Electricity prices are next to rise after FIT rate hike
Renewable energy provides clean fuel and are sustainable, unlike the traditional fossil sources. But most renewable energy sources have a cost that electricity consumers must bear in exchange for a clean environment.
The Energy Regulatory Commission finally ruled on a long-standing petition of National Transmission Corp. to increase the current Feed-In Tariff Allowance (FIT-All) rate of ₱0.2563/kWh—actually higher than those initially calculated at ₱0.2481/kWh or applied for at ₱0.22911/kWh. The prevailing FIT-All rate prior to the approval was ₱0.1830/kWh.
The FIT-All is billed to and collected from all electricity consumers by Transco, and paid to FIT-eligible renewable energy developers. These RE developers are ensured a fixed rate per kWh, or FIT Rate, for the electricity generated by their projects over a period of 20 years. For solar energy projects, the current FIT rate is ₱8.68/kWh, subject to further escalation and adjustments that may be approved by the ERC.
Most renewable energy sources clearly will increase the monthly billing charges of consumers. But the ERC could have mitigated the increase in the overall electricity rates, now at P10.0041 per kwh (from Manila Electric Co.) from a higher P10.5477 per kWh in April, had it considered other options that could actually lower the charges.
The ERC, instead, chose to approve the increased FIT-All rate, increasing further the burden to consumers instead of finding ways to lower electricity prices.
The energy regulator defended the decision, saying it recognized the compelling need to adjust the FIT-Allowance “in order to avert any negative impact on the consumers who are actually subsidizing the growth of the RE industry through the FIT-Allowance Fund.”
ERC granted the adjustment of the FIT-Allowance charge “to all on-grid end-users for an additional amount of P0.0590 per kWh from the P0.1249 per kWh current level.”
The regulator, however, could have approved the agreement between Meralco and the competitive Solar Philippines Tarlac Corp. to sell electricity for just ₱2.9999/kWh, subject to a two-percent escalation. The rate is the cheapest offer from a solar plant and the lowest price among similar supply agreements. It is also significantly lower compared with the existing FIT rates enjoyed by eligible solar power generators.
SPTC could have begun supplying electricity at ₱2.9999/kWh as early as January 26, 2018, and consumers would have already enjoyed savings on electricity costs.
Instead of expediting the approval of the agreement, the ERC prioritized the increase in the FIT-All rate to ₱0.2563/kWh. Worse, the ERC recently approved a solar supply agreement with a tariff of ₱6.58/kWh, while ignoring the ₱2.9999/kWh solar PSA of Meralco and SPTC.
Other solar rates endorsed by the ERC are costlier. The regulator last year granted a feed-in tariff rate of P8.69 per kilowatt-hour to 16 solar projects as endorsed by the Energy Department under the second round of installation target.
“We already completed the issuance of CoCs [certificate of compliance] for the solar power plants covered by the second round of FiT rate which is P8.69 per kWh,” ERC spokesman Rexie Digal earlier said.
Consumer group unhappy
The FIT-All rate has already stirred up a hornet’s nest. Consumer group Laban Konsyumer Inc. has sought the support of Meralco and all private distribution utilities and electric cooperatives to defer the implementation of the higher FIT Allowance, until all legal remedies are exhausted.
“At the moment, we have not received the decision and shall exhaust all legal remedies such as filing of a motion for reconsideration and appeal. We have pending petitions in the ERC against Transco for over-recovery of at least P0.05 for the 2016 Fit Allowance, which was given due course and now subject to notice and hearing by the ERC,” said Laban Konsyumer president Victorio Dimagiba.
“We assure the consumers that we shall fight it out to recover the over-recovery of almost P 0.08 per kWh in FIT Allowance or the approximate amount of P6 billion. We are likewise flagging the Commission on Audit to exercise its mandate to audit the collection of Fit Allowance by Transco,” said Dimagiba.