Audit of NGCP facilities starts as power outlook brightens

MANILA, Philippines — The Energy Regulatory Commission (ERC) has started inspecting the transmission facilities of National Grid Corp. of the Philippines (NGCP) to see if the private company was complying with all its regulations.

ERC Chair Agnes Devanadera said on Wednesday that the ongoing virtual audit would cover NGCP facilities in Luzon, Visayas, and Mindanao to assess whether the system being used by the company to operate the grid was sufficient to carry out its functions and responsibilities.

The ERC has engaged the consultancy firm Navarro, Amper & Co. for help in the NGCP audit, which was also intended to train ERC personnel on such a task.

The technical consultant would undertake the documentation and presentation of its findings to the ERC, including a knowledge transfer program since the regulatory agency lacked the technical expertise and capability to conduct such compliance review of NGCP.

The audit followed calls from Energy Secretary Alfonso Cusi, who had blamed NGCP for the recent brownouts that hit Luzon, for the ERC to check on the operator of the country’s power transmission backbone.

Cusi repeatedly complained to the Senate energy committee about NGCP’s noncompliance with a circular that required it to buy power reserves based entirely on “firm contracts” with suppliers. With firm contracts, suppliers are committed to deliver on demand of NGCP, unlike nonfirm contracts that allow the supplier to sell its electricity elsewhere.

However, NGCP president Anthony Almeda had warned the committee that there would be an “astronomical spike in electricity prices for consumers” if NGCP was forced to follow the Department of Energy’s policy since firm contracts required the payment of electricity supply regardless of whether or not it was used.

NGCP also argued that shifting to firm contracting was not the solution to the power supply shortage, especially since the company gets supply for its power reserves from the same pool of generators, many of which went on unscheduled shutdowns, and whose current combined output was not enough to meet consumer demand.

Outlook

Fears caused by the DOE warning last week of more brownouts in Luzon starting next week have been dampened by the increasing power supply in Luzon and weakening demand, partly due to the onset of rainy season, over the past three weeks.

The DOE earlier said that capacity reserves would be critically thin in the fourth week of June, third week of July and first week of August as many power plants remained closed while demand could pick up with the reopening of more industries when the government starts easing quarantine restrictions.

Officials of the Independent Electricity Market Operator of the Philippines (Iemop) said in a briefing on Wednesday that the improving supply-demand trend was expected to continue throughout this week.

Data from Iemop, which operates the Wholesale Electricity Spot Market where power buyers and sellers transact deals, showed that available generation capacity in Luzon increased to 13,721 megawatts on average as of June 20 from 12,885 MW last May 30.

At the same time, average peak demand declined to 10,913 MW from 11,227 MW. On a daily basis, however, peak demand rose slightly in June to 11,601 MW from 11,591 MW last month.

Hydro plant closure

This could also minimize the impact of the impending closure of three hydroelectric facilities that supply 12.4 MW to the Luzon grid.

The Aboitiz group’s Hedcor Inc. formally received on June 22 an order from the National Commission on Indigenous Peoples in the Cordillera Administrative Region to stop operations—within five days after receipt—of the run-of-river hydro plants in Benguet.

Hedcor had insisted that it complied with all requirements and was saddened considering that the order came amid projections of a looming supply shortage in Luzon.

The closure order was due to alleged irregularities regarding the Free Prior Informed Consent-Memorandum of Agreement (FPIC-MOA) between Hedcor and the Bakun Indigenous Tribes Organization (Bito), which was signed in October 2019.

“We believe that we have been compliant with all the requirements during the course of the FPIC application process, and have been waiting for the issuance of the certificate precondition since the FPIC-MOA was signed,” said Noreen Vicencio, Hedcor vice president for corporate services.

“The (order) will not just affect Hedcor, but also the customers and communities we serve. At this time of a (looming) red alert situation in the Luzon grid, the continued operation of our plants is very crucial,” Vicencio said in a statement.