Bidding to determine power tariffs?

Business World Online
Posted on March 11, 2012 11:37:37 PM


A PROPOSAL to set feed-in tariffs (FIT) via public bidding has been raised by a congressional panel, a development that could further delay the establishment of ground rules for the renewable energy (RE) sector.


The Joint Congressional Power Committee (JCPC), in a Feb. 22 letter to the Energy department, said nothing in the Renewable Energy Act of 2008 prohibited a competitive bidding to set FIT rates -- adding to the ongoing debate of how much of a guarantee to give RE investors.


Energy Secretary Jose Rene D. Almendras on Friday said the proposal had been forwarded to the Energy Regulatory Commission (ERC).


"There is an ongoing opinion in both houses [of Congress] to determine the feed-in tariff is to bid it out. I sent the letter to the ERC because it is the ERC that sets the feed-in tariff anyway," Mr. Almendras said.


The ERC currently supports a cost-based scheme where the National Renewable Energy Board (NREB) has recommended FITs based on installation targets set by the Energy department.


Hearings to determine tariff levels are still ongoing.


The JCPC said "the ERC can lawfully set the feed-in tariff rates through a competitive bidding process, instead of the cost based mechanism."


"The just and reasonable and non-discriminatory ratemaking standards may also be achieved through a market-based approach, i.e., by way of a competitive public bidding," it added.


Feed-in tariffs represent a guaranteed payment for RE investors via universal charge. Proposed rates are P7 per kilowatt- hour (kWh) for biomass, P6.15/kWh for run-of-river electricity, P10.37/kWh for wind power, P17.65/kWh for ocean technology and P17.95/kWh for solar. These are estimated to add around P0.12/kWh to consumers’ electricity bills.


The installation targets are 250 megawatts (MW) each for hydroelectricity and biomass, 200 MW for wind power, 50 MW for solar energy and 10 MW for ocean technology.


Some investors have said the targets and tariffs proposed by the NREB are too small. -- ENJD