Energy Secretary Alfonso Cusi called on NGCP to meet the standards for power reserve contracts, which serve as buffer in the event of power plants fall unexpectedly, instead of asking the Palace to resolve its standoff on reserve levels with the DOE.
When the privately-owned National Grid Corporation of the Philippines (NGCP) wrote to the Office of the President (OP) seeking the Palace’s intervention on demand-side management, this got Energy Secretary Alfonso Cusi’s goat.
For one, the NGCP has been warning of thin reserves, which could affect the May elections, if not resolved on the demand-side, through declaration of holidays.
The NGCP took over the management and operation of the power grid in 2009.But the government, through the National Transmission Corp. (TransCo), still owns the assets.
But Cusi insists it is not a question of thin reserves or supply issue but more about compliance issue.
He further questioned NGCP if: 1) all capacities at all power stations are available; 2) all available capacities are connected; 3) congestion issues must be addressed; 4) Grid Operating Maintenance Program was thoroughly planned and 5) reserves are contracted from a separate pool of capacity for ancillary service which can be tapped in cases of emergency.
In short, he was skeptical if NGCP did due diligence before announcing the thin reserves to media, the legislators and to Malacanang.
Reacting to NGCP’s January 31 letter to the Office of the President that was received on February 3, Cusi called on NGCP to meet the standards for power reserve contracts, which serve as buffer in the event of power plants fall unexpectedly, instead of asking the Palace to resolve its standoff on reserve levels with the DOE.
The NGCP noted that 2021 actual demand exceeded 2019 pre-pandemic demand by 296 megawatts (MW) with the 2022 projected demand peak expected to exceed 2019 levels by 1,043 MW or 9 percent.
‘Not necessary’
“I don’t think (it’s necessary) – reacting to the letter to OP. All the National Grid Corp. of the Philippines has to do is comply with its obligation to provide firm reserves in accordance to the concession agreement,” Cusi told Business World.
The DOE requires the grid to have reserve power, known as ancillary services (AS) on tap committed under firm contracts.
The NGCP’s position is that full compliance with the firm-contract requirement will ultimately raise power prices because of the expense involved in committing reserves.
It said it instead proposes to tap a network of AS providers under firm and non-firm (verbal agreements) contracts.
In a news conference on January 25, Electric Power Industry Management Bureau Director Mario Marasigan said the NGCP must have all its power reserves committed under firm contracts to insulate it from power market disruption.
Holidays: solution to power shortages?
The NGCP’s letter to the OP specifically sought Palace intervention on demand-side management — referring to measures that will regulate consumer usage.
Among its proposals were holiday declarations to ensure power is available during critical election and vote counting days.
“Non-working holidays can help as ensure there will be more power supply in the grid on the day and a day after the elections especially with the closure of commercial (establishments) and government offices,” NGCP Assistant Vice-President and spokeswoman Cynthia Perez-Alabanza said.
This is the first time the NGCP has written to the OP regarding power supply matters.
It is also the second time it has sought Palace intervention in connection with the elections.
The NGCP’s own data indicate a firm contract level equivalent to 809.3 MW. It estimates that it requires 1,776.7 MW more to meet the full coverage level on firm contracts. Non-firm contracts are equivalent to 2,807.2 MW.
Cusi had earlier expressed skepticism about NGCP’s warning of thin power supply conditions during the dry season.
‘What is NGCP doing?’
He hit the grid operator for issuing such a warning when it should be ensuring adequate supply during the dry season. “So, what is NGCP doing about it?” Cusi asked.
“Increased demand for power during our hotter months, and reduced supply during these same dry months is an annual occurrence, and as system operator and grid operator, the NGCP is very much aware of this cycle,” he added.
“The NGCP is expected to perform their responsibilities that contribute to the adequacy of supply, and more so this year as we will be holding national elections this summer,” Cusi said.
‘Revisit NGCP franchise’
Last June 2021, Cusi asked the Senate to revisit the franchise granted to NGCP as he flagged “compliance issues” in the recent Luzon brownouts.
Cusi had repeatedly criticized NGCP for being “consistently non-compliant” with the requirement to secure “firm” contracts for ancillary services that would provide on-call, backup energy supply whenever needed.
The Energy Regulatory Commission (ERC) has already ordered the NGCP to explain the delay in 33 approved power transmission projects, to which NGCP said it would cooperate with the ERC and provide all the needed information.
“We are demanding NGCP to comply with their concession agreement by contracting the required reserves, but yung aming panawagan, di po narinig, di po pinakinggan [but our call was not heard, it was not listened to],” he said back then.
‘Constantly bullied’
In responses, the NGCP decried being “constantly bullied” and being “used as a scapegoat” amid the recent power interruptions in Luzon. “We were blamed for not contracting enough ancillary service as if it is the solution to the problem,” NGCP president Anthony Almeda said.
Almeda said the NGCP “has 100 percent contracted a healthy mix of firm and non-firm ancillary service contracts.”
NGCP sources the power it needs to support its AS from the same pool of energy suppliers serving end consumers. “AS is not extra energy, nor is it replacement power for power plants that go down. If power supply is not enough to meet the needs of the consumers, how can there still be power for AS?” Almeda insisted.
AS, the NGCP stressed, is a stop-gap measure, dispatched only to stabilize and balance the grid in cases of power supply and demand imbalance.
In times when supply is sufficient, it is meant to run only long enough to bridge the gap between the loss of supply event, and the time that replacement power can be scheduled by the Independent Electricity Market Operator of the Philippines Inc. (Iemop), usually within the succeeding hour or two. It should not run for days, weeks, or months on end without violating the Electric Power Industry Reform Act (EPIRA) and prevailing regulatory approvals.
In earlier meetings with legislators, Cusi suggested the use of other energy sources for baseload such as nuclear, subject to technical and safety requirements. “If found feasible and doable, allow the same as congress may deem appropriate.”
But more important, Cusi stressed, a legislation must be crafted to amend NGCP’s franchise so it could take back the responsibility to prepare the Transmission Development Plan (TDP) and remove the delegation of the governmental power to expropriate because, he said, NGCP is wrongfully registering properties under its name instead of the National Transmission Corp. (TransCo) as owner.
He cited NGCP’s refusal to include TransCo in crafting the TDP, refusal to allow TransCo to inspect NGCP’s facilities, delays in NGCP’s vital power projects and non-compliance with a DOE circular ordering NGCP to contract 100-percent firm contracts for ancillary services (AS), among others.
“If it had only contracted firm contracts, we wouldn’t be here talking about the brownouts last week,” Cusi said.
Tags: #DepartmentOfEnergy, #NGCP, #powersupply, #electricity, #2022Elections