Reduction in FIT subsidy for RE facilities pushed

Published July 21, 2020, 10:00 PM

by Myrna M. Velasco

The Energy Regulatory Commission (ERC) is prodded to enforce regulatory action that shall reduce the feed-in-tariff (FIT) subsidy being paid by Filipino consumers in their monthly electric bills.

In raising this concern with the regulatory body, Laban Konsyumer Inc. (LKI) President Victorio Mario Dimagiba took reference on the relatively lower FIT incentive that the Vietnamese energy market has dangled to developers – citing in particular the 8.5 US cents or P4.25 per kilowatt-hour (kWh) subsidy it set for wind technology; while that is at higher P7.40 and P8.53 per kWh subsidy for the same technology installation in the Philippines.

Dimagiba primarily asked the ERC to sort out degression in FIT subsidies mandated for RE developments — given the number of years that the subsidy has already been in place; and taking into account also the maturity of the RE market.

“Why would Vietnam consumers pay P4.25 and Philippine consumers not only pay more but an increasing rate,” the LKI chief executive stressed.

He particularly noted that the trend in the Philippines appears to be that even after degression, the FIT

rates being passed on to consumers seem to be at increasing levels.

“After the degressed rate, the rate will still be adjusted upwards each year. This is a dangerous trend for the consumer, especially if it continues to go up during the lockdown and quarantine phases of our country during the long and ongoing pandemic,” Dimagiba pointed out.

FIT degression palpably refers to downward movement or decrease in the rate of RE incentive that consumers shoulder from out of their pockets.

“During this time of pandemic when many of us consumers are financially challenged, we believe that the feed-in-tariff should go down instead of increasing. The original rules themselves state that FIT

should degress over a period of time,” Dimagiba opined.

Primarily, he indicated the intent of FIT fund administrator National Transmission Corporation (TransCo) to seek higher FIT Allowance to be reflected in the ratepayers’ bills for year 2020.

In Dimagiba’s view, “this may lead to a higher FIT-All to fund the additional payments to FIT-eligible generation companies,” citing that in the case of solar, the resulting FIT for the first wave of installations could significantly climb to P11.2758 per kWh for 2020 compared to a leaner P9.68 per kWh in 2015; while for wind, it had been up to P9.8976 per kWh this year vis-a-vis P8.53 per kWh in 2015.

“These are significant increases any way you look at them. And this will definitely have an impact on the final rates that consumers have to pay because it will surely be passed on to our detriment,” Dimagiba stated.
He added “people are losing jobs, and do not have the means to pay for higher electricity rates, and these are FIT-All rates if ever…a cost that we do not know if we are enjoying the power that we are paying for with these costs.”