DoE considering AS charge for WESM members responsible for forced outages
THE Department of Energy (DoE) is proposing to require members of the Wholesale Electricity Spot Market (WESM) to pay for ancillary services (AS) if their forced outages are found to have been their responsibility.
“The DoE deemed it necessary to provide price mitigating measures in the Reserve Market such as the causer pays mechanism (CPM) to ensure consumer protection and accountability of market participants in ensuring grid reliability,” the DoE said in a draft circular.
The proposed policy will apply to all WESM members forced to turn to ancillary services, a form of reserve that companies keep on contractual standby should supply prove inadequate. This includes generation companies, the transmission network service provider, and customers of the spot market.
The cost of ancillary reserves that will be recovered via CPM will depend on the generating capacity allocated to stabilize or restore the system.
Ancillary services are tapped by grid operators to support the transmission of power from generators to consumers to maintain reliable operations.
Despite significant improvement in the reliability of the grid operations with the launch of the reserve market, the market operator, however, observed a “high market clearing price” for ancillary services, the DoE said.
In the February billing period, this manifested in an increased transmission charge collected from consumers.
“(The CPM aims) to have a sharing of cost of reserve between generators and consumers, considering that reliability is affected by changes in supply and demand,” according to Luningning Baltazar, assistant director of the DoE’s Electric Power Industry Management Bureau.
She said that the CPM will enable generators who frequently report outages to pay for a bigger share of ancillary service costs, as determined by a formula for reserve responsibility sharing.
According to the DoE, reserve responsibility sharing will be calculated by the market operator through a “runway model” based on the real-time dispatch schedule and reliability performance of the generation companies.
Separately, in an advisory, the DoE directed the distribution utilities and the National Grid Corp. of the Philippines (NGCP) to be ready to implement the interruptible load program (ILP) during the dry months.
The DoE has requested updates on the registered ILP participants. It has also asked the entities to submit “any concerns and request for support for distribution utilities which are new to the implementation of the ILP.”
The ILP asks large power consumers to use their generators or shift their operations instead of sourcing power from the grid.
This is meant to spare households from power interruptions during red alerts — when supply is insufficient to meet demand. — Sheldeen Joy Talavera