NGCP moves to cut costs of ancillary services

National Grid Corp. of the Philippines, operator of the country’s electricity superhighway, aims to bring down the cost of ancillary services by as much as 40 percent.

In a statement, NGCP said the rates in the ancillary services procurement agreements (ASPA) it filed in the Energy Regulatory Commission were “significantly lower” than those in the current agreements.

“The new contracting methodology, rates and payment structure to be applied on all prospective ASPAs were designed to lower the overall cost of ancillary services by as much as 40 percent and, at the same time, ensure the availability of ancillary services capacity for the reliability and security of the grid,” NGCP said.

These agreements include those entered into with Trans-Asia Power Generation Corp. (TA-Power), Trans-Asia Oil and Energy Development Corp. (Trans-Asia) and Panasia Energy Inc. (PanAsia).

NGCP said it was tasked to provide ancillary services to all transmission users of the main grids by the Electric Power Industry Reform Act of 2001 (Epira), its Implementing Rules and Regulations, the Philippine Grid Code (PGC) and the Wholesale Electricity Spot Market (WESM) rules. NGCP is also mandated to implement the ERC-promulgated Ancillary Service Procurement Plan (ASPP) and the Ancillary Services Cost Recovery Mechanism (AS-CRM).

Ancillary services referred to “services that are necessary to support the transmission of capacity and energy from resources to loads while maintaining reliable operation of the transmission system in accordance with good utility practice and the Grid Code.”

Ancillary services are needed to ensure reliability in the operation of the transmission system and, consequently, in the reliability of the electricity supply in the Luzon, Visayas and Mindanao grids.

“It is the responsibility of NGCP to adequately serve generation companies, distribution utilities and suppliers requiring transmission service and/or ancillary services through the transmission system,” NGCP said.

Ancillary services also stabilize electricity supply and prevent system-wide blackout, and regulate the volume of electricity delivered to end users.

In emergency cases, when a power plant breaks down for instance, ancillary service providers make back-up plant readily available.