Power Watch: NGCP failed to contract sufficient power reserves’

“The root cause of the massive blackout in Panay on January 2-4, 2024, was the failure of the National Grid Corporation of the Philippines (NGCP) to contract sufficient power reserves for energy reliability.”

Thus said Power Watch Negros Sec.-Gen. Wennie Sancho, who also said that “the Department of Energy (DOE) for the past two years has been reminding NGCP of its obligation to provide sufficient levels of Ancillary Services (AS) or power reserves.”

Department Circular No. DC 2019-12-0018 entitled “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid,” mandates the NGCP as the System Operator (SO) to procure Ancillary Services (AS) through “firm” contracts which should be 4 percent of the power demand and could be tapped in case power plants go off line. This is to ensure that the facilities contracted to provide AS are always available whenever needed by the system for reliability of the grid, he added.

“Unfortunately, the DOE sees the NGCP is consistent on not complying with its responsibility with the firm contracting requirement. The NGCP has been dragging its feet by pursuing insufficient capacity and even opting on unreliable non-firm AS Procurement Agreements (ASPA’s),” he also said, quoting Energy Chief Alfonso Cusi.

DOE Secretary Cusi even further said that preventing power outages will require a regulatory reserve which is equivalent to 4 percent of the peak demand plus the capacity of the biggest power plant in the system. The reserve ancillary services contracted by NGCP is in preparation for the dry months, Sancho also said in his statement.

NGCP failed to secure 100 percent of “firm” contracts for ancillary services. The whole issue is not about power crisis but compliance with the terms of the contract that NGCP signed with the government.

In May 2017 TransCo accused NGCP with violating its concession agreement with power grid operators by supposedly making too much money from the operations of the country’s electricity grid. It was alleged that NGCP violated the terms of its contract by profiting unduly from the operations of the power grids, by allowing telecommunication firms to mount their fiber optic cables on the transmission towers.

The Energy Regulatory Commission (ERC) issued a Show Cause Order against the NGCP in July 2023 over delays in 37 transmission projects. The ERC said that NGCP failed to meet its proposed timelines to complete the projects.

The widespread power disturbance that happened in Western Visayas on January 2, 2024, could have been prevented had the NGCP completed on time the 230 kV Cebu- Negros- Panay backbone project, a major part of the Transmission Development Plan.

In the sequence of events that were presented during the various meetings on the Panay incident, NGCP failed to show clear indication that it had prudently exercised its authority to balance supply and demand of power in the Panay Grid, specifically at the onset of the tripping of PEDC Unit 1 which have contributed to the voltage problem in the area.

Power Watch is urging the government to ensure the full compliance by the NGCP to the DOE policies particularly those that compromise the security and reliability of the electric power supply.

“What is holding NGCP from contracting AS power reserves? Who is calling the shot in NGCP?,” Sancho also said in a statement today.*