Power rate hike looms as NGCP begins recovery of ancillary services

Electricity consumers across the country may expect higher electricity bills beginning next month as the National Grid Corp. of the Philippines (NGCP) is set to recover the remaining unsettled payments for its contracted reserve requirements or ancillary services from power generators.

To recall, the Energy Regulatory Commission (ERC) approved last December the collection of the remaining 70% deferred payments to the power reserve market amounting to P3.05 billion, which was due for the February and March 2024 billing periods.

The suspension was partially lifted in May 2024, allowing power reserve generators to recover an initial P1.7 billion from the grid operator.

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

"In the next billing statement of NGCP, we will see additional current ancillary service charges, so the uncollected [payments] last year will be added in February rates," NGCP head of Revenue Management Julius Ryan Datinggaling said at a press conference in San Juan City on Wednesday.

Ancillary services (AS) serve as an available generation capacity for dispatch for contingency in case transmission or power generation problems occur.

It forms part of the total electricity bill as AS charge, which covers the expenses for grid stability and reliability.

Datinggaling said the final amount to be charged from consumers is still pending.

The ERC had 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 power industry regulator also earlier said the P3.05-billion will be collected over a staggered period of three months for those in Luzon; and six months for those in Mindanao and the Visayas.

NGCP ownership

During the same press briefing, NGCP spokesperson Cynthia Alabanza maintained that the integrity and security of the country's transmission system remain intact, despite concerns raised about State Grid Corporation of China's involvement as a 40% owner of NGCP.

"They are saying that if the Chairman of the Board is Chinese, therefore, he is an executive and officer—that is not necessarily true, even the SEC (Securities and Exchange Commission) says that is not illegal," Alabanza said.

"The law permits having a foreign nationals in the board as long as they remain as president officers," she added.

The NGCP official said NGCP's ownership structure complies with the 1987 Constitution, which limits foreign ownership in public utilities to 40%.

Filipino shareholders, led by Henry Sy Jr. and Robert Coyiuto Jr., own the majority 60% of the grid operator.

The NGCP consortium is comprised of Monte Oro Grid Resources Corporation, Calaca High Power Corporation, and State Grid Corporation of China.

During the House legislative franchises panel probe on the grid operator's performance, NGCP Assistant Vice President for System Operation Clark Agustin said that, "NGCP is a Filipino-led company, with 60% of its shares owned by Filipinos."

"Decisions are based on established procedures. There's protocol for maintenance and emergency. There are control centers in Luzon, Visayas and Mindanao," Agustin said.

"If you decide to cut off power for the entire country, there's no such case. There is no central control point which is a single button. China is [just] a technical partner allowed by the government, and this is not a midnight deal. NGCP is transparent in all its dealings,” he added. — VDV, GMA Integrated News