NGCP files MR for ancillary services contracts

System operator National Grid Corporation of the Philippines (NGCP) has filed its motion for reconsideration (MR) with the Energy Regulatory Commission (ERC) for its request to be allowed monthly renewal of its ancillary services (AS) contracts while its procurement processes for power reserves are still ongoing. The MR filing was formally received by the ERC on Tuesday (March 28), as conveyed by the regulatory body via its statement to the media. “The ERC is thoroughly reviewing the grounds cited by NGCP in its motion for reconsideration and rule upon the same expeditiously,” the agency stressed. The regulatory body qualified that the MR was anchored on an earlier denial of NGCP’s request “to extend its ancillary services procurement agreement (ASPA) with 1590 Energy Corporation (1590EC),” one of the contracted AS providers of the transmission firm. From that filing, the Commission indicated that it is “currently evaluating the motion in accordance with the Revised Rules of Practice and Procedure of the Commission.” As emphasized, the bid of NGCP for monthly extension of its AS contracts had been thumbed down by the ERC in its December 12 ruling last year. In turn, that prompted the system operator to raise alarm bells of brownouts if such will not be acted upon by the regulatory body. NGCP argued it will need to resort to monthly renewals of AS contracts because its procurements for these power supply needs of the power system are still ongoing; and any regulatory lag could affect the reliability of its operations. Nevertheless, the ERC stipulated that “among the grounds cited by the Commission in denying the request was the fact that the 190-megawatt ASPA with 1590EC was in fact already expired as of September 25, 2022 and that it was a non-firm contract sought to be extended.” The ERC further said at the time of the promulgation of its decision, the rate of the non-firm dispatchable reserve (DR) of NGCP – as gleaned from its contract with 1590 Energy Corp. was  “more expensive at P1.25/kW/hr than the rate for firm DR contracts at P0.85/kW/hr.” The Commission similarly highlighted that the non-firm contracting for AS was “in violation of the rules of the Department of Energy (DOE) requiring all ASPAs to be firm contracts.” The ERC thus specified that “ the extension requested by NGCP violates the DOE circular requiring all ASPAs to be procured through competitive selection process (CSP)” – in reference to the bidding system being enforced on power supply sourcing in the restructured electricity sector – including the AS requirements for the reliable operation of the transmission system. The regulatory body reiterated that even as late as December 2022, “NGCP still had existing non-firm AS providers aside from 1590 EC which could provide and augment the reserve requirements of the grid.” The ERC likewise narrated that “as early as 2019, the DOE already directed NGCP to renegotiate its non-firm contracts to firm contracts, but as of December 2022, only one (1) non-firm ASPA was converted to firm.”