The Department of Energy (DOE) will be setting a competitive selection process (CSP) for the National Grid Corporation of the Philippines’ (NGCP) procurement of ancillary services (AS), or reserve power, and will require it to submit five-year power demand forecasts to ensure that expected needs are sufficiently covered.
Based on a draft department circular, the DOE said AS providers must be engaged through CSP. This comes as the department flagged the grid operator for not entering into enough firm contracts for the needs of the power grid at the end of 2020.
NGCP recently said it will be holding a public auction to secure reserves in compliance with the DOE’s two-year old AS policy. This comes in the wake of the recent Red Alerts and rotating brownouts in Luzon.
Based on the draft document, the CSP for AS must be transparent and non-discriminatory, promote competition and protect the interests of the general public by ensuring sufficient reserves at the least cost.
The DOE also proposed the presence of observers during the auction to “assure all parties to the CSP for power supply that the process employed is conducted in an open, transparent, effective, efficient, and equitable manner.”
It also said that observers may come from the DOE, Energy Regulatory Commission (ERC), and National Transmission Corporation (Transco).
The draft guidelines also require the submission of an annual AS agreement procurement plan (ASAPP), containing projections of reserve requirements for the next five years.
It said that the NGCP “shall develop and submit to the DOE its annual ASAPP not later than 31 March of every year which contains the projected AS requirements for the next five years.”
The ASAPP should contain the type of AS requirement per grid, existing ancillary service procurement agreements, and monthly levels of reserves needed per grid.
Once approved and implemented, the draft rules will cover different groups in the energy industry including ERC, the Independent Electricity Market Operator of the Philippines, NGCP, Transco, and all generating facilities.