NGCP to follow DOE order to sign firm contracts for backup power


Posted at Jun 15 2021 11:31 AM

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But the company maintains this will not solve Luzon power woes

MANILA - The National Grid Corporation of the Philippines will comply with the Department of Energy's instruction to enter into firm contracts with backup power providers, a spokesperson said Tuesday.

NGCP, the privately owned operator of the country's power grid, believes, however, that this will not solve electricity problems but will instead increase power rates, said lawyer Cynthia Alabanza.

"We will follow, but we ask that the ERC (Energy Regulatory Commission) be given an opportunity to really see the impact of this," she told ANC's Headstart.

"If it’s something that will lead to higher rates for the consumers and no better services, then I think that’s something that the DOE should consider, as well as the ERC," she said.

Alabanza said the NGCP "sources everything from the same pot and if that pot doesn’t hold enough to meet both needs, then you’re still going to have the same problem."

"Signing a firm agreement will not give you additional power. It will just give you bigger bills, larger bills to pay...There won’t be a power plant that will magically turn up when we sign the firm contracts," she said.

"You will just be paying more for the same services. And if it’s the same amount of power that’s currently in the grid, it will not improve the situation because the problem is not ancillary services; the problem is supply," she added.

Alabanza said while the NGCP does not hold deciding powers here, the company believes it should be prudent in its contracting strategies "as a good corporate citizen."

Following a Senate hearing last week, the NGCP had 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.

Prior to that, the DOE said the power outages recently experienced happened because the NGCP refused to procure backup power through firm agreements which would have obliged providers to deliver power whenever it is needed. The DOE said the NGCP was obliged by its franchise to enter into these contracts.

Alabanza maintained in the interview that even if NGCP had entered into these contracts, there still would have been power outages because of the thin power supply. She said the reserve requirements were fully contracted and all available power is being used.

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