Philippine households and businesses will face steeper electricity bills this July, driven by an uptick in transmission rates implemented by the National Grid Corporation of the Philippines (NGCP).
The adjustment stems primarily from the growing expense of procuring emergency backup power to guarantee grid reliability.
Breakdown of the Rate Adjustment
According to Julius Ryan Datingaling, NGCP’s head of revenue management, the average transmission fee rose by 0.77 percent, reaching ₱1.4604 per kilowatt-hour (kWh) compared to the previous month. These updated rates will be passed on to power distributors and electric cooperatives, eventually trickling down to consumers.
The primary catalyst for the adjustment was a 10.18 percent surge in ancillary service costs, which climbed to ₱0.7955 per kWh in June from ₱0.7220 per kWh in May.
What are Ancillary Services?
Ancillary services act as a power reserve that the NGCP taps into to stabilize the grid and avert blackouts during unexpected plant shutdowns or consumption spikes. These are non-markup, pass-through expenses collected directly from consumers and forwarded to electricity producers without the grid operator making a profit.
Regional Impacts Vary
The grid operator noted that the impact of the rate hike varied across the country’s three major grids:
- Luzon and Mindanao: A dip in power demand was insufficient to cushion the rising price of securing reserves, resulting in higher ancillary charges for end-users.
- Visayas: Despite grappling with multiple grid alerts recently, the region saw a decline in these specific rates. Datingaling explained that a surge in regional power consumption distributed the reserve overhead across a larger volume of energy, thereby lowering the per-kilowatt-hour cost.
Datingaling pointed out that reserve rates are highly volatile because they are dictated by both procurement expenses and actual grid demand.
Impact of Generation Outages
Regarding the recent power alerts in the Visayas, NGCP spokesperson Cynthia Alabanza clarified that the issue was tied to offline power generation facilities rather than transmission line bottlenecks.
“They are the same power plants that provide ancillary services,” Alabanza said. “So when these power plants go out, there’s a very big likelihood that the suppliers of NGCP for ancillary services are also affected.”
She further noted that such generation outages shrink the overall pool of backup power, complicating the operator’s efforts to book adequate reserves.
Finally, NGCP reiterated that it retains none of the revenue generated from these ancillary charges. The collected amounts are entirely distributed to the generation firms supplying the reserves and the Independent Electricity Market Operator of the Philippines (IEMOP), which runs the country’s wholesale electricity market.