Solar franchise aims to cut electricity rates

A pending bill aimed at lowering electricity rates in the Philippines is stirring up a hornet’s nest in the power sector. Critics of House Bill 8179, which proposes to grant a company the non-exclusive right to build solar-battery mini-grids in off-grid areas nationwide at zero cost to the government argue, argue that the franchise will result in another monopoly and inefficient electricity service. 

Supporters of the bill, however, say the new franchise is the county’s best shot at lowering electricity rates in the Philippines. Electricity rates in the Philippines are actually the highest in Asia due to lack of competition. New players, like Solar Para sa Bayan, will provide competition and force existing industry players to reduce their rates.

Consumer groups have expressed support for House Bill 8179. The National Association of Electric Consumers for Reforms, or Nasecore, says the bill offers Filipinos an alternative choice for electricity and will pave the way for more competition in the power industry.

“The fact electric service is still so poor and costly, 17 years after Epira (Electric Power Industry Reform Act), shows current measures have failed. Solar Para Sa Bayan should be thanked for fulfilling the intent of Epira, which consumers have long waited for. We hope this wakes up the power industry, and leads to more reforms that will benefit the people, instead of institutionalizing the inefficiencies of electric utilities,” Nasecore executive director Rafael Acebedo said.

Solar Para Sa Bayan, or SPSB, is owned by businessman Leandro Leviste, who also owns Solar Philippines. The company supplies Manila Electric Co. the lowest cost of any power plant in the Philippines at P2.99 per kWh, or 50 percent below Meralco’s all-in cost of generation (inclusive of VAT) of P6 per kWh. 

Solar Philippines managed to reduce its generation costs after developing and constructing its solar projects in-house. It manufactures solar panels in its 800-MW factory in Batangas, the first Filipino solar panel factory.

No monopoly

Supporters of the bill dismissed concerns of another monopoly in the making, citing the non-exclusivity clause of HB 8179.

“The text of the bill speaks for itself: It is non-exclusive, encourages others to apply for the same, and aims to end the existing monopolies on electricity, because we believe consumers deserve new choices for better service at lower cost. It also incurs zero cost to government, and eliminates the need for billions in subsidies to existing utilities,” Leviste said.

“Solar Para Sa Bayan only targets areas where consumers complain about electricity. If, instead of trying to prevent competition, utilities focused on lowering costs and improving service, then Filipinos would be satisfied with their electric service, and there’d be no need for us at all,” he added.

The construction of solar-batter mini-grids incurs zero cost to the government and comes with no subsidies and no incentives, unlike existing renewable energy and rural electrification programs. 

The National Electrification Administration has requested the government P25 billion for its sitio electrification. With the private sector, taxpayers can save this entire amount.

National Power Corp’s Universal Charge for Missionary Electrification is a fee amounting to P0.1561/kWh paid by all Filipinos, most of all in Metro Manila, with total Napocor subsidies amounting to around P20 billion yearly. 

Electric cooperatives receive subsidies for their inefficiencies, such as the Lanao del Sur Electric Cooperative. The government recently announced it would condone P10 billion in debts because of its inability to pay over the years.

The so-called feed-in-tariff, meanwhile, amounts to P0.2563/kWh, or nearly P30 billion in yearly fund tht the renewable energy industry depends on, except for SPSB.

While the government was subsidizing renewable energy from P8 to 9/kWh, SPSB and its affiliates signed power supply agreements with Meralco for as low as P2.99/kWh, proving that there was no need for any FIT. As a result, the government stopped granting more FIT, saving billions of pesos in subsidies.

A Pulse Asia survey results show overwhelming support for new options and public dissatisfaction with high electricity rates. Twenty municipalities have signed resolutions supporting SPSB projects, while over 100,000 people have also signed petitions supporting congressional passage of HB 8179.

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Topics: Ray Eñano , Solar franchise , electricity rates
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