FIT-All rate increase for RE to greet consumers

Electricity consumers will be greeted with a “Happy New Year rate hike” as they will need to pay more as subsidy to renewable energy (RE) projects via the feed-in-tariff allowance (FIT-All) line item in the electric bills that had been jacked up to P0.0983 per kilowatt hour (kwh), almost double if compared to the current pass-on rate of P0.0495 per kwh.

Energy Regulatory Commission (ERC FACEBOOK / MANILA BULLETIN)

That was based on the approval given by the Energy Regulatory Commission (ERC) on the FIT-All rate petition of RE fund administrator National Transmission Corporation (TransCo) to account for adjustments in calendar year 2020. The FIT-All increase will be reflected in the bills by January.

The regulatory body qualified that compared to TransCo’s FIT-All application of P0.2278 per kwh, the approved subsidy charge is lower by P0.1295 per kwh. But it was a misleading statement because in the electric bills of consumers, the overall impact will still be an uptick from the prevailing FIT-All charge.

On the computation of advocacy group Laban Konsyumer Inc. (LKI), the adjusted FIT-All charge will cause roughly P20 increase in the bills of consumers in the 200-kwh consumption threshold.

ERC Chairperson Agnes T. Devanadera said “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.”

The industry regulator further justified that its own calculation resulted in lower FIT-All versus the applied rate, by fleshing out all the factors integrated by TransCo in its filing.

The items scrutinized by the ERC in its FIT-All approval had been: the FIT differential; working capital allowance; administration allowance; disbursement allowance and forecast national sales.

The ERC in particular noted that TransCo had over-recoveries of P7.3 billion as of May 5, 2020; which was a higher calculated figure vis-à-vis the regulatory body’s own estimate of P3.5 billion.
FIT is an incentive paid to all qualified RE developers; and in the electric bills, this is reflected as FIT-All charge that is a separate line item and considered a subsidy paid by all Filipino consumers.

Devanadera emphasized “the implementation of the FIT has increased supply of renewable energy by 1,262.491 megawatts as of December 28, 2020,” adding that the integration of  RE in the country’s power mix somehow helped in reducing prices in the Wholesale Electricity Spot Market (WESM), based on their ‘merit order effect’ in the power system.

“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,” the ERC chief stressed.

In the approval of the new FIT-All charge, the ERC indicated that it employed actual generation from January to March 2020 and a forecast from April to December 2020 that then summed up to 3,414,953,807.2 kilowatt-hours versus TransCo’s higher projection of 4,098,632,000 kwh.

Relative to forecast cost recovery rate, the regulator noted that TransCo used 36-month load weighted average price (LWAP) for Luzon and Visayas for the period from April 2016 to March 2019 and the blended generation rates for Mindanao; while the ERC applied the combination of actual cost recovery rate within January 1 to March 31, 2020 and then the forecast cost recovery rate from April 1 to December 31, 2020.

And on the continuing pass-on of FIT-All to consumers, TransCo as well as the distribution utilities, retail electricity suppliers, Philippine Electricity Market Corporation (PEMC) and the National Grid Corporation of the Philippines (NGCP) had been mandated “to make available their records to the Commission” for the audit process to be carried out by the regulator.

TransCo, in particular, was directed to provide to the ERC an update or report on the status of drawn or borrowed amount from the FIT differential accounts and the payments already made to it – within 30 days from the time that it receives the regulatory agency’s order.