Power hike looms as ERC OKs collection of P3.05B unsettled reserve market fees

Power consumers in the Luzon, Visayas, and Mindanao grids are facing a possible increase in household electricity rates in 2025 after the Energy Regulatory Commission (ERC) approved the collection of the remaining 70% contracted reserve or ancillary services requirements of the power system operator.

In a statement on Thursday, the ERC said the total amount yet to be recovered from power consumers due to deferred payments to the power reserve market stood at P3.05 billion, which was due for February and March 2024 billing periods.

The power industry regulator said the amount will be collected over a staggered period of three months, starting January 2025, for those in Luzon; and six months for those in Mindanao and the Visayas.

The deferral resulted from the suspension of power reserve market operations as it became a factor that jacked up power rates early this year.

The suspension was partially lifted in May, allowing power reserve generators to recover an initial P1.7 billion.

The ERC also ordered the Independent Electricity Market Operator of the Philippines to recalculate the unpaid reserve trading amounts, which resulted in the adjusted value for the remaining portion that is yet to be recovered at P3.05 billion.

With the remaining P3.05 billion to be collected, the ERC said the corresponding rate impact to consumers will be P0.124 per kilowatt hour (kWh) for Luzon and Visayas, while Mindanao will have a rate impact of P0.033 per kWh.

The energy reserves market is a platform in which power producers offer their capacities for ancillary services or reserves, which is then being purchased by the National Grid Corporation of the Philippines (NGCP).

Ancillary services serve as an available generation capacity for dispatch for contingency in case transmission or power generation problems occur. —NB, GMA Integrated News