TAGUIG CITY – The Department of Energy (DOE) firmly maintains its call for the National Grid Corporation of the Philippines (NGCP) to comply with its obligations, as the System Operator (SO), to secure urgently needed Ancillary Services (AS) or power supply reserves and reduce its transmission fee, instead of making excuses to justify continued non-compliance with the Department's issuances.
Under Department Circular (DC) DC2019-12-0018, “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid”, the NGCP is mandated to procure 100% firm power reserves, as well as engage in the forward contracting of reserve requirements to ensure grid reliability. These steps would help secure the availability of power services during untoward occurrences, such as the simultaneous plant outages and deratings which led to the series of Red and Yellow Alerts on 31 May and 1 June 2021.
“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 Secretary Alfonso G. Cusi stated.
CONSUMER WELFARE FIRST, BEFORE DIVIDENDS
According to the Secretary, "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 (WACC), and finish the transmission projects on time."
TRANSPARENCY IN ISSUING POLICIES
It may be recalled that the DOE has advocated for more transparency on the electricity cost. This paved the passage of the Murang Kuryente Act and the issuance the “Uniform Monthly Electricity Bill Format” for consumers and industry participants to further scrutinize the items on the electricity bill.
The DOE likewise issued, among other directives, the Competitive Selection Process policy in 2018, the Ancillary Services policy in 2019, the Grid Operation and Maintenance Program in 2020 for the power players to comply their obligations that ensures a 24/7 delivery of electricity to its consumers.
“To find the solutions to the recurring power interruptions, we issued these policies for the industry players to comply,” Secretary Cusi emphasized.
ANCILLARY SERVICES AND THEIR SOURCING
The NGCP is not limited to procure from the existing power plants in order to comply with its obligations under its franchise. The DOE’s 2019 AS policy clearly states that the NGCP may engage in forward contracting, which allows the entry of additional capacities.
NATIONAL SECURITY
“The DOE emphasizes that the operation of our national power grid is a matter of national security. It is time for the government to take back our grid’s Systems Operations,” Secretary Cusi concluded.
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