Sunday, May 12, 2013



Early this week, Luzon was hit by a blackout after major power plants in Luzon, like falling dominoes, went into unscheduled shut downs – one after the other.
Over 80% of Luzon Island lost power. At least five (5) base load plants shut down with over 3,800 MW sucked out of the grid.
As expected, the entities most responsible for electricity supply were the first to deny knowledge of what happened. And disclaim responsibility.
Who must answer for that disaster? Will the snafu happen again, and how soon?
Why did the blackout happen?
The short and simple answer: there were no reserves to protect the stability of the system from unplanned generation plant outages.
When Calaca 1 and 2 shut down, there was no contingency reserve to cover the tripping generation unit, there was no dispatchable reserve to cover the cascade of other tripping plants, and apparently, there was not even a frequency regulating reserve.
Reserves are crucial to the stability of the system. When a base load plant trips and there is no reserve to replace it, the system becomes unstable and the other plants will automatically trip and disconnect from the grid to protect itself from the instability in the system.
In a TV interview right after the blackout, an NGCP spokesperson candidly admitted that they did not know what happened and they were still trying to trace the cause. She could only go as far as to confirm that the first plant to trip was Calaca 1, followed by Calaca 2, and the rest of the other base load plants followed in the cascade of shut downs that resulted in the grid blackout.
If NGCP had the 674MW contingency reserve and the 674MW dispatchable reserve, that reserve would have been more than sufficient to cover Calaca 1 & 2, the system would have remained stable, the other plants would not have tripped and there would have been no blackout.
Why do we highlight the role of NGCP in the blackout?
It is the mandate and responsibility of NGCP to provide and procure the different levels of reserves that will secure and keep the system stable. This is called ancillary services. If NGCP did its job under its high voltage transmission franchise, the blackout would not have happened. 
The ERC, on the other hand, has regulatory review and approval of the rates to be collected for ancillary services. The DOE reviews and approves the transmission development plans, (which includes provisions for reserves and ancillary services) for consistency and compliance with the national power development plans. In other words, in cases where no real reserves are provided for by NGCP, DOE should already flag this. 
WESM is the price clearing and settlement platform for those reserves.
The NGCP website, citing the Electric Power Industry Reform Act (EPIRA), says it (NGCP) “assumes NPC’s authority and responsibility for planning, construction and centralized operations and maintenance of the high voltage transmission facilities, including grid interconnections and ancillary services.”
Ancillary services, according to NGCP, are “support services necessary to sustain the transmission capacity and energy that are essential in maintaining the power quality, reliability and security of the grid.”
The same provisions and undertakings are restated in the franchise of NGCP, constituting in essence its obligations to the consumers for the privilege to supply high-voltage transmission services on a monopoly basis.
After the Luzon-wide blackout, the question arises: is NGCP faithfully and truthfully discharging its mandate under EPIRA and its franchise? Would the blackout have happened if NGCP did its job? Does NGCP have the reserves?
NGCP won the Transco concession in January 2008 and Congress passed RA 9611, its legislative franchise, in December of the same year.
According to the NGCP website, ancillary services include the Frequency Regulating Reserve (FRR), a generating capacity necessary to automatically adjust the system in case of load fluctuation; the Contingency Reserve (CR) or Spinning Reserve to respond in case of a generating unit tripping; Dispatchable Reserve (DR) or Backup Power Service to replace the contingency reserve and to be synchronized in 15 minutes; Reactive Power Reserve and Black Start Service.
The Regulating Reserve should be equivalent to 4% of the total system load or about 352MW, the Contingency Reserve equal to the biggest plant, and the Dispatchable Reserve to the next biggest plant. That would be about 647MW CR, and another 647MW DR, more or less the size of the Sual Power Plant.
EPIRA allows NGCP to charge and collect payments for these ancillary services, and this was highlighted in November last year when MERALCO claimed that its rates were going up because NGCP was charging them more for ancillary services.
Based on recent ERC orders, NGCP’s transmission charge for 2013 is P0.67475 pkwh; for 2012 it was P0.68450 pkwh. It was given by ERC a Maximum Annual Revenue of P44.567 Billion for 2013; P42.903 Billion for 2012, which are the basis of the average rate it collects.
Earlier, NGCP tried to distance itself from issues on ancillary services, insisting that it does not form part of its approved transmission rate. While it is NGCP who bills and collects ancillary services from end-users, as provisionally approved by ERC, it remits the collection for ancillary services directly and entirely to the generators from which the ancillary services are taken, the company said in a statement to a major network.
A check on the company’s postings showed that in Luzon, a generator it has contracted with is Trans Asia Oil & Energy Dev. Corp., which belongs to the Phinma Group. 
After the Luzon black out, shouldn’t we ask Trans Asia Oil why there was no generation capacity to replace Calaca 1 & 2.

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