTION SCHEME

Colombia (on-going 9 years)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

Auction Scheme

Descendingclock auction

Instrument

Optioncontracts

The firm energy product

is a financial call optionbacked by a physicalresource (generation units)certified as being able togenerate energy when thescarcity conditions arepresent.

Note that the auction is for Firm EnergyObligations (also known as OEF) in the FirmEnergy Market.

Parties involved

• The auction facilitator is ColombianComision de Regulacion de Energia y Gas(CREG) which allocates OEFs.

• OEFs are option contracts that commitgenerating companies to supplycontracted amounts of energy at apredetermined scarcity price whenever thespot price in the electricity market exceedsthe scarcity price.

Auction Procedure

• The allocation of Firm Energy Obligations(OEFs) among different generators andinvestors is done through a dynamicauction type in which bidders participateactively, while the electricity demand ofend-users connected to the system isaggregated and represented by a price-quantity function previously established bythe regulator (CREG), i.e. elastic demandcurve, and publicly published before theauction occurs.

• The auctioneer opens the process at aprice equal to two times the Entry Cost (avalue calculated by CREG and publiclypublished before the auction occurs).Likewise, the auctioneer announces thefloor price at which this first round willclose.

• Between these two prices, bidders drawtheir firm energy supply curve and thenthis information is sent to the auctionadministrator.

• Prices obtained from auctions areguaranteed to new investors for a period ofup to twenty years in order to help them in

The first auctions were held inMay and June 2008 andallocated OEFs that last for upto twenty years, starting inDecember 2012. As a result,about 9,000 GWh per year ofOEFs were allocated to newgeneration along with62,860GWh per year allocatedto existing generation plants atan average price of14US$/MWh, i.e. auctiondetermined “option” price ofUS$14/MWh. In addition, anoption fee price is also paid. Inthe future, subsequent auctionswill be carried out at CREG’sdiscretion, i.e. whenever CREGestimates that demand forelectricity in future years cannotbe covered by existing and newplanned generation capacity.

• Prices obtained fromauctions areguaranteed to newinvestors for a periodof up to twenty yearsin order to help themin firming up theircash flows andtherefore facilitateproject finance.

• The auction is onlyconducted at thediscretion ofColombian Comisionde Regulacion deEnergia y Gas(CREG) whenever itestimates thatdemand for electricityin future years cannotbe covered byexisting and newplanned generationcapacity.

• The scheme allocatesFirm EnergyObligations (alsoknown as OEFs) tonew and existinggenerating plants inorder to guarantee asufficient long-runsupply of firm energyat prices determinedat competitiveauctions.

• There is a questionof whethergenerators will beable to deliver theirfirm energyobligations when thecall option isexercised. Thismight be a specialconcern for hydroplants whoseproductionscapability has anegative correlationwith spot prices.

• There is also aquestion of whetherholding adescending clockauction is justified.The main purpose ofa descending clockauction is pricediscovery.However,participants showedthat their reserveprices did notchange during theauction. This maybe due to theparticular types ofuncertainty faced bythe bidders. Giventhis, different auctionformats should beconsidered.

97

firming up their cash flows and thereforefacilitate project finance.

Sources: Cramton (2015); Harbord (2016); Hammons (2011); Maurer and Barroso (2011); and Moreno et al. (2010)

98

DECENTRALIZED AUCTION SCHEME

Chile (on-going 10 years)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

Auction Scheme

Combinatorialauctions

Instrument

Forwardcontract

Although generators tradetwo products in the market,energy and capacity,competition is only set interms of energy, sogenerators compete byoffering a volume and priceof energy. Nevertheless,the final contract includesvolumes and prices of both energy and capacity.

Parties involved

• The distributors themselves can organizetheir process to simultaneously auctiontheir net demand. The process, however,is subject to the supply auctioningregulator, Comision Nacional de Energia(CNE).

Rules of auction

• Distributors must be 100% contracted allthe time, at least for the next 3 years.

• Distributors must contract their energythrough auctions.

• Each distributor auctions its consumptionrequirements according to its own criteria(i.e. auction design is freely decided byeach distributor).

• A coordinated group of distributors arepermitted to organize a process in order tosimultaneously auction their net demand.

• Distributors can auction contracts for up to15 years at a fixed price (indexedaccording to changes in main variables).

• Prior to the auction, the regulator sets aprice cap for the auction which is publiclyannounced.

• Prior to the auction, a capacity price isfixed by the regulator (indexed accordingto CPI) which is publicly announced.

• The auction is cleared at a point whichbalances cost minimization and demandcoverage maximization.

Auction Procedure

• All contracts are allocated by means of amulti-objective combinatorial sealed bidmechanism which seeks cost minimizationand demand coverage maximization.

• Generators bid a specific price and energyamount (MWh when specifying a monthly

In August 2016, the Chileangovernment unveiled the resultsof its latest power tender tosupply 12,430 GWh toregulated customers starting in2021. The average winningprice was US$ 47.6/MWh. It isthe lowest price since tendersstarted nearly a decade ago.The recent Chile energyauctions, saw the lowest cost ofsolar in the world, at US$29.1/MWh. Following thistender, the governmentestimated energy bills will godown by 20% from 2021onwards. Major winners in therecent energy auction includesEndesa Chile (only conventionalsource of power generationawarded in this tender), Acciona(Spain) and WPD (Germany).

Each generator offers aprice and a volume ofenergy, and the auction iscleared at an optimum point that balances cost

minimization and demandcoverage maximization.Contract prices arepassed directly toconsumers by means of apass-through mechanism.Distributors thus have aconstant yield for theirassets, regardless ofauction results.

• An immediate

consequence of this

high degree of

decentralization is

that contracts

cannot be

standardized (i.e.

contracts are not

similar). This fact, in

turn, allows

generators to have

many possibilities

for which they can

bid, i.e. generators

can simultaneously

present different

bids (volume and

price) for various

types of contracts

according to their

preferences (risk,

supply period, etc.).

• The complex anddiscretional set ofallocation ruleswhich follows amulti-objectivecriterion in theChilean design mayincrease bidderuncertainty which, inturn, increases thelikelihood ofinefficientassignments.

99

peak and off-peak supply) for eachcontract.

• For each contract, the price-quantitysupply curve is drawn and intersected withthe respective amount of demand as in apay-as-bid auction. The generatorcapacities are not considered yet. Then,the clearing price of this auction is calledthe non-restricted mean price (NRMP).

• Constraining the allocation withgenerators’ capacity limits, all feasiblesupply conditions are determined alongwith their respective clearing prices foreach contract. Each clearing price iscalled the restricted mean price (RMP).

• For every feasible solution, the deviationbetween the NRMP and the RMP iscomputed for each contract:

𝐷𝐷𝐷𝐷𝐷𝐷𝑏𝑏,𝑐𝑐 =𝑅𝑅𝐷𝐷𝐷𝐷𝑏𝑏,𝑐𝑐

𝑁𝑁𝑅𝑅𝐷𝐷𝐷𝐷𝑏𝑏− 1

• For every feasible solution, the sum ofsquared deviations over all contracts iscalculated as

𝑆𝑆𝐷𝐷𝐷𝐷𝐷𝐷𝑐𝑐 = �(𝐷𝐷𝐷𝐷𝐷𝐷𝑏𝑏,𝑐𝑐)2𝑁𝑁

𝑏𝑏=1

• The final allocation of the auctions is givenby the condition that presents theminimum sum of squared deviations.

Sources: Hammons (2011); Maurer and Barroso (2011); Mastropietro, et al. (2016); Moreno et al. (2010); & Roy (2016)

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DECENTRALIZED AUCTION SCHEME:

Peru (on-going 10 years)Auction Scheme/

Instrument Product Info Procedure Results Pros Cons

Auction SchemeFirst-pricesealed bid forsingleproduct, andpay-as-bidauction formultiple unitsof sameproduct

InstrumentForwardcontract

• First-price sealedbid auction:concession of powerplants

• Pay-as-bid auction:mid- and long-termenergy contracts

Parties involved • Auction Regulator/s: The Ministry of

Energy and Mines determines the totalenergy to be auctioned and setsquotas for each energy type whileOSINERGMIN (government agency)is the regulator for regular auctions.

• Generators as bidders• Distributors

The basic principles of the Peruvian electricity auction system are: • The expected demand of regulated

users should be fully contracted bydistributors, at least for the next fewyears. This is monitored and enforcedby the regulatory agency.

• Distributors should call for supplyauctions at least three years beforetheir demand requirement, and with acontractual duration of no less thanfive years, which would be insufficientfor developing medium to large-scalehydro plants.

• Distributors design and manage theirown auctions (including the selectionof the demand to be contracted andthe auction mechanism), but theprocess is subject to general approvaland supervision by the regulator (i.e.OSINERGMIN) and should follow thespecific guidelines set forth in theregulations.

• Free users can request that theirdemand be incorporated into a supplyauction organized by a distributor.

In February 2016, Peru heldits fourth renewable energyauction since 2010, settingrecord-low wind and solarenergy prices for LatinAmerica at the time.Grenergy (Spain) offered abid of USD 36.8/MWh forwind, and Enel Green Power(Italy) a bid forUSD 47.9/MWh for solar PV.

The product auctionedin an energy contractincludes a demand andits “associated peakand off-peak energy.Prices offered are onlyfor energy (peak andoff-peak) and the peakvalue is remuneratedby means of theregulated capacitypayments. The energyrequirements are thensplit into two parts: aminimum fixed portion,which will beprovided/taken (andpaid) bygenerators/distributors,and a variableadditional optionalquantity (up to 20percent of the fixedquantity) requested bydistributors. The fixedpart is considered atake-or-pay portion, andthe additional volume ispaid as taken with noobligation for aminimum take. Energycontracts awarded areindexed to local fuelprices, inflation, andexchange rate

One major challengeof the auctionspreviously describedhas been to attract theparticipation of newhydroelectric plants.The major constrainthas been the three-year interval betweenthe actual auction andthe delivery ofelectricity. This is feltto be too short aperiod to allow theparticipation of newhydro plants even withthe application of aneconomic “handicap”(the discount factor) intheir offers to becompared with thosefrom othertechnologies.

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• The regulator establishes a price capfor each auction, above which no offerwould be accepted. The maximumprice is only revealed if a givenauction “round” does not cover all thedemands put out to tender and at leastone bid received is rejected because itis higher than the maximum price.

• In case the situation described aboveoccurs, a new tender is called (i.e., anew auction round).

Auction implementation in Peru has been envisioned in two basic phases.

First Phase (2006-2009) • The auctions traded products with

durations of less than five years, to bedelivered over a three-year interval.

• It adopted the first-price sealed-bidauction as the main mechanism.

• Generators were allowed to supplymonthly quantity offers (non-decreasing) and the clearingmechanism was applied on a monthlybasis.

Second Phase (2009 onwards) • Distributors are free to select their

preferred auction mechanism – eitherdescending clock mechanism or pay-as-bid auction

• Each bidder may submit up to threeregular offers (offers that span theentire duration of the contract) andthree optional offers (referring to newgeneration projects that may beginoperations up to 24 months after thecontract’s starting date). The latterare only considered in case the“regular” offers of all bidders are notenough to cover demand.

Sources: International Renewable Energy Agency (2013); International Renewable Energy Agency (2017); Maurer and Barroso (2011); and Mastropietro, et al. (2016)

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Cross-Country Comparisons of Various Key Indicators

Notes: * Scores ranging from 1 to 7, higher average score means higher degree of competitiveness** Scores ranging from -2.5 to 2.5, with higher values corresponding to better outcomes

Sources: World Bank and World Economic Forum

ENERGY-RELATED INDICATORS* COUNTRIES

Philippines Brazil Chile Colombia Peru UK US

Electricity generation (kWh per capita)** 772.21 2,892.08 4,184.22 1,462.59 1,469.00 5,200.18 13,558.37

Electricity consumption (kWh per capita) 632.81 2,591.80 3,811.54 1,127.86 1,285.02 4,822.90 12,210.36

Installed electricity capacity (mW) 17,951.00 135,023.71 20,235.66 15,529.60 11,305.30 94,387.30 1,081,414.25

Renewables share in electricity production (%) 25.64 72.90 43.52 70.01 51.67 20.99 13.54

Rate of electricity transmission-distribution losses (%) 10.30 15.12 7.01 12.28 11.22 8.16 6.15

Residential prices (US$ cents per kWh - taxes incl.) 13.91 14.96 11.30 11.53 10.33 22.11 10.31

Industrial prices (US$ cents per kWh - taxes incl.) 9.59 12.10 7.75 11.00 5.96 13.32 5.79Notes: * Available data in 2014

** Electricity generation per capita = electricity production (in 2014) / total population (in 2014)Sources: Enerdata and World Bank

INDICATORS/INDICES COUNTRIES

Philippines Brazil Chile Colombia Peru UK US

Classification by Income Lower middle Upper middle High Upper middle Upper middle High High

Macroeconomic (2016)

Population (in million) 103.32 207.65 17.91 48.65 31.77 65.64 323.13

GDP (constant 2010 US$ (in billion)) 284.48 2,248.11 269.00 366.16 193.48 2,730.70 16,865.60

GDP (current US$ (in billion)) 304.91 1,796.19 247.03 282.46 192.09 2,618.89 18,569.10

GDP per capita (constant 2010 US$) 2,753.35 10,826.27 15,019.63 7,525.86 6,089.40 41,602.98 52,194.89

GDP per capita (current US$) 2,951.07 8,649.95 13,792.93 5,805.61 6,045.65 39,899.39 57,466.79

Competitiveness (2016)*

Global 4.36 4.10 4.60 4.30 4.20 5.50 5.70

Infrastructure 3.40 4.00 4.70 3.70 3.60 6.00 5.90

Governance (2015)**

Voice and Accountability 0.14 0.38 0.99 -0.07 0.16 1.27 1.08

Political Stability and Absence of Violence -0.84 -0.38 0.40 -1.06 -0.51 0.56 0.70

Government Effectiveness 0.11 -0.19 1.08 -0.03 -0.28 1.74 1.46

Regulatory Quality -0.04 -0.21 1.35 0.45 0.49 1.86 1.30

Rule of Law -0.35 -0.19 1.33 -0.31 -0.53 1.81 1.60

Control of Corruption -0.43 -0.43 1.26 -0.29 0.60 1.87 1.38

103

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Bajay, S. (n.d.). Medium- and long-term energy planning in Brazil: How the implementation of energy efficiency and renewable

energy programs are being carried out.

Barroso, L., J. Rosenblatt, A. Guimares, B. Bezerra, & M. Pereira (n.d.). Auctions of Contracts and Energy Call Options to Ensure

Supply Adequacy in the Second Stage of the Brazilian Power Sector Reform.

Benedettini, S. (2013). "PJM and ISO-NE forward capacity markets: a critical assessment." Research Report Series n. 12.

BGS-Auction (2017). Overview. Retrieved from: http://www.bgs-auction.com/bgs.auction.overview.asp.

Business Wire (2016). “ISO New England’s Wholesale Electricity and Capacity Markets Were Competitive in 2015.” Retrieved from:

http://www.businesswire.com/news/home/20160526006006/en/ISO-England%E2%80%99s-Wholesale-Electricity-Capacity-

Markets-Competitive.

Cramton, P. (2015) Colombia Firm Energy Auction: Descending Clock or Sealed-bid? Retrieved

from http://www.creg.gov.co/phocadownload/presentaciones/cramton-colombia-firm-energy-auction-format%20v0.pdf.

de Castro, L., M. Negrete-Pincetic, and G. Gross (2008). “Product definition for future electricity supply auctions: The 2006 Illinois

experience." The Electricity Journal 21(7): 50-62.

De Virgilio, Brian (2006). "A discussion of the deregulation of the energy industry in illinois and its effects on consumers." Loy.

Consumer L. Rev. 19 (3): 256. Retrieved

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Energias de Portugal (2009). Brazilian Electricity System. Retrieved

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Engie (2016). Understanding the Capacity Market.

