The Energy Regulatory Commission (ERC) and the National Grid Corporation of the Philippines (NGCP) yesterday warned securing firm contracts on all ancillary reserves would result in higher rates.
Ancillary energy serves as the available generating capacity for dispatch in order to meet contingency reserve requirements when a generating unit trips or a transmission interconnection problem occurs.
NGCP currently maintains ancillary reserves with both firm and non-firm contracts. Those with firm contracts are charged with higher rates as the electricity produced by a generator would solely be reserved for the use of NGCP regardless if it will be utilized or not.
During a virtual Senate hearing yesterday, ERC chair Agnes Devanadera, said based on their projections, customers consuming 200 per kilowatt hour per month may experience an increase in rate rangking from P148.1 per to P225.1 per kwh.
NGCP’s computations projects power rates to surge by P0.64 per kWh for Luzon, P0.54 per kWh for Visayas and P1.39 per kWh for Mindanao that would translate to an addition of P128, P108 and P278, respectively, for those consuming 200 kwh.
NGCP said ancillary services are dispatched only to stabilize and balance the grid in case of power supply and demand imbalance as they are not meant to run for a long period as it will violate prevailing regulatory approvals.
“Shifting to firm contracting is not the solution to the power supply shortage. We get our power to support ancillary service from the same pool of generators, many of which went on unscheduled shutdowns and whose current collective output is not enough to meet consumer demand. Signing a firm contract will not make a large capacity power plant magically appear with the stroke of a pen. The only thing that changes is the charging mechanism,” NGCP said.
The company also said it does not deny its obligation to secure sufficient ancillary services but only wants the DOE’s mandate to be “thoroughly studied” with its price impact.
During the hearing, it was also discussed if NGCP’s current non-firm contracts can be automatically upgraded to firm contracts.
Senate committee on energy chairman Sherwin Gatchalian said the DOE and the ERC must first come up with details on how to successfully transition the said contracts as “rescinding” them may result in penalties.
“ERC and DOE should flesh out the details as we don’t want to encounter more legal impediments for this transition,” Gatchalian said.
Energy Secretary Alfonso Cusi at the hearing said in view of the urgency of the situation, the agency may allow NGCP to contract firm ancillary reserves without undergoing bidding via competitive selection process (CSP) as long as the rates would be approved by the ERC.
“We can have bilateral contracts subject to the ERC’s approval but thereafter, all would have to undergo CSP,” Cusi said.
Cusi made the suggestion after Devanadera stated that it would be hard for all parties to contract firm ancillary services via CSP in a span of just 30 days., – with Raymond Africa
