TransCo raps Napocor on services

The National Transmission Corp. (TransCo) has accused the National Power Corp. (Napocor) of failure to deliver ample ancillary services to its customers.

TransCo’s acting vice president for system operation Eugene H. Bicar, in a letter to Napocor vice president for sales and services Oscar Lorico and the Power Sector Assets and Liabilities Management Corp. (PSALM), said since Sept. 21, 2006, “TransCo has been continuously collecting from the consumers the ancillary charges as if these have been fully supplied by Napocor, and Napocor, has been receiving the full payment of ancillary services when in fact Napocor failed to deliver the required level.”

Bicar noted that since July 5, 2007 “Napocor and PSALM trading teams (at the wholesale electricity spot market) are not nominating capacities for spinning reserves.”

It was learned that ancillary service charges amounting to 37.56 centavos per kilowatthour are being collected from Napocor’s customers since September 2006.

In the franchise area of the Manila Electric Co., the biggest customer of Napocor, the state-owned generation firm is collecting P800 million a month worth of ancillary service charges passed on in the electricity bills of its customers.

At this level of ancillary services at Meralco’s franchise area, Napocor could have already collected some P8.8 billion since September last year.

The ancillary service charges is collected from all consumers nationwide by TransCo, which in turn remits these payments to Napocor.

Bicar’s letter also said that this practice  by the two state-run power companies “resulted to a critical reserve level for Luzon that greatly compromises the grid’s reliability.”

With this, the system operator has requested Napocor and PSALM “to religiously submit your daily nominations for ancillary services and maximize the reserve capacity of certified plants to comply with the ERC (Energy Regulatory Commission) orders.”

As provided by the ERC, TransCo has a provisional authority to implement the ancillary services cost recovery mechanism (AS-CRM).

“Recent developments such as the privatization of two ancillary services providers, namely Magat and Pantabangan hydroelectric plants and the consistently low nomination of reserves by Napocor and PSALM compel us to implement the AS-CRM,” TransCo said.

TransCo said it will implement this scheme starting in the next billing month.

Given this scenario, TransCo also warned Napocor that such move “may result to reduced revenues for Napocor.”