NGCP's pass-through ancillary costs jump in November on oil, coal prices
Transmission rates for November billing periods have risen despite cooler weather that typically lowers electricity consumption, the National Grid Corporation of the Philippines (NGCP) said, citing a spike in its ancillary service (AS) rate.
In a briefing on Tuesday, Nov. 11, Julius Ryan Datingaling, NGCP head of regulatory management said transmission charges increased by ₱0.0034 per kilowatt-hour (kWh) for November.
“The increase in rates generally is due to the ancillary service reserve,” Datingaling said. “For the AS rates, it also increased by almost 10 centavos per kilowatt-hour.”
Residents in Luzon will see an upward AS rate adjustment of ₱0.1805/kWh, while Mindanao’s AS charge increased by ₱0.0058/kWh. In contrast, AS rates in Visayas declined by ₱0.2731/kWh.
AS charges are pass-through costs paid to power generators that also serve as AS providers to maintain supply-demand balance on the grid.
The price surge is driven by the fuel sources used by power plants in Luzon and Mindanao, Datingaling said, noting their reliance on costly oil and coal.
“The prices have gone up from all the types of AS reserve for Luzon and Mindanao... The fuel used [in Luzon and Mindanao] are oil-based and coal,” he said, citing a report from the Independent Electricity Market Operator of the Philippines (IEMOP).
This correlation means that higher oil prices will consequently increase the reserve market’s clearing price, directly affecting consumer electricity costs.
Manila Electric Co. (Meralco), for example, saw its November bills rise by ₱0.1520/kWh, which reflects the higher transmission rate in Luzon.
Despite the rate increase, NGCP Spokesperson Cynthia Alabanza clarified that the rise in transmission wheeling rates does not affect the company's revenues, as its income is cap-limited.
Alabanza also addressed the proposed investment by the state-run Maharlika Investment Corp. (MIC) in Synergy Grid and Development Corp. (SGP), which would provide the government a
“foothold” in NGCP.
“They’re still going through the process. So, talks are still on... They’re still discussing the details,” she said.
MIC earlier offered to acquire a 20 percent stake in SGP last January, a move that would also entail two board seats each in SGP and NGCP.