The targeted procurement of power reserves or ancillary services (AS) by system operator National Grid Corporation of the Philippines (NGCP) is seen as the ultimate solution to spare Filipino consumers from distressing power interruptions or blackouts, hence, the Energy Regulatory Commission (ERC) wants to make sure that all requirements for the auction of power reserves will be complied with.
Within that purview, the ERC issued a ‘show cause order’ mandating the system operator
“to explain its failure to comply with DOE (Department of Energy) Circulars on the contracting of ancillary services to ensure grid security and stability.”
The DOE circular refers to the requirements and processes on competitive selection process (CSP) that shall be upheld for the targeted AS bidding within this month.
The ERC, in particular, has directed NGCP “to file within 15 days upon the receipt of the SCO (electronically) and another five days after (through personal service) their verified explanation as to why no administrative penalty should be imposed upon it on the possible violations cited.”
It further stipulated that “the submission shall also include necessary proof that will support all the allegations in its verified explanation.”
According to the industry regulator, the NGCP has yet to comply with several terms under the CSP rules for the auction of its reserves contracting; and such include the need for the system operator “to seek approval from the DOE on its Ancillary Service Agreement Procurement Plan.”
Additionally, the ERC noted that NGCP will need to corner the approval of the DOE
“on the terms of reference (TOR) of the Ancillary Service Competitive Selection Process (AS CSP); and for the transmission company “to complete the AS CSP within six (6) months from the effectivity of the Circular.”
As explained by the regulatory body, “ancillary services are necessary to support the transmission of capacity and energy from resources to loads, while maintaining reliable operation of the grid in accordance with good utility practice and existing rules.”
For the AS-CSP, in particular, this refers to “the process whereby ancillary service providers are awarded ancillary service contracts through transparent and competitive bidding in accordance with the rules and regulations set by government regulators,” according to the ERC.
The industry regulator qualified that NGCP has already issued the TOR and the schedule for the conduct of AS-CSP, but it has yet to fulfill the other requirements being enforced by the DOE “pursuant to its mandate as a policy-making authority.”
The regulatory agency indicated that its issuance of a show cause order “is consistent with the mandate of the ERC to enforce the implementing rules and regulations of the EPIRA (Electric Power Industry Reform Act) including those formulated and adopted by the DOE.”
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