Forster, S., & A. Amazo (2016). Auctions for Renewable Energy Support in Brazil: Instruments and lessons learnt.

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the Global Marketplace, (Ed.), ISBN: 978-953-307-155-8, InTech. Retrieved from: http://www.intechopen.com/books/electricity-

infrastructures-in-the-global-marketplace/market-mechanismsand-supply-adequacy-in-the-power-sector-in-latin-america.

Harbord, D. (2016). CREG Expert Panel on Colombian Energy Market Reform. Retrieved

from http://apolo.creg.gov.co/Publicac.nsf/52188526a7290f8505256eee0072eba7/536e4d4ad166cd5a052580420070e8d0/$FI

LE/Circular069-2016%20Anexo2.pdf.

International Renewable Energy Agency (2013). Renewable Energy Auctions Analysing 2016 Executive Summary. Retrieved

from http://www.irena.org/DocumentDownloads/Publications/IRENA_REAuctions_summary_2017.pdf.

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Mastroprieto, P., C. Batle, L. Barroso, & P. Rodilla (2016). The Evolution of Electricity Auctions in South America. Energy Sources,

Part B: Economics, Planning, and Policy.

Maurer, L. and L. Barroso (2011). Electricity Auctions: An Overview of Efficient Practices.

Melo, E., E. Neves, & A. Costa (2009). The New Governance Structure of the Brazilian Electricity Industry: How Is It Possible To

Introduce Market Mechanisms?

Moreno, R., L. Barroso, H. Rudnick, S. Mocarquer, B. Bezerra (2010). Auction approaches of long-term contracts to ensure

generation investment in electricity markets: Lessons from the Brazilian and Chilean experiences. Energy Policy 38, pp. 5759-

5769.

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Control-VII. Revitalizing Operational Reliability, 2007 iREP Symposium. Retrieved

from: http://gross.ece.illinois.edu/files/2015/03/2007-Aug-Lessons-from-the-2006-IL-Electricity-Auction.pdf.

Orme, B. (2016). Understanding the UK’s Capacity Market.

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pubs.naruc.org/pub/53761871-2354-D714-5193-B5F43E809050.

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content/uploads/2015/07/AEC_GG_CHILE_REPORT_FINAL_Dec2016.pdf.

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White, D., M. Chang and B. Fagan (2016). 2016 BGS Auction Review: An Analysis of Utility Differences. Retrieved

from: www.synapse-energy.com/sites/default/files/BGS-Auction-Review-2016-16-030.pdf.

Woolf, F., V. Gambhir, I. Londres, & L. Simpson (2010). Brazil’s Electricity Market: A Successful Journey and An Interesting

Destination.

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Discussion Paper in Economics No 16-13.

105

SEVENTEENTH CONGRESS OF THE ] REPUBLIC OF THE PHILIPPINES ] Second Regular Session ]

SENATE

S.B. No. _______

Introduced by SEN. WIN GATCHALIAN

AN ACT

INSTITUTIONALIZING REFORMS

IN THE PROCUREMENT BY DISTRIBUTION UTILITIES

OF SUPPLY FOR THE CAPTIVE MARKET

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

CHAPTER I

GENERAL PROVISIONS

SECTION 1. Title. – This Act shall be known as the “Electricity Procurement 1

Act of 2017”. 2

3

SECTION 2. Declaration of Policy. – It is hereby declared the policy of the 4

State to ensure the quality, reliability, security, and affordability of supply of 5

electric power. To protect public interest as it is affected by the rates and 6

services of distribution utilities while the country has not yet transitioned to 7

full retail competition, the State recognizes that a Competitive Selection Process 8

in the procurement of Power Supply Contracts by distribution utilities 9

engenders transparency, enhances security of supply, and ensures stability of 10

electricity prices to captive consumers. 11

12

Annex 3b. Senate Bill 1308 (draft as presented on Aug. 9, 2017)

106

SECTION 3. Scope and Application. – This Act shall apply to any distribution 1

utility or any other entity that owns, operates, or controls one or more 2

distribution systems in the main grid and off-grid in the procurement of supply 3

for their captive market, the matter in which the procurement is to be 4

undertaken, the review process to be required, and the timelines to be observed 5

in such processes. 6

7

SECTION 4. Definition of Terms. – For purposes of this Act, the following 8

terms shall be defined as stated below: Provided, That other terms used in this 9

Act but not defined herein shall be understood to mean the way they are 10

defined in Republic Act No. 9136 or the Electric Power Industry Reform Act of 11

2001 and its Implementing Rules and Regulations: 12

13

a) Bid – the offer of a price by a generation company or a wholesale14

aggregator during the CSP bidding to serve the power demand volume15

put forward for sale by a distribution utility or a demand aggregator:16

Provided, That the price shall be the generation charge per kilowatt hour17

which must be inclusive of all costs that will be passed on or charged by18

the generation company or wholesale aggregator including but not19

limited to the following:20

i. capital recovery fee,21

ii. fixed operations and management fee,22

iii. variable operations and management fee,23

iv. fuel cost which can be, at the option of the distribution utility24

and as stated in the Invitation to Bid, a fixed price, or based on25

an independent source of forecast of fuel prices, or derived from26

a formula provided in the Invitation to Bid;27

v. start-up cost,28

vi. replacement capacity cost,29

vii. line rental cost, and30

viii. all other costs as may be included by ERC as part of the31

computation of the generation charge.32

33

b) Captive Market – refers to the electricity end-users who do not have the34

choice of a supplier of electricity, as may be determined by the Energy35

107

Regulatory Commission, in accordance with Republic Act No. 9136 or the 1

Electric Power Industry Reform Act of 2001; 2

3

c) Competitive Selection Process (CSP) – refers to a process wherein a4

distribution utility or a group of distribution utilities, on their own or5

through a Demand Aggregator, undertake a transparent and competitive6

procurement of Power Supply Contracts, in accordance with the7

provisions of this Act.8

9

d) Demand Aggregator – refers to a person or entity registered with the10

Energy Regulatory Commission, engaged in consolidating the power11

demand of distribution utilities for the purpose of subjecting it to a CSP:12

Provided, That demand aggregators serve as mere representatives of13

distribution utilities in the CSP and do not have the legal personality to14

enter into a PSC on behalf of the distribution utilities;15

16

e) Department of Energy (DOE) – refers to the government agency created17

pursuant to Republic Act No. 7638 or the Department of Energy Act of18

1995, and whose functions were expanded by Republic Act No. 9136 or19

the Electric Power Industry Reform Act of 2001;20

21

f) Distribution Utility – refers to any electric cooperative, private22

corporation, government-owned utility, or existing local government unit23

which has an exclusive franchise to operate a distribution system24

including those whose franchise covers economic zones;25

26

g) Energy Regulatory Commission (ERC) – refers to the regulatory body27

created pursuant to Republic Act No. 9136 or the Electric Power Industry28

Reform Act of 2001;29

30

h) EPIRA – refers to Republic Act No. 9136, otherwise known as the Electric31

Power Industry Reform Act of 2001;32

33

i) Electric Cooperative – refers to a distribution utility organized pursuant34

to Presidential Decree No. 269, as amended, or as otherwise provided in35

the EPIRA;36

37

108

j) Generation Company – refers to any person or entity authorized to1

operate facilities used in the generation of electricity;2

3

k) Invitation to Bid – refers to the invitation for generation companies and4

wholesale aggregators to submit a bid for a volume of power demand put5

forward for sale by a distribution utility or a group of distribution6

utilities, or a demand aggregator which includes, but shall not be limited7

to, the following information:8

i. Eligibility requirements,9

ii. Date, time, and place of submission of eligibility10

requirements,11

iii. Date of pre-bid conference,12

iv. Description of the load requirement,13

v. Contract period: Provided, That is shall not be greater than14

five (5) years,15

vi. General conditions of the PSC,16

vii. Specific conditions of the PSC, and17

viii. Such other necessary information deemed necessary by the18

Third Party Auctioneer.19

20

l) Market Operator – the operator of the Wholesale Electricity Spot Market21

as established by the DOE pursuant to the EPIRA;22

23

m) Power Supply Contract (PSC) – refers to a contract between a generation24

company or a wholesale aggregator and a distribution utility whereby the25

latter purchases electricity from the former: Provided, That the contract26

resulted from a CSP: Provided further, That the CSP has been confirmed27

by the ERC as having complied with all requirements and procedures in28

accordance with this Act and the CSP Rules;29

30

n) Power Supply Procurement Management Plan (PSPMP) – refers to a31

distribution utility’s assessment of a variety of its demand side and32

supply side resources, pursuant to and consistent with its Distribution33

Development Plan resulting to a comprehensive power supply34

procurement schedule to meet customer electricity demand while35

ensuring an optimal supply mix for its captive market;36

37

109

o) Reserve Price – refers to the price set by ERC as a ceiling for each1

particular CSP;2

3

p) Third Party Auctioneer – refers to the entity mandated to under the4

CSP as described in Section 8 of this Act; and5

6

q) Wholesale Aggregator – refers to any person or entity, other than a7

generation company, issued a Certificate of Registration by ERC to sell8

electricity to Distribution Utilities by combining generation capacities of9

Generation Companies.10

1112

CHAPTER II 1314

COMPETITIVE SELECTION PROCESS 15161718

SECTION 5. General Principles. – Subject to all the other provisions of this 19

Act and the CSP Rules, all CSPs shall be governed by the following principles: 20

a) Distribution utilities shall determine the volume of power demand they21

shall put forward for sale through a CSP: Provided, That it shall be at22

least 70% of their total power demand requirement;23

b) Distribution utilities shall determine the schedules of their respective24

CSPs;25

c) Distribution utilities can only undertake a CSP if it is in conformity with26

their approved PSPMPs;27

d) The Third Party Auctioneer shall be the sole body that coordinates and28

conducts all CSPs;29

e) The Third Party Auctioneer shall procure and manage a secure software-30

based platform for the bidding component of the CSP;31

f) The Third Party Auctioneer shall be liable for any negligence or abuse in32

the conduct of the CSP;33

g) The Third Party Auctioneer shall be entitled to recover its just and34

reasonable costs as well as a reasonable return in its operations;35

h) The Third Party Auctioneer shall be regulated by the ERC;36

i) All CSPs shall have uniform requirements and procedures;37

j) All CSPs shall have standardized forms, documents, and contracts;38

k) Each CSP shall be completed within a reasonable period of time;39

110

l) Each CSP shall have an undisclosed reserve price as determined by the1

ERC;2

m) The power of review of ERC shall be limited to verifying whether each3

CSP has complied with all procedures and requirements as specified in4

this Act and the CSP Rules;5

n) PSCs can only be entered into as a result of a CSP; and6

o) Distribution utilities, generation companies, wholesale aggregators, and7

other signatories to the PSC shall be liable for all provisions in the said8

contract.9

10

SECTION 6. Participants. – The participants to the CSP are duly-registered 11

distribution utilities, demand aggregators, generation companies, and 12

wholesale aggregators. Distribution utilities and demand aggregators shall put 13

forward, as their product, a volume of power demand for sale. Generation 14

companies and wholesale aggregators shall tender a bid for the product offered. 15

16

SECTION 7. CSP Rules. – The CSP Rules, which shall serve as this Act’s 17

implementing rules and regulations, shall be formulated by ERC in 18

coordination with DOE and NEA and in consulation with all stakeholders 19

within sixty (60) days from the promulgation of this Act. The CSP Rules shall 20

include but shall not be limited to the following matters: 21

a) Rules governing the Third Party Auctioneer including but not limited to:22

i. Detailed scope of work,23

ii. Bonds and guarantees,24

iii. Costs and return recovery mechanisms,25

iv. Monitoring and evaluation framework,26

v. Prohibited acts, and27

vi. Fines and penalties;28

b) Rules for registration of all CSP participants with the Third Party29

Auctioneer;30

c) Rules for registration of demand aggregators;31

d) Rules for certification of wholesale aggregators;32

e) Detailed procedure and timeline for a CSP: Provided, That it shall comply33

with Section Chapters II and III of this Act: Provided further, That a CSP34

111

shall not exceed sixty (60) days from the advertisement of the invitation 1

to bid until the verification of ERC; 2

f) Rules for determination of the reserve price for a CSP;3

g) Standardized contents of an Invitation to Bid;4

h) Standardized general conditions of a PSC: Provided, That it shall comply5

with Section 11 of this Act;6

i) Guidance in the preparation of the particular conditions of a PSC:7

Provided, That it shall comply with Section 11 of this Act;8

j) Procedure and requirements for reconsideration and complaints in9

accordance with Sections 13 and 18 of this Act;10

k) Procedure and requirements for negotiated PSCs by distribution utilities11

in accordance with Section 17 of this Act; and12

l) Other such rules, procedures, and requirements that will ensure the13

effective implementation of this Act.14

1516

SECTION 8. Third Party Auctioneer. –The Third Party Auctioneer shall 17

intially the be the Market Operator: Provided, That three (3) years from the 18

effectivity of this Act, the ERC shall review the performance of the Market 19

Operator according to a monitoring and evaluation framework incorporated in 20

the CSP Rules. 21

Should the ERC find that the Market Operator did not substantially meet 22

the performance targets in the monitoring and evaluation framework and/or it 23

has been found guilty of neglience and/or abuse, it may procure a new Third 24

Party Auctioneer in compliance with all laws and IRRs related to government 25

procurement. In this case, the ERC shall determine the contents of the bidding 26

documents for the new Third Party Auctioneer in accordance with this Act and 27

the CSP Rules: Provided, That the Third Party Auctioneer shall be a team of 28

private individuals or a private corporation duly recognized in the Philippines, 29

with no direct or indirect interest in any generation company and/or 30

distribution utility, having vast experience in competitive bidding and a 31

comprehensive knowledge of the electric power industry, and a demonstrated 32

ability to manage and conduct the CSP: Provided, further, That the performance 33

of the new Third Party Auctioneer, and any other Third Party Auctioneer 34

thereafter, shall be reviewed by the ERC every three (3) years. 35

36

112

SECTION 9. Preliminary Matters. – After the promulgation of the CSP Rules, 1

all present and future participants in the CSP shall register in accordance with 2

Section 7 of this Act: Provided, that such registration will serve as the contract 3

between the Third Party Auctioneer and the CSP participant with regards to 4

their respective duties, responsibilities, guarantees, and liabilities. Afterwhich, 5

all CSP participants shall undergo training in accessing and using the CSP 6

software-based platform to be utilized by by the Third Party Auctioneer. 7

8

SECTION 10. Power Supply Procurement Management Plan. – Every 9

distribution utility shall prepare and submit its PSPMP to the DOE as part of 10

its annual submission of the Distribution Development Plan, and undertake a 11

cost-benefit analysis of the power supply requirements for its captive market 12

taking into consideration, among others, prevailing price in the market, energy 13

demand forecasting, load matrix, and existing DOE policies, including but not 14

limited to the Power Development Plan, the National Renewable Energy Plan, 15

the Renewable Portfolio Standard, and Retail Competition and Open Access. 16

The PSPMP shall be updated annually and approved by the Board of 17

Directors of the distribution utility and submitted to DOE on or before the 15th 18

of March. In the case of electric cooperatives, the submission shall include the 19

