The Department of Energy (DOE) is seeking feedback on a draft circular exacting monetary penalty on energy actors that trigger the use of so-called ancillary services.
The agency said the proposal is meant to protect electricity consumers from solely paying the price of requiring the use of ancillary services resulting from outages, whether caused by the grid operator, electricity distributor or the power generation company itself.
Ancillary services kick in to maintain balance in the system, ensure normal frequency and voltage levels in response to demand changes, smooth out variable renewable energy supply and even the loss of large generating units.
In the draft circular, the cost recovery mechanism is applied against the wholesale electricity spot market (WESM) member that required or caused the use of ancillary services.
The mechanism is applied against the generation companies, the NGCP as transmission network service provider as well as power customers.
“It is a policy aiming to have a sharing of cost of reserve between generators and consumers considering that reliability is affected by changes in supply and demand. Further to this, the policy is also designed to impose appropriate ancillary service cost to generators who cause the dispatch of contingency and dispatchable reserves,” Luningning Baltazar, DOE assistant director of the Electric Power Industry Management Bureau, said in a statement.
“Those generators who are frequently on outage will have a higher share of ancillary service cost as determined based on the formula for reserve responsibility sharing,” Baltazar added.
The DOE accepts comments on the draft circular until 25 April this year.
