Power producers back GFI as feed-in-tariff administrator

MANILA, Philippines - Big power producers are backing a government-run financial institution to administer the funds to be collected from the feed-in-tariff allowance (FIT-All).

Ernesto Pantangco, president of the Philippine Independent Power Producers Association Inc. (PIPPA), said the industry players are proposing a GFI to administer the FIT proceeds.

Under the rules of the Energy Regulatory Commission (ERC), the FIT funds should be handled by the National Grid Corp. of the Philippines (NGCP).

But Pantangco noted that NGCP, which took over the power network concession from the National Transmission Co. (TransCo), – is now being run by a private entity.

“The ERC rules say the settlement agent is NGCP. However, there’s been some questions raised that these are public funds to be collected from consumers and NGCP is a private corporation,” he said.

Since there is an existing rule appointing NGCP as the FIT fund’s administrator, Pantangco said the PIPPA had sought an opinon from the Office of Government Corporate Counsel (OGCC).

He said aside from the Development Bank of the Philippines (DBP), the other fund administrators that could be tapped are the Philippine Electric Market Corp. (PEMC) and Power Sector Assets and Liabilities Management Corp. (PSALM).

“We’re getting a legal opinion from OGCC that the alternate option is to get PEMC or PSALM to administer the funds. The fund is being held by DBP. But the settlement agent will collect from consumers and disburse to the renewable energy investors – which can be either PSALM or PEMC,” he said.

According to the PIPPA official, they see DBP as a better option to handle the FIT-All proceeds as this may result to savings.

“We even told DBP why not be the settlement agent to reduce the fees. We’re hoping and telling DBP to be the administrator to have a lower administration and processing fees. But we still need that legal opinion from OGCC,” he said.

FIT is a structured rate to be charged by renewable energy developers that would guarantee their returns over a 15-year period. 

The FIT will be paid by electricity consumers connected to the transmission or distribution networks through a uniform per kilowatt-hour charge to be known as FIT-All, the implementation of which is similar to that of the present universal charge.

Starting with the effectiveness of the Renewable Energy Act in January this year, the total additional power capacity from new RE projects envisioned to be installed within the next five years now runs at 1,636 megawatts.

Proceeds from the FIT, through a so-called renewable energy charge (REC), under the ERC rules, will be administered by a fund manager, most likely the NGCP.