ERC Revises Ancillary Services Billing to Align with Grid and Transmission System Peaks, Ensuring Fairer Cost Recovery

The Energy Regulatory Commission (ERC) has approved a revised methodology for determining the load billing determinant used in the calculation of Ancillary Service (AS) charges, a move aimed at strengthening transparency, fairness and consumer protection in rate-setting.

Through Resolution No. 25, Series of 2025, the Commission aligned the AS billing determinant with the load billing determinant prescribed under the Open Access Transmission Service (OATS) Rules, 2022 Edition. The revision establishes a more consistent framework for recovering AS costs across all customer categories.

The ERC said the decision addresses concerns raised by large-load customers over sudden increases in AS charges. With the final Ancillary Services Rules still under development, the Commission opted to immediately harmonise existing regulatory parameters to ensure consistency with established transmission ratemaking principles.

Under the revised approach, AS charges will now be based on the average of a customer’s twelve-monthly demands coincident with the monthly transmission system peak, as outlined under Rule F(A1)3.2 of the OATS 2022 Edition. This replaces the earlier methodology that relied on each customer’s non-coincident peak demand and is expected to result in a more equitable and system-reflective allocation of AS costs.

The Commission noted that aligning AS billing with transmission system peaks would help avoid disproportionate and unexpected cost burdens on load customers while better reflecting actual grid operations and system requirements.

Commenting on the development, ERC Chairperson Nino Juan said the initiative underscores the Commission’s commitment to continuously improving its regulatory framework in response to evolving grid conditions and the growing integration of renewable and flexible energy resources. He added that as ancillary services are critical to maintaining power system reliability and stability, the ERC aims to ensure that cost recovery mechanisms remain reasonable, transparent and aligned with operational data and stakeholder feedback.