ERC partially lifts reserve market billing for March

Power consumers may have to bear the brunt of the costs incurred by generation companies in providing power reserves after the Energy Regulatory Commission (ERC) partially lifted the suspension of settling transactions in the reserve market.

In ERC Case No. 2023-002 RC, the ERC said the directive allows power generators to recover an initial P1.7 billion, or 30 percent of the reserve market trading transactions in March.

Based on the 9 May order, the ERC said the recoverable amount is subject to adjustments pending the submission of the list of non-compliant generators by grid operator National Grid Corp. of the Philippines (NGCP).

“In this instance, partial recovery of costs for services rendered will allow these generators to recover a portion of their operating costs to enable them to continue supplying in the energy or reserve market for the benefit of the public,” ERC said.

“The ERC always needs to strike a balance in performing its mandate to ensure the reliability and security of the power system through the continuous operations of the generators and protecting the consuming public,” it added.

To recall, the regulatory agency suspended the billing and settlement in the reserve market to temper spikes in electricity rates.

It suspended the implementation of Section 8 on Billing and Settlement of the Price Determination Methodology (PDM) for the implementation of the co-optimized energy and reserve market in the Wholesale Electricity Spot Market (WESM) in the March billing period.

However, ERC chairperson and CEO Monalisa Dimalanta said the agency will target to fully lift the suspension within the month.

Ancillary services are indispensable for maintaining the smooth transmission of electricity from power generation facilities to customers, ensuring a steady and reliable power supply.

Citing reports from the Independent Electricity Market Operator of the Philippines (IEMOP), which operates the WESM, the ERC said there were “significant price increases” in reserve costs” in March this year compared to a month ago.

Amid concerns about cost increases and the mechanics of the co-optimization process, the ERC has requested that both the IEMOP and the Philippine Electricity Market Corporation (PEMC) provide the results of their software audit. These concerns stem from existing policies and regulations.