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Rationalize FIT-All

"It is more aligned to the all-of-society spirit of bayanihan."

 

The Energy Regulatory Commission’s (ERC) recent decision approving the petition of the National Transmission Corporation (TransCo) for higher Feed-In-Tariff Allowance (FIT-ALL) rates this year is seen to again increase the electricity bills of consumers. 

FIT-All is one of the items in the electric bill that subsidizes selected renewable energy power producers that all power consumers must pay. The FIT is a 20-year guaranteed rate to select renewable energy (RE) players to encourage more investments and clean technologies to supply our growing energy demand. FIT-All is collected from consumers and businesses nationwide by Distribution utilities (DUs), the National Grid Corp. of the Philippines (NGCP), and Retail Electricity Suppliers (RES) then the proceeds are remitted to the FIT Fund which is administered by TransCo. 

On the other hand, consumer groups and industry observers have aired concerns on the lack of transparency in the FIT system. The amount of subsidy to RE generators are not standard and differs with each technology raising suspicions of influence by unscrupulous players.

Yes, the environmental objective of FIT is good given the need to cut carbon emissions in response to climate change, but are we implementing this at fair cost?

The ERC decision increases the FIT-All charge to P0.0983 per kilowatt hour (kwh) from the current rate of P P0.0495 per kwh, adding an average of P20 for households consuming 200 kWh. Yet another burden that consumers have to bear on top of the rising inflation and deep depression our economy is in.

Disturbing is how these increases and retroactive adjustments are allowed when there are already RE developers going forward with projects at rates much lower than FIT. Here are some eye-opening examples reported in the news that illustrate how expensive the Philippine FIT scheme is, which at that time was already at P8.69 for solar and P8.53 per kWh for wind, more than 50 percent higher than the following examples:

In August 2017, Meralco invited power developers to a price challenge to the P3.50 per kWh offer by Citicore in compliance with the Competitive Selection Process (CSP) rules of the Energy Regulatory Commission (ERC). The CSP imposes transparency in the procurement of power supply by distribution utilities (DUs) for their captive markets. This low rate reflects a declining trend in solar power costs claimed by RE producers. 

In another instance, Island Wind Corp. offered in February 2018 a 150-megawatt power-supply deal to Meralco at P3.50 kWh.  It is now awaiting the Department of Energy (DOE) to issue its circular on the conduct of CSP via Swiss/Price Challenge.

In June 2019, the ERC approved Meralco’s 50-megawatt supply agreement with the PowerSource First BulacanSource First Bulacan Solar Inc. for P4.69 per kWh with a 2-percent annual escalation that in 20 years will only be P5.7516 per kWh, still below the current FIT.

Announced recently is the joint venture for two wind farm projects of AC Energy of the Ayala group and UPC Renewables of Hong Kong that will be built in Vietnam. The FIT offered by the Vietnamese government for the 60-megawatt output of the two wind turbine plants is at 8.5 US cents or at current exchange rate, only P4.08 per kWh.

With the issuance of Energy Regulatory Commission (ERC) Resolution No. 6, Series of 2020, “A Resolution Approving the Adjustment to the Feed-In-Tariff (FIT)” dated May 26, 2020, we can anticipate seeing increases in FIT charges in our electricity bills.

This is a disappointing turn-around from ERC’s laudable move to lower FIT rates in 2020 and suspending FIT collection during COVID 19. It’s as if we were just given a little reprieve for the holidays before being hit anew thru an essential utility. For millions of ordinary consumers, this FIT burden is heartless and unacceptable.

The Social Weather Stations (SWS) September 2020 survey confirmed the worrying reality that about 39.5 percent of the adult labor force or around 23.7 million Filipinos were unemployed amid the coronavirus pandemic.

Just think of all those Filipino households whose breadwinners have lost their livelihood and forced to make do with some creative trade or odd jobs for daily subsistence. People want to and must go out to work, but their jobs are gone, and the mobility needed to eke out some kind of income is sorely restricted and very expensives.

During the cautious occasions that I venture out to take sanity breaks from work from home anxieties, the low confidence and fear of the people of the life-threatening risk of COVID-19 is evident. We all want to survive this crisis and until we achieve herd immunity, economy recovery will be stymied. 

Until we get to better times, suspending FIT-All and rationalizing it to balance consumer interests with the RE industry’s sustainability would be more aligned to the all-of-society spirit of bayanihan.

Topics: Orlando Oxales , Energy Regulatory Commission , ERC , National Transmission Corporation , TransCo , Feed-In-Tariff Allowance , FIT-All , renewable energy , National Grid Corp. of the Philippines , NGCP , Retail Electricity Suppliers
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