Higher electricity rates set in January

MANILA, Philippines - Electricity rates are expected to be higher by four centavos per kilowatt-hour by January next year with the implementation of the so-called feed-in-tariff allowance (FIT-ALL), a kind of incentive provisionally approved by the Energy Regulatory Commission (ERC) for renewable energy players.

In an Oct. 7 order that was made public yesterday, the ERC issued a provisional authority to the state-owned National Transmission Co. (Transco) to implement the FIT-ALL as mandated under the Renewable Energy Act of 2008.

The FIT-ALL is designed to encourage energy players to invest in the more expensive but less lucrative renewable energy sector. Renewable energy players are solar, wind, biomass and small hydropower companies.

FIT-ALL is four centavos per kwh. It is similar to a universal charge, which is a separate line in electricity bills and is used to pay off the debts of the National Power Corp. (Napocor), the state-owned power company.

The FIT-ALL system ensures that renewable energy developers are paid in full for their actual electricity generation based on an approved fixed tariff.

In its petition, Transco said the grant of a provisional authority would allow it to pay FIT to renewable energy developers on time, allowing the latter unhampered operations.

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

Under the FIT system, renewable energy companies are entitled to the following FIT rates: P9.68 per kwh for solar power, P8.53 per kwh for wind and P5.90 per kwh for run-of-river hydroelectric power.

In its decision, the ERC led by its chairman Zenaida Cruz-Ducut said Transco has presented enough documents to support its petition to implement the FIT-ALL.

“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.

In this month’s billing statement, the electricity rate in Luzon is P10.50 per kwh.

The government is trying to attract investors in the renewable energy sector amid calls among environmental groups for the development of cleaner sources of energy.

The FIT-ALL scheme comes at a time when the Philippines is facing a power crisis in 2015.

Invoking Section 71 of the Electric Power Industry Reform Act of 2001, Energy Secretary Carlos Jericho Petilla cited the necessity for additional capacity of up to 500 megawatts next year to address the looming shortage.