The National Grid Corporation of the Philippines (NGCP) warned of intermittent power interruptions resulting from the denial by the Energy Regulatory Commission (ERC) of its request for the extension of ancillary service (AS) agreements while the competitive selection process (CSP) is underway.
This scenario has forced the NGCP on Monday to seek Department of Energy (DOE) intervention on the issue to “avert avoidable power interruptions” down the line.
Ancillary servers (AS) are the available generating capacity meeting contingent power reserves when generating units trip or a transmission interconnection problem occurs.
AS are necessary units allowing the NGCP to manage power fluctuations to ensure the quality and reliability of power flowing through its system since fluctuations can damage sensitive equipment if the fluctuations are severe enough to pose a danger to the transmission system as a whole.
The ERC’s refusal came after NGCP concluded the acceptance and opening of bids for ancillary servers on March 14, 15 and 16, 2023 for Luzon, Visayas and Mindanao, respectively. The NGCP is evaluating the bids and expects to formally award contracts to winning bidders no later than April 18 this year.
The ancillary services procurement agreements or ASPAs resulting from the CSP are subject to ERC approval. The NGCP also said a provisional approval for new ASPAs may not be expected earlier than June 2023.
“Many of NGCP’s AS agreements have expired. We have resorted to month-to-month extensions of our existing agreements to ensure the sufficiency of services while the procurement process is ongoing. With ERC’s denial of this interim arrangement, our hands are tied. The Philippine transmission grid shall be vulnerable to power interruptions resulting from an artificial lack of AS. Without an existing ASPA, NGCP cannot nominate power plants to provide the critical services,” NGCP said in a statement.
In a letter dated March 25, 2023 addressed to Energy Secretary Raphael Lotilla, NGCP president and chief executive officer Anthony Almeda said that extending the ASPAs on month-to-month basis is “a middle ground strategy to remain compliant with the relevant DOE Circulars, while at the same time preserving the integrity of the transmission grid with the continuous provision of AS, especially during the summer months, when it is needed most.”
“We have always conducted the procurement of AS with good faith, with the best services for the least cost as a primary motivating factor. We have done much to improve the procurement process but above all else, we must be able to provide these services. With this disappointing development, this leaves us with no other option,” the NGCP further said.
“If we sign interim extensions, we expect the ERC to issue us yet another show cause order. If we do not, we will be unnecessarily subjecting consumers connected to the grid to avoidable and damaging fluctuations or worse, interruptions,” NGCP said.
