ERC cautioned on new rate hike decisions

By Myrna M. Velasco – June 26, 2017, 10:00 PM

from Manila Bulletin

The Energy Regulatory Commission (ERC) is being cautioned on succeeding decisions it might render that would drive up electricity rates for consumers, especially those on feed-in-tariff (FIT) subsidy for the renewable energy (RE) sector as well as other pending applications of the regulated power entities.

This was sounded off by CitizenWatch Secretary General Paco Pangalangan while raising alarm that “we fear the additional price increases, especially that of the FIT, since this is a shown pattern of continuous increase over the years.”

At least for customers in the franchise area of Manila Electric Company (Meralco), there will be a three-month rate reprieve because of the P6.9-billion refund ordered recently by the industry regulator.

But the group noted this would all be canceled out once the ERC starts issuing decisions on pending petitions that would have ‘rate hike effect’ on the consumers’ electric bills.

“If the FIT and other fees continue to go up, it will negate the benefits immediately owed to consumers through the refund and price decrease and only further prejudice consumers in the long run,” Pangalangan said.

For forecasting wrongly on how prices will shape in the country’s electricity spot market, the subsidy being paid for by consumers now to RE installations had grown way too higher than reference ‘avoided cost’ of conventional technologies.

That as a given, FIT fund administrator National Transmission Corporation (TransCo) keeps on seeking hike in the feed-in-tariff allowance (FIT-All), with the last installment approved at P0.059 per kilowatt hour.

There is still a pending FIT application to reflect upward adjustment for calendar year 2017, which the ERC is expected to act on anytime.

Based on TransCo’s filing last year, it batted for an increase to the FIT-All at the level of P0.229 per kWh, so the additional charges may still round up to P0.05 per kWh.

FIT-All is a separate line item in the electric bills; and while it appears that the amount is negligible, the yearly collection from consumers actually runs into the P16 billion to P18 billion range.

The other pending applications that may increase power rates include the universal charge (UC) recoveries of Power Sector Assets and Liabilities Management Corporation (PSALM); National Power Corporation; and the cost recoveries for ‘force majeure events’ of the National Grid Corporation of the Philippines.