The Energy Regulatory Commission (ERC) said the National Grid Corporation of the Philippines (NGCP) will implement the System Peak Demand (SPD) billing starting in the May to June 2023 cycle.
The regulatory body said in a statement this will result in a stronger incentive to use electricity more efficiently to avail of savings in transmission charges.
ERC on May 24 issued an order that will ensure NGCP shifts to the SPD methodology from the Non-Coincident Peak Demand (NCPD) methodology in determining transmission rates.
ERC said under the SPD methodology, users will be charged based on their actual impact on the grid during the peak demand period.
The NCPD methodology charges users based on the collective highest demand of all grid users, regardless of their individual consumption patterns.
The regulatory body said commercial or industrial consumers will now have a direct incentive to manage the timing of their electricity usage to save on transmission costs by shifting their time-of-use outside of the system’s peak demand period to significantly reduce their transmission charges.
ERC said distribution utilities can also encourage customers to adopt such changes in demand management to realize savings from the SPD methodology.
ERC added the implementation of SPD as billing determinant also facilitates the integration of renewable energy resources into the grid as there will be a “clearer understanding” of the peak demand period. This will allow transmission customers to optimize the use of renewable energy and in effect, increase reliability of electricity supply while reducing reliance on fossil fuel-based power generation.
ERC also said SPD helps optimize the efficiency of the grid by reducing the burden on the system during peak hours and effectively lessen the need for capital investments in grid capacity upgrades.
Meanwhile, the ERC also issued a show cause order for NGCP to explain why it should not face administrative penalties for the delays, non-completion and failure to start at least 37 approved transmission projects.
In the order dated June 14 but issued on July 4, ERC required explanation for delays in the completion of 37 projects in which 26 are still uncompleted and three are yet to commence. The delays average 820 days and range from 21 to 2,561 days.
NGCP is given 15 days from the receipt of the order to submit a verified explanation.
