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High court asked to stop new electricity surcharge

THE Supreme Court should stop the government from imposing another surcharge on people’s energy bills for “electricity that has yet to be generated by power plants that have yet to be built,” a taxpayer appealed on Tuesday.

Lawyer Remigio Michael Ancheta asked the high court to stop the Energy Regulatory Commission from allowing state-owned National Transmission Corp. to charge consumers an extra P0.04 per kilowatt hour starting this month in a supposedly erroneous application of the renewable energy law.

Ancheta said that while the Renewable Energy Act of 2008 allows the collection of a feed-in tariff allowance (FIT All) for the development of renewable energy, the law never contemplated advance collection of the tariff.

Ancheta estimated that a usual residential power user, who consumes 200 kwh in a month, will pay an additional charge of P8.12 under the FIT system and that translates to P230.12 million a month or about P2.7 billion this year.

“The Department of Energy and ERC chose means that are beyond what is necessary to achieve the purpose of the law to the prejudice of the public,” Ancheta said in his 32-page petition.

“Otherwise stated, the public would be made to pay for electricity that has yet to be generated,” the lawyer said.

“Unless this Honorable Court strikes down this unreasonable and oppressive attempt to collect from the public an amount that they can otherwise use for basic necessities, the consumers will be required to bear the burden by the start of the year 2015,” Ancheta added.

Under the renewable energy law, the FIT will be collected by the government and remitted to eligible developers of electricity from wind, solar, ocean, run-of-river hydro-power and biomass sources.

But Ancheta lamented that the ERC gravely abused its discretion in expanding the implementation of the law to force consumers to pay in advance for renewable energy that has not been generated and considering that eligible plants have not yet been built, much less operated.

Specifically, Ancheta asked the court to nullify as unconstitutional the FIT rules and guidelines that the ERC approved allowing TransCo to impose the FIT All of P0.0406/kwh as provided by an ERC order dated October 7, 2014.

The ERC order grants provisional authority for the TransCo to function as a fund administrator and pay the RE developers.

Under ERC Case 2011-006 RM and Resolution 10, Series of 2012, the ERC approved four kinds of initial FIT rates.

The initial FIT rates were P8.53/kWh on wind technology; P6.63/kWh for biomass; P9.68/kWh for solar; and for hydropower at P5.90/kWh.

On Nov. 19, 2012, the ERC issued Resolution 15, Series of 2012, designating TransCo as the FIT-All fund administrator tasked with the establishment, management, administration, disbursement and settlement of the FIT-All Fund.

Consequently, distribution utilities like the Manila Electric Company, are mandated to adopt the necessary modification in their billing and collection systems.

Meralco did not immediately announce whether it will already charge the Fit-All in the next billing period and instead said their generation charges may even go down this month due to lower fuel costs and increased availability of power plants.

“There is a possibility of lower generation cost based on our initial analysis and primarily this may be due to lower effective price of fuel cost and lower incidence of plant outages,” Meralco spokesman Joe Zaldarriaga told reporters.

He said there is no actual data yet but indications point  to a lower generation charge for Meralco in January.

Consumers of Meralco, the country’s biggest power distributor, experienced lower charges in December by P0.19 per kilowatt-hour  for a typical household consuming 200 kWh, equivalent to a decrease of around P38 in their electricity bill.

Meralco rates also declined by P0.41 per kWh in November due to availability of the power plants and lower cost of fuel.

“The downward adjustment is attributed principally to the P0.17 per kWh reduction in the generation charge, which registered its lowest level for the year,” Meralco said earlier.

The P4.94 per kWh generation charge in December marks the first time since October 2013 that the said charge went below P5.00 per kWh.

“The reduction in the generation charge was mainly driven by lower charges from the Wholesale Electricity Spot Market (WESM), which registered a reduction of P1.70 per kWh due to the normal operations of the power plants during the November supply month,” Meralco said.

WESM is the country’s trading floor of electricity where buyers and sellers trade their output.

Meralco also said that the supply situation in Luzon improved in the November supply month especially after Sual’s Unit 1 (647 MW) came back online after a month-long maintenance shutdown in October.

In addition, WESM charges decreased due to the completion in October of adjustments from prior months, which include additional Must-Run Unit compensation for Malaya and the secondary cap additional compensation for the supply months of May and June.

These account for around P0.09 of the P0.17 per kWh decrease in generation charge this month.

The WESM tripartite committee imposed a secondary cap at the WESM of P6.245 per kWh to prevent price caps resulting from tightness in supply.

Meralco said the lower WESM charges in November offset the slight P0.10 per kWh and P0.03 per kWh increases in the average rates of the Independent Power Producers and power plants covered by Power Supply Agreements, respectively.

Meralco sourced bulk of its power supply from its PSAs in November accounting for 53 percent, followed by IPPs at 43 percent and the WESM at 4 percent.

The company said the P0.014 decrease in taxes and P0.023 cumulative decrease in the system loss charge and subsidies contributed to the contributed to the overall downward adjustment in the bills to households.

Transmission charges, on the other hand, increased by P0.017 per kWh due to the higher ancillary service charges.

Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges.

Payment for the generation charge goes to the power suppliers such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs.

Payment for the transmission charge, meanwhile, goes to the National Grid Corporation of the Philippines. Of the total bill, only the distribution, supply, and metering charges accrue to Meralco.

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