Transmission firm National Grid Corporation of the Philippines (NGCP) will appeal the Energy Regulation Commission (ERC) decision imposing a penalty and ruling on alleged non-compliance to publication requirements for its power reserves or ancillary services (AS) procurement to satiate its electricity needs in operating the country’s electricity system.

In a disclosure to the Philippine Stock Exchange (PSE), NGCP’s holding firm Synergy Grid and Development Phils. Inc. indicated that “NGCP intends to file a motion for reconsideration within the period allowed by the rules and regulations.”

Synergy Grid emphasized the stipulation in the ERC ruling that NGCP has been directed “to submit the terms of reference (TOR) and instructions to bid (ITB) to the Department of Energy in compliance with Section 7.4 and 7.5 of the AS-CSP (ancillary services-competitive selection process) within 30 days from receipt of the decision.”

In the ERC verdict, the regulatory body said that the transmission firm committed violation when it failed to comply on the publication of the TOR as well as the ITB on its scheduled competitive selection process (ASP) for its contracting of ancillary services or power reserves to guarantee the reliable operations of the power transmission highway.

Failure to heed the regulator’s ruling within the prescribed period would “compel the Commission to impose additional penalties” to include cancellation of its certificate of public convenience and necessity (CPCN) as well as revocation of its franchise.

NGCP has a 50-year franchise and the initial term under its concession agreement with the government is for 25 years or until 2034. Renewal of the concession agreement is subject to the mutual consent of relevant parties.

The procurement of power reserves or ancillary services will be highly critical to ensure that consumers will be reliably served, especially during the critical months of summer when power grids, especially Luzon, would experience recurring tight supply conditions.

NGCP initially targeted last September to undertake an auction of its AS contracting, but the Department of Energy (DOE) pointed out its oversight on the required publication of its TOR and ITB, because these might have legal implications once the signed ancillary services procurement agreements (ASPAs) will be filed with the ERC for its approval.

Under Section 7.4 of the CSP rules issued by the DOE, it was expressly stated that “prior to the publication of the invitation to bid, the SO (system operator) shall conduct a CSP for the procurement of ASPA for a contract of a maximum of five years.”

Section 7.5 of the DOE-issued rules also provides that, “the TPBAC (third party bids and awards committee) shall cause the publication and posting of the ITB for the procurement opportunity in accordance with the periods specified in the (DOE) Circular.”