The National Grid Corporation of the Philippines (NGCP) is waiting for final regulatory approval on two ancillary service agreements that are still delayed, despite initial approvals, due to ongoing disputes between the grid operator and power producers over contract rates.

Data released by the NGCP showed that while the Energy Regulatory Commission (ERC) approved 36 Ancillary Service Procurement Agreements (ASPA) through the competitive selection process in 2025, two specific contracts have not yet entered the implementation phase.

These holdouts involve disputes over payment scales and formal requests by the power providers to terminate their commitments.

Under the Electric Power Industry Reform Act, ancillary services are essential support mechanisms that stabilize the transmission system, ensuring that electricity flows reliably from power plants to end users. Without these services, the grid faces increased vulnerability to fluctuations in frequency and voltage.

One of the primary delays involves CIP II Power Corp., which provides dispatchable reserves for the Luzon grid. The company has filed a motion for reconsideration with the ERC, seeking a re-evaluation of its interim-approved rates while simultaneously seeking to terminate its procurement agreement.

In the Visayas, SPC Island Power Corp. has similarly filed a request to cancel its contract for dispatchable reserves and black-start services—the latter critical for restarting the grid following a total blackout.

The impasse stems largely from a mismatch between competitive auction prices and regulatory caps. The NGCP noted that 33 agreements have received final authority from the ERC, but six were approved at rates lower than those originally awarded during the competitive selection process.

As a result, several providers have suspended their contracted firm capacity, refusing to supply the services until the regulator resolves their motions for reconsideration.

The grid operator has grown increasingly vocal about these procurement hurdles as the Philippines integrates more intermittent renewable energy into the national mix.

While the ERC cleared deals with five suppliers during the first half of last year—including a significant portfolio of four battery energy storage systems—the NGCP warned that the surge in variable renewable energy requires a more robust backbone of dependable baseload plants and fast-ramping resources.

The NGCP is now urging the Department of Energy to refine grid-integration policies. The operator maintains that without a stable pricing environment that encourages providers to fulfill their ancillary service contracts, the risk of power fluctuations and localized outages will persist as the country pivots away from traditional fuel sources.