MANILA, Philippines - To ensure the reliability of power supply in the Luzon grid, the National Grid Corporation of the Philippines (NGCP) and First Gen Hydro Power Corp. have entered into a three-year supply agreement.
The agreement involves a three-year contract for NGCP to buy the power from First Gen Hydro for its ancillary services.
Ancillary services are those necessary to support the transmission capacity and energy from resources to loads while maintaning reliable operation of the transmission system.
NGCP, led by the group of Henry Sy Jr., and First Gen Hydro, a subsidiary of Lopez-owned First Gen Corp. signed the agreement for the supply of ancillary services to the Luzon grid.
The contract will allow NGCP to use as ancillary services power from First Gen Hydro’s 120.8-megawatt (MW) Pantabangan hydro power plant.
With this, NGCP has asked the Energy Regulatory Commission (ERC) to approve the ancillary services agreement with First Gen Hydro.
It said the current levels of available ancillary services in the Luzon grid are significantly “insufficient to meet the required levels.”
“Thus, at present, the transmission of power Luzon grid cannot be considered reliable, stable and secure... The continued deficiency of available ancillary services despite the increasing demand for power will have significant adverse effect on the public,” NGCP said.
NGCP will purchase the ancillary services from First Gen Hydro for a period of three years at around P6.20 per kilowatthour.
It said the proposed rates are reasonable considering that the same reflect true costs of generation of power from First Gen’s Pantabangan power plant.
“The cost of procuring the ancillary services under the ancillary services procurement agreement shall be recovered from load customers but only until such time that such ancillary services are already traded at the wholesale electricity spot market,” it added.