by Alena Mae S. Flores
Energy Secretary Jose Rene Almendras has endorsed a proposal to set the prices of electricity produced from renewable energy projects based on competitive bidding, instead of the so-called feed-in tariff rates that will be partially subsidized by consumers.
Almendras said he had sent the proposal of the Joint Congressional Power Commission to the Energy Regulatory Commission. He said the congressional body wanted to bid out the rates for renewable energy projects, instead of the cost-based mechanism under the feed-in tariff.
“I sent the letter to ERC, forwarded the letter to ERC and said this is the suggestion of the JCPC. They want to bid out the pricing [for renewable energy],” Almendras said.
Almendras said there were ongoing discussions in the Senate and the House of Representatives that instead of adopting the feed-in tariff, the renewable energy developers would be asked to offer the most competitive price for each project.
He said to resolve the issue, he was leaving to JCPC, which has oversight control over the energy sector, the choice of how to price renewable energy. “The way to determine the FIT is to bid it out,” he said.
The National Renewable Energy Board has an existing petition before the ERC on feed-in-tariff, which is expected to be affected by the proposal of JCPC.
“That’s the reason why we forwarded it to ERC because ERC has the guidelines. DoE does not set the guidelines for the FIT. They’ll have to study,” Almendras said.
Senator Serge Osmeña, co-chairman of JCPC, said in a letter to Almendras that the Renewable Energy Act does not prescribe the particular ratemaking mechanism to be used in determining the feed-in tariff rates.
“We likewise believe the ERC can lawfully set the FIT rates through a competitive bidding process, instead of the cost- based mechanism prescribed in Rule 5 of the FIT rules,” Osmeña said.
He noted the ERC, in the past, had required the conduct of a public bidding as an additional requirement to support the applications of distribution utilities for inclusion of new power supply contract costs in their retail rates through an issuance on Dec. 22, 2004.
The 2004 issuance amended the guidelines for the recovery of costs for the generation components of the distribution utilities’ rates. Its implementation, however, was suspended due to lack of public hearing.
ERC executive director Francis Saturnino Juan had said they were hoping to issue the decision on the feed-in tariff by the second quarter while NREB chairman Pete Maniego urged the regulator to issue a decision soon as it has been delaying renewable energy projects.
“We have to approve the FIT now in order to start the projects. Renewable energy projects are in limbo as they wait for the FIT, they cannot go into financial closing,” Maniego said.
(Published in the Manila Standard Today newspaper on /2012/March/12.)
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