I periodically get questions from foreign and local entities trying to get an initial, basic understanding of the Philippine power sector. This post’s title is an example. I freely give away that information. I give away a lot of information – on this blog, on my wiki, on Twitter, and via email.
If you have a question, just ask me. If it’s publicly available information, or even just opinion, I’m generally happy to respond. I don’t sell information. I don’t sell data. I don’t sell connections and introductions. Those are all meaningful services; but there are others here that are better positioned to do that than I am.
I make a living through engagements in which I collaboratively work with the client in addressing and working through complex strategic issues – ones in which neither one of us could do as well by working alone. I capitalize on my experience adding that to yours, synthesize a lot of information on the Philippine sector, and perform custom analytics that are specific to the client’s issue at hand. That’s the value I bring – that’s where I have competitive advantage.
Giving away the above information not only advances competition in the sector in general, it enhances the market for my services (I’m most competitive when working with knowledgeable players) while simultaneously deprecating the value of competitors colleagues that supply ONLY the above types of services. Heh. How about that? (Frankly, I work best when teamed with such other consultants).
Back to TSC. This is not an official definition of a TSC – it is a conceptual, working definition, highlighting only certain characteristics that seem relevant to me at the moment.
TSC stands for Transition Supply Contract and is the term used to refer to NPC’s current bilateral contracts with the distribution utilities. These contracts are for supplying a specific amount of capacity and energy over a certain term – most of these expire on or before the end of December 2010, with some details I won’t get into at the moment for simplicity. The price NPC supplies power at under the TSCs is the NPC Time-Of-Use rate, which is a tariff regulated by the ERC. It includes pass-through mechanisms for fuel, purchase power, and currency exchange rate adjustments.
The TSCs are assignable by NPC to an IPP that acquires an NPC asset through the PSALM’s auction process. So a TSC could end up in the hands of an IPP as a contract between the IPP and the distribution utility. Some of these have already been transferred, for example, with the sale of Masinloc.
A TSC does not specify the source of power – it obligates the supplier to provide certain amounts of capacity and energy at certain prices. It is not, for example, a unit contingent contract. So the supplier, if it’s an IPP, must have a portfolio of plants or make other arrangements to provide power during periods its own generation is unavailable.
[Caveat - I have not actually seen a TSC that was transferred to an IPP. I'm presuming the characteristics are as I've stated, which represents the current TSCs that I've seen that are in force between NPC and various distribution utilities.]