TransCo explores legal option to cut FIT rates for RE

Published August 25, 2017, 10:00 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/08/25/transco-explores-legal-option-to-cut-fit-rates-for-re/

Feed-in-tariff (FIT) fund administrator National Transmission Corporation (TransCo) is exploring legal options on how it can bring down the FIT rates for renewable energy developments and amend the terms of said incentive scheme, such as shortening the duration from where it had been fixed at for 20 years.

In an interview with reporters, TransCo President Melvin A. Matibag noted that he is initially looking at how the classification of the FIT can be legally subscribed to as “toll or a tax,” so the rules can be amended with the imprimatur of Congress.

“I’m viewing the FIT as a toll or a tax, meaning if it’s a toll or a tax, the legislature can amend it,” he said.

Matibag indicated that TransCo will be studying this option and will eventually submit its recommendation to the Department of Energy (DOE) and to the Joint Congressional Power Commission (JCPC), the legislative body that has oversight function over the electric power industry.

He added “I’m looking at the legal option that if we will view the FIT as a toll or a tax, or if it is an exaction of the government, that can be reduced. The rates (for solar) should not be locked at R8.69 per kilowatt hour or 20 years.”

To the TransCo chief, that is the only way he is seeing that the public’s burden on the RE subsidy can be eased – given the fact also that shortfall on collection of the FIT Allowance (FIT-All) had been continuously swelling.

“We have P8.1 billion shortfall in collection. It increases every three (3) months at P400 million, so it will be P9.0 billion by the end of the year,” he said, emphasizing that they are also scheduled to file with the Energy Regulatory Commission (ERC) for additional increase in FIT-All by August 31, bringing that rate component higher to P0.25 per kWh level.

Matibag said he is ready on counterargument that the RE developers will raise, primarily on premise that such move redounds to changing investment rules at mid-game.

He stressed “they (RE developers) will argue that it will be an infringement of contract, but I will argue that it is not an infringement of contract – it’s an incentive given to you, it’s an exaction, it’s a tax… and with all due respect to the DOE and the ERC, it’s the industry dictating the amount from the very start – they’re part of the

board (apparently referring to the National Renewable Energy Board).”

He said the project developers will definitely be given allowance for viable margins, but they will have to re-justify that with recent developments on the falling prices of RE technologies (primarily solar) in the world market.

“Initially, I am looking at the RE law in relation to the Philippine Constitution… and also the wisdom behind the FIT – because supposedly, it is to lower the electricity rate, now if it defeats the purpose, then Congress can look into it,” Matibag expounded.