Time-shift to lower NGCP rates for big customers

Big power consumers, such as commercial and industrial facilities and distribution companies, can experience lower charges from the National Grid Corporation of the Philippines by efficiently adjusting their energy usage away from the peak demand period in a given day.

Technically termed as time-of-use (TOU), the shift could bring down the charges that transmission firm National Grid Corporation of the Philippines (NGCP) will be passing on to customers, primarily big-ticket entities such as commercial and industrial facilities and major load customers like the distribution utilities.

By adopting the TOU, which shifts a company’s use of electricity away from the peak demand period in a given day, a big power user can experience lower cost. This is because charges spike when system demand peaks.

Already, Energy Regulatory Commission (ERC) said the system of transmission tariff pass-on, which was already enforced in the May-June 2023 billing cycle, has already manifested the desired outcome for a more efficient process and lower charge effect on the billing system.

The ERC edict on the system peak demand (SPD) billing was underpinned by the 2022 Open Access Transmission Service (OATS) rules, which mandate a shift in billing system from non-coincident peak demand (NCPD) methodology.

NCPD takes into account the sum of the individual maximum demand of end-users and it does not differentiate on the time usage at any given period in a day; while a switch to SPD billing may entail higher charges for customers when they would be pulling power from the system as demand ticks up.

The ERC qualified that “by shifting their time-of-use outside of the system’s peak demand period, these entities can significantly reduce their transmission charges.”

With that newly-enforced methodology then, it was reiterated that “commercial or industrial consumers will now have a direct incentive to manage the timing of their electricity usage to save on transmission costs.”

In the case of the distribution utilities, the industry regulator emphasized that “they can encourage their customers to  adopt such changes in demand management to realize the savings that arise from the SPD methodology.”

As explained by the ERC, the SPD methodology will result in higher charges because it is based on their actual impact on the grid during the peak demand period. In contrast, the NCPD methodology charges users based on the collective highest demand of all grid users, regardless of their individual consumption patterns.”

Thus, when end-users will be shaving peak consumption as supply runs tight in the grid, they would be able to lower their cost because of lower transmission charges that they will end up paying.

“This shift will have significant implications for consumers and utilities alike,” the regulatory body pointed out.

For the distribution utilities, the industry regulator indicated that “they can encourage their customers to  adopt such changes in demand management to realize the savings that arise from the SPD methodology.”

In the view of the ERC, the new billing system will also be helpful when it comes to the integration of renewable energy (RE) resources into the grid.

“With a clearer understanding of the peak demand period, transmission customers can optimize the use of energy from renewable sources such as solar and wind,” the ERC said, adding that “this optimization increases reliability of electricity supply while reducing reliance on fossil fuel-based power generation.”

The regulatory body similarly noted that if efficiency is optimized in the operation of the power grid, this will lessen required capital outlay for grid capacity upgrades and that in turn will lower costs for consumers.