THE possibility of power outages could happen soon unless the Energy Regulatory Commission (ERC) withdraws its order denying the request of the National Grid Corporation of the Philippines (NGCP) for monthly extensions on ancillary services agreements (ASAs).
On Monday, NGCP warned of the possibility of intermittent power interruptions after the ERC denied a request for month-on-month extensions on ASAs, while the competitive selection process (CSP) is being undertaken.
In denying its request, the ERC cited DOE (Department of Energy) Circular No. 2019-12-0018 which disallows execution of Ancillary Services Procurement Agreements (ASPAs) on a non-firm basis, and Circular No. 2021-10-0001 which requires procurement of AS through CSP only.
The NGCP has already concluded the acceptance and opening of bids for AS on March 14, 15, and 16 for Luzon, Visayas, and Mindanao, respectively. It is now evaluating the bids and expects to formally award contracts to winning bidders no later than April 18, 2023.
However, the ASPAs resulting from CSP still need to be approved by the ERC. NGCP is anticipating that a provisional approval (PA) for the said ASPAs may not be expected earlier than June 2023, “with the regulatory processes that applications of this nature need to undergo.”
NGCP said that as early as September 2022, several of its ASPAs have already expired. Consequently, it was constrained to extend existing ASPAs on a month-to-month basis 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,” explained NGCP.
Ancillary services support the transmission of power from generators to consumers to maintain reliable operations. These are necessary for NGCP to manage power fluctuations to ensure the quality and reliability of power flowing through its system. If not managed properly, fluctuations can cause damage to sensitive equipment, or even automatic load dropping (ALD) if the fluctuations are severe enough to pose a danger to the transmission system as a whole.
“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,” NGCP stressed.
“With this disappointing development, this leaves us with no other option. 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,” explained NGCP.
Order was 3 months old
The ERC order was promulgated on December 12, 2022 but was received by NGCP only last March 22.
NGCP will file a motion for reconsideration on the argument that the DOE circulars apply only to new ASPAs, and not to extensions of existing ASPAs.
When sought for commnent, ERC chairperson Monalisa Dimalanta said her office will wait for NGCP’s filing of a motion of reconsideration, which is provided for under the Revised Rules of Practice of the commission, “so we can officially revisit our ruling,” she replied via Viber.
Separately, NGCP President Anthony Almeda wrote to DOE Secretary Raphael Lotilla, asking the agency to intervene in the issue to avert avoidable power interruptions.
“We respectfully inform you of the immediate the need to extend existing ASPAs to prevent possible ALD caused by a lack of AS,” Almeda said.
Further, Almeda told Lotilla that “unless the ERC withdraws its order, or DOE authorizes the month-to-month extension of existing ASPAs by clarifying that Circular Nos. 2019-12-0018 and 2021-10-0001 do not apply to these contracts, the Philippine Grid will unnecessarily be vulnerable to ALD caused by the artificial lack of AS.”
Almeda reiterated that the grid operator considered these extensions as 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.