Tuesday, May 22, 2018

ERC okays Transco bid to hike FiT-All rate


By Lenie Lectura - May 20, 2018

Consumers should brace for an increase in their electricity bills starting June after the Energy Regulatory Commission (ERC) approved a higher feed-in-tariff allowance (FiT-All) rate of 25.63 centavos per kilowatt-hour (kWh).
The amount is 7.33 centavos per kWh higher than the current FiT-All rate of 18.30 centavos per kWh. It is also higher than the 22.91 centavos per kWh rate applied by the National Transmission Corp. (Transco), the administrator of the FiT-All fund.
FiT-All is billed to all on-grid electricity consumers, which appears as a separate line item in power distributors’ bills. The amount is meant to cover payments to renewable-energy (RE) developers, who are assured of a fixed rate per kWh for electricity generated by their projects over a period of 20 years.
In its 49-page decision, the commission said there is a need to raise the FiT-All rate to address the inability of the FiT-All fund to pay in full the claims of FIT-eligible generators.
“While the Commission is granting a rate of P0.2563 per kWh, considering that there is an existing rate of P0.1830 per kWh, what is being added is only an increment of P0.0733 per kWh which represents the increase from the current FiT-All rate. The approved FiT-All rate is sufficient to cover the obligations,” the ERC said.
As of February 5 this year, the total RE claim stood at P40.120 billion of which, only 82 percent has been paid, and P7.378 billion remains unpaid. Accrued interest has ballooned to P527 million. This is 195 percent higher than the January 2016 interest level when the Commission approved the 2016 FiT-All rate of 18.30 centavos per kWh.
“The condition has exacerbated to the detriment of the consumers since interest is also charged in the FiT-All fund, thus, based on that and the fact that there is again an alternative prayer in this application, the commission believes that the grant of the adjustment is justified,” the ERC said.
The newly approved rate represents the FiT-All rate for 2017. Transco has a separate application for a FiT-All rate for 2018 which is pending before the ERC.
Transco President Melvin Matibag acknowledged the backlog in payments owed to RE developers.
“Backlog was caused by a combination of a lot of things though not attributable to Transco because we are only the administrator. We are very much concerned and we are doing our best to resolve the issue. We are also looking for other options to address the backlog,” he said.  “With the ERC approval, we can somehow address the backlog on the payment of FiT-All.”
Matibag was referring to earlier proposals to ask financial assistance from the World Bank  or the Asian Infrastructure Investment Bank  to pay RE developers.
“We are looking for funds so that we can cover the backlog without interests…30 to 40 years of loan payment. The World Bank and AIIB have untouched energy funds for renewable that could be availed of,” he said.
Also, the Transco chief said he looks forward to the immediate resolution of the 2018 FiT-All rate application.
Distribution utilities, and not Transco, will collect the new FiT-All rate from consumers.
When sought for comment, Manila Electric Co. (Meralco) said it has already been advised by Transco that the new FiT-All rate will take effect in June.
“Therefore, we need to implement it,” Meralco utility economics Head Lawrence Fernandez said in a text message.
Consumer advocacy group Laban Konsyumer Inc. (LKI) said it will appeal the decision. “As soon as we receive our copy as intervenor, we shall invoke again the same reason for the 2016 FiT-All. Eventually, we will bring the case to the Court of Appeals for gross abuse of judgment and lack of jurisdiction,” LKI President Victor Dimagiba said.
The LKI earlier asked the ERC to render null and void its decision to increase FiT-All rates for 2016.
Citing records, The LKI said Transco applied for a FiT-All for 2016 of 10.25 centavos per kWh. In February 2016 the ERC provisionally approved a FiT-All rate of 12.40 centavos per kWh. Three months later, the ERC granted an additional amount of 5.9 centavos per kWh, bringing the total FiT-All rate for 2016 to 18.30 centavos per kWh.
Dimagiba argued that Transco did not file for an amendment of its 2016 FIT-All rate application. He asked the ERC then to render its May 2017 decision null and void for lack of jurisdiction.
He also noted that Transco lawyers filed an urgent motion to issue the decision on its 2017 FiT-All rate application on April 11.
“Yet, the decision of the ERC was dated February 27, but docketed and published on May 11.”

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