NGCP says power rates to spike if DOE insists on firm contracts for backups


Posted at Jun 10 2021 06:05 PM | Updated as of Jun 10 2021 08:52 PM

MANILA (UPDATE) - The country’s power grid operator said electricity rates will spike if it follows the Energy Department’s order to enter into firm contracts with backup power providers. 

The National Grid Corporation of the Philippines (NGCP) said that based on its initial simulations, power rates may rise by P0.64 per kilowatt-hour in Luzon, P0.54 per kWh in Visayas, and P1.39 per kWh in Mindanao if it enters into firm contracts for ancillary services (AS).

"Kung ikaw ay taga-Luzon at ang average consumer na 200 kWh ang iyong kinokunsumo, posibleng magbayad ka ng P128 additional kada buwan," said NGCP Spokesperson Cynthia Alabanza.

(If you're from Luzon and your average consumption is 200 kWh, you may pay an additional P128 per month.)

Visayas and Mindanao consumers who use 200 kWh per month meanwhile stand to pay an additional P108 and P300 per month respectively, Alabanza added. 

The Department of Energy earlier said the country experienced power outages last week because of the NGCP’s refusal to procure ancillary services or backup power through firm contracts which oblige providers to deliver power whenever it is needed.

The DOE said the NGCP was obliged by its franchise to enter into these contracts.

In a statement last April, the DOE said the NGCP has been entering into non-firm contracts for ancillary services, where “the provider decides whether they will provide AS even if they are scheduled by the NGCP.”

But in a statement released Thursday, the NGCP said procuring all of its ancillary services requirements under 100 percent firm contracts, would mean paying AS providers for 24/7 availability, regardless of whether their services are needed. 

“It’s going to be take or pay," Alabanza said.

The grid operator added that shifting to firm contracting “will not solve the current lack in supply, as they are taken from the same pool of power plant suppliers.”

“We get our power to support AS from the same pool of generators, many of which went on unscheduled shutdowns, and whose current collective output is not enough to meet consumer demand. Signing a firm contract will not make a large capacity power plant magically appear with the stroke of a pen. The only thing that changes is the charging mechanism,” NGCP said.

The DOE said that besides the high heat index that pushed demand for power, maintenance work and unscheduled outages at key power plants in Luzon and low gas pressure from the Malampaya also contributed to power supply problems last week. 

- With a report from Johnson Manabat, ABS-CBN News

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