NEA: Provided, That NEA shall provide the necessary assistance to electric 20

cooperatives to equip them in the creation of their respective PSPMPs. 21

DOE, with NEA in the case of electric cooperatives, shall endorse the 22

submitted PSPMP within sixty (60) days from receipt to ERC and the Third 23

Party Auctioneer. For purposes of transparency, the endorsed PSPMPs shall be 24

posted by the DOE in the electronic portal as provided for under Section 20 of 25

this Act. 26

The contents of the PSPMP shall include but shall not be limited to the 27

following information: 28

a) Planning and acquisition period and schedule;29

b) Demand forecast, forecasted load profile, and load duration curve;30

c) Additional resource requirements, if applicable;31

d) Resource acquisition plan, if applicable;32

e) Demand side management programs, if applicable;33

113

f) Mandated renewable energy quota pursuant to the Renewable Portfolio1

Standards under the Renewable Energy Act, if applicable; and2

g) Any additional information that DOE, in consultation with ERC, may3

require.4

5

SECTION 11. Standardized Contracts. – All contracts, forms and documents 6

used during the CSP shall be standardized and unified. The ERC, in 7

consultation with stakeholders, shall develop generic forms, standard bidding 8

documents, and standard PSCs subject to the provisions of this Section. 9

Standard PSCs shall have general conditions and particular conditions. 10

The general conditions refer to the portion of the contract which provides for 11

terms generally applicable to all PSCs, such as but not limited to: 12

a) Definitions and interpretations;13

b) Obligations and deliveries;14

c) Event of default;15

d) Dispute resolution;16

e) Scope of work;17

f) Representation and warranties;18

g) Replacement power;19

h) Default;20

i) Bond and guarantees;21

j) Treatment of taxes and other governmental charges; and22

k) Penalties for delay, non-performance of contract, and breach of23

confidentiality.24

The particular conditions refer to the conditions of specific application to25

the demand needs of distribution utilities and the project-specific clauses in 26

the contract such as but not limited to: 27

a) Load requirement;28

b) Contract period: Provided, That is shall not be greater than five (5) years;29

c) Price per kWh equal to the winning bid of the CSP;30

d) All costs included in the winning bid;31

e) Peso conversion methodology;32

f) Method of procurement of fuel, if applicable;33

g) Form and method of payment;34

114

h) Availability declaration, nomination, WESM offers, and general dispatch;1

i) Power plant source;2

j) Installed, net, and dependable capacity;3

k) Allowable number of scheduled and unscheduled shutdowns;4

l) Target commercial date of operation of the power plant, if applicable; and5

m) Minimum energy offtake, if applicable.6

7

SECTION 12. Pre-Qualification. – The Third Party Auctioneer shall annually 8

make a provisional schedule of all CSPs in the next three (3) years based on the 9

schedule and information contained in the PSPMPs of all distribution utilities. 10

All distribution utilities shall inform the Third Party Auctioneer at least three 11

(3) months before its scheduled CSP in order to decide on the following12

matters: 13

a) Whether or not the distribution utility will aggregate its demand with14

other distribution utilities, and if so whether it will be represented by a15

demand aggregator;16

b) Specific details and conditions of the Invitation to Bid, PSC, and other17

necessary forms and documents;18

c) Schedule of the entire CSP; and19

d) Other matters as the distribution utility and the Third Party Auctioneer20

deem necessary.21

Upon finalization of the specific details and conditions of the Invitation to 22

Bid, PSC, and other necessary forms and documents, the Third Party 23

Auctioneer shall submit all documents to the ERC at least one (1) month before 24

the scheduled CSP for a determination of the reserve price. The ERC shall then 25

forward the reserve price to the Third Party Auctioneer on the day of the 26

competitive bidding: Provided, That the Third Party Auctioneer is prohibited 27

from disclosing the reserve price to any party until the confirmation of the 28

results. 29

30

SECTION 13. Qualification. – The qualification period starts with the 31

advertisement of the invitation to bid. It shall be followed by the pre-bid 32

conference and any other process indicated in the CSP Rules. It shall end with 33

the elibility screening. 34

During the qualification stage, the Third Party Auctioneer determines 1

who is eligible to participate in the competitive bidding based on the Invitation 2

to Bid, PSC, and other forms and documents. 3

Participants who are considered ineligible and disqualified may seek a 4

reconsideration from the Third Party Auctioneer within five (5) calendar days 5

from release of the results of the eligiblity screening which must be acted upon 6

by the Third Party Auctioneer within three (3) calendar days. 7

8

SECTION 14. Competitive Bidding. – All eligible generation companies 9

and/or wholesale aggregators shall participate in the competitive bidding 10

through a software-based platform provided by the Third Party Auctioneer: 11

Provided, That the actual bidding shall not exceed one (1) day. 12

13

SECTION 15. Confirmation and Verification. – On the same day of the actual 14

bidding, the Third Party Auctioneer shall issue an bidding report containing the 15

results and as confirmed by the observers in compliance with Section 19 of this 16

Act: Provided, That such report shall include the list and details of all bids 17

offered including the ERC-determined reserve price. 18

Within five (5) calendar days from the date of actual bidding, the Third 19

Party Auctioneer shall submit a comprehensive report to the ERC on the CSP 20

as well as documentary requirements to support the same: Provided, That the 21

comprehensive report shall include the details of each stage of the CSP. 22

Within ten (10) calendar days from receipt of the comprehensive report, 23

the ERC shall issue a verification to the Third Party Auctioneer, the 24

distribution utility concerned, and the winning generation company or 25

wholesale aggregator whether the CSP has complied with all procedures and 26

requirements as stated in this Act and the CSP Rules. 27

Upon receipt of a positive verification, the distribution utility and the 28

winning generation company or wholesale aggregator can sign the PSC: 29

Provided, That a copy thereof shall be provided to the ERC. 30

31

SECTION 16. Non-Verification. – Upon receipt of a negative verification, the 32

entire CSP shall be repeated: Provided, That the ERC shall impose fines and

115

33

116

penalties on the Third Party Auctioneer: Provided further, That the ERC, motu 1

poprio or upon complaint, may initiate an investigation against the Third Party 2

Auctioneer for alleged negligence or abuse in the CSP: Provided finally, That 3

this is without prejudice to any civil or criminal case against the Third Party 4

Auctioneer. 5

6

SECTION 17. Exemptions from Competitive Selection Process. – A 7

distribution utility may be exempted from a CSP on the basis of force majeure 8

or an emergency: Provided, That it has filed the necessary petition before the 9

ERC, and the latter has found reasonable evidence to support the occurrence 10

of a force majeure event or the existence of an emergency: Provided further, 11

That such an emergency is not a result of the distribution utility’s negligence or 12

willful act in order to be exempted from the CSP. A distribution utility shall 13

start negotiating its PSC once ERC has issued its CSP exemption certificate. In 14

cases of CSP exemption, ERC shall exercise its rate-making and review power 15

over the negotiated PSC. 16

17

SECTION 18. Negligence and Abuse. – Any allegation of negligence and/or 18

abuse on the part of the Third Party Auctioneer at any stage of the CSP shall be 19

filed with the ERC within five (5) calendar days from the occurrence of the said 20

act/s: Provided, That this is without prejudice to any civil or criminal case 21

against the Third Party Auctioneer: Provided further, That no temporary 22

restraining order shall be issued against an ongoing CSP as it is imbued with 23

public interest. 24

25

CHAPTER III 2627

TRANSPARENCY 2829

SECTION 19. Observers. – The Third Party Auctioneer shall, in all stages of 30

the CSP, ensure that there shall be present at least one (1) observer from the 31

DOE, ERC, and in the case of electric cooperatives, the NEA: Provided, That the 32

said person/s do not have any direct or indirect interest in the PSCs subject to 33

CSP. The observers shall: 34

a) Confirm the bidding results of the CSP;35

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b) Submit a independent report on the CSP to the ERC within five (5)1

calendar days from the date of the actual bidding; and2

c) Keep in strict confidence all information acquired by virtue of the3

proceedings while the CSP is still on-going.4

Any observer who commits a breach of confidentiality shall be subject to5

the administrative disciplinary action under this Act, without prejudice to any 6

civil or criminal action. 7

8

SECTION 20. Electronic Portal. – The ERC shall develop a portal which shall 9

serve as the primary source of information on the CSP: Provided, That the ERC 10

shall ensure the integrity, security, and confidentiality of all documents 11

submitted through the portal. 12

In all stages of the CSP, the Third Party Auctioneer shall ensure that 13

information from generation companies and distribution utilities shall be 14

posted in the electronic portal to ensure equal access of information to the CSP 15

participants. 16

17

CHAPTER IV 1819

PROHIBITED ACTS AND PENALTIES 20212223

SECTION 21. Confidentiality. – Prior to their official release, no aspect of the 24

documents used in any CSP shall be divulged or released to any prospective 25

generation company, distribution utility, or any other person or entity having 26

direct or indirect interest in the PSAs subject of CSP. 27

28

SECTION 22. Administrative Offenses. – The following acts, when committed 29

by a government official and/or employee, shall be considered administrative 30

offenses: 31

a) Breach of confidentiality as provided under Section 19 and 21 of this Act;32

b) Willful acts which delay the operationalization of the CSP; and33

c) Failure to comply with the mandated timelines prescribed to perform34

specific acts defined under this Act.35

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1

SECTION 23. Administrative Penalties. – Any person found guilty of the Act 2

stated in Sec. 22 (a), on the first offense shall be suspended from service for six 3

(6) months and one (1) day to one (1) year without pay, and on the second4

offense shall be dismissed from service and shall be perpetually disqualified 5

from re-employment in any government agency or instrumentality. 6

Any person found guilty of the Act stated in Sec. 22 (b), on the first 7

offense shall be suspended from service for six (6) months and one (1) day to 8

one (1) year without pay, and on the second offense shall be dismissed from 9

service and shall be perpetually disqualified from re-employment in any 10

government agency or instrumentality. 11

Any person found guilty of the Act stated in Sec. 22 (c), on the first 12

offense shall be reprimanded, on the second offense shall be suspended from 13

service for one (1) to thirty (30) days, and on the third offense shall be 14

dismissed from service and shall be perpetually disqualified from re-15

employment in any government agency or instrumentality. 16

17

CHAPTER V 1819

FINAL PROVISIONS 2021

SECTION 24. Transitory Provision. –Pending the creation and effectivity of 22

CSP Rules, the existing ERC Resolution requiring a CSP shall continue to 23

apply. 24

25

SECTION 25. Separability Clause. – If, for any reason, any provision of this 26

Act is declared to be unconstitutional or invalid, the other sections or 27

provisions hereof which are not affected thereby shall continue to be in full 28

force or effect. 29

30

SECTION 26. Repealing Clause. – All laws, decrees, orders, rules and 31

regulations or parts thereof which are inconsistent with or contrary to the 32

provisions of this Act are hereby repealed, amended or modified accordingly. 33

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1

SECTION 27. Effectivity. – This Act shall take effect fifteen (15) days after its2

publication in at least two (2) national newspapers of general circulation. 3

4

Approved. 5

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  United  States  of  America  Boston  University,  Department  of  Economics      

Masters   CAS  EC571   Energy  and  Environmental  Economics  

Environmental  resources  and  markets  characterized  from  physical,  economic,  and  legal  standpoints.  Welfare  arguments  for  public-­‐‑sector  intervention.  Methodologies  for  policy  assessment  and  simulation  analyzed,  including  project  analysis,  new  technology,  evaluation  models,  deterministic  and  econometric  models.  

http://www.bu.edu/econ/  

Yale  University,  Department  of  Economics      

Undergraduate   Econ  452b   Contemporary  Issues  in  Energy  Policy  

This  course  provides  an  overview  of  the  challenges  in  the  global  energy  framework  generated  by  the  increasing  concerns  about  energy  security  and  climate  change.  A  number  of  energy  sources  and  technological  options  will  be  examined  with  particular  emphasis  on  their  environmental,  social,  and  economic  tradeoffs.  Specific  areas  of  focus  will  include:  the  availability  of  secure,  economically  feasible,  yet  environmentally  unattractive  fossil  fuel  options;  the  technical  and  economic  challenges  facing  the  new  energy  sources  and  the  type  of  policies  that  will  be  needed  to  facilitate  the  transition  to  a  low-­‐‑carbon  and  more  efficient  energy  economy;  the  promises  and  limitations  of  renewable  energy  systems;  the  new  energy  revolution  fueled  by  significant  shale  oil  and  gas  reserves  around  the  globe;  and  the  promises  and  perils  of  nuclear  power.  

http://economics.yale.edu/  

Survey of Energy Economics Course Offerings abroadAnnex 4. Proposed Course Syllabus on Power Sector Economics

120

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  Undergraduate   Econ  331a   The  Economics  

of  Energy  and  Climate  Change  

The  essentials  of  energy  and  environmental  economics,  with  applications.  Analysis  of  core  topics  in  public  goods,  intertemporal  choice,  uncertainty,  decision  theory,  and  exhaustible  resources.  Applications  include  energy  security,  nuclear  power,  the  relationship  between  nuclear  power  and  nuclear  proliferation,  and  climate  change.  

http://economics.yale.edu/  

Stanford  University,  Department  of  Economics  

Undergraduate   Econ  17N   Energy,  the  Environment,  and  the  Economy  

Examines  the  intimate  relationship  between  environmental  quality  and  the  production  and  consumption  of  energy.  Assesses  the  economics  efficiency  and  political  economy  implications  of  a  number  of  current  topics  in  energy  and  environmental  economics.  Topics  include:  the  economic  theory  of  exhaustible  resources,  Greenhouse  Gas  Emissions  (GHG)  control  (cap  and  trade  mechanisms  and  carbon  fees),  GHG  emissions  offsets,  the  Strategic  Petroleum  Reserve  (SPR),  the  "smart"  transmission  grid  for  electricity,  nuclear  energy  and  nuclear  waste,  the  real  cost  of  renewable  energy,  natural  gas  and  coal-­‐‑fired  electricity  production,  the  global  coal  and  natural  gas  markets,  Corporate  Average  Fuel  Efficiency  (CAFE)  and  Low-­‐‑Carbon  Fuel  Standards  (LCFS),  Energy  Efficiency  Investments  and  Demand  Response,  and  Carbon  Capture  and  Sequestration  (CCS).  For  all  topics,  there  will  be  reading  to  explain  the  economics  and  engineering  behind  

https://economics.stanford.edu/courses  

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University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  the  topic  and  class  discussion  to  clarify  and  elaborate  on  this  interaction.  

Undergraduate   Econ  251   Natural  Resource  and  Energy  Economics  

Economic  theory  and  empirical  analysis  of  non-­‐‑renewable  and  renewable  natural  resources,  with  considerable  attention  to  energy  provision  and  use.  Topics  include:  exhaustible  resources;  renewable  resources;  and  energy  industry  market  structure,  pricing,  and  performance  

Rice  University,  Department  of  Economics  

Masters  in  Energy  Economics  

Econ  437   Energy  Economics  

Discussion  of  key  aspects  in  the  supply  and  demand  of  energy.  Topics  include  optimal  extraction  of  depletable  resources,  transportation,  storage,  end-­‐‑use  and  efficiency,  and  the  relationship  between  economic  activity,  energy,  and  the  environment.  

More  courses  in  Masters  in  Energy  Economics  can  be  read  here:    

https://economics.rice.edu/  

Econ  620   Industrial  Org  &  Energy  Sector  

The  course  will  discuss  monopoly,  oligopoly,  and  the  underlying  sources  of  monopoly  power  in  energy  industries  and  how  the  industries  can  be  restructured  to  isolate  the  monopoly  elements  from  the  more  competitive  ones.  Other  topics  include  price  discrimination,  vertical  control,  mergers  and  acquisitions,  and  strategic  behavior  between  firms.  

Econ  610   Energy  &  The  Macroeconomy  

Discusses  connections  between  energy  and  economic  activity  at  the  regional,  national,  and  international  level,  and  especially  the  role  of  energy  shocks  in  economic  fluctuations,  innovations  in  energy  supply  as  drivers  of  regional  economic  growth,  and  the  role  of  energy  

122

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  commodities  in  transportation  and  international  trade.  

Econ  601   Energy  Economics  I  

Introduces  the  energy  sector  to  students,  discusses  key  aspects  of  energy  supply,  demand  and  pricing,  and  is  foundational  for  the  MEECON  degree.  Topics  include  optimal  extraction  of  depletable  resources,  trade  of  energy  commodities,  storage,  end-­‐‑use  demand  and  energy  efficiency,  and  the  relationship  between  economic  activity,  energy  and  the  environment.  

