Show-cause orders prompt NGCP to defer AS auction

BY LENIE LECTURA – SEPTEMBER 21, 2022
from Business Mirror

The National Grid Corporation of the Philippines (NGCP) has put off the competitive auction for ancillary services (AS) after the Energy Regulatory Commission (ERC) issued show-cause orders (SCOs) to the company last week.

“With the issuance by the ERC of the order dated September 15, 2022 pertaining to the conduct of Competitive Selection Process (CSP) for ancillary services, all qualified bidders are hereby advised that the conduct of CSP for AS has been moved to a later date,” the NGCP said in an advisory posted on its website Tuesday.

Based on the latest bid bulletin, the bid submission deadline for Luzon, Visayas, Mindanao AS CSP was set on September 19, 20, and 21, respectively. The bid offers were supposed to be opened on September 20 for Luzon, 21 for Visayas, and 22 for Mindanao. The grid operator was also supposed to issue a notice of award to the winning bidders on October 17 to 21.

The AS CSP from interested grid-connected merchant plants and Independent Power Producers was already put off early this year due to “several issues” raised by the prospective bidders.

Last Friday, the ERC issued SCOs for failure to comply with the directives of the Department of Energy (DOE) in the procurement of AS. It was given 15 days to explain why it should not be penalized for not complying with the policies issued by the DOE in October 2021.

The ERC cited three sections of DOE Department Circular No. 2021-10-0031 entitled, “Prescribing the Policy for the Transparent and Efficient Procurement of Ancillary Services by the System Operator”, with which the NGCP failed to comply. These are Section 4.2 requiring NGCP to seek approval from the DOE on its Ancillary Service Agreement Procurement Plan; Sections 7.4 and 7.5 mandating NGCP to seek the approval of the DOE on the Terms of Reference (TOR) of the AS CSP; and Sections 7.1 and 7.11 requiring NGCP to complete the AS CSP within six months from the effectivity of the circular.

While the ERC noted that NGCP has already issued the TOR and the schedule for the conduct of AS CSP, the latter has yet to comply with the said provisions in existing policies adopted by the DOE pursuant to its mandate as a policy-making authority.

Ancillary services are necessary to support the transmission of capacity and energy from resources to loads, while maintaining reliable operation of the grid in accordance with good utility practice and existing rules.