Electricity backbone concessionaire National Grid Corporation of the Philippines’ (NGCP) neglect had resulted in the unreliability of the electricity system in the country, Department of Energy (DoE) Secretary Alfonso G. Cusi indicated yesterday.
There are also issues of various violations, refusal to submit to an audit, and the threats to national security amid reports of foreign hand in the NGCP’s management of the grids that concerns the government and which the DoE is very much concerned about.
Thus, the agency recommended the government to take over the country’s electricity grid operations from NGCP, which Cusi said had failed to secure enough power reserves that are necessary to augment supply in case of unforeseen power plant outages.
“The recent rotational power interruption is a serious matter and should not be mixed with other issues. What we have right now is not a power crisis but a compliance issue,” Cusi argued during a public hearing of the Senate Committee on Energy.
Since the power industry is at the mercy of the private sector — from generation to transmission — Cusi pointed out that passing the grid operations to the government would give the DoE more teeth to craft and implement stricter policies.
Under the Electric Power Industry Reform Act (EPIRA), the DoE and the Energy Regulatory Commission (ERC) are mandated to promote competition, encourage market development, ensure consumer choice, and penalize abuse of market power in the restructured electricity industry.
NGCP in hot water
Cusi said the “forced or unplanned outages of power plants and the lack of ancillary services owned or operated by the private sector” caused the rotational brownouts in Luzon last week.
He said the NGCP did not comply with the required “firm” ancillary service contracts or reserves, which should be 4 percent of the power demand that could be tapped in case of power plants going offline.
“It has been frustrating, now and again. Hopefully, the Senate would appreciate what the DoE has been talking about all these years. The firm contracted reserves are necessary because it is intended to provide safe capacity to the grid without reducing inventory,” Cusi said.
“It would also encourage new investments in building new power plants. For a plant to be put up, we need an assurance of a contract,” he added.
However, NGCP spokesperson Cynthia Alabanza contended that the grid operator, for the most part, fully contracted its ancillary services requirement, needed to balance and stabilize grid operations under the Philippine Grid Code.
“The Ancillary services are there, but they’re being dispatched by the IEMOP as supply because, in times of deficiency like now, supply for consumption should be prioritized over the reserve,” Alabanza said.
Senator Sherwin Gatchalian said that the country lost millions in economic gains during the two-day brownout.
“Last 31 May and 1 June, we’ve experienced rotational brownouts in different parts of the country and those rotational brownouts affected close to 705,000 customers in two days. This is just only in the Meralco franchise,” Gatchalian said.
“So again, two-day loss. The two-day brownouts these are the rotational brownouts equated to P116 million and just to give context we’re now trying to recover from the pandemic,” he added.
Relatedly, Cusi also reiterated the need to fast-track the completion of the P52-billion Mindanao-Visayas Interconnection Project (MVIP) to generate additional capacity in Luzon.
“The delays connecting Negros and Panay to Cebu and Mindanao to the Visayas, which if were put in place by NGCP in time with the grid schedule, could have facilitated the importation of more energy to the islands of Luzon,” Cusi said.
In a phone interview, National Transmission Corp. (TransCo) President and CEO Melvin Matibag agreed with Cusi’s view that the NGCP should be held liable for the delays in the multi-billion project essential in unifying the country’s grid.
Matibag said the project should be completed by as early as 2020 but it was pushed back last year due to the impact of the Covid-19 crisis.
He noted that even NGCP cannot provide an exact timeline when the project will be finished.
The MVIP was the first project declared by the government as Energy Project with National Significance (EPNS) giving it top priority. It aims to connect the Mindanao grid to the Visayas grid, and which will ultimately lead to unifying the national grid.
The NGCP claims the project timetable is continually reassessed due to the varying degrees of community quarantine which remain in effect.