Econ  604   Energy  Economics  II  

Explores  a  variety  of  topics  in  energy  modeling  and  energy  data  analysis.  Topics  include  optimal  extraction  of  depletable  resources,  game  theoretic  approaches  to  OPEC  behavior,  national  oil  company  behavior,  models  of  storable  energy  commodities,  energy  demand  by  end-­‐‑use  sector,  energy  security  and  fundamental  drivers  of  commodity  prices.    

University  of  Arizona,  Department  of  Economics  

Doctoral   ECON  696W   Environmental  and  Energy  Economics  -­‐‑  Empirical  

The  analysis  of  important  and  current  empirical  topics  in  environmental  and  energy  economics.  It  begins  with  a  brief  introduction  to  some  of  the  most  important  theoretical  ideas  of  environmental  economics  and  then  dives  into  recent  empirical  analyses  of  the  costs  and  benefits  of  environmental  and  energy  issues.  Topics  will  include:  economic  and  health  costs  of  pollution,  wholesale  and  retail  electricity  markets,  household  energy  behavior,  emissions  markets,  the  effects  of  environmental  

https://econ.arizona.edu/undergraduate  

123

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  regulation  on  firms,  fuel  economy  standards  and  gasoline  taxes,  and  the  relationship  between  the  environment  and  economic  development.  

Doctoral   Econ  696V   Environmental  and  Energy:  Applied  Theory  

Using  formal  economic  analysis  to  provide  new  perspectives  on  environmental  questions.    The  first  half  of  the  course  emphasizes  methods  for  dynamic  analysis  and  numerical  techniques  for  dynamic  optimization,  with  special  application  to  climate  economics.    The  second  half  studies  theoretical  approaches  to  a  core  set  of  environmental  and  energy  topics,  including  decision-­‐‑making  under  uncertainty.  

Undergraduate   Econ  473   Energy  Markets  and  Environmental  Economics  

Economic  analysis  of  various  markets  for  energy  and  the  impact  of  energy  production  and  consumption  on  the  environment.  

University  of  California,  San  Diego,  Economics  Department  

Undergraduate   Econ  132   Energy  Economics  

Energy  from  an  economic  perspective.  Fuel  cycles  for  coal,  hydro,  nuclear,  oil,  and  solar  energy.  Emphasis  on  efficiency  and  control  of  pollution.  Comparison  of  energy  use  across  sectors  and  across  countries.  Global  warming.  Role  of  energy  in  the  international  economy.  

http://www.ucsd.edu/catalog/courses/ECON.html  

Georgetown  University,  Economics  Department  

Masters  

Energy  Institute  at  Haas  

MBA212  /  EWMBA212.1  

Energy  and  Environmental  Markets  

Drawing  on  the  tools  of  economics  and  finance,  we  study  the  business  and  public  policy  issues  that  these  changes  

124

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  have  raised  in  energy  markets.  Topics  include  the  development  and  effect  of  organized  spot,  futures,  and  derivative  markets  in  energy;  the  political  economy  of  deregulation;  climate  change,  environmental  policy  and  the  emerging  markets  for  green  energy;  market  power  and  antitrust;  and  the  transportation  and  storage  of  energy  commodities.  We  examine  the  economic  determinants  of  industry  structure  and  evolution  of  competition  among  firms  in  these  industries;  investigate  successful  and  unsuccessful  strategies  for  entering  new  markets  and  competing  in  existing  markets;  and  analyze  the  rationale  for  and  effects  of  public  policies  in  energy  and  environmental  markets.  

Massachusetts  Institute  of  Technology    (open  university)  

Undergraduate   14.44/14.444   Energy  Economics  

This  course  explores  the  theoretical  and  empirical  perspectives  on  individual  and  industrial  demand  for  energy,  energy  supply,  energy  markets,  and  public  policies  affecting  energy  markets.  It  discusses  aspects  of  the  oil,  natural  gas,  electricity,  and  nuclear  power  sectors  and  examines  energy  tax,  price  regulation,  deregulation,  energy  efficiency  and  policies  for  controlling  emission.  

https://ocw.mit.edu/courses/economics/14-­‐‑44-­‐‑energy-­‐‑economics-­‐‑spring-­‐‑2007/  

Colorado  School  of  Mines  

MS  Mineral  and  Energy  Economics  

EBGN  430/530  

Energy  Economics  

Application  of  models  to  understand  markets  for  oil,  gas,  coal,  electricity,  and  renewable  energy  resources.  Models,  modeling  techniques,  and  issued  included  are  supply  and  demand,  market  structure,  transportation  

http://inside.mines.edu/UserFiles/File/economicsBusiness/Syllabus/graduate%20courses/EBGN%20530%20F17.pdf  

125

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  models,  game  theory,  futures  markets,  environmental  issues,  energy  policy,  energy  regulation,  input/output  models,  energy  conservation,  and  dynamic  optimization.  The  emphasis  in  the  course  is  on  the  development  of  appropriate  models  and  their  application  to  current  issues  in  energy  markets.  

Colorado  School  of  Mines  

PHD  Mineral  and  Energy  Economics  

EBGN  521   Micro  of  Mineral  and  Energy  Markets  

The  second  of  two  courses  dealing  with  applied  microeconomic  theory.  This  part  concentrates  on  the  behavior  of  the  minerals  and  energy  segment  of  the  economy,  the  theory  of  production  and  cost,  derived  demand,  price  and  output  level  determination  by  firms,  and  the  competitive  structure  of  product  and  input  markets.  

http://inside.mines.edu/UserFiles/File/economicsBusiness/Syllabus/graduate%20courses/EBGN%20521%20S17.pdf  

EBGN575   Advanced  Mining  and  Energy  Valuation  

The  use  of  stochastic  and  option  pricing  techniques  in  mineral  and  energy  asset  valuation.  The  Hotelling  Valuation  Principle.  The  measurement  of  political  risk  and  its  impact  on  project  value.  

http://inside.mines.edu/UserFiles/File/economicsBusiness/Syllabus/graduate%20courses/EBGN%20575%20S17.pdf  

126

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  

Australian  College  of  Asia  and  the  Pacific  

Master  of  Energy  Change  

IDEC8089   Energy  Economics  

The  course  examines  the  role  of  energy  in  economic  activity,  economic  methods  of  assessing  energy  technologies,  projects,  and  policies,  and  debates  concerning  alternative  future  energy  scenarios.  Both  fossil  fuels  and  renewable  and  nuclear  energy  sources  will  be  studied  as  well  as  energy  efficiency  and  conservation.  Additional  topics  include  the  environmental  impacts  of  energy  use  including  climate  change  and  the  role  of  energy  in  economic  development.  

http://programsandcourses.anu.edu.au/2018/course/IDEC8089  

Asia  Nanyang  Technological  University  Singapore  (Asian  School  of  Environment)  

HE3010   Energy  Economics  

This  course  seeks  to  give  students  an  introduction  to  the  economics  of  energy  use  and  its  relationship  with  the  environment.  It  looks  at  energy  demand  and  supply,  both  now  and  in  the  future,  and  energy  markets  and  trading  (in  particular,  in  oil  markets).  Alternative  energy  supply  technologies  and  the  economics  of  renewable  resources  are  also  examined.  Issues  such  as  monopoly  power  in  electricity  markets  and  regulation  and  deregulation  in  such  markets  will  also  be  discussed.  Finally,  it  deals  with  issues  relating  to  energy  security  and  the  effect  of  energy  use  on  the  environment  and  climate  change.  

http://www.ase.ntu.edu.sg/course/energy-­‐‑economics  

Oceania  

127

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  The  Hong  Kong  Polytechnic  University  (School  of  Accounting  and  Finance)  

Master  of  Finance  (Financial  Economics  in  Energy  and  Environment)  

AF5633   Economics  of  World  Energy  Markets  

Energy  is  a  critical  resource  for  the  functioning  of  a  modern  economy.  The  energy-­‐‑environment-­‐‑economy  interactions  are  now  of  increasing  importance  to  businesses,  policy  makers  and  civil  societies.  This  course  explores  the  theoretical  and  empirical  perspectives  on  the  demand  for  energy  at  sectoral  and  country  levels,  energy  supply,  energy  markets,  and  public  policies  affecting  energy  markets.  It  discusses  aspects  of  crude  oil,  natural  gas,  coal,  electricity,  renewable  and  nuclear  energies,  and  examines  energy-­‐‑related  issues  like  energy  security  and  greenhouse  gases  emissions.  

http://www.af.polyu.edu.hk/syllabus/2017-­‐‑18/AF5633_MoF_EEE.pdf  

Europe  University  of  Münster,  Germany  

Master  of  Science  in  Economics  

VWL  MWP  46   Advanced  Energy  and  Resource  Economics  

The  Energy  Economics  seminar  deals  with  the  economic  issues  in  the  energy  economy.  The  Resource  Economics  seminar  mainly  deals  with  the  economic  problems  which  are  associated  with  the  use  of  energy-­‐‑related  resources.  The  students  work  on  scientific  seminar  papers  on  a  specific  topic  which  they  are  to  defend  during  the  seminar.  

http://www.wiwi.uni-­‐‑muenster.de/pruefungsamt/downloads/modulhandbuecher/master/Master_VWL_Economics_Modulhandbuch_PO2015_EN_Stand_2016_02_23.pdf  

128

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  VWL  MWP47   Applied  Energy  

Economics  The  module  “Applied  Energy  Economics”  will  look  at  practical  issues  of  the  energy  sector.  The  lecture  discusses  current  problems  in  energy  and  environmental  policy  and  emphasizes  technical  and  business-­‐‑management  aspects  of  the  energy  system  in  Germany  and  Europe.  If  possible,  the  exercise  will  be  in  conjunction  with  a  subject-­‐‑specific  excursion.  Lecture  and  exercise  are  offered  in  block  courses.  

http://www.wiwi.uni-­‐‑muenster.de/pruefungsamt/downloads/modulhandbuecher/master/Master_VWL_Economics_Modulhandbuch_PO2015_EN_Stand_2016_02_23.pdf  

Undergrad   VWL  9   Energy  Economics  I  

Energy  as  an  essential  factor  of  production;  Major  markets  for  energy  carriers  (lignite,  hard  coal,  crude  oil,  etc);  Basics  of  the  electricity  sector;  Market  design  under  a  grid  infrastructure  for  electricity  and  natural  gas;  Foundations  of  energy  policy,  issues  in  climate  policy  and  modeling  in  Energy  Economics;  Current  issues  in  Energy  Economics.  

http://www.wiwi.uni-­‐‑muenster.de/pruefungsamt/downloads/modulhandbuecher/bachelor/Modulhandbuch-­‐‑PO-­‐‑2010-­‐‑BSc-­‐‑VWL_EN_2014_10.pdf  

VWL 10 Energy  Economics  II  

The  proseminar  deals  with  the  main  topics  of  Energy  Economics  I.  These  topics  are  combined  with  current  developments  in  the  energy  sector  and  energy  policy  and  form  the  basis  of  essays  (7  pages)  written  by  the  attending  students.  The  essays  will  be  presented  in  the  seminar  by  the  participants  and  discussed  afterwards.  

http://www.wiwi.uni-­‐‑muenster.de/pruefungsamt/downloads/modulhandbuecher/bachelor/Modulhandbuch-­‐‑PO-­‐‑2010-­‐‑BSc-­‐‑VWL_EN_2014_10.pdf  

129

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  Université  Toulouse  1  Capitole  (Toulouse  School  of  Economics),  France  

Master  2  Environmental  and  Natural  Resources  Economics  

The  Economics  of  Energy  Markets  and  Networks  

The  course  aims  at  providing  students  with  a  thorough  understanding  of  the  functioning  of  energy  markets.  The  first  part  of  the  course  will  be  devoted  to  the  electricity  industry.  The  topics  which  will  be  covered  in  this  part  include  peak-­‐‑load  pricing,  market  power  in  generation,  electricity  retailing,  demand  response,  default  service  and  capacity  auctions.  The  second  part  of  the  course  will  focus  on  regulatory  issues  and  will  cover  the  main  economic  principles  of  regulation  and  their  application  to  network  industries.  Finally,  the  last  part  of  the  course  will  be  devoted  to  the  economics  of  the  gas  industry.  

https://www.tse-­‐‑fr.eu/sites/default/files/TSE/ecole/doc/syllabi/2017-­‐‑2018/M2/ERNA/S4/m2_s2_the_economics_of_energy_markets_and_networks_lefouili_sand_haritchabalet_salant.pdf  

Energy  Economics  and  Climate  Change  

Over  the  past  decades,    energy  markets  have  become  some  of    the  most  dynamic  markets    of  the  world  economy.  Traditional  fossil  fuel  and  electricity  markets  have  seen  a  shift  from  heavy  regulation  to  market-­‐‑  driven

incentives.  At  the  same    time,  rising  environmental  concerns    led  to  an  array  of  new  regulations  and  “environmental  markets”.  The    growth    of  renewable  energy  is    another  source  of  rapid  change  and  brings  a  new  set  of  technological  and  policy  challenges  to  the  table.  This  course  on  “Energy  and  Climate  Change”  is    aimed  at  providing  a  detailed  introduction  to  issues  in  energy  markets  and  climate  change  economics.  It  is  structured  in  three  main  blocks.  Block  one  provides  

https://www.tse-­‐‑fr.eu/sites/default/files/TSE/ecole/doc/syllabi/2017-­‐‑2018/M2/ERNA/S4/m2_s2_energy_economics_climate_change_lamp.pdf  

130

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  an  overview  on  energy-­‐‑related  economics  research.  It  starts  with  the  discussion  of  underlying  theoretical  arguments  for  environmental  regulation  and  develops  on  the  use  of  economic  incentives  (pigovian    fees,  permit  markets)  as  opposed  to  more  prescriptive  type  of  regulation.  Block  two  focuses  on  policy  related  questions  concerning  the  EU-­‐‑ETS  market.  Finally,  block  three  will  provide  a  detailed  introduction  to  the  theoretical  aspects  of  climate  change  modeling  

Heriot  Watt  University  

Master  of  Science  in  Energy  and  Economics  

B51ET   Foundations  of  Energy  

To  provide  the  students  with  an  overview  of  current  energy  production  and  consumption,  extraction  and  conversion  technologies,  environmental  impact  of  energy  consumption,  policies,  and  current  energy  debates  and  to  provide  them  with  fundamental  skills  to  analyse  energy  systems  quantitatively.  

https://www.hw.ac.uk/documents/pams/201718/B51ET_201718.pdf  

C21EN   Environmental  and  Energy  Economics  

The  aim  of  the  course  is  to  introduce  students  to  the  core  concepts  and  methods  of  modern  economics  and  environmental  and  energy  economics  in  particular.  It  will:  • Demonstrate  how  particularanalytical  techniques  may  beapplied  to  understanding  energy

• markets  and  environmental  issues,and  carbon  emissions  and  climatechange  in  particular;

• Enable  students  to  apply  the  tools  ofanalysis  to  a  range  of  models;

https://www.hw.ac.uk/documents/pams/201718/C21EN_201718.pdf  

131

University   Undergrad/Grad   Course  No.   Course  Title   Description   Website  • Enable  students  to  use  the  resultsfrom  this  analysis  to  understand,critique,  and  formulate  policyrelating  to  environment  issues  andcarbon  emissions  in  particular,  andto  energy  markets.

