Cusi signs RPS for RE sector, dismissing fears of rate hikes

Published December 28, 2017, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2017/12/28/cusi-signs-rps-for-re-sector-dismissing-fears-of-rate-hikes/

Even with raised concerns on lack of technical and economic studies, Energy Secretary Alfonso G. Cusi already signed the Renewable Portfolio Standards (RPS) Rules that will serve as the next incentive scheme for renewable energy (RE) developments in the country.

The energy chief also dismissed fears on cost impact of the prescribed percentage of RE procurement for power utilities, a scenario reminiscent of the feed-in-tariff (FIT) era when subsidy proponents were sounding off that RE developments will bring down power rates for consumers – but it’s the reverse that actually happened. It had been a ‘pricey blank check’ that the consumers did not sign up for, but has been continually distressing their pockets.

“The DOE (Department of Energy), after consultations with consumer groups and industry players, clarified this policy and placed the ‘no higher rates’ condition in the Department Circular itself,” Cusi said.

As prescribed under the RPS rules, on-grid utilities must strive for 35-percent share of RE in the energy mix onward to year 2030. RE sourcing shall be enforced on the third year (or year 2020), with 2018-2019 period considered the transition phases to project developments.

Nevertheless, industry experience contends that even policy prescriptions would not be able to control factors that will eventually influence RE developments – and this could come as another shock for ‘unsuspecting consumers’ when cost-impacting realities of project developments would bite – especially since the policy had not been rooted on genuine and deep studies, a typical shoddy act of policy formulation for some sectors in the country.

For one, with the overcapacity in supply and full contracting mandate on DUs, they might just be forced eventually to source additional capacity from RE generation whether or not these are still needed in their supply portfolio, hence, the plea for thorough study on the policy.

Cusi still argued though that “the RPS for on-grid rules outlined various safety nets to protect the electricity end-users and to ensure that this new venture will not result in higher electricity rates.”

He noted that the mandated DUs on RE procurement under the RPS policy shall undertake competitive selection process (CSP) on their RE supply sourcing. And according to him, that is a safeguard that will guarantee “no rate hikes” for consumers.

“The DUs have the obligation to look for the optimal supply mix and ensure a level playing field among the power developers,” the energy chief stressed.

An alternative scheme for DUs to comply with the RPS had also been set forth, including net metering installations and green energy option that could be exercised by the consumers themselves.

Cusi reiterated that “the requirement to comply with the CSP ensures a transparent mechanism that ascertain least cost procurement of power supply and ensure competition among the players.”

He further assured that “a regular review process on RPS will be conducted by the DOE to ensure the compliance of all the participants to the RPS.”

This review shall also “determine the impact to the consumers and whether the imposed minimum RE generation requirement should continue or be adjusted upon accordingly.”