Elevated reserve market prices seen signaling strong system demand

THE Energy Regulatory Commission (ERC) said prices on the reserve market remain high, pointing to strong demand for power required by the system.

In a statement late Wednesday, the ERC said the average price on the reserve market on April 14-20 was P5.45 per kilowatt-hour (kWh) in Luzon, P12.859 per kWh in the Visayas, and P14.763 per kWh in Mindanao.

These were higher than the prices in the previous week and in the same period in March, according to prices reported by the Philippine Electricity Market Corp.

The system operator buys reserve power to ensure the proper operation of the energy grid.

ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said that the prices on the reserve market are driven by the offers of plants that provide ancillary services to the National Grid Corp. of the Philippines (NGCP).

“So, high reserve market prices signal high demand by NGCP for those services,” Ms. Dimalanta said via Viber.

Rates for ancillary services, which are passed on to the consumers, are composed of the price at which those services were obtained by NGCP from the market, and those set in contracts for ancillary services, she said.

Ms. Dimalanta said that the contracted ancillary services have much lower rates because these are regulated and approved by ERC.

She said that almost all of the 36 ancillary service procurement agreements (ASPAs) approved by the NGCP are in effect under provisional authority.

The ERC has completed the deliberations and set final rates for most of these contacts, with only eight awaiting final approval, she said.

“We will issue the final decisions for these ASPAs soon to close out the rates and NGCP can then contract for more ASPAs,” Ms. Dimalanta said.

An ASPA is a contract between the NGCP and a power plant operator to supply ancillary services, which are crucial for maintaining the reliability and stability of the power grid. — Ashley Erika O. Jose