Heriot  Watt  University  

Master  of  Science  in  Energy  and  Economics  

C21EE   Energy  and  Economics  Dissertation  

This  course  will  provide  an  opportunity  for  the  postgraduate  student  to  explore,  in  depth,  a  research  topic  in  the  field  of  energy  and  economics,  and  to  write  a  dissertation  that  is  an  original  work.  The  course  aim  is  to  extend  the  student's  knowledge  considerably  in  their  programme  pathway  of  MSc  Energy  and  Economics,  and  to  develop  skills  (e.g.,  discursive,  analytical,  econometric)  required  for  original  thinking  and  economic  analysis  at  masters  level.  It  also  aims  to  provide  a  skill  set  that  will  pave  the  way  for  the  student  to  pursue  research  within  their  chosen  career  or  through  further  postgraduate  study.  

https://www.hw.ac.uk/documents/pams/201718/C21EE_201718.pdf  

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ECON 173, Power Sector Economics Proposed Syllabus

Overview

Energy is a crucial element of economic growth and development and a key input to economic production. However, energy supply interruptions, climate change impacts, and price shocks agitate the economy. Due to perceived future energy scarcity and its impact on the country’s economic growth, public policy on energy is of utmost importance.

This course provides an overview of the economic, technological, and political factors that shape the energy industry, the business models that emerge, and the policies governments use to regulate the industry; all with particular application to the Philippines. The strategy is to introduce some simple economic concepts and use this as framework to explore the role of technology and innovation, global markets and geopolitics, and the regulation of externalities including climate change. The course will use specific examples regarding power generation, transmission and distribution in the Philippines and elsewhere with regard to cost, reliability, and environmental effects.

Learning Objectives

At the end of this course, the students should be able to (1) design and evaluate energy policies by applying the principles of economics and public policy; (2) engage the classic literature of the field and more recent methodological developments/applications; (3) participate in research that contributes to the field of energy economics; and (4) enhance confidence in presentation and discussion skills using economics.

Recommended Books:

Dixit, Robert K.; Pindyck, Robert S. 1994. Investment under Uncertainty http://press.princeton.edu/titles/5474.html

Pindyck and Rubinfield – Microeconomics https://www.pearson.com/us/higher-education/product/Pindyck-Microeconomics-8th-Edition/9780132857123.html

W. Kip Viscusi, John Vernon, and Joseph Harrington. 2005. Economics of Regulation and Antitrusthttps://mitpress.mit.edu/books/economics-regulation-and-antitrust

Harris, Jonathan. 2014 Environmental and Natural Resource Economics: A Contemporary Approach. Routledge Publishing. https://itunes.apple.com/us/book/environmental-natural-resource/id696020760?mt=11 Student supplemental materials: http://www.ase.tufts.edu/gdae/publications/textbooks/ENRE_student.html

Tietenberg, Tom and Lynne Lewis (2012) Environmental and Natural Resource Economics, 9th Edition, Pearson. 9th Edition.

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Course outline at a glance

I. Introduction; why energy economics?a. Economics of Natural Resources

II. Energy and its measurements; energy in history (with Philippine applications)III. Basics of energy economics and policy:

Supply, demand, market equilibrium, price elasticityIV. The structure of energy markets: power sector example

a. Philippines vis-à-vis other countriesV. Economic efficiency, efficiency of market equilibrium, when markets are not efficient, effects of

policies (price ceiling, price support)a. Effects of policies (cont.): commodity taxes and subsidies, tax incidence and elasticities of

supply and demandb. Effects of policies (cont.): gains from trade, import tariffs, tax incidence and elasticities of

supply and demandVI. Regulation, Deregulation, and Market Pricing: the power sector (with Philippine applications)VII. Market for Natural GasVIII. Oil and Gas Market

a. Oil economics & regulationb. New sources: oil sands, oil shale,c. Biofuels

IX. Renewable EnergyX. Externalities including consumption externalitiesXI. Cost-benefit analysis, discounting and present value

a. Levelized cost of electricity (LCOE)b. Levelized avoided cost of electricity (LACE)

XII. Demand forecastingXIII. Innovation, reliability (disruption): power and natural disasterXIV. Energy and sustainable economic development

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Detailed course outline and reading list

I. Economics of Natural Resources

Fullerton, Don. 2008. "Distributional Effects of Environmental and Energy Policy: An Introduction."Unpublished Paper.

Krautkraemer, Jeffrey A. 2005. “Economics of Natural Resource Scarcity: The State of the Debate.”Discussion Paper.

II. Why energy economics? Energy and its measurements; energy in history

*Bhattacharyya, Subhes C. 2011.Energy Economics: Concepts, Issues, Markets and Governance.London: Springer-Verbag,.

Wolfram, Catherine, Orie Shelef, and Paul Gertler. 2012. "How Will Energy Demand Develop in the Developing World?" Journal of Economic Perspectives, 26(1): 119-138.

Philippines *Fabella, Raul V. 2002.“The Regulatory Environment of the Energy Industry in the Philippines.”

Working Paper. University of the Philippines. *Aldaba, R. (2003) “Regulatory policies and reforms in the power and downstream oil industries”,

PIDS Discussion Paper No. 2003-16 *Ravago, M.V., R. Fabella, R. Alonzo, R. Danao. D. Mapa, G. Ducanes, “Energy: Power Security

and Competitiveness.” EPDP Working Paper 2016-01R http://www.upecon.org.ph/epdp/working-paper-fil-2040-energy-01/

*Ravago, M.V., A. Brucal, J. Punongbayan, and J Roumasset. “The Role of Power Prices inStructural Transformation: Evidence from the Philippines.” EPDP Working Paper

III. Basics of energy economics and policy: Supply, demand, market equilibrium, price elasticityPindyck, Robert S., and Daniel Rubinfeld L. 2008. Microeconomics. Prentice Hall Business

Publishing. “Adoption of Demand Aggregation and Supply Auctioning Policy in the Electric Power Industry.”

(Lecture). March 2015 Toba, Natsuko. 2003.“Welfare Impacts of Electricity Generation Sector Reform in the Philippines.”

Working Paper. Economics and Research Department. Department of Energy. 2002. "Wholesale Electricity Spot Market Rules." (Report).“Demand

Aggregation and Supply Auctioning Policy (DASAP).” (Presentation). 2015. Department of Energy. Rules and Regulations Implementing Republic Act No. 9513. Philippines:

2009. Dumagan, Jesus C., and Timothy D. Mount. 1992. "Measuring the consumer welfare effects of

carbon penalties ." Energy Economics, 14(2): 82-93.

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Dumagan Jesus C., and Timothy D. Mount. 1996. “Global properties of well-behaved demand systems: A generalized logit model specification.” Economic Modelling, 13(2): 235-256.

Dumagan, Jesus C., and Timothy D. Mount. 1993. “Welfare effects of improving end-use efficiency: Theory and application to residential electricity demand.” Resource and Energy Economics, 15(2): 175-201.

Dumagan Jesus C., and Timothy D. Mount. 1997. “Approximating compensated income from ordinary demand functions.” Economics Letters, 55(2): 191-201.

IV. The structure of energy markets: power sector example

*Joskow, Paul L. . 2012. "Creating a Smarter U.S. Electricity Grid." Journal of EconomicPerspectives, 26(1): 29-48.

*Joskow, Paul L. 2003. “Electricity Sector Restructuring And Competition: Lessons Learned.”Cuadernos de Economia. Working Paper

*Borenstein, Severin. 2002. "The Trouble With Electricity Markets: Understanding California’sRestructuring Disaster." Journal of Economic Perspectives, 16(1): 191-211

*Brandts, Jordi, Paul Pezanis-Christou, and Arthur Schram. 2008. "Competition With ForwardContracts: A Laboratory Analysis Motivated by Electricity Market Design." The Economic Journal, 118(525): 192-214.

*Cook, Jonathan. 2013. "The Future of Electricity Prices in California: Understanding MarketDrivers and Forecasting Prices to 2040." Research Project, Davis, California.

Borenstein, Severin. 2014Competitive Wholesale Electricity Markets Module 1. Lecture, Energy Institute at HAAS,

Market Power in Electricity Markets Module 2. Lecture, Energy Institute at HAAS, 2014.

a. Philippines vis-à-vis other countriesDepartment of Energy.2014. Adoption of Demand Aggregation and Supply Auctioning Policy in

the Electric Power Industry. Philippines Mendoza, Maria Fe V.2014. “Strengthening the Competition Policy and Regulatory Governance in

the Philippine Electricity Industry.” Discussion Paper. University of the Philippines. National Economic and Development Authority. 2001.Republic Act No. 9136: An Act Ordaining

Reforms in the Electric Power Industry, Amending for the Purpose Certain Laws and for Other Purposes. Philippines

“The Actors of EPIRA: Interplay, Impact, and Implications for the Power Reform Process.” (Lecture). 2015.

Valderrama, Helena Agnes S. 2007. “Market Structure Issues in the Philippine Power Generation Sector.” Philippine Management Review, 14: 23-37.

“Operation of the WESM: An Introduction to Operation of the Wholesale Electricity Market in the Philippines.” (Lecture).

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V. Economic efficiency, efficiency of market equilibrium, when markets are not efficient, effects ofpolicies (price ceiling, price support)

a. Effects of policies (cont.): commodity taxes and subsidies, tax incidence and elasticity ofsupply and demand

Benedict Clements & David Coady & Stefania Fabrizio & Sanjeev Gupta & Baoping Shang, 2014."Energy subsidies: How large are they and how can they be reformed?," Economics of Energy & Environmental Policy, International Association for Energy Economics, 1(1)

b. Effects of policies (cont.): gains from trade, import tariffs, tax incidence and elasticities ofsupply and demand

Allcott, Hunt, and Michael Greenstone. 2012. "Is There an Energy Efficiency Gap?" Journal of Economic Perspectives, 26(1): 3-28.

VI. Regulation, Deregulation, and Market Pricing: the power sector (with Philippine applications)

Joskow, Paul L.2000. “Deregulation and Regulatory Reform in the U.S. Electric Power Sector.”Working Paper. Center for Energy and Environmental Policy Research.

*Griffin, James M., and Puller, Steven L.. 2005. Electricity Deregulation Choices and Challenges.Chicago: The University of Chicago Press.

*Boyce , John R., and Aidan Hollis. 2005. "Governance of electricity transmission systems."Energy Economics, 27(2): 237-255.

Borenstein, Severin. 2010. "The Redistributional Impact of Non-Linear Electricity Pricing." NBER Working Paper Series. 1-56.

Regulation and Mitigation of Market Power Module 3. Lecture, Energy Institute at HAAS, 2014. Resource Adequacy in Restructured Electricity Markets Module 4. Lecture, Energy Institute at

HAAS, 2014.

*Abrenica, Ma. Joy V. 2004 .“Contracting for Power: The Philippine Case.” Discussion Paper.University of the Philippines..

*Fabella, Raul V. 2002.“The Regulatory Environment of the Energy Industry in the Philippines.”Working Paper. University of the Philippines.

*Abrenica, Ma. Joy V. 2009. “Detecting and measuring market power in the Philippine wholesaleelectricity market.” The Philippine Review of Economics, 46(2): 5-46.

*Abrenica, Joy and Adelardo Ables (2001). “Competition Policy in the Power Sector”, PhilippineInstitute for Development Studies (mimeo).

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*Abrenica, J. (2014). Designing a Competitive Electricity Market. Philippine Center for EconomicDevelopment. Policy Note No. 2014-02. Retrieved at http://icsc.ngo/sites/default/files/resources/0B2Q_bksekBT1SjVobE5DQmlHSXc.pdf

*Danao, Rolando A.2009. “Market power in the Philippine power market.” Discussion Paper.University of the Philippines.

Clarete, R. 2016. “The Value Added Tax and Red Tape: What Contributes More to Electricity Tariffs in the Philippines,” http://www.upecon.org.ph/epdp/working-paper-06-vat/

Energy Regulatory Commission. 2004. "The Price Determination Methodology For The Philippine Wholesale Electricity Spot Market (WESM)." Unpublished Paper.

VII. Market for Natural GasJoskow, Paul L. 2013. "Natural Gas: From Shortages to Abundance in the United States."American

Economic Review, 103(3): 338-43

VIII. Market for NuclearChakravorty, Ujjayant, Bertrand Magne, and Michel Moreaux. 2012. "Resource Use Under Climate

Stabilization: Can Nuclear Power Provide Clean Energy?" Journal of Public Economic Theory, 14(2): 349-389.

G. Cornelis van Kooten, Craig Johnston, and Linda Wong . 2013. “Wind versus Nuclear Options forGenerating Electricity in a Carbon-Constrained World: Strategizing in an Energy-RichEconomy”. American Journal of Agricultural Economics, 95: 505-511.

IX. Oil and Gas Market

a. Oil economics & regulationFinley, Mark. 2012. "The Oil Market to 2030—Implications for Investment and Policy." Economics

of Energy & Environmental Policy, 1(1): 25-36.Knittel, Christopher R. 2012. "Reducing Petroleum Consumption from Transportation." Journal of

Economic Perspectives, 26(1): 93-118.Smith, James L. . 2009. "World Oil: Market or Mayhem." Journal of Economic Perspectives, 23(3):

145-164Chakravorty, Ujjayant, and James Roumasset. 1990. "Competitive Oil Prices and Scarcity Rents

When the Extraction Cost Function is Convex." Resources of Energy, 12(4): 311-320.Understanding the Decline in the Price of Oil since June 2014Christiane Baumeister and Lutz Kilian Journal of the Association of Environmental and Resource

Economists 2016 3:1, 131-158 Abrenica, J., Danao, R., Mendoza, N. (2014). Market competition in the downstream oil industry: is

there evidence of price asymmetry?, The Philippine Review of Economics, Vol. 51, No. 2

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b. New sources: oil sands, oil shaleWang, Zhongmin, and Alan J. Krupnick. 2015. "A Retrospective Review of Shale GasDevelopment

in the United States: What Led to the Boom?" Economics of Energy & Environmental Policy, 4(1): 5-17.

Jacoby, Henry D, Francis O'Sullivan, and Sergey Paltsev.2012. "The Influence of Shale Gas on U.S. Energy." Economics of Energy and Environmental Policy, 1(1): 37-52.

Gopalakrishnan, Sathya and Klaiber, Henry,.2014. “Is the Shale Energy Boom a Bust for Nearby Residents? Evidence from Housing Values in Pennsylvania”. American Journal of Agricultural Economics, 96(1): 43-66.

X. Renewable EnergyRE in GERmany (Economist Articles)

https://www.dropbox.com/sh/mb5ukdwk066wkgp/AACfxRdRA2Zzx17M8bOEHgUea?dl=0

Claudies, Forest, MacGill. 2014. “Distributional effects of the Australian Renewable Energy Target (RET) through wholesale and retail electricity price impacts,” Energy Policy

Heal, Geoffrey. 2010. "Reflections—The Economics of Renewable Energy in the United States." Review of Environmental Economics and Policy, 4(1): 139-154.

Joskow, Paul L. 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies.".American Economic Review, 101(3): 238-41.

Yamaguchi, Yohei, Kenju Akai, Junyi Shen, Naoki Fujimura, Yoshiyuki Shimoda, and Tatsuyoshi Saijo. 2013. "Prediction of photovoltaic and solar water heater diffusion and evaluationof promotion policies on the basis of consumers’ choices." Applied Energy, 102: 1148-1159.

PPL Electric Utilities. n.d. "Renewable Energy Options." Report. RE in Germany, various “The Economist” articles Gowrisankaran, Gautam, Stanley Reynolds, and Mario Samano. Intermittency and the Value of

Renewable Energy. Working Paper No. 17086, National Bureau of Economic Review, 2011 Borenstein, Severin. 2012. "The Private and Public Economics of Renewable Electricity

Generation." Journal of Economic Perspectives, 26(1): 67-92. Moselle , Boaz, Jorge Padilla, and Richard Schmalensee, (eds) . Harnessing Renewable Energy

Electric Power Systems: Theory, Practice, Policy. Washington DC, US: RFF Press, 2010.

Congress of the Philippines. 2008. Republic Act No. 9513: An Act Promoting the Development, Utilization, and Commercialization of Renewable Energy Resources and for Other Purposes. Philippines.

