The National Grid Corporation of the Philippines (NGCP) yesterday warned of the possibility of intermittent power interruptions after the Energy Regulatory Commission (ERC) denied its request for month-to-month extensions on ancillary services (AS) agreements while a competitive selection process (CSP) is being undertaken.
NGCP is seeking the intervention of the Department of Energy (DOE) on the matter to “avert avoidable power interruptions.”
AS serves as the available generating capacity for dispatch to meet contingency reserve requirements when a power generating unit trips or a transmission interconnection problem occurs.
AS is also necessary for NGCP to manage power fluctuations to ensure the quality and reliability of power flowing through its system. If not managed properly, fluctuations can cause damage to sensitive equipment or lead to automatic load dropping if the fluctuations are severe enough to pose a danger to the transmission system as a whole.
NGCP said ERC’s refusal came after the firm concluded the acceptance and opening of bids for AS on March 14, 15 and 16 for Luzon, Visayas and Mindanao, respectively. The firm is currently evaluating the bids and expects to formally award contracts to winning bidders no later than April 18, 2023.
Ancillary Services Procurement Agreements (ASPAs) resulting from the said CSP will have to be approved by the ERC.
NGCP said with the regulatory processes that these applications need to undergo, a provisional approval for new ASPAs resulting from the AS CSP may not be expected earlier than June.
“Many of NGCP’s AS agreements have expired. We have resorted to month-to-month extensions of our existing agreements to ensure the sufficiency of services while the procurement process is ongoing. With ERC’s denial of this interim arrangement, our hands are tied. The Philippine transmission grid shall be vulnerable to power interruptions resulting from an artificial lack of AS. Without an existing ASPA, NGCP cannot nominate power plants to provide the critical services,” said NGCP, in a statement.
In a letter to DOE Secretary Raphael Lotilla dated March 25, 2023, NGCP president and chief executive officer Anthony Almeda said extending existing ASPAs on a month-to-month basis is “a middle ground strategy to remain compliant with the relevant DOE circulars, while at the same time preserving the integrity of the transmission grid with the continuous provision of AS, especially during the summer months, when it is needed most.”
“We have always conducted the procurement of AS with good faith, with the best services for the least cost as a primary motivating factor. We have done much to improve the procurement process but above all else, we must be able to provide these services. With this disappointing development, this leaves us with no other option,” NGCP said.
“If we sign interim extensions, we expect the ERC to issue us yet another show cause order. If we do not, we will be unnecessarily subjecting consumers connected to the grid to avoidable and damaging fluctuations or worse, interruptions,” NGCP added.
