I delivered this message in a webinar hosted by the Stratbase and the ADR Institute /CitizenwatchPhillippines on Ensuring Power Supply Security for a Sustainable Economic Recovery held on November 11, 2021.
“Good morning to all of you.
I am here as a representative from Laban Konsyumer, Inc. and it is my advocacy to protect consumer welfare.
Over the past few months, we have been experiencing increases in our power bills, mainly because of higher pass-through charges.
And there’s more. There is an ongoing energy crisis which has been affecting markets all over the world. Natural gas, coal and crude oil prices have been hitting new highs following the sudden spike in demand as countries started pandemic recovery efforts that coincided with the onset of the winter season.
The Philippines is not spared from this. As a net oil importer, our local industries are affected by movements in global prices.
As of November 9 , 2021, domestic oil prices resulted in a net increase of P20.95 per liter for gasoline, P17.50 per liter for diesel, and P15.09 for kerosene, since the beginning of the year.
Continuing increases in our power rates are imminent. And we, at Laban Konsyumer Inc. are concerned. We believe that we should do something about things we can control.
For instance, the feed-in tariff (FIT) which we all know is a policy designed to encourage developers to build more renewable energy (RE) projects by giving them a premium rate for the power they produce for a period of 20 years.
But what we have seen so far was that it comes at the expense of having the Filipino consumers shoulder the subsidies, whose lives have already been challenged by the ongoing pandemic.
Middle of this year, Department of Energy (DOE) Secretary Alfonso Cusi said that the FIT, and I quote, “proved to be a big mistake as it forced electricity prices in the country upwards.”
He even said that the DOE would no longer offer it for prospective projects, and is even exploring ways on how they could stop implementing it retroactively.
This is also why Laban Konsyumer Inc. has been continuously campaigning for either junking the FIT policy, or repealing the existing Renewable Energy Act No. 9513 or the RE law, as we aim to better safeguard the consumers.
DOE data as of end-June showed that there are 567 MW of committed solar projects until 2027. More than 12,000 MW of solar projects and over 5,000 MW wind projects are indicative through 2029.
As of last year, we’ve seen the FIT rate for solar projects rise to a whopping P11.30 per kilowatt-hour, from P9.68 per kWh from 2014.
Meanwhile, the FIT rate for wind projects was at P9.90 per kWh in 2020, also showing an increase from the 2014 rate of P8.53 per kWh.
These FIT adjustments in solar and wind already contribute to higher FIT-Allowance, which is part of the power bills that we pay every month. This is a burden for consumers, especially those who are already struggling to pay their bills.
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 only translate to an installed generating capacity of 4 percent for solar energy and 2 percent for wind energy, since the enactment of the RE Law 13 years ago based on DOE data as of end of 2020.
I like to call this de minimis achievement.
This has led to us asking the Congress in May this year to legislate a measure that will amend the RE Law, and we have submitted various statements, position papers, and comments for the amendments to the measure.
On top of this, we lodged a petition to the Energy Regulatory Commission (ERC) to nullify FIT increases in ERC Case Number 2021-001 RM.
What does the removal of the FIT mean for consumers?
One, they will be spared from paying 9 centavos per kWh of FIT-All.
At present, there is a pending application with the ERC to further increase the rate to over 20 centavos per kWh.
Two, RE power plants such as solar and wind will be forced to undergo a Competitive Selection Process or CSP before they sign a power supply agreement with distribution utilities.
This is aimed at lowering the prices of electricity as they would then have to compete and offer power at the least cost possible.
Three, RE developers will lose the incentive from receiving an agreed fixed price per kWh of the electricity they sell.
There are many other tools that governments can use to encourage adoption of RE.
Another new policy on RE development is called the Green Energy Auction Program (GEAP), and hopefully the GEAP is not a pseudo FIT program.
Especially during these trying times, empathy and compassion are business imperatives. We believe that putting consumer welfare first will be key to economic development. “
Atty. Vic Dimagiba
President, Laban Konsyumer Inc.
Email at email@example.com