United States Department of Energy. 2011. Oahu Wind Integration Study. Final Report, University of Hawaii, Hawaii Natural Energy Institute, School of Ocean and Earth Science and Technology.

Renewable Energy Research Laboratory, University of Massachusetts st Amherst. 1970. "Wind Power: Capacity Factor, Intermittency, and what happens when the wind doesn’t blow?" Fact Sheet.

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Stockton, Keith M. 2004. "Utility-scale wind on islands: an economicfeasibility study of Ilio Point, Hawai’i." Renewable Energy, 29(6): 949–960.

Woodford, Dennis. 2011. Oahu Wind Integration and Transmission Study (OWITS): Hawaiian Islands Transmission Interconnection Project. Subcontract Report, Golden, Colorado: National Renewable Energy Laboratory.

World Wind Energy Association. 2011. "World Wind Energy Report 2010." Energy Report, Bonn, Germany.

Borenstein, Severin. "The Market Value and Cost ofSolar Photovoltaic Electricity Production." Center for the Study of Energy Markets Working Paper, University of California Energy Institute, January 2008.

Kao, Shih-Chieh, and et.al. 2014. New Stream-reach Development (NSD) [electronic resource] : A Comprehensive Assessment of Hydropower Energy Potential in the United States Final Report. United States. Dept. of Energy. Office of Energy Efficiency and Renewable Energy, SciTech Connect.

Atif Ansar, Bent Flyvbjerg, Alexander Budzier, Daniel Lunn. 2014. “Should we build more large dams? The actual costs of hydropower megaproject development”, Energy Policy, 69: 43-56

Washington, D.C. : United States. Dept. of Energy. Office of Energy Efficiency and Renewable Energy ; Oak Ridge, Tenn. : distributed by the Office of Scientific and Technical Information, U.S. Dept. of Energy, 2014

Frondel, Manuel, Nolan Ritter, Christoph M. Schmidt, Colin Vance.2010.“Economic impacts from the promotion of renewable energy technologies: The German experience”, Energy Policy, 38(8): 4048-4056 http://dx.doi.org/10.1016/j.enpol.2010.03.029.

Dale, Michael. "A Comparative Analysis of Energy Costs of Photovoltaic, SolarThermal, and Wind Electricity Generation Technologies." Applied Sciences, 2013: 325-337

XI. Biofuelsde Gorter, Harry, and David R. Just. 2010. "The Social Costs and Benefits of Biofuels: TheIntersection of Environmental, Energy and Agricultural Policy." Applied Economic Perspectives andPolicy, 32(1): 4-32.Madhu Khanna & Xiaoguang Chen & Haixiao Huang & Hayri Onal, 2011. "Supply of CellulosicBiofuel Feedstocks and Regional Production Pattern," American Journal of Agricultural Economics,Agricultural and Applied Economics Association, 93(2): 473-480Madhu Khanna & Xiaoguang Chen, 2013."Economic, Energy Security, and Greenhouse Gas Effectsof Biofuels: Implications for Policy," American Journal of Agricultural Economics, Agricultural andApplied Economics Association, 95(5): 1325-1331.Robert J. Myers, Stanley R. Johnson, Michael Helmar, and Harry Baumes.2014. “Long-run andShort-run Co-movements in Energy Prices and the Prices of Agricultural Feedstocks for Biofuel”.American Journal of Agricultural Economics, 96(4): 991–1008Charles Towe and Constant I. Tra . 2013. “Vegetable Spirits and Energy Policy”. American Journalof Agricultural Economics, 95: 1-16

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David Zilberman, Gal Hochman, Deepak Rajagopal, Steve Sexton, and Govinda Timilsina. 2012. “The Impact of Biofuels on Commodity Food Prices: Assessment of Findings” American Journal of Agricultural Economics, 95(2): 275–281

XII. Externalities - including consumption externalities"Energy for Electricity.2010." In Hidden Costs of Energy: Unpriced Consequences of Energy

Production and Use, 64-153. Washington, United States of America: National Academy of Sciences.

"Energy for Transportation.2010." In Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use, 154-221. Washington, USA: National Academy of Sciences.

Allcott, Hunt, Allan Collard-Wexler, and Stephen D. O'Connell. 2014. "How Do Electricity Shortages Affect Productivity? Evidence from India." Unpublished Paper. 1-76.

Eddy, Melissa. "German Energy Push Runs Into Problems." The New York Times. March 19, 2014. http://www.nytimes.com/2014/03/20/business/energy-environment/german-energy-push-runs-into-problems.html.

Borenstein, Severin. Energy Externalities Module 6. Lecture, Energy Institute at HAAS, 2014.

XII. Cost-benefit analysis, discounting and present valueManzhos, Sergei. "On the Choice of the Discount Rate and the Role of Financial Variables and

Physical Parameters in Estimating the Levelized Cost of Energy ." International Journal of Financial Studies, 2013: 54-61.

Gayer, Ted, and Kip Viscusi. "Determining the Proper Scope of Climate Change Benefits." Vanderbilt University Law School Law and Economics Working Paper Number 14-20, 2015.

Hawkins, T. R., Singh, B., Majeau-Bettez, G. and Strømman, A. H. 2013.” Comparative Environmental Life Cycle Assessment of Conventional and Electric Vehicles.” Journal of Industrial Ecology, 17: 53–64.

Muller, Nicholas Z., Robert Mendelsohn, and William Nordhaus. 2011. "Environmental Accounting for Pollution in the United States Economy." American Economic Review, 101(5): 1649-75

Administration, Energy Information. Assessing the Economic Value of New Utility-Scale Electricity Generation Projects. Working Paper, US Energy Information Administration, 2013.

Borenstein, Severin. "The Market Value and Cost of Solar Photovoltaic Electricity Production." Center for the Study of Energy Markets Working Paper, University of California Energy Institute, January 2008.

Namovicz, Chris. Assessing the Economic Value of New Utility-Scale Renewable Generation Projects. Lecture, EIA Energy Conference, 2013.

141

Econ 173 proposed

Chakravorty, Ujjayant, James Roumasset, and Kinping Tse. 1997. "Endogenous substitution among energy resources and global warming." The Journal of Political Economy, 105(6): 1201-1234.

XIII. Levelized cost of electricity (LCOE) and Levelized avoided cost of electricity (LACE)Administration, Energy Information. Levelized Cost of Electricity and Levelized Avoided Cost of

Electricity Methodology Supplement. Report, US Energy Information Administration, 2012.

Axelrod, Howard, and Daniel Shawhan. "Levelized Cost of Energy -­‐-­‐Making Economic Sense of Energy Options." Georgia Tech, 2013.

Baldwin, Sam. LCOE and LACE. Lecture, EIA LCOE-LACE Workshop, 2013.

Cambell, Matt. The Drivers of the Levelized Cost of Electricity for Utility-Scale Photovoltaics. Report, SunPower, 2008.

Kost, Christopher, and et.al. Levelized Cost of Electricity. Study, Germany: Fraunhofer Institut for Solar Energy Systems ISE, 2013

Lazard. "Lazard's Levelized Cost of Energy Analysis." Lecture, 2014.

Leifman, Michael. LCOE and LACE Seeking Simplicity. Lecture, EIA LCOE/LACE Workshop, 2013.

Niemeyer, Victor. LCOEs and Renewables. Lecture, EIA LCOE/LACE Workshop, 2013.

Taylor, George. Improving the Completeness and Accuracy of Levelized Cost of Electricity Calculations. Lecture, EIA Workshop on LCOE/LACE, 2013

Veatch, Black and. "Levelized Cost of Energy Calculation." Lecture, n.d.

XIV. Demand forecastingDanao, R. (2001). Short-Run Residential Demand for Electricity in Rural Electric CooperativesFranchise Areas", The Philippine Review of Economics.

Danao, R., and Ducanes, G. (2016). “An Error Correction Model for Forecasting PhilippineAggregate Electricity Consumption” Working Paper, Energy Policy and Development Program

XV. Innovation, reliability (disruption): power and natural disaster"Germany's Energy Transition: Sunny, windly, costly and dirty." The Economist. January 18,

2014. http://www.economist.com/news/europe/21594336-germanys-new-super-minister-energy-and-economy-has-his-work-cut-out-sunny-windy-costly.

Fargione, Joseph, et al. 2008. Land Clearing and the Biofuel Carbon Debt. Reports, www.sciencemag.org

Joskow, Paul L. 2000. “Why Do We Need Electricity Retailers? Or Can You Get It Cheaper Wholesale?” Discussion Draft.

The Economist. "Curbing Climate Change: The Deepest Cuts." September 20, 2014.

142

Econ 173 proposed

Wilson, Lindsay. Shades of Green: Electric Cars’ Carbon Emissions Around the Globe. Shrink That Footprint, 2013.

Borenstein, Severin. Commodity and Futures Markets Module 5. Lecture, Energy Institute at HAAS, 2014

XVI. Energy and sustainable economic developmentWoodhouse, Erik J.2005. “The Philippines Electricity Market Investment Context.” Seminar

Draft. Stanford University. Gillis, Justin. "Sun and Wind Alter Global Landscape, Leaving Utilities Behind." The New York

Times. September 12, 2014. http://www.nytimes.com/2014/09/14/science/earth/sun-and-wind-alter-german-landscape-leaving-utilities-behind.html?_r=0.

Bushnell, James. 2015. “How (and who) will pay for our energy infrastructure?” Unpublished Paper.

Fullerton, Don. 2008. "Distributional Effects of Environmental and Energy Policy: An Introduction." Unpublished Paper.

Recent Environmental Policy Developments in the Power Sector Module 8. Lecture, Energy Institute at HAAS, 2014.

Chakravorty, K Emerick, & MV Ravago. 2016. “Lighting Up the Last Mile: The Benefits and Costs of Extending Electricity to the Rural Poor,” http://www.upecon.org.ph/epdp/working-paper-lighting-up-04/

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ECON 276, Power Sector Economics Proposed Syllabus

Overview

Energy is a crucial element of economic growth and development and a key input to economic production. However, energy supply interruptions, climate change impacts, and price shocks agitate the economy. Due to perceived future energy scarcity and its impact on the country’s economic growth, public policy on energy is of utmost importance.

This course provides an overview of the economic, technological, and political factors that shape the energy industry, the business models that emerge, and the policies governments use to regulate the industry; all with particular application to the Philippines. The strategy is to introduce some simple economic concepts and use this as framework to explore the role of technology and innovation, global markets and geopolitics, and the regulation of externalities including climate change. The course will use specific examples regarding power generation, transmission and distribution in the Philippines and elsewhere with regard to cost, reliability, and environmental effects.

Learning Objectives At the end of this course, the students should be able to (1) design and evaluate energy policies by

applying the principles of economics and public policy; (2) engage the classic literature of the field and more recent methodological developments/applications; (3) undertake research that contributes to the field of energy economics; and (4) enhance confidence in presentation and discussion skills using economics.

Recommended Books:

Evans, J. and L. Hunt (eds), 2009. “International Handbook on the Economics of Energy,” https://www.e-elgar.com/shop/international-handbook-on-the-economics-of-

energy?___website=uk_warehouse Ranci, Pippo, and Guido Cervigni, eds. 2013. “The Economics of Electricity Markets: Theory and

Policy”. Cheltenham, UK: Edward Elgar Publishing. Gan, Deqiang, Donghan Feng, and Jun Xie. 2013. “Electricity Markets and Power System Economics”.

New York: CRC Press. Dixit, Robert K.; Pindyck, Robert S. 1994. Investment under Uncertainty

http://press.princeton.edu/titles/5474.html W. Kip Viscusi, John Vernon, and Joseph Harrington. 2005. Economics of Regulation and Antitrusthttps://mitpress.mit.edu/books/economics-regulation-and-antitrustPindyck and Rubinfield – Microeconomics https://www.pearson.com/us/higher-

education/product/Pindyck-Microeconomics-8th-Edition/9780132857123.html Harris, Jonathan. 2014 Environmental and Natural Resource Economics: A Contemporary Approach.

Routledge Publishing. https://itunes.apple.com/us/book/environmental-natural-resource/id696020760?mt=11 Student supplemental materials: http://www.ase.tufts.edu/gdae/publications/textbooks/ENRE_student.html

Tietenberg, Tom and Lynne Lewis (2012) Environmental and Natural Resource Economics, 9th Edition, Pearson. 9th Edition.

144

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145

Course outline at a glance

I. Introduction; why energy economics?a. Economics of Natural Resources

II. Energy and its measurements; energy in history (with Philippine applications)III. Basics of energy economics and policy:

Supply, demand, market equilibrium, price elasticityIV. The structure of energy markets: power sector example

a. Philippines vis-à-vis other countriesV. Economic efficiency, efficiency of market equilibrium, when markets are not efficient, effects of

policies (price ceiling, price support)a. Effects of policies (cont.): commodity taxes and subsidies, tax incidence and elasticities of

supply and demandb. Effects of policies (cont.): gains from trade, import tariffs, tax incidence and elasticities of

supply and demandVI. Regulation, Deregulation, and Market Pricing: the power sector (with Philippine applications)VII. Market for Natural GasVIII. Oil and Gas Market

a. Oil economics & regulationb. New sources: oil sands, oil shale,c. Biofuels

IX. Renewable EnergyX. Externalities including consumption externalitiesXI. Cost-benefit analysis, discounting and present value

a. Levelized cost of electricity (LCOE)b. Levelized avoided cost of electricity (LACE)

XII. Demand forecastingXIII. Innovation, reliability (disruption): power and natural disasterXIV. Energy and sustainable economic development

Econ 276 proposed

146

Detailed course outline and reading list I. Economics of Natural Resources

Fullerton, Don. 2008. "Distributional Effects of Environmental and Energy Policy: An Introduction."Unpublished Paper.

Krautkraemer, Jeffrey A. 2005. “Economics of Natural Resource Scarcity: The State of the Debate.”Discussion Paper.

II. Why energy economics? Energy and its measurements; energy in history

*Bhattacharyya, Subhes C. 2011.Energy Economics: Concepts, Issues, Markets and Governance.London: Springer-Verbag,.

Wolfram, Catherine, Orie Shelef, and Paul Gertler. 2012. "How Will Energy Demand Develop in the Developing World?" Journal of Economic Perspectives, 26(1): 119-138.

Philippines *Fabella, Raul V. 2002.“The Regulatory Environment of the Energy Industry in the Philippines.”

Working Paper. University of the Philippines. *Aldaba, R. (2003) “Regulatory policies and reforms in the power and downstream oil industries”,

PIDS Discussion Paper No. 2003-16 *Ravago, M.V., R. Fabella, R. Alonzo, R. Danao. D. Mapa, G. Ducanes, “Energy: Power Security

and Competitiveness.” EPDP Working Paper 2016-01R http://www.upecon.org.ph/epdp/working-paper-fil-2040-energy-01/

*Ravago, M.V., A. Brucal, J. Punongbayan, and J Roumasset. “The Role of Power Prices inStructural Transformation: Evidence from the Philippines.” EPDP Working Paper

III. Basics of energy economics and policy: Supply, demand, market equilibrium, price elasticityPindyck, Robert S., and Daniel Rubinfeld L. 2008. Microeconomics. Prentice Hall Business

Publishing. “Adoption of Demand Aggregation and Supply Auctioning Policy in the Electric Power Industry.”

(Lecture). March 2015 Toba, Natsuko. 2003.“Welfare Impacts of Electricity Generation Sector Reform in the Philippines.”

Working Paper. Economics and Research Department. Department of Energy. 2002. "Wholesale Electricity Spot Market Rules." (Report).“Demand

Aggregation and Supply Auctioning Policy (DASAP).” (Presentation). 2015. Department of Energy. Rules and Regulations Implementing Republic Act No. 9513. Philippines:

2009. Dumagan, Jesus C., and Timothy D. Mount. 1992. "Measuring the consumer welfare effects of

carbon penalties ." Energy Economics, 14(2): 82-93. Dumagan Jesus C., and Timothy D. Mount. 1996. “Global properties of well-behaved demand

systems: A generalized logit model specification.” Economic Modelling, 13(2): 235-256.

