CANE POINTS: NGCP Announces Hike in Transmission Rates

In the previous column, electricity consumers were advised to brace for an increase in transmission and generation charges this September because of the series of Yellow Alerts experienced in the first week of August by the Visayas grid, composed of the inter-connected island grids of Panay, Negros, Cebu, Bohol, Samar and Leyte.

The NGCP announced yesterday that there will be an increase in transmission rates this month.

The NGCP issues a Yellow Alert “when the operating margin is insufficient to meet the transmission grid’s contingency requirement”. In layman’s terms, NGCP issues a Yellow Alert when the power reserve is critically low, such that, if even just one power generating plant falters or bogs down, the grid will suffer widespread brownout.

Last August 1, the NGCP issued a Yellow Alert for the Visayas and Mindanao grids. In the Visayas grid, the available capacity at that time was 2,569 MW, while peak demand was 2,449 MW, leaving a power reserve of only 120 MW. In the Mindanao grid, the available capacity was 2,827 MW, while peak demand was 2,667 MW, or a power reserve of only 160 MW. The power reserve for both island grids was too thin for comfort.

In another instance last August 6, NGCP announced another Yellow Alert in the Visayas because the available capacity was at 2,538 MW, while peak demand was 2,369 MW, leaving a power reserve of only 169 MW. If one power plant breaks down during peak hours, the Visayas grid would have suffered widespread brownouts.

During the first week of August, NGCP announced four Yellow Alerts in the Visayas Grid.

NGCP explained that the tight power supply in the Visayas grid was caused by the unavailability of six power plants since 2023, the forced outage of 12 power plants from April to August, and the partial breakdown of eight power plants, which were forced to function at lower than their maximum power generating capacity. All these troubles afflicting the power plants deprived the grid of 744 MW of power.

Under a Yellow Alert, the power grid becomes unstable, in terms of consistency of the voltage delivery and voltage frequency. For the power grid to be stable, the power supply voltage and the voltage frequency should be within an acceptable range. To stabilize the grid and ensure the smooth, continuous delivery of power, the ancillary services (AS) providers come into play, but their services don’t come free.

The NGCP announced on its Facebook page yesterday (September 17) that the ancillary service rates increased by 13.41%, thereby driving the overall transmission rates higher.

The power bill contains basically the generation charge, which goes to the power supplier; the transmission charge, which goes to NGCP; and the distribution charge, which goes to the electric coop or distribution utility.

Moreover, the transmission charge is composed of two components: the transmission wheeling rate, which goes directly to NGCP, and the ancillary service rate, which is collected by NGCP but is then forwarded or paid by NGCP to ancillary service providers. When the ancillary service rate increases, the overall transmission rate increases, too.

NGCP said the overall transmission rate this September is PhP 1.42/kWh, or PhP 0.10/kWh higher compared to the PhP 1.32/kWh overall transmission rate last month.

The increase is due to the increase in ancillary service rate from PhP 0.5872/kWh last month to PhP 0.6659/kWh this September. On the other hand, NGCP’s transmission wheeling rate for September is PhP 0.5970/kWh, a scratch higher than last month’s PhP 0.5923/kWh.

Aside from causing this increase in overall transmission rate, the four Yellow Alerts experienced by the Visayas grid last month will most likely cause a spike in the generation rate of the consumers’ power bill this September.
NGCP reported that six power plants have not been functioning since 2023, 12 more power plants suffered forced outage from April to August, and eight power plants were hobbling along at less than their full rated generating capacities, consequently depriving the grid of 744 MW of power supply.

Low supply amid high demand translates to higher prices. In the absence of 744 MW from the grid, power supply is low while consumers’ power demand remains high. Distribution utilities and electric coops, which rely on power supply contracts from these affected power plants, have no choice but to buy their required power from the Wholesale Electricity Spot Market. The law of supply and demand prevails.

Thus, consumers should not be surprised when they see an increase in their power bills this September. A closer look at the power bill will reveal that the increase is due to the increase in transmission rate and generation rate, which were all caused by the Yellow Alerts experienced by the Visayas grid last month.* (BB)