ERC approves collection of higher feed-in tariff allowance

The Energy Regulatory Commission said Tuesday it approved with modification the application of the National Transmission Corp.  to collect a feed-in tariff allowance equivalent to P0.0983 per kilowatt-hour for 2020 which will become effective in the next billing cycle.

It said the decision increases the FIT-All by P0.0488 per kWh from the 2019 level of P0.0495 per kWh charged to consumers.

ERC chairperson Agnes Devanadera said, however, that the newly approved FIT-All for calendar year 2020 was lower by P0.1295 per kWh than TransCo’s proposed rate of P0.2278 per kWh.

TransCo is the administrator of the feed-in tariff fund which is used to pay the FIT of renewable energy developers as mandated by the Renewable Energy Act of 2008.

The law established a FIT system for electricity produced from wind, solar, ocean, run-of-river, hydropower and biomass. The system guarantees all eligible renewable energy plants an entitlement for the applicable FITs for a period of 20 years.

The FIT-All, on the other hand, is a uniform charge billed to all on-grid electricity users and is set annually by the ERC.

“We came up with a lower FIT-All rate in view of the fact that the commission used some actual figures as bases in our computations, among others,” Devanadera said.

Devanadera said the implementation of the FIT increased the supply of renewable energy by 1,262.491 megawatts as of Dec. 28.

“We have witnessed the reduction in the price of electricity in the WESM because of the entry of this additional renewable energy capacity as a result of the merit order effect.  The FIT-All collection ensures not just the sustainability of this additional capacity, but also attracts additional investments for a clean and sustainable energy industry,” she said.

The ERC’s calculation resulted in a lower FIT-All rate, compared to TransCo’s proposed rate, in view of the variance in the computation of FIT-All components particularly the FIT differential, working capital allowance, administration allowance, disbursement allowance and forecast national sales.

It said TransCo used the FIT-eligible capacity of 1,375.78 MW from the list of the Department of Energy as of July 2019, while the ERC used the DOE list with certificate of endorsement as of Dec. 31, 2019.

TransCo forecasted the generation for 2020 at 4,098,632,000kWh while ERC used the combination of actual generation from January to March 2020 and forecasted generation from April to December 2020, equivalent to 3,414,953,807.2 kWh.

It said TransCo used the 36-month load weighted average price for Luzon and the Visayas for the period April 2016 to March 2019 and used the blended generation rates for Mindanao, while the ERC used the combination of actual cost recovery rate for Jan. 1 to March 31, 2020 and the forecast cost recovery rate from April 1 to Dec. 31, 2020.