Econ 276 proposed 147

Dumagan, Jesus C., and Timothy D. Mount. 1993. “Welfare effects of improving end-use efficiency: Theory and application to residential electricity demand.” Resource and Energy Economics, 15(2): 175-201.

Dumagan Jesus C., and Timothy D. Mount. 1997. “Approximating compensated income from ordinary demand functions.” Economics Letters, 55(2): 191-201.

IV. The structure of energy markets: power sector example

*Joskow, Paul L. . 2012. "Creating a Smarter U.S. Electricity Grid." Journal of EconomicPerspectives, 26(1): 29-48.

*Joskow, Paul L. 2003. “Electricity Sector Restructuring And Competition: Lessons Learned.”Cuadernos de Economia. Working Paper

*Borenstein, Severin. 2002. "The Trouble With Electricity Markets: Understanding California’sRestructuring Disaster." Journal of Economic Perspectives, 16(1): 191-211

*Brandts, Jordi, Paul Pezanis-Christou, and Arthur Schram. 2008. "Competition With ForwardContracts: A Laboratory Analysis Motivated by Electricity Market Design." The Economic Journal, 118(525): 192-214.

*Cook, Jonathan. 2013. "The Future of Electricity Prices in California: Understanding MarketDrivers and Forecasting Prices to 2040." Research Project, Davis, California.

Borenstein, Severin. 2014Competitive Wholesale Electricity Markets Module 1. Lecture, Energy Institute at HAAS,

Market Power in Electricity Markets Module 2. Lecture, Energy Institute at HAAS, 2014.

a. Philippines vis-à-vis other countriesDepartment of Energy.2014. Adoption of Demand Aggregation and Supply Auctioning Policy in

the Electric Power Industry. Philippines Mendoza, Maria Fe V.2014. “Strengthening the Competition Policy and Regulatory Governance in

the Philippine Electricity Industry.” Discussion Paper. University of the Philippines. National Economic and Development Authority. 2001.Republic Act No. 9136: An Act Ordaining

Reforms in the Electric Power Industry, Amending for the Purpose Certain Laws and for Other Purposes. Philippines

“The Actors of EPIRA: Interplay, Impact, and Implications for the Power Reform Process.” (Lecture). 2015.

Valderrama, Helena Agnes S. 2007. “Market Structure Issues in the Philippine Power Generation Sector.” Philippine Management Review, 14: 23-37.

“Operation of the WESM: An Introduction to Operation of the Wholesale Electricity Market in the Philippines.” (Lecture).

Econ 276 proposed

148

V. Economic efficiency, efficiency of market equilibrium, when markets are not efficient, effects ofpolicies (price ceiling, price support)

a. Effects of policies (cont.): commodity taxes and subsidies, tax incidence and elasticity ofsupply and demand

Benedict Clements & David Coady & Stefania Fabrizio & Sanjeev Gupta & Baoping Shang, 2014."Energy subsidies: How large are they and how can they be reformed?," Economics of Energy & Environmental Policy, International Association for Energy Economics, 1(1)

b. Effects of policies (cont.): gains from trade, import tariffs, tax incidence and elasticities ofsupply and demand

Allcott, Hunt, and Michael Greenstone. 2012. "Is There an Energy Efficiency Gap?" Journal of Economic Perspectives, 26(1): 3-28.

VI. Regulation, Deregulation, and Market Pricing: the power sector (with Philippine applications)

Joskow, Paul L.2000. “Deregulation and Regulatory Reform in the U.S. Electric Power Sector.”Working Paper. Center for Energy and Environmental Policy Research.

*Griffin, James M., and Puller, Steven L.. 2005. Electricity Deregulation Choices and Challenges.Chicago: The University of Chicago Press.

*Boyce , John R., and Aidan Hollis. 2005. "Governance of electricity transmission systems."Energy Economics, 27(2): 237-255.

Borenstein, Severin. 2010. "The Redistributional Impact of Non-Linear Electricity Pricing." NBER Working Paper Series. 1-56.

Regulation and Mitigation of Market Power Module 3. Lecture, Energy Institute at HAAS, 2014. Resource Adequacy in Restructured Electricity Markets Module 4. Lecture, Energy Institute at

HAAS, 2014.

*Abrenica, Ma. Joy V. 2004 .“Contracting for Power: The Philippine Case.” Discussion Paper.University of the Philippines..

*Fabella, Raul V. 2002.“The Regulatory Environment of the Energy Industry in the Philippines.”Working Paper. University of the Philippines.

*Abrenica, Ma. Joy V. 2009. “Detecting and measuring market power in the Philippine wholesaleelectricity market.” The Philippine Review of Economics, 46(2): 5-46.

*Abrenica, Joy and Adelardo Ables (2001). “Competition Policy in the Power Sector”, PhilippineInstitute for Development Studies (mimeo).

*Abrenica, J. (2014). Designing a Competitive Electricity Market. Philippine Center for EconomicDevelopment. Policy Note No. 2014-02. Retrieved at http://icsc.ngo/sites/default/files/resources/0B2Q_bksekBT1SjVobE5DQmlHSXc.pdf

Econ 276 proposed 149

*Danao, Rolando A.2009. “Market power in the Philippine power market.” Discussion Paper.University of the Philippines.

Clarete, R. 2016. “The Value Added Tax and Red Tape: What Contributes More to Electricity Tariffs in the Philippines,” http://www.upecon.org.ph/epdp/working-paper-06-vat/

Energy Regulatory Commission. 2004. "The Price Determination Methodology For The Philippine Wholesale Electricity Spot Market (WESM)." Unpublished Paper.

VII. Market for Natural GasJoskow, Paul L. 2013. "Natural Gas: From Shortages to Abundance in the United States."American

Economic Review, 103(3): 338-43

VIII. Market for NuclearChakravorty, Ujjayant, Bertrand Magne, and Michel Moreaux. 2012. "Resource Use Under Climate

Stabilization: Can Nuclear Power Provide Clean Energy?" Journal of Public Economic Theory, 14(2): 349-389.

G. Cornelis van Kooten, Craig Johnston, and Linda Wong . 2013. “Wind versus Nuclear Options forGenerating Electricity in a Carbon-Constrained World: Strategizing in an Energy-RichEconomy”. American Journal of Agricultural Economics, 95: 505-511.

IX. Oil and Gas Market

a. Oil economics & regulationFinley, Mark. 2012. "The Oil Market to 2030—Implications for Investment and Policy." Economics

of Energy & Environmental Policy, 1(1): 25-36.Knittel, Christopher R. 2012. "Reducing Petroleum Consumption from Transportation." Journal of

Economic Perspectives, 26(1): 93-118.Smith, James L. . 2009. "World Oil: Market or Mayhem." Journal of Economic Perspectives, 23(3):

145-164Chakravorty, Ujjayant, and James Roumasset. 1990. "Competitive Oil Prices and Scarcity Rents

When the Extraction Cost Function is Convex." Resources of Energy, 12(4): 311-320.Understanding the Decline in the Price of Oil since June 2014Christiane Baumeister and Lutz Kilian Journal of the Association of Environmental and Resource

Economists 2016 3:1, 131-158 Abrenica, J., Danao, R., Mendoza, N. (2014). Market competition in the downstream oil industry: is

there evidence of price asymmetry?, The Philippine Review of Economics, Vol. 51, No. 2

b. New sources: oil sands, oil shale

Econ 276 proposed 150

Wang, Zhongmin, and Alan J. Krupnick. 2015. "A Retrospective Review of Shale GasDevelopment in the United States: What Led to the Boom?" Economics of Energy & Environmental Policy, 4(1): 5-17.

Jacoby, Henry D, Francis O'Sullivan, and Sergey Paltsev.2012. "The Influence of Shale Gas on U.S. Energy." Economics of Energy and Environmental Policy, 1(1): 37-52.

Gopalakrishnan, Sathya and Klaiber, Henry,.2014. “Is the Shale Energy Boom a Bust for Nearby Residents? Evidence from Housing Values in Pennsylvania”. American Journal of Agricultural Economics, 96(1): 43-66.

X. Renewable EnergyRE in GERmany (Economist Articles)

https://www.dropbox.com/sh/mb5ukdwk066wkgp/AACfxRdRA2Zzx17M8bOEHgUea?dl=0

Claudies, Forest, MacGill. 2014. “Distributional effects of the Australian Renewable Energy Target (RET) through wholesale and retail electricity price impacts,” Energy Policy

Heal, Geoffrey. 2010. "Reflections—The Economics of Renewable Energy in the United States." Review of Environmental Economics and Policy, 4(1): 139-154.

Joskow, Paul L. 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies.".American Economic Review, 101(3): 238-41.

Yamaguchi, Yohei, Kenju Akai, Junyi Shen, Naoki Fujimura, Yoshiyuki Shimoda, and Tatsuyoshi Saijo. 2013. "Prediction of photovoltaic and solar water heater diffusion and evaluationof promotion policies on the basis of consumers’ choices." Applied Energy, 102: 1148-1159.

PPL Electric Utilities. n.d. "Renewable Energy Options." Report. RE in Germany, various “The Economist” articles Gowrisankaran, Gautam, Stanley Reynolds, and Mario Samano. Intermittency and the Value of

Renewable Energy. Working Paper No. 17086, National Bureau of Economic Review, 2011 Borenstein, Severin. 2012. "The Private and Public Economics of Renewable Electricity

Generation." Journal of Economic Perspectives, 26(1): 67-92. Moselle , Boaz, Jorge Padilla, and Richard Schmalensee, (eds) . Harnessing Renewable Energy

Electric Power Systems: Theory, Practice, Policy. Washington DC, US: RFF Press, 2010.

Congress of the Philippines. 2008. Republic Act No. 9513: An Act Promoting the Development, Utilization, and Commercialization of Renewable Energy Resources and for Other Purposes. Philippines.

United States Department of Energy. 2011. Oahu Wind Integration Study. Final Report, University of Hawaii, Hawaii Natural Energy Institute, School of Ocean and Earth Science and Technology.

Renewable Energy Research Laboratory, University of Massachusetts st Amherst. 1970. "Wind Power: Capacity Factor, Intermittency, and what happens when the wind doesn’t blow?" Fact Sheet.

Stockton, Keith M. 2004. "Utility-scale wind on islands: an economicfeasibility study of Ilio Point, Hawai’i." Renewable Energy, 29(6): 949–960.

Econ 276 proposed 151

Woodford, Dennis. 2011. Oahu Wind Integration and Transmission Study (OWITS): Hawaiian Islands Transmission Interconnection Project. Subcontract Report, Golden, Colorado: National Renewable Energy Laboratory.

World Wind Energy Association. 2011. "World Wind Energy Report 2010." Energy Report, Bonn, Germany.

Borenstein, Severin. "The Market Value and Cost ofSolar Photovoltaic Electricity Production." Center for the Study of Energy Markets Working Paper, University of California Energy Institute, January 2008.

Kao, Shih-Chieh, and et.al. 2014. New Stream-reach Development (NSD) [electronic resource] : A Comprehensive Assessment of Hydropower Energy Potential in the United States Final Report. United States. Dept. of Energy. Office of Energy Efficiency and Renewable Energy, SciTech Connect.

Atif Ansar, Bent Flyvbjerg, Alexander Budzier, Daniel Lunn. 2014. “Should we build more large dams? The actual costs of hydropower megaproject development”, Energy Policy, 69: 43-56

Washington, D.C. : United States. Dept. of Energy. Office of Energy Efficiency and Renewable Energy ; Oak Ridge, Tenn. : distributed by the Office of Scientific and Technical Information, U.S. Dept. of Energy, 2014

Frondel, Manuel, Nolan Ritter, Christoph M. Schmidt, Colin Vance.2010.“Economic impacts from the promotion of renewable energy technologies: The German experience”, Energy Policy, 38(8): 4048-4056 http://dx.doi.org/10.1016/j.enpol.2010.03.029.

Dale, Michael. "A Comparative Analysis of Energy Costs of Photovoltaic, SolarThermal, and Wind Electricity Generation Technologies." Applied Sciences, 2013: 325-337

XI. Biofuelsde Gorter, Harry, and David R. Just. 2010. "The Social Costs and Benefits of Biofuels: TheIntersection of Environmental, Energy and Agricultural Policy." Applied Economic Perspectives andPolicy, 32(1): 4-32.Madhu Khanna & Xiaoguang Chen & Haixiao Huang & Hayri Onal, 2011. "Supply of CellulosicBiofuel Feedstocks and Regional Production Pattern," American Journal of Agricultural Economics,Agricultural and Applied Economics Association, 93(2): 473-480Madhu Khanna & Xiaoguang Chen, 2013."Economic, Energy Security, and Greenhouse Gas Effectsof Biofuels: Implications for Policy," American Journal of Agricultural Economics, Agricultural andApplied Economics Association, 95(5): 1325-1331.Robert J. Myers, Stanley R. Johnson, Michael Helmar, and Harry Baumes.2014. “Long-run andShort-run Co-movements in Energy Prices and the Prices of Agricultural Feedstocks for Biofuel”.American Journal of Agricultural Economics, 96(4): 991–1008Charles Towe and Constant I. Tra . 2013. “Vegetable Spirits and Energy Policy”. American Journalof Agricultural Economics, 95: 1-16David Zilberman, Gal Hochman, Deepak Rajagopal, Steve Sexton, and Govinda Timilsina. 2012.“The Impact of Biofuels on Commodity Food Prices: Assessment of Findings” American Journal ofAgricultural Economics, 95(2): 275–281

Econ 276 proposed 152

XII. Externalities - including consumption externalities"Energy for Electricity.2010." In Hidden Costs of Energy: Unpriced Consequences of Energy

Production and Use, 64-153. Washington, United States of America: National Academy of Sciences.

"Energy for Transportation.2010." In Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use, 154-221. Washington, USA: National Academy of Sciences.

Allcott, Hunt, Allan Collard-Wexler, and Stephen D. O'Connell. 2014. "How Do Electricity Shortages Affect Productivity? Evidence from India." Unpublished Paper. 1-76.

Eddy, Melissa. "German Energy Push Runs Into Problems." The New York Times. March 19, 2014. http://www.nytimes.com/2014/03/20/business/energy-environment/german-energy-push-runs-into-problems.html.

Borenstein, Severin. Energy Externalities Module 6. Lecture, Energy Institute at HAAS, 2014.

XII. Cost-benefit analysis, discounting and present valueManzhos, Sergei. "On the Choice of the Discount Rate and the Role of Financial Variables and

Physical Parameters in Estimating the Levelized Cost of Energy ." International Journal of Financial Studies, 2013: 54-61.

Gayer, Ted, and Kip Viscusi. "Determining the Proper Scope of Climate Change Benefits." Vanderbilt University Law School Law and Economics Working Paper Number 14-20, 2015.

Hawkins, T. R., Singh, B., Majeau-Bettez, G. and Strømman, A. H. 2013.” Comparative Environmental Life Cycle Assessment of Conventional and Electric Vehicles.” Journal of Industrial Ecology, 17: 53–64.

Muller, Nicholas Z., Robert Mendelsohn, and William Nordhaus. 2011. "Environmental Accounting for Pollution in the United States Economy." American Economic Review, 101(5): 1649-75

Administration, Energy Information. Assessing the Economic Value of New Utility-Scale Electricity Generation Projects. Working Paper, US Energy Information Administration, 2013.

Borenstein, Severin. "The Market Value and Cost of Solar Photovoltaic Electricity Production." Center for the Study of Energy Markets Working Paper, University of California Energy Institute, January 2008.

Namovicz, Chris. Assessing the Economic Value of New Utility-Scale Renewable Generation Projects. Lecture, EIA Energy Conference, 2013.

Chakravorty, Ujjayant, James Roumasset, and Kinping Tse. 1997. "Endogenous substitution among energy resources and global warming." The Journal of Political Economy, 105(6): 1201-1234.

