RE investments will increase electricity rates, says ERC

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WEDNESDAY, 25 MAY 2011 20:40 FERNAN MARASIGAN / REPORTER

THE Energy Regulatory Commission (ERC) said the entry of renewable energy (RE) investors into the power industry would surely raise electricity rates as renewable energy is much more expensive than conventional power generated from crude oil, coal, water and natural gas.

This prompted Party-list Rep. Teodoro Casiño of Bayan Muna to chide ERC officials, during a hearing of the House of Representatives’ energy committee on Tuesday for trying to condition the public that higher electricity rates are inevitable with the entry of more renewable energy sources into the country’s power mix.

The ERC’s initial computations revealed that electricity produced from ocean waves would cost P17.65 per kilowatt hour (kWh); from sunlight, P17.95 per kWh; and from wind, P10.37 kWh. The body is set to deliberate a “fit-in” tariff system that would charge the higher cost of renewable energy across all consumers. 

“Considering that the country already has the second highest electricity rates in Asia, next only to Singapore, any increase in rates would be unacceptable. If the development of renewable energy really entails higher rates, government should first work to reduce current prices, which are already way too high for ordinary consumers,” said Casiño.

To compensate for the higher fit-in tariffs of renewable energy, Casiño called for the enactment of House Bill 1630 that will exempt electricity from the value-added tax, which he said will substantially reduce the electricity bills being paid by residential, industrial electric cooperative and government users.  

The measure has been pending with the Committee on Ways and Means since August 2, 2010.

Casiño also calls for the undertaking of a critical review of the Electric Power Industry Restructuring Act of 2001 aimed at bringing down electricity rates. The legislator said the opposite has happened, thus the need to review the law.

Pending the review, and policy resolutions by Congress, Casiño said the remaining state power assets (Angat, Leyte I and II, Agus and Pulangi plants) that produce cheap power should not be privatized.

The militant legislator also called for more fiscal and no-fiscal incentives for Filipino companies engaged in the development of geothermal, hydro, solar, wind and ocean energy.