Congress is being urged to craft a legislative measure that shall seek to remove or renegotiate feed-in-tariff (FIT) incentives to renewable energy (RE) projects -- given that this separate line item in the bill has been driving up electricity rates paid for by Filipino consumers.

That recommendation is being advanced by advocacy group Laban Konsyumer Inc. (LKI) to House Committee on Energy Chairman Juan Miguel Arroyo and Senate Committee on Energy Chairman Sherwin T. Gatchalian, chiefly for them to sponsor the proposed bill.

LKI President Victorio Mario Dimagiba said the targeted scrapping of the FIT incentives - that will cover even commercially existing RE projects – is a follow-through to the pronouncement made by Energy Secretary Alfonso G. Cusi in a Joint Congressional Energy Commission (JCEC) hearing last April “on the removal of FIT that are paid to renewable energy developers.”

To have the FIT incentives thrown out, Dimagiba noted that Congress shall legislate a measure that will amend the Renewable Energy (RE) Act or Republic Act 9513.

He similarly propounded that “for the consumers to feel immediately the impact of the removal of the FIT, we also propose that the FIT-All being paid by the consumers that increases every year be absorbed under the Murang Kuryente Act,” which in essence shall be subsidized via the Malampaya fund.

The FIT is an incentive scheme in the initial wave of RE project installations in the country – with the first wave of FIT perks awarded in 2014; and the second batch in 2016, especially for wind and solar developments.

In the case of biomass projects, the grant of FIT incentives had been given extension by the Department of Energy (DOE) until December 2019; while run-of-river hydro installations got an indefinite extension or until such time that 250 megawatts cap on developments would have been fully subscribed.

Without the FIT incentives then, the initial round of RE investments in the country would not have happened. However, the grid parity promise of the RE developers – that should have happened as early as 2016 – appears failing until this time because the consumers are still saddled with increasing FIT-All charges.
It is within that premise then that consumers’ agitation over the FIT costs have been escalating; and have been prompting advocacy groups like the LKI to push for its scrapping.

Such proposal though will likely be met with extreme opposition, especially so since the RE projects have financial commitments to honor with their lenders.

Dimagiba opined that if the water concession contracts of Manila Water Company and Maynilad Water Service Inc. had been renegotiated by the government, then it can also be done in the FIT payment agreements with RE developers.

For the qualified RE developers to be paid with FIT, a specific line item in the electric bill – under FIT Allowance or FIT-All is being passed on monthly to all electricity ratepayers.

The monthly revenue stream from the FIT-All is being remitted to FIT fund administrator National Transmission Corporation, which is also the entity in charge of settling the FIT claims of the RE developers.