CANE POINTS: Generation, Transmission Troubles to Drive Power Rates Up

During the first week of August, the National Grid Corporation of the Philippines (NGCP) announced four Yellow Alerts. What exactly does this mean for power consumers?

NGCP issues a Yellow Alert when the power reserve is critically low. There is still enough generating capacity for the moment to supply the normal power needs of consumers, but the balance is very fragile, such that a sudden increase in power demand, or unforeseen trouble in one power generating plant, will translate to widespread power outage.

On the other hand, a Red Alert means there is zero reserve power. Under this situation, the generating plants are overstressed to produce the power needs of consumers, leading to breakdown of their equipment. Before that happens, NGCP will be compelled to cut off power supply to large areas, so that the power plants will not breakdown.

During Yellow Alert or Red Alert, the power grid becomes unstable, in term of consistency of the voltage delivery and the frequency of the delivered voltage.

If there is overvoltage, like when you plug a 110 volts appliance to a 220 volts outlet, the power supply components of the appliance will most likely overheat and explode. Similarly, if you plug a 220 volts appliance to a 110 volts power outlet, your appliance will not function because of low power supply and your appliance will be damaged.

In terms of voltage frequency, it is similar to the AM/FM radio. When you tuner is not pinpointed at the exact frequency of the radio station you are trying to listen to, the sound transmission comes out garbled and weak. That’s also the case with electric power.

For the power grid to be stable, the power supply voltage and the voltage frequency should be within an acceptable range, which is plus or minus 5% of the standard value. Unfortunately, power fluctuations occur due to troubles in the power generating units, glitches at any part of the hundreds of kilometers length of NGCP’s transmission system, or a sudden increase or decrease in power demand.

Consumers have experienced these power fluctuations. Sometimes these fluctuations lead to a power interruption, but more often the power grid recovers its stability, and consumers are spared the inconvenience of prolonged power interruptions.

When these fluctuations occur, ancillary services come into play to stabilize the grid and ensure the smooth, continuous delivery of power. These ancillary services are similar to power generators, because they serve as “small-scale, short-term” standby or reserve power supply. Unlike the full-pledged power generators which operate at almost full capacity 24 / 7, ancillary service providers operate on a shorter, rotating period.

Think of ancillary services providers as the automatic voltage regulator (AVR) and uninterrupted power supply (UPS) of the computer, TV, aircon, ref or any other sensitive appliance. The AVR protects the appliances from voltage surges, while the UPS provides power long enough to save whatever task you are working on in your PC, or to switch off or transfer the appliance to a power source independent from the power grid, such as a battery or a power generating unit.

In the same manner that appliance users pay for their AVRs and UPSs, power consumers also have to pay ancillary services providers to ensure the stability of the grid and minimize the occurrence of power interruptions.

The power grid has experienced several Yellow Alerts last August, compelling ancillary services providers to work overtime to stabilize the power grid. Because ancillary services providers worked longer and more intensely than normal, they will also charge more for the services they provided. These additional charges for their services, which are integrated into the transmission charge, will be reflected in the September power bill.

The transmission charge is composed of two components: the transmission wheeling charge, which goes directly to NGCP, and the ancillary services charge, which NGCP collects and forwards to the ancillary services providers.

This September, the transmission charges will likely increase, because of increases in the ancillary services charge, as presented earlier, and the transmission charge. Recently, the Energy Regulatory Commission allowed NGCP to increase its basic wheeling charge and collect its under-recoveries for the period 2016-2020. Both components of the transmission will likely reflect increases this September.

Moreover, Yellow Alerts mean less available power supply from the generation side. Low supply amid high demand, of course, translates to higher prices. Consumers should not be surprised if there will be a significant increase in generation charges this September.

The good news is that the distribution charge remains unchanged. For Negros Power, the distribution charge, or the portion of the electric bill which goes to Negros Power, has remained the same at Php1.1866/ kilowatt-hour (kWh) since 2010. This translates to a about 10% of the rate per kWh. Only about 10% of what consumers pay for their electric bill goes to Negros Power for its operations.

Thank God for small mercies!* (BB)