Electricity consumers anticipated relief from paying the Feed in Tariff Allowance (FIT-ALL) in their power bills when no less than the Department of Energy (DOE) Secretary announced in an investor forum abroad that he had stopped the Feed in Tariff (FIT ) which is a heavy burden to the consumers. The decision to stop the FIT was confirmed by the Secretary in a Joint Congressional Energy Committee hearing. Replying to this writer during the recently concluded Public Consultation of the 2020 to 2040 Philippine Energy Plan, the DOE reiterated that they had stopped the FIT.
My question now is how can Renewable Energy (RE) become the number one source of power in the country by 2040 by adding new capacity that will come from the Green Energy Auction Program or GEAP.
What is the GEAP for the consumers? Will GEAP bring down the cost of electricity from renewable energy without the payment of FIT and the FIT-ALL?
The guidelines of the GEAP are spelled out in a DOE Circular 2020-07-017 entitled “Promulgating the Guidelines Governing the Policy for the Conduct of the Green Energy Auction Program in the Philippines” (14 July 2020). The objective of this Circular is for mandated Renewable Portfolio Standards (RPS) participants like Distribution Utilities (DUs) and Electric Cooperatives (ECs) to obtain Power Supply Agreements (PSA) for RPS compliance.
The DOE posted a Draft Circular “Providing the Revised Guidelines for the Green Energy Auction Program in the Philippines.”
In contrast to the original Circular, the proposed revision to the GEAP Guidelines will adopt the mechanism of the Feed-in-Tariff (FIT) Program. Winners of the auction will become FIT-eligible plants, with guaranteed payments like the existing FIT plants. The FIT rate is proposed to be determined through the auction. Electricity customers nationwide will share in the payment of GEAP winners thru the payment of FIT-Allowance. This means that the already very high FIT-All rate will continue to increase with the entry of new capacity from the GEAP.
To me, therefore, the proposed revision to the GEAP Guidelines appears to be a stealthy way to perpetuate the FIT and the FIT-All subsidy burden on consumers. This objective disregard the potential rate impact to the consumers. The draft revisions do not consider price impact and the protection of consumers in the implementation of the program. As there is no set capacity and volume for the entire program, GEAP appears to be an unlimited FIT Program. This makes participation in the FIT and the consumer burden of the FIT-All, open-ended as more and more RE plants can become part of the FIT through GEAP.
Further, the National Transmission Corporation (Transco) filed the 2022 FIT Allowance application at a very steep price. It is clear that Transco’s objective is to load the FIT portfolio with cash for the GEAP winners.
On 29 July 2021, Transco filed its Application for Approval of 2022 FIT-Allowance. In its Application, Transco proposed a FIT-All rate of P0.3320/kWh for 2022. This rate is significantly higher than any of the approved FIT-All rates since the program was implemented in 2015.
In this connection, an industry leader from the private electric operators has opined to me that GEAP is not one of the authorized mechanisms in the Renewable Energy Act.
The DOE Director for the Renewable Energy Management Bureau also told me that she will bring up for discussions in the GEAP Committee the Laban Konsyumer Inc. (LKI) position paper against the draft GEAP guidelines.
In addition to the above LKI position paper, I believe that Congress should pass a law to repeal the FIT program as the cost of renewable energy has declined resulting to lower contracted generation costs. The continuation of the FIT program in any form should be permanently stopped. LKI has already submitted a letter to both committees on Energy of Congress on this matter.
Our consumer group shall continue to advocate for the least cost of electricity and shall oppose all “ways of skinning a cat… “.
Atty. Vic Dimagiba, AB, LLB, LLM
President, Laban Konsyumer Inc.
Email at [email protected]