ERC to review market rules after brownouts

The Energy Regulatory Commission (ERC) will review key power market rules, reserve policies, and price mechanisms after a series of red and yellow alerts in Luzon and the Visayas exposed what the regulator called a “flexibility shortage” in the grid.

Speaking at an Energy Forum on Tuesday led by the Economic Journalists Association of the Philippines, ERC Chairperson Francis Saturnino C. Juan admitted the power crisis was poorly managed, with rotating brownouts imposed six times between 13 and 18 May while spot market prices repeatedly hit the P32,000-per-megawatt-hour cap.

“I will not stand here and tell you we performed well in managing that crisis. We are facing a flexibility shortage in the hours after the sun goes down,” Juan said.

ERC data showed the outages were concentrated in the late afternoon and evening, when solar generation dropped off, but household demand remained high.

He said all six manual load Dropping incidents were caused by generation deficiencies, not transmission failures or fuel shortages.

“We did not have enough reserves on the right side of the dispatch curve,” he said.

Juan said the ERC would revisit reserve requirements, accelerate procurement of battery storage and fast-ramping capacity, and review the Wholesale Electricity Spot Market’s secondary price cap after the P32,000 ceiling was reached during every Red Alert hour monitored by the regulator.

“A price cap is meant to be a circuit breaker, not a destination,” Juan said.

The ERC is also looking at expanding demand-response programs and time-of-use pricing to reduce pressure on the grid during critical evening hours.

“This is the cheapest megawatt on the grid, and we have underused it for too long,” Juan said.

He also warned that excess solar generation is already driving spot market prices into negative territory at midday because the country lacks enough storage capacity to hold surplus power for evening use. “That is, in effect, electricity we are paying to throw away,” Juan said.

The National Grid Corporation of the Philippines on Tuesday placed the Visayas grid under an extended Yellow Alert from 2 p.m. to 10 p.m. due to thinning power reserves amid multiple plant outages.

The transmission operator said available capacity stood at 2,509 megawatts (MW) against a peak demand of 2,333 MW.

NGCP said 14 plants have remained on forced outage since May, while 15 plants have been operating at derated capacities, leaving a total of 960.55 MW unavailable to the grid.

The outage of Panay Energy Development Corp. Unit 2 also contributed to the extended alert status.