TAGUIG CITY – For the past 2 years, the Department of Energy (DOE) has been reminding the National Grid Corporation of the Philippines (NGCP) of its obligation to provide sufficient levels of Ancillary Services or power reserves, as provided in Department Circular No. DC2019-12-0018 entitled, “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid”.

 

The Circular mandates the NGCP, as the System Operator (SO), to procure Ancillary Services (AS) through firm contracts, to ensure that the facilities contracted to provide AS are always available whenever needed by the system for reliability of the grid. 

 

Since the effectivity of said Circular, the DOE has been regularly evaluating the NGCP’s progress in contracting firm ancillary services. 

 

“The DOE sees the NGCP is consistent on not complying with its responsibility with the firm contracting requirement. The NGCP has been dragging its feet by pursuing insufficient capacity and even opting an unreliable contracting of “non-firm” AS Procurement Agreements (ASPAs),” Energy Chief Alfonso G. Cusi stated. 

 

In non-firm ASPAs, the AS provider decides whether they will provide AS even if they are scheduled by the NGCP, which compromises grid reliability at times.  

 

“Kapag non-firm yung kontrata, hindi sigurado na may reserba. Kaya kulang o manipis ang suplay lalo na pag tumataas yung demand sa kuryente tulad ng summer season,” Sec. Cusi explained. 

 

Thus,  the DOE promulgated DC2019-12-0018 which explicitly mandated the SO to renegotiate its existing non-firm contracts, as necessary and (2) comply with the 100% firm AS requirement. 

 

“Section 4 of the policy outlines that prior to the Reserves Market, the NGCP should contract 100% firm ASPAs. Section 12 states that they should renegotiate their contracts to convert them to firm. The same section also mandates that the NGCP should already engage in forward contracts for the reserve requirement,” Sec. Cusi emphasized. 

 

As of December 2020, the NGCP’s level of firm contracted AS are still way below the requirement of DC2019-12-0018 and the AS Procurement Plan, as approved by the Energy Regulatory Commission:

 

*Please refer to attached table*

 

With the slow progress in securing firm contracts, the DOE is closely monitoring compliance of the NGCP in fulfilling the AS requirements of the country.

 

For the enforcement of these policies, the DOE has been collaborating with the Philippine Competition Commission, the Energy Regulatory Commission, and the Department of Justice. 

 

“The government is looking into the full compliance of the NGCP and the other industry players to the DOE policies, particularly those that compromise the security and reliability of electric power supply,” Sec. Cusi reiterated.

 

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