National Grid Corp. of the Philippines (NGCP) on Thursday warned of an “astronomical spike” in electricity prices if it was forced to comply with a Department of Energy (DOE) policy that the grid operator should engage with suppliers entirely through “firm” contracts.
NGCP is locked in a debate with the DOE on how to secure contracts with power producers for ancillary services.
But the Senate energy committee, chaired by Sen. Sherwin Gatchalian, said a debate was moot and academic considering that the DOE had already issued a relevant circular in 2019.
“Debating on whether ancillary services will help (avoid supply shortages and brownouts) is moot since the DOE has issued their circular and the committee supports that policy,” Gatchalian said. “As we look for solutions, it is best [for NGCP] to comply.”
The committee held a hearing on Thursday in an effort to help find solutions to the occurrence of red alerts in Luzon or when reserve power generating capacity is less than 475 megawatts—or worse, when peak demand exceeds available capacity.
Department Circular No. DC2019-12-0018 mandates the NGCP, to buy ancillary services through firm contracts, to ensure that the power plants contracted are always available whenever needed by the system for reliability of the grid.
Energy Secretary Alfonso Cusi has repeatedly called out NGCP, which he said was “consistent on not complying” with the circular.
According to NGCP, ancillary services are not meant to replace baseload plants—generators that run round the clock—or for any long-term or continuous use.
Instead, ancillary services are a stop-gap measure, dispatched only to stabilize and balance the grid in cases of power supply and demand imbalance.
At the hearing, NGCP president Anthony Almeda lamented that the company “has constantly been bullied not just over the past couple of days, but in the past years—being used as the scapegoat, the easy target to blame for the issue (the occurrence of red alert situations).“It saddens me that NGCP has become the whipping boy over this issue to protect vested interests within the industry,” Almeda said. INQ
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