NGCP rate change impacts Iloilo City’s electricity price

By Francis Allan L. Angelo

A subtle yet impactful development in the energy sector has unfolded this March, affecting countless consumers across the region.

The National Grid Corporation of the Philippines (NGCP), the entity responsible for overseeing the country’s electricity transmission network, has implemented a significant change in its ancillary service charges, leading to a noticeable increase in the power rates paid by consumers.

In Iloilo City, the impact of these changes is palpable, with MORE Power, the city’s distribution utility, reporting an effective electricity rate of P10.0316 kWh, up from P9.96/kWh the previous month.

Despite these adjustments, the Distribution, Supply, and Metering (DSM) charges billed by MORE Power have remained unchanged,

The crux of this development is the P0.18 per kWh hike in transmission charges for March, directly attributed to the cost of Ancillary Services (AS) charged by the NGCP.

Consequently, this adjustment has ushered in an increase in power rates for consumers amounting to over P0.06 per kWh.

The alteration in Ancillary Service Rates this month follows the full commercial operations of the Reserve Market, initiated on January 26, 2024.

The Reserve Market plays a pivotal role in ensuring the reliability and stability of the power supply by facilitating the procurement of additional power reserves.

A notable factor contributing to the rise in AS costs is the increased expense for the Contingency Reserve, which has surged to more than four times its previous amount last month.

The Contingency Reserve comprises power plants designated to compensate for any shortfall in supply from the grid’s largest synchronized generating unit, serving as a critical safety net to prevent outages.

The Visayas grid, in particular, sources its Contingency Reserve Requirement from the Reserve Market.

However, the region has been grappling with a reduced supply and ongoing maintenance activities in its power plants, leading to a slender offering in the Reserve Market and, consequently, an uptick in prices for this month.

The majority of participants in the reserve market include coal suppliers and diesel plants within the Visayas grid, highlighting the region’s reliance on these energy sources.

On a brighter note, the generation charge has seen a reduction of P0.11 per kWh this month, thanks to a decrease in the average nodal prices in the Wholesale Electricity Stock Market (WESM). This decline offers some relief to consumers amidst the rising ancillary service charges.