New tariff for renewable energy to increase power rates by January

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The Energy Regulatory Commission (ERC) has given the green light for the feed-in-tariff allowance (FIT-ALL) for renewable energy projects, according to ERC Executive Director, Saturnino Juan.

“The long wait is over. We will have the FIT system effective January 2015 billing,” Juan said.

Revenue from the FIT-ALL will be distributed among renewable energy companies – specifically, solar, wind, biomass and small-scale hydropower ventures – as an incentive to further invest in this environment-friendly, but more costly and less lucrative energy sector.

The FIT-ALL will see to it that developers of renewable energy sources will be fully remunerated for their actual electricity generation, with the approved fixed tariff as basis of compensation; specifically, P9.68 per kwh for solar power, P8.53 per kwh for wind and P5.90 per kwh for run-of-river hydroelectric power.

The downside, however, to applying the FIT-ALL is that cost will be passed-on to all consumers of electricity.

Juan explained that on account of the FIT-ALL, electricity rates would increase by 4 centavos per kilowatt-hour, to be shouldered by all on-grid electricity consumers.

This add-on would be much like the “universal charge” on electric bills, which is used to by the National Power Corp. (Napocor) to pay off their debts.

Implementation of the new charge will be handled by the National Transmission Co. (Transco); in accordance with the Renewable Energy Act of 2008, Juan said.

Transco said the grant of a provisional authority would allow it to perform its duties to pay the renewable energy developers the FIT rate which they are entitled to, thereby allowing their continued operations.

After collection, Transco, as mandated by the ERC, would administer the fund.

The ERC approved the implementation of the FIT-ALL in October; saying that Transco’s petition and supporting documents were sufficient for the board to grant provisional authority to carry out the FIT-ALL system.

“For this purpose, all distribution utilities, retail electricity suppliers, the National Grid Corp. of the Philippines are hereby directed to adopt the necessary modifications in their respective billing and collection systems to effect the implementation of the said FIT-ALL as a separate line item in their bills to end-users starting in the January 2015 billing and remit the same in accordance with the FIT-ALL guidelines,” the ERC said.