Feed-in-tariff disguised as green energy tariff

          It was more than two (2)weeks since I wrote the Secretary of Energy pleading for his agency to stop the auction for around 2000 MW of electricity using renewable energy resources like solar, wind, biomass and run of river hydro.  The plea is primarily for the Secretary of Energy to assure the Filipino consumers that going green and clean also means the least cost peso per kwh of electricity that consumers shall pay.  The expectations of least cost of renewable energy overshadows the nobility of the green energy auction program.

          As early as September 8, 2021, our advocacy group, Laban Konsyumer, Inc., expressed vehement opposition to the hasty implementation of the Green Energy Auction Program (GEAP) as it apparentlyperpetuates the Feed-In Tariff (FIT) and FIT-Allowance (FIT-ALL). While it bears a different name, the GEAP is an obvious disguise of FIT-ALL and would still result in additional burden for electricity consumers who would eventually have to pay for the charges to be remitted to the renewable energy developers in the GEAP.

At the moment, for eligible solar and wind energy plants that entered the FIT program in 2015, the FIT increased over the past five (5) years to as much as Php11.28/kwh for solar energy and Php9.90/kwh for wind energy.  These FIT are fixed payments to the eligible plants. Thus, the Feed in Tariff is also known as Fixed-in Tariff, payable for a maximum of 20 years.  This is the existing tariff backdrop over which the green energy auction is to be held. 

On the other hand, prices of solar and wind energy projects in our region have gone down to, for instance,US$0.03877/kwh (or Php1.98/kwh, at an exchange rate of Php51 per US$) for solar in Cambodia and $0.085/kwh (or Php4.34/kwh) for wind in Vietnam. The wind farm in Vietnam is in fact owned by our very own Ayala group, which started commercial operations last year.  If a Filipino company can sell wind power at Php4.34/kwh in Vietnam, why should Filipinos pay almost P10/kwh for wind under the FIT program?

In pursuit of our advocacy for reasonable power rates, Laban Konsyumer has been consistent in our opposition to all unfair subsidy burdens as we even recommended that Congress immediately pass a law to repeal the FIT program since the cost of renewable energy has declined over the years and resulted in lower contracted generation costs. This advocacy is better reserved to the incoming 19th Congress on June 30 this year.

          The Energy Secretary was consistently quoted in media and in the Senate categorically stating that the FIT Program is not only anti-consumer but creates a distortion on the fairness that should be the norm in the power industry. But this could be lip service. When his department issued the Circular on the green energy auction programthatwould entail guaranteed rates for the renewable energy projects, shades of the FIT clouds the nobility of green energy as green and clean but an expensive cost of power for consumers.

Why so?

Implementing the GEAP would contribute to the increase of the FIT-ALL charged to consumers nationwide.  As in the original FIT, consumers would be given no choice, but to again pay the businesses of RE developers participating in the GEAP.

Unlike the Renewable Portfolio Standards (RPS), the GEAP Rules has no provision to protect consumers against electricity price increases. There is no assurance that the resulting Green Energy Tariff (GET) would be lower than recently approved RE-based Power Supply Agreements of distribution utilities.

There is also no set capacity or volume for the entire program, and the limit is only set per auction round. GEAP appears to be worse than its predecessor as it appears to be an “unlimited FIT Program.” The DOE’s declaration of capacities to be auctioned off was only based on its own assessment and did not even undergo any public consultation. More importantly, any risk of over-contracting would be borne by electricity consumers, and not the government.

Considering all these, the GEAP is obviously an ill-conceived program that will benefit only RE developers to the detriment of consumers.

We wrote this letter to urge the DOE to immediately put the GEAP on hold and not force its implementation during the remainder of this administration. We also encourage the deferral to give more time to accommodate more discussions on the matter, which concerns us, consumers.

The state should thus refrain from enriching an already heavily subsidized industry at the expense of already burdened electricity consumers.

There is already a proposal to significantly increase the FIT-ALL, with just the existing roster of eligible plants.  The FIT-ALL will definitely grow if more plants become treated as FIT-eligible through the GEAP.

As a footnote, LKI challenged in ERC the FIT increases of the existing eligible plants in Case No. 2021-001 RM.ERC continues to sit on LKI’s petition.

Atty. Vic Dimagiba

President, Laban Konsyumer Inc.

Email at [email protected]