Econ 276 proposed 153

XIII. Levelized cost of electricity (LCOE) and Levelized avoided cost of electricity (LACE)Administration, Energy Information. Levelized Cost of Electricity and Levelized Avoided Cost of

Electricity Methodology Supplement. Report, US Energy Information Administration, 2012.

Axelrod, Howard, and Daniel Shawhan. "Levelized Cost of Energy -­‐-­‐Making Economic Sense of Energy Options." Georgia Tech, 2013.

Baldwin, Sam. LCOE and LACE. Lecture, EIA LCOE-LACE Workshop, 2013.

Cambell, Matt. The Drivers of the Levelized Cost of Electricity for Utility-Scale Photovoltaics. Report, SunPower, 2008.

Kost, Christopher, and et.al. Levelized Cost of Electricity. Study, Germany: Fraunhofer Institut for Solar Energy Systems ISE, 2013

Lazard. "Lazard's Levelized Cost of Energy Analysis." Lecture, 2014.

Leifman, Michael. LCOE and LACE Seeking Simplicity. Lecture, EIA LCOE/LACE Workshop, 2013.

Niemeyer, Victor. LCOEs and Renewables. Lecture, EIA LCOE/LACE Workshop, 2013.

Taylor, George. Improving the Completeness and Accuracy of Levelized Cost of Electricity Calculations. Lecture, EIA Workshop on LCOE/LACE, 2013

Veatch, Black and. "Levelized Cost of Energy Calculation." Lecture, n.d.

XIV. Demand forecastingDanao, R. (2001). Short-Run Residential Demand for Electricity in Rural Electric CooperativesFranchise Areas", The Philippine Review of Economics.

Danao, R., and Ducanes, G. (2016). “An Error Correction Model for Forecasting PhilippineAggregate Electricity Consumption” Working Paper, Energy Policy and Development Program

XV. Innovation, reliability (disruption): power and natural disaster"Germany's Energy Transition: Sunny, windly, costly and dirty." The Economist. January 18,

2014. http://www.economist.com/news/europe/21594336-germanys-new-super-minister-energy-and-economy-has-his-work-cut-out-sunny-windy-costly.

Fargione, Joseph, et al. 2008. Land Clearing and the Biofuel Carbon Debt. Reports, www.sciencemag.org

Joskow, Paul L. 2000. “Why Do We Need Electricity Retailers? Or Can You Get It Cheaper Wholesale?” Discussion Draft.

The Economist. "Curbing Climate Change: The Deepest Cuts." September 20, 2014.

Wilson, Lindsay. Shades of Green: Electric Cars’ Carbon Emissions Around the Globe. Shrink That Footprint, 2013.

Borenstein, Severin. Commodity and Futures Markets Module 5. Lecture, Energy Institute at HAAS, 2014

Econ 276 proposed 154

XVI. Energy and sustainable economic developmentWoodhouse, Erik J.2005. “The Philippines Electricity Market Investment Context.” Seminar

Draft. Stanford University. Gillis, Justin. "Sun and Wind Alter Global Landscape, Leaving Utilities Behind." The New York

Times. September 12, 2014. http://www.nytimes.com/2014/09/14/science/earth/sun-and-wind-alter-german-landscape-leaving-utilities-behind.html?_r=0.

Bushnell, James. 2015. “How (and who) will pay for our energy infrastructure?” Unpublished Paper.

Fullerton, Don. 2008. "Distributional Effects of Environmental and Energy Policy: An Introduction." Unpublished Paper.

Recent Environmental Policy Developments in the Power Sector Module 8. Lecture, Energy Institute at HAAS, 2014.

Chakravorty, K Emerick, & MV Ravago. 2016. “Lighting Up the Last Mile: The Benefits and Costs of Extending Electricity to the Rural Poor,” http://www.upecon.org.ph/epdp/working-paper-lighting-up-04/

Volume III • Issue 1 July 2017The official newsletter of the Energy Policy and Development Program (EPDP)

EPDPnewsEPDP joins development of energy-related

Senate Bills

Special Lecture: Philippine Competition Landscape by the Philippine Competition Commission

On 6 April 2017, Chairman Arsenio Balisacan of the Philippine Competition Commission gave a special lecture in the UP School of Economics on the current competition landscape in the Philippines. He elaborated on the Philippine Competition Act and the developments, priorities and challenges in its implementation. Chairman Balisacan emphasized that competition has an important role in economic growth as it encourages market efficiency, which eventually leads to improvement in the welfare of the Filipino people. Limited competition has negative consequences on the economy and to consumers, such as higher prices and poor quality of electricity or others services. The special class lecture provided evidence-based policies that support a competitive and efficient energy sector. In attendance were professors as well as undergraduate and graduate students of economics who are also in the field of energy or development work.

Chairman Balisacan’s presentation can be downloaded at the EPDP website http://www.upecon.org.ph/epdp/capacity-building/long-term-capacity-building/

Dr. Majah Ravago and Dr. Rolando Danao representing EPDP at the 31 May 2017 Senate Hearing on Senate Bill 1290: Philippine Energy Research and Policy Development Institute Act of 2016.

PEMC President Melinda Ocampo presenting on 20 April 2017 for the EPDP Lecture Series session “Electricity Trading and Pricing in the Philippines”

PCC Chairman Arsenio Balisacan discussing the Philippine Competition Landscape on 6 April 2017

EPDP, GPH strengthen partnership to enrich stakeholder knowledge

of energy sector

Senate Committee on Energy Chairperson Senator Sherwin Gatchalian invited EPDP earlier this year to provide input in developing two Senate Bills he authored: SB 1290 or “An Act Establishing the Philippine Energy Research and Policy Development Institute, Defining its Objectives, Powers and Functions, Providing Funds Therefor, and for Other Purposes (Philippine Energy Research and Policy Development Institute Act of 2016)” and SB 1308 or “An Act Institutionalizing Reforms in the Procurement by Distribution Utilities of Supply for the Captive Market or (Energy Procurement Act of 2016).”

Since then, EPDP has been working closely with Senator Gatchalian’s Office, offering technical advice and suggestions on the bills as well as appearing in the first Senate Hearings for both bills—on 1 March 2017 for SB 1308 and 31 May 2017 for SB 1290. The Senate Committee on Energy then invited EPDP to join the Technical Working Groups convened to thoroughly discuss and polish each section of the bills.

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EPDP holds Research-Policy Workshop to refine research

for GPH needsOn 9-10 June 2017, the EPDP Research-Policy Workshop was held at Hotel Kimberly in Tagaytay City. Day 1 of the workshop was alloted for a peer review session where EPDP’s research fellows presented their ongoing studies. Other fellows and invited external reviewers provided their input on the data requirements, processes and usefulness of the presented studies. These comments will be taken into consideration to strengthen EPDP’s research initiatives.

In order to increase awareness of EPDP’s research and promote the use of its findings and analyses, reviewers from partner government agencies and other sectors were invited. Present were Mr. Armando Ramirez III and Mr. John Edrian Atendido (NEDA); Director Jesus Tamang, Ms. Marietta Quejada, Ms. Victoria Capito, and Mr. Noriel Reyes (DOE); Chairman Arsenio Balisacan, Commissioner Stella Quimbo, and Ms. Eina Concepcion (PCC); Ms. Jenelyn Macanas (Senate Committee on Energy); Mr. Gil Dy-Liacco (USAID); and Mr. Romeo Bernardo (private sector).

Day 2 of the workshop covered the policy priorities of EPDP’s partner government agencies. During the session, the DOE presented their policy priorities, which include energy security, efficiency, conservation, access, affordability of energy prices, and resiliency of energy facilities. During their presentation, DOE also emphasized that the agency will be technologically-neutral and will tap any resource or technology that can provide the country’s energy requirement in a timely, efficient, and sustainable manner.

EPDP Lecture Series Session: Electricity Trading and Pricing in the Philippine WESM by the Philippine Electricity Market Corporation

On 20 April 2017, EPDP hosted a lecture titled “Electricity Trading and Pricing in the Philippines” as part of the EPDP Lecture Series. Guest speaker Philippine Electricity Market Corporation (PEMC) President Melinda Ocampo gave a presentation on the fundamentals of the design and operations of the Philippine Wholesale Electricity Spot Market (WESM) and shared some market development milestones and plans. The lecture was attended by students, academics and various stakeholders from the energy sector, all of whom enriched the discussion with their questions, insights, and experiences.

Launched in March 2017, the Lecture Series gathers energy experts and practitioners from different sectors with the objective of providing a neutral platform to exchange ideas and insights on the energy sector. By providing a holistic understanding of the country’s power industry, EPDP aims to contribute to strengthening short- and long-term capacities of the academe, government representatives, energy professionals and other stakeholders.

PEMC’s presentation may be downloaded at: http://bit.ly/2c1A9SW.

Special Lecture: Philippine Economy, Infrastructure and Development by the National Economic and Development Authority

National Economic and Development Authority Undersecretary for Regional Development Dr. Adora Navarro

gave a special lecture on 27 April 2017 at the UP School of Economics. The discussion covered growth, structural change and the outlook on infrastructure development strategy under the Philippine Development Plan 2017-2022. In her presentation, Undersecretary Navaro highlighted that public and private infrastructure programs (e.g. roads, agriculture, energy, ICT) are all meant to spur asset creation in both rural and urban areas, eventually raising the country’s competitiveness. The lecture was attended by graduate students whose backgrounds are in policy and development work.

Dr. Navarro’s presentation may be downloaded at http://www.upecon.org.ph/epdp/capacity-building/long-term-capacity-building/

EPDP fellows and staff as well as representatives from partner government agencies and the private sector were present at the Research-Policy Workshop

[L-R]: Director Jesus Tamang of the Energy Policy and Planning Bureau of DOE, EPDP fellow Dr. Raul Fabella

NEDA Undersecretary Adora Navarro talking about Philippine growth, development and competitveness on 27 April 2017

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EPDP, in collaboration with the Philippine Competition Commission (PCC) and the World Bank, will conduct a two-day Executive Seminar, “Fostering Dynamic Competition in the Philippine Power Industry” on 16-17 October 2017.The first day will consist of two parts, the executive session and lectures on competition and market power. The executive session, to be attended by high-level government officials, will focus on policy-level issues both in the local and international electricity markets. The second day will feature sessions on the technical aspects of monitoring and promoting competition in the power sector. The technicalsession is intended for the technical staff of GPH agencies and academic institutions as well as energy stakeholders from the private sector.

In June, two EPDP research papers were presented in conferences in Vietnam and in Greece.

EPDP Fellow Dr. Laarni Escresa presented her paper “An Analysis of Time to Regulatory Permit Approval in Philippine Electricity Generation” on 22 June at the 13th Annual AsLEA Conference at the University of Economics in Ho Chi Minh City. The annual conference invites researchers, academics and professionals to discuss topics in law and economics relevant to Asia.

On 29 June 2017, EPDP Program Director Dr. Majah Ravago presented EPDP’s paper “The role of power prices in structural transformation: evidence from the Philippines” in Athens, Greece at the 23rd annual Conference of the European Association of Environmental and Resource Economists (EAERE), which ran from 28 June to 1 July. EAERE is the largest scientific association in the world dealing with environmental and resource economics. In its annual conference, economists, policy makers, practitioners and students from countries around the world present research and discuss current issues.

You may download the paper and presentation at http://www.upecon.org.ph/epdp/resource-center/library/epdp-products/working-papers/

Bringing EPDP research abroad

EPDP, stakeholders visit the Kalayaan Pumped Storage Power

PlantLast 25 April 2017, representatives from the National Economic and Development Authority, Department of Energy, and Department of Trade and Industry joined EPDP fellows, staff and researchers on a trip to the Kalayaan Pumped Storage Power Plant (KPSPP) in Laguna to learn more about the plant’s operations and maintenance. The plant in Kalayaan is one of the three hydroelectric power plants in the province of Laguna operated by CBK Power Company Limited. According to their website, the CBK complex generates 728 megawatts combined, providing a significant portion of the total power supply of Metro Manila.

The group was welcomed by Mr. Eddie Reyes, VP for Operations and Maintenance; Engr. Melvin T. Robles, Plant Manager (KPSPP); Engr. Nelson Humarang, Engineering Director; Engr. Dennis Rosacay, Safety and Environment Manager; and Ms. Jocelyn Pinca, Community Relations Manager. The CBK team gave presentations about the CBK complex areas, functions, processes, and services. The visit was concluded with a tour of KPSPP by Engr. Rosacay and Ms. Pinca.

The educational visit to KPSPP offered firsthand learning that contributes to EPDP’s thrust to strengthen the capacity of Philippine Government in formulating coherent and evidence-based policies and strategies for the cost-effective use of energy resources towards environmentally-sound energy development.

One of the presentations they gave may be viewed at https://www.youtube.com/watch?v=RKbXoKYN6AE. Learn more about CBK through their website http://www.cbkpower.com/

Dr. Majah Ravago presenting at the EAERE Conference in Greece on 29 June 2017

The CBK team with EPDP fellows and staff at the Kalayaan Pumped Storage Power Plant (KPSPP) in Laguna

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This newsletter (UP Energy Policy and Development Program) is made possible by the generous support of the American People through the United States Agency for International Development (USAID). EPDP is a four-year Program implemented by the UPecon Foundation, Inc. The contents of this newsletter are the sole responsibility of the EPDP Team and do not necessarily reflect the views of USAID, the United States Government, or the UPecon Foundation, Inc.

UPecon Foundation

EPDP NEWS is published by the Energy Policy and Development Program (EPDP). The information in this newsletter are provided by EPDP’s research, capacity building, policy, and communications components.

Suite B2-003 Centennial Bldg., Concordia Albarracin Hall, E. Jacinto St. corner C.P. Garcia

Ave., University of the Philippines, Diliman Quezon City, Philippines 1101

http://www.upecon.org.ph/epdp/

ContributorsJean Marie Isabelle Lau Wang

J. Kathleen MagadiaJennylene Layaoen

EPDP Program DirectorDr. Majah-Leah Ravago

Editorial Staff

Consulting EditorDr. Rolando Danao

Layout and EditingJean Marie Isabelle Lau Wang

Support continues for energy education and

researchEPDP hosted the Economics 199 Research Seminar Class Conference last 15 May 2017 at the University of the Philippines, Diliman. Students of economics, development and policy presented their research papers, which covered wide-ranging development topics including energy poverty, electricity prices and volatility, income inequality and agriculture. The Econ 199 class is under the supervision of Dr. Majah Ravago.

The panel of evaluators was composed of EPDP Fellows Dr. Rolando Danao, Dr. Ramon Clarete, Dr. Karl Jandoc, Dr. Geoffrey Ducanes and PhD students Jan Carlo Punongbayan and Kenmore Espinoza of the UP School of Economics as well as EPDP Fellow Dr. Dennis Mapa of the UP School of Statistics. The Econ 199 Class Conference is one of the EPDP’s activities geared towards supporting tertiary education institutions in producing energy policy specialists and practitioners that the Philippine government may tap in the future.

EPDP will participate in the 55th Philippine Economic Society Annual Meeting on 8 November 2017 at Novotel, Cubao, Quezon City. With the conference theme “Growing Amidst Risk and Uncertainty” in mind, EPDP will be holding two sessions.For more information about the event and the Philippine Economic Society, you may refer to http://www.pes.org.ph/.Photo from the PES Facebook page

On 25 January and 13 February 2017, the Pampanga Electric Cooperative II generously shared their time and expertise with EPDP for the latter’s study, “Energy Conservation ‘Nudges’: Evidence from a Randomized Residential Field Experiment in the Philippines.” Led by General Manager Amador Guevarra, PELCO II management and technical staff welcomed EPDP in their office in Guagua, Pampanga. This study is primarily funded by the DOST-NAST with additional support from EPDP and CREST Japan Science and Technology Agency.

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