No more Feed In Tariff!

Published May 15, 2021, 6:00 AM

by Atty. Vic Dimagiba

I was invited to the Joint Congressional Energy Commission meeting held last April 27, 2021. I was very encouraged again by the invitation to participate in the JCEC. We submitted to the JCEC the position paper of the consumer advocacy group which I lead, Laban Konsyumer Inc., on the power supply outlook and renewable energy law. Our position paper can be accessed in our website at www.labankonsyumercom.

This is the big news on the removal of the Feed in Tariff or FIT.

Secretary of Energy Alfonso G.  Cusi  in the Virtual Economic Briefing of the Philippine Embassy in Washington D.C. held on April 15, 2021 Philippine time, relating to the Philippine Energy Plan of 2018-2040, announced that “we have stopped the Feed in Tariff or FIT which proved to be a big mistake as it forced electricity prices in the country upwards. We cannot have our consumers shoulder the financial burden of such subsidies any longer. This holds true most especially since RE technologies and their market competitiveness have significantly progressed in the past decade. “

I raised my hand for the opportunity to speak in the JCEC and brought up the information on the removal of FIT to the Chairman of the JCEC, Senator Win Gatchalian. Since Secretary Cusi was still present in the virtual session, the Senator yielded the floor to the DOE Secretary.

No ifs and buts.

 Secretary Cusi reiterated and affirmed the information. Sec Cusi was quoted, to wit, “with regard to the FIT, tinigil na po natin yan dahil talaga mali yan. (We already stopped that because it’s really wrong)  That is robbing the consumers. As a developing country, we cannot afford to be giving FIT or subsidies para po dun sa mga bagong (for the new) technologies that are being introduced “(BusinessWorld, April 27, 2021). He said that the DOE is studying at present how to implement the removal of FIT for current contracts.

What does the removal of the FIT mean for consumers?

First, consumers will find relief from paying P0.09 per kWh as Feed in Tariff Allowance or FIT ALL. (The present pending application is to increase to P0.2008 per kWh the FIT ALL).

Second, renewable energy power plants like solar and wind energy shall now be subject to a Competitive Selection Process or CSP when they sign a power supply agreement with distribution utilities. They will compete and offer power at the least cost.

Third, renewable energy developers will lose the incentive from receiving an agreed fixed price per kWh of the electricity they sell.

For the information of the consumers, the fixed price as authorized by the Energy Regulatory Commission in May 2020 for solar energy had increased from P9.68 to P11.2758 per kWh while that for wind energy had increased from P8.53 to P9.8976 per kWh, and all these upward adjustments were retroactive to 2016.

On the other hand, Meralco in its May 2021 power rate report says their total per kWh generation charge is P8.60 per kWh.

In view of this FIT increases, our consumer group had filed a petition in the ERC to annul the FIT increases for lack of notice and hearing in ERC Case No. 2021-001 RM which was docketed in January 13, 2021. The petition had been endorsed to the proper division of the ERC. Meantime, solar and wind energy developers are being paid the increased FIT since November 2020. The Commission had included as among the issues in the pending increases of the FIT Allowance the petition of Laban Konsyumer Inc. to revoke the FIT increases.

Despite the financial support in the form of an agreed and fixed price per kWh paid to solar and wind energy developers, the irony of the FIT is that solar and wind energy power translate only to an installed generating capacity for total Philippines of 3.7% or 2.7% for solar energy and 1% for wind energy since the enactment of the Renewable Energy Act of 2008 13 years ago. In my opinion, I call this deMinimis achievement.

The announcement of the removal of the FIT was very appropriate. There were supervening events and new implementing rules pursuant to DOE Circular No DC 2018-02-0003 that ensure power rates are the least cost, reasonable, competitive, transparent and subject to public scrutiny. And the Supreme Court upheld the validity of the CSP in a decision written by Carpio Antonio, J.

We hail the FIT removal as announced by Sec. Cusi.

Secretary Cusi has laid the basis to continue the removal of the incentives granted by the Renewable Energy Act of 2008 especially the Feed in Tariff or FIT that are paid to the renewable energy developers as well as the Feed in Tariff Allowance of Fit Allowance that are collected from all on- grid electricity consumers.

Atty. Vic Dimagiba, AB, LLB, LLM

President, Laban Konsyumer Inc.[email protected]