NGCP to comply with DOE’s order to sign deals for backup power supply

After days of raising its objection, the National Grid Corporation of the Philippines (NGCP) on Thursday said it would comply with the Department of Energy’s (DOE) requirement for firm ancillary services to ensure backup power supply.

“As a policy, we try not to do what the DOE is encouraging us and what they are asking us to do, which is forward contracting because for ancillary services provision, these are technical and there are timing issues," NGCP spokesperson Cynthia Alabanza said during the continuation of Senate hearing on the rotational brownouts in Luzon.

Alabanza said there was a need to test the capability to meet the grid's requirements, "but again, with the directive of this honorable body as well as the guidance of the Department of Energy and the Energy Regulatory Commission, we will move forward and contract our ancillary services needed through firm contracting and through an open public bidding for existing plants."

"We are right now contracted fully for firm and non-firm, but we will comply,” Alabanza said.

At a latter part of the discussion , Energy Secretary Alfonso Cusi asked Alabanza anew about the NGCP’s position on the firm contracting.

“Just a point of clarification on what is manifested and stated by NGCP, that they will follow the regulator and this body? Does it mean that they will continue to defy what the policy of the DOE is?” Cusi asked.

In response, Alabanza assured the DOE chief that the NGCP would will follow their directive on the firm contracting.

Cusi also asked Alabanza if the NGCP would now allow the DOE along with the National Transmission Corporation (TransCo) to conduct an audit on the transmission grid facilities.

“As long as it is within the parameters of our governing law and the concession agreement, we will comply po,” Alabanza told Cusi.

During the Senate energy committee hearing last June 10, the NGCP said consumers would suffer an increase in electricity rates if it complied with the DOE’s policy of 100% firm contracting for ancillary services (AS) or power reserves.

The DOE has repeatedly blamed NGCP for the thin power supply in Luzon as it failed to comply with the required “firm” ancillary service contracts or reserves, which should be 4% of the power demand and could be tapped in case power plants go offline.

The NGCP explained that it fully contracted its ancillary services requirements, but most of these are on a “non-firm” basis, which the DOE identifies as unreliable since the ancillary service provider decides if they will provide reserves.

The grid operator noted that ancillary services are not energy “reserves” that the grid can tap for extended periods of time should major power plants falter.

Shifting from the current non-firm arrangements to a firm arrangement will also not solve the current lack in supply, as they are taken from the same pool of power plant suppliers, NGCP added.

The grid operator said that the long-term solution is installing new baseload power plants to meet rising demand.

With the NGCP’s commitment to comply with the DOE policy, Senator Nancy Binay asked the ERC to give an advanced warning to the consumers that there will be an increase in electricity rates.

ERC Chairwoman Agnes Devanadera said she will instruct a technical group from the commission to sit down with Philippine Independent Power Producers Association for the necessary adjustments in the power rates. —NB, GMA News