By Sheldeen Joy Talavera, Reporter
CONSUMERS will encounter elevated electricity expenses commencing in March as the Energy Regulatory Commission (ERC) sanctioned a revised tariff for the feed-in tariff allowance (FIT-All).
In a declaration late on Saturday, the ERC announced the ratification of the rate at P0.1189 per kilowatt-hour (kWh), surpassing the present rate of P0.0838 per kWh charged to on-grid consumers.
Nevertheless, this new price is below the P0.1220 per kWh requested by the National Transmission Corp. (TransCo).
The ERC indicated that the collection of the modified FIT-All will commence with the billing period for March.
The FIT-All is a standardized fee imposed on all on-grid electricity users to facilitate the development and advancement of renewable energy.
Payments are directed to the FIT-All fund set up and overseen by TransCo. The fund is allocated to compensate qualifying RE developers who have secured fixed rates for the electricity produced by their initiatives.
In its administrative role, TransCo is responsible for submitting the application before the ERC to ascertain the yearly FIT-All rate.
In endorsing the increase, the ERC acknowledged the depletion of the FIT-All Fund due to persistently low prices in the Wholesale Electricity Spot Market (WESM), the trading platform for electricity.
“The unexpectedly low WESM prices negatively impacted the fund’s ability to meet the FIT payments, necessitating modifications in the FIT-All calculation to guarantee payments for the supply to consumers sourced from renewable energy (RE) FIT-eligible power plants,” the ERC stated.
The FIT differential was reduced to P10.13 billion from TransCo’s estimate of P13.64 billion. This signifies the gap between the FIT rates payable to RE and the WESM prices.
The ERC noted that it utilized actual generation data for the period of January to December 2024 “to ensure a more precise evaluation.”
It also pointed out that the calculations for the administration allowance and disbursement allowance were based on actual expenditures incurred in 2024, instead of TransCo’s projected statistics.
“The ERC is dedicated to guaranteeing that FIT-All rates are equitable, transparent, and indicative of real market circumstances,” the commission remarked.
When asked for additional information, ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta informed BusinessWorld that the increase in the FIT-All rate in the first quarter will ensure that the fund is sufficiently endowed to compensate the qualified RE FIT providers.
“For Q4 (fourth quarter), the rate remains in effect until a new rate is promulgated by the Commission or until suspended, similar to our action in December 2022,” Ms. Dimalanta stated in a Viber message.
In response to inquiries, Jose M. Layug, Jr., president of the Developers of Renewable Energy for Advancement, Inc., communicated to BusinessWorld that the revised FIT-All rate enhances the assurance of RE developers and the private sector in the Philippines.
“This decision by the ERC aligns with the recent Supreme Court ruling issued on August 13, 2024, affirming the constitutionality of the Renewable Energy Act of 2008 and the FIT System aimed at fostering the development of renewable energy resources as mechanisms to effectively mitigate or reduce detrimental emissions and consequently balance the objectives of economic growth and safeguarding health and the environment,” he mentioned in a Viber message.
In January 2024, the ERC lifted the 13-month suspension of FIT-All collection due to the foreseen deficit in the FIT-All fund.
The ERC initially halted FIT-All collection for three months, covering the billing period from December 2022 to February 2023, to lessen the financial strain on consumers amid increasing electricity costs in 2022.
The suspension of the FIT-All collection was extended two times in 2023.