The Department of Energy (DOE) stands firm on its call for the National Grid Corporation of the Philippines (NGCP) to secure ancillary services (AS), which it says are urgently needed to obtain the needed power reserves, and reduce transmission fees instead of “making excuses” for non-compliance with the department’s AS policy.
The DOE once again cited the policy, entitled “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid” issued in 2019, wherein NGCP is mandated to contract 100% firm power reserves, as well as engage in the forward contracting of reserve requirements to ensure grid reliability. This comes in the wake of the Red Alerts in Luzon two weeks ago.
“We at the DOE have been proactively seeking to protect and uphold the welfare of consumers through our policies and programs. This holds true most especially with electricity prices. To prevent electricity price spikes, the power industry players must comply with their obligations to increase the generation capacity. This can be done through the purchase of replacement power by the distribution utilities and the procurement of ancillary services or reserves by the NGCP,” Energy Sec. Alfonso Cusi said in a statement.
NGCP previously warned of a spike in electricity bills, saying that getting 100% firm contracts would hit typical households in Luzon, Visayas, and Mindanao with an additional Php128, Php108, and Php278 in their power bills, respectively, based on initial estimates.
“It is not for NGCP to say that electricity will be more costly if they comply. Having the required reserves is not optional. If NGCP wants to help consumers, be magnanimous, and lower the cost of electricity, they should just reduce their transmission fee, reduce the Weighted Average Cost of Capital, and finish the transmission projects on time,” Cusi stressed.
The department also reminded power players and the public of its measures aimed at making power rates more affordable and securing stable flow of electricity. Aside from the AS policy, the DOE paved the way for the passage of Republic Act 11371 or the Murang Kuryente Act in 2019. It also instituted the Competitive Selection Process policy in 2018 and the Grid Operation and Maintenance Program (GOMP) in 2020. The GOMP aims to compel power players to comply with their obligations to ensure 24/7 delivery of electricity to its consumers.
The DOE likewise reminded the grid operator that it is not limited to procuring power from the existing plants in order to comply with its obligations under its franchise. Under the AS policy, NGCP may engage in forward contracting, which allows the entry of additional capacities.
NGCP previously said that it is aware of its obligations to secure the necessary AS.