ERC tasked to set ‘green energy tariff’ for RE developments

Published January 23, 2020, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2020/01/23/erc-tasked-to-set-green-energy-tariff-for-re-developments/

After tug-of-war among government agencies, it has been resolved that the Energy Regulatory Commission (ERC) shall finally be the one to determine and establish the “green energy tariff” for the next round of renewable energy (RE) installations in the country.

That has been the latest prescription in the recent draft of a Circular of the Department of Energy (DOE) circulated to industry stakeholders for their comments and inputs.

The DOE-cast policy stipulated that “in arriving at the green energy tariff for peak and off-peak power supply (for Luzon-Visayas and for Mindanao for the relevant quarters), this shall be determined annually by the ERC.”

Initially, the plan had been for the DOE and the National Renewable Energy Board (NREB) to calculate what was first proposed as “green energy pricing” – and such shall be done in collaboration with the ERC.

In the new draft circular of the DoE, it was made clearer that this will already be ERC’s job, and for it to factor in “the degressed FIT (feed-in-tariff) rates as the price cap.”

The energy department further noted that “the green energy tariff shall be used as initial market values (IMVs) in the conduct of the green energy auction.”

The auction part is designed to be undertaken by a committee sanctioned by the DOE – and will cover the RE capacities that shall be included in the Renewable Portfolio Standards (RPS) policy of the government.

The RPS is an edict requiring distribution utilities (DUs) to secure certain percentage of their supply from RE resources – and this is set at a percentage accelerating until year 2030.

On the green energy tariff, it was specified that this shall be calculated on peso-per-kilowatt hour (P/kwh) basis “to reflect the value of actual energy generated by qualified suppliers and to be consistent with the compliance requirements on the RPS on-grid rules.”

As further mandated, the enforcement of pre-approved “green energy tariff” shall be reckoned annually on the prescribed methodology for such pricing mechanism.

“The IMVs shall be published by the ERC on its website, as updated annually not later than the last day of February of the succeeding years,” the DOE Circular has specified.