The Energy Regulatory Commission (ERC) has fined the National Grid Corporation of the Philippines (NGCP) a Php5.1 million for not complying with the Department of Energy (DOE) circular requiring the procurement of reserves.
In its decision, the ERC noted that NGCP’s failure to submit its terms of reference (TOR) and invitation to bid (ITB) was one violation, and the failure to publish and maintain on its website without the prior approval of the TOR and ITB from the DOE as another violation.
The ERC warned the NGCP that its non-compliance with the laws, rules, orders, and regulations issued by authorities “may result in the cancellation of its Certificate of Public Convenience and Necessity (CPCN) and the endorsement by the ERC to the Philippine Congress of the revocation of its legislative franchise.”
“We are sorely disappointed at the recent turn of events. It seems that the duplicity is still the name of the game, and we are still dealing with the same economically motivated political maneuvers,” NGCP said in a statement related to the fine.
Under Department Circular No. DC2021-10-0031 or “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator” (AS-CSP Policy). This policy requires all ancillary services or reserves required by the grid to be procured pursuant to an open and competitive process under a firm contracting agreement.
“This aims to improve transparency, competitiveness, and wide dissemination of bid opportunities among qualified facilities. For energy security, it is crucial for NGCP to meet and maintain the required reserve levels,” ERC said.
In a policy issued in 2019, the DOE has required the NGCP to contract 100% firm power reserve and engage in the forward contracting of reserve requirements to ensure grid reliability.