Ancillary services drive power rate hike in November

Power consumers will experience a slight increase in their November 2025 electricity bills following a hike in transmission rates driven mainly by higher Ancillary Services (AS) charges, the National Grid Corporation of the Philippines (NGCP) said.

AS rates, which are passed through to consumers and paid to power generators supplying reserve power during supply-demand imbalances, rose by PHP 0.0997 per kilowatt-hour (kWh).

The adjustment reflects a 15.23% increase from PHP 0.6546/kWh in September to PHP 0.7542/kWh in October.

NGCP clarified that it does not earn from AS charges and that the increased amounts are fully remitted to generation companies with whom it has bilateral agreements, or to the Independent Electricity Market Operator of the Philippines (IEMOP) when procured from the Reserve Market.

“NGCP emphasized that it does not earn from AS and does not benefit from any change in AS prices,” the grid operator stated.

“These are remitted directly to generation companies with bilateral contracts with NGCP, and to the Independent Electricity Market Operator of the Philippines (IEMOP) for AS sourced from the Reserve Market.”

Transmission wheeling charges, which represent NGCP’s fee for transporting electricity through its high-voltage grid, also slightly increased in October.

The wheeling rate rose by PHP 0.0034/kWh to PHP 0.5953/kWh, up from PHP 0.5920/kWh in September, representing a modest 0.57% increase.

However, NGCP stressed that this minimal adjustment does not impact the company’s revenue due to regulatory restrictions.

“The increase in transmission wheeling rates has no effect on NGCP’s revenue as its income is cap-limited by the Energy Regulatory Commission (ERC),” the company explained.

As a result of both AS and wheeling charge increases, the overall average transmission rate billed by electric cooperatives and distribution utilities to consumers for the October 2025 billing cycle rose by 7.91%.

This brought the average transmission rate up to PHP 1.5105/kWh, compared to PHP 1.3998/kWh in the previous month.

Ancillary Services play a crucial role in grid stability, providing backup support to maintain power quality and reliability during unplanned outages or sudden demand surges.

AS costs can vary based on system demand, reserve availability, and market rates, particularly when sourcing from the newly activated Reserve Market operated by IEMOP.

The Reserve Market began commercial operations in 2023 as part of government efforts to strengthen power system resilience amid tight supply margins.

Under the Electric Power Industry Reform Act (EPIRA), transmission and AS charges are unbundled and transparently shown in consumers’ monthly bills.

These charges are regulated by the ERC and undergo periodic adjustment and review to reflect actual system conditions and market dynamics.

While AS charges are inherently volatile, transmission wheeling rates remain relatively stable and are capped by NGCP’s approved revenue requirements.

NGCP operates the country’s power transmission system under a 25-year concession agreement with the government and is regulated by the ERC.

It continues to invest in grid modernization and expansion to accommodate growing electricity demand and facilitate integration of renewable energy sources into the grid.

The increase in AS-related costs is expected to be temporary and may adjust downward depending on system stability and market prices in the coming months.