PAGADIAN CITY -- The rapid climb in the cost of maintaining a power reserve for the Mindanao grid is causing the radical hike in the cost of electricity currently billed to consumers despite some five months of regular brownouts.
In a press advisory, the National Grid Corporation of the Philippines (NGCP) said this cost item, referred to as ancillary services, increased almost eight times its level in December 2009.
From P77 per kilowatt in December 2009, the cost of ancillary services went up to P607 per kilowatt last April.
The low-cost regime occurred during the time the two power barges supplying the service to NGCP in Mindanao were still owned by the National Power Corporation, a government-owned and controlled firm.
The power barges were eventually sold to the Aboitiz Group; the first one last February, and the other one by March.
At that time, power generation in the Mindanao grid has been aided by oil-based sources as its hydroelectricity production capacity began to dwindle amid the onset of a dry spell.
As grid operator, the NGCP is required to maintain a certain level of power reserve that is “necessary to support the transmission of electricity from power resources to load customers and to maintain the reliability of power services.”
Beth Martinez, NGCP corporate communications officer for Western Mindanao, said one basic function of a power reserve is ensuring that the right voltage of electricity is being wheeled to load customers.
Since NGCP does not operate a power plant, it contracts the services of power generators to be able to come up with the requisite level of reserve for the grid, Martinez added.
The increase in cost of ancillary services happened as the rate for transmission has remained stable the past few months.
Electricity transmission from generators to load customers is the principal business of NGCP as operator of the country’s power grids.
Its direct customers include distribution utilities, which could be private utilities and electric cooperatives; and large industries and companies directly connected to the grid.
The NGCP bills and collects both transmission and ancillary services charges from its direct customers, who in turn, passed on the charges to retail power consumers.
The company then remits the collection of ancillary service charges to its contracted providers per an Ancillary Services Procurement Agreement approved by the Energy Regulatory Commission (ERC), NGCP said.
As the collecting agent, the company does not get revenues from the said fees, explained NGCP.
The charges are not subsidized anymore by government and thus reflect the true cost of electricity per current market forces, especially the prevailing world market prices for fuel used in running the power barges which supply the ancillary services, NGCP stressed.
The company also pointed out that its billing computation and collection for ancillary services have been approved by the ERC. (Ryan D. Rosauro)