ANCILLARY SERVICES to distribution utilities (DUs) may increase by more than 10 centavos per kilowatt-hour (kWh) in the May billing cycle, according to the National Grid Corp. of the Philippines (NGCP).

This follows clearance by the Energy Regulatory Commission (ERC) to partially recover costs from the reserve market, which was suspended in March.

“With the order of the ERC on May 9, 2024, there will be an impact, an increase of more than 10 centavos from our estimate…corresponding to the 30% AS (ancillary services) costs last March 2024,” Julian Ryan Datingaling, head of revenue management department at NGCP, said in a briefing on Thursday.

In the May 9 order, the ERC allowed the settlement of 30% of transactions made on the reserve market for the March billing month.

Based on ERC simulations, the amount to be partially paid to generators in the reserve market will be P1.7 billion.

The amount is subject to adjustments pending the submission of the list of non-compliant generators by the NGCP, an intervenor in the case, during the period.

The total reserve trading amount for the March period will be P5.7 billion, the ERC said.

NGCP Spokesperson Cynthia P. Alabanza said that the amount is supposed to be charged as part of the February-to-March billing.

She said that the increase of 10-centavo per kWh is just an estimate of what distribution utilities may charge their consumers after the partial lifting of the suspension.

“We do not bill the consumers, so the rates will be translated by distribution utilities and cooperatives. That’s why, when we give you estimates, these are averages but this will change depending on the DU,” Ms. Alabanza said.

ERC Chairperson Monalisa C. Dimalanta has said that the 30% allowed settlement may possibly lead to an increase in transmission charges.

Ancillary services are tapped by grid operators to support the reliable operations of the grid.

These are pass through charges billed by the grid operator and remitted directly to generation companies. Ancillary services are included in the transmission charge component which is about 3.58% of a consumer’s monthly electricity bill.

In January, the Independent Electricity Market Operator of the Philippines (IEMOP) commenced with full commercial operations of the reserve market.

The reserve market allows the optimization of the market operator and system operator interfaces and automated real-time dispatch of committed ancillary services.

The ERC issued a suspension order in March after the IEMOP observed a significant increase in reserve costs for March compared to February. — Sheldeen Joy Talavera