Big Win for Gencos: Higher Transmission Charge Sparks Controversy

The National Grid Corporation of the Philippines (NGCP) recently made a statement that has left many in the energy sector scratching their heads. According to the NGCP, it did not profit from the upward adjustment in transmission charge this month. But what does this mean for the stakeholders involved?

The transmission charge is a fee collected by the NGCP for the transmission of electricity from power plants to distribution utilities. It is one of the components that make up the overall cost of electricity in the Philippines.

The NGCP explained that the ancillary services (AS), which is a component of transmission charge, is a pass-through cost. This means that the NGCP collect the ancillary services charge from consumers, but it does not retain the funds. Instead, the NGCP passes on the collected amount to the power generation companies (gencos) that provide ancillary services.

Ancillary services are services provided by gencos to support the reliable operation of the grid. These services include frequency regulation, spinning reserve, and non-spinning reserve. Gencos that provide these services are entitled to receive payment from the NGCP.

The NGCP's statement implies that the higher transmission charge is actually beneficial to gencos. Since the ancillary services charge is a pass-through cost, the NGCP does not earn any revenue from the increase in transmission charge. Instead, the collected amount goes directly to the gencos that provide ancillary services.

This development has sparked controversy in the energy sector. On one hand, gencos are reaping the benefits of the higher transmission charge. On the other hand, consumers are bearing the brunt of the increased cost of electricity.

Many are questioning the fairness of this arrangement. Some argue that the NGCP should be more transparent about how the transmission charge is calculated and how the ancillary services charge is passed on to gencos. Others are calling for a review of the current regulatory framework to ensure that the interests of all stakeholders are protected.

As the debate continues, one thing is clear: the higher transmission charge has significant implications for the energy sector. It highlights the complex relationships between the NGCP, gencos, and consumers. It also underscores the need for greater transparency and accountability in the regulation of the energy sector.