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ERC approves AS agreement between NGCP and 3 Aboitiz firms

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The National Grid Corporation of the Philippines (NGCP) is looking at ancillary services (AS) charges that may be 30% to 40% less than the current structure for the same amount of reserves.

This is after the Energy Regulatory Commission (ERC) recently granted provisional authority to NGCP to implement its Ancillary Service Procurement Agreement (ASPA) with three Aboitiz-owned power firms – SN Aboitiz Power-Magat, Inc., SN Aboitiz Power – Benguet, Inc. and Therma Luzon, Inc.
NGCP President Henry Sy, Jr. has long been pushing to lower AS rates for NGCP grid customers. “We are constantly looking for ways to lessen AS cost by engaging power generators who are technically capable and willing to provide AS at a rate acceptable to grid-users,” Mr. Sy said.

The Commission issued the order in response to the petition of NGCP to procure Ancillary Service (AS) from the three power plants to augment the existing reserves for the Luzon Grid wherein the demand is increasing. According to NGCP, the available reserves are not sufficient to comply with the required levels of contingency and dispatchable reserves prescribed in the Philippine Grid Code (PGC). 

The agreement will also address the possible AS supply deficiency during the dry season when Kalayaan Hydroelectric Plant has low water reserve.

NGCP Spokesperson Atty. Cynthia D. Perez-Alabanza explained, “By entering into an agreement with the AS suppliers, NGCP is ensured of the reliability of the supply of reserves necessary to maintain the quality and frequency of electricity transmitted to distribution utilities and other grid-users.”

The ASPA, which will be effective for a period three years, is a result of negotiations between NGCP and the three power firms to arrive at an AS rate that is beneficial for both the generators as supplier and NGCP’s power customers as consumer. In turn, the ERC-approved AS rate indicates that AS charges may be 30% to 40% less than the current structure for the same amount of reserves.

Mr. Sy added, “We continue to push for less expensive ancillary services to make sure that we only get the more efficient and affordable ancillary services providers. We want to serve our grid customers better. We will secure the reliability and stability of the grid, but we will not burden the end-consumers.”

The Commission also granted NGCP the authority to schedule the contracted AS capacities with the reminder that the system operator shall “optimize the economic and technical dispatch of the said resources”. ERC also reiterated that in scheduling, the system operator shall consider the “AS provider with the least cost for the reserve needed to maintain the quality, security, reliability, and integrity of the grid”. Further, NGCP is directed by the Commission to submit a monthly computation of AS rates for monitoring purposes.

Ancillary Services, as defined in Section 4 (b) of the EPIRA, are “those services that are necessary to support the transmission of capacity and energy from resources to loads while maintaining reliable operation of the transmission system in accordance with good utility practice and the Grid Code”.

AS are needed to regulate the frequency of transmitted electricity to avoid fluctuations and to help the system adapt to sudden loss of power supply to prevent the occurrence of massive blackouts. AS also provides assistance to back-up generating plants to recover from a shutdown to temporarily augment lack of supply in the system, thereby, normalizing the system during a power loss.

Apart from contracting AS providers, NGCP is also responsible for dispatching the capacity needed to supply the required ancillary services and for developing and proposing wheeling charges and ancillary service tariffs to the ERC.

As grid operator, NGCP is tasked to bill and collect AS charges based on the ERC-approved rates. These charges, however, do not form a part of NGCP’s revenues and are only pass-on charges remitted entirely to the generation companies from which the AS are sourced.

NGCP is a privately owned corporation in charge of operating, maintaining, and developing the country’s power grid. It transmits high-voltage electricity through “power superhighways” that include the interconnected system of transmission lines and towers, substations and related assets.




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