Feed-in-Tariff shocker

Published December 26, 2020, 7:00 AM by Atty. Vic Dimagiba
https://mb.com.ph/2020/12/26/feed-in-tariff-shocker/

Out of the many consumer advocacies that Laban Konsyumer Inc. has undertaken, there is one that dominated its efforts in 2020. The onset of the pandemic in the first quarter, created many problems for the average Filipino – the most consuming of which would be the dificulty to make ends meet. The major reason for the increased difficulty is the escalating cost of goods and services, and the common component that always appears in an analysis of the reasons for such increase is the high cost of power. Thus the State has been on the backs of the electricity distributors for them to lower, defer, extend, and waive collection of electricity bills as a way of easing the burden of the consumers.

However, in the midst of COVID 19, the energy regulator shocked electricity consumers by approving hefty increases in Feed in Tariff (FIT) effective and retroactive to 2016 up to 2020.

What is FIT?

FIT or Feed-in-tariff is a guaranteed rate paid to selected power producers for twenty (20) years. This payment is subsidized by an ALLowance collected from consumers nationwide: thus “FIT ALL.” The electricity distributor has been required to collect FIT ALL as part of the components of the electricity bill. The collected amount is then distributed to the renewable energy producers following certain formulas. The setting of the FIT and the FIT ALL are under the supervision of the energy regulator.

For my readers’ reference, and to highlight the additional FIT that will be shouldered by the hapless consumers, it can be seen the already high FIT for solar energy 2014 entrant at P9.68/kwh is adjusted up to P11.2758/kwh for year 2020; for solar energy 2015 entrant, the FIT for 2015 was increased from P8.6900 up to P 10.1226/kwh. For solar energy 2016 entrant, the FIT was increased from P 8.6900 up to P 9.8248/kwh.

The same is true for wind energy 2014-2015 entrant, which from the original FITat P8.53/kwh, it now stands at P9.8976/kwh for year 2020. For wind 2016 entrant, the FIT was adjusted from P 7.400/kwh up to P8.5804/kwh in 2020.

In my appreciation of the sequence of events, the newly-approved FIT was tailor-fitted to increase the benefits of the industry at the expense of the consumers.

The regulator’s resolution was dated May 26, 2020, published on July 3, 2020 and took effect on July 18, 2020.

Coincidentally, of the five (5) members of the regulator, one (1) did not take part, and two (2) members retired on July 10, 2020.

The following then happened in rapid succession: the petition to increase the FIT ALLowance by P0.22 per kwh was filed on July 20, 2020, a pre–filing conference was held on July 21, 2020 and the case was docketed on August 4, 2020.

This is why Laban Konsyumer Inc. (LKI) has been very critical about the FIT and the FIT ALL. We recently wrote a letter to the energy regulator and laid the first step to reverse the FIT hefty increases, arguing absence of notice and hearing and lack of quorum.

It is clear that the framework of the Feed in Tariff is a form of risk transfer from producers to consumers. Producers are, in effect, guaranteed FIT subsidies through the establishment of a pool of FIT-ALL funds even before they produce a single watt of electricity. To us in consumer advocacy, the welfare of the consumer is clearly the last thing on the regulator’s mind, as consumers are being forced to pay high prices for renewable energy from which they are not even reaping the benefits.

What makes matters worse, is that we have seen these surreptitious adjustments in worst possible timing, which is in the middle of a pandemic that is being faced by the nation. While other electric service providers like the Distribution Utilities and Electric Cooperatives were providing reliefs to electricity consumers during the pandemic, FIT-eligible developers continue to be paid in full and on time from the FIT ALL paid by consumers nationwide.

One thing is surely certain: FIT-ALL is not for ALL consumers.