ERC rejects DOE price scheme for renewable-energy auction
By Lenie Lectura -February 10, 2020
from Business Mirror
The Energy Regulatory Commission (ERC) does not agree with the Department of Energy (DOE) that there should be a preapproved rate for renewable energy (RE), which will be the cap for the planned auction of 2,000 megawatts (MW).
According to ERC Financial and Administrative Service Head Sharon Montañer, the regulator prefers to conduct its own study on how best to arrive at appropriate rates.
“There is a draft,” Montañer said, referring to the Green Energy Pricing Program (GEPP) of the DOE. “It’s preapproved. In its circular, the DOE wants to impose a pre-approved rate. The rate indicated is the cap, it will be the degressed FiT rates.”
The ERC, she added, will come out with its position paper on this. “We will have to do our own study first so we can quote applicable rates. The rate is pre-approved so we do not really agree with it. The circular is just a draft so we will submit a position paper.”
Under the draft circular on GEPP, a price would be set. Under which, interested RE developers could offer their capacity, and allocate the capacity to the distribution utilities that are required to purchase RE as mandated by the RPS (Renewable Portfolio Standards).
This will be done via a competitive bidding.
The proposed RE capacity auction veers away from the feed-in-tariff (FiT) program, a system that provides guaranteed payments in the form of power rates given to RE developers for 20 years.
Energy Secretary Alfonso G. Cusi said the rates “shouldn’t be expensive than what we are paying right now.”
The energy chief was referring to the following FIT rates: P9.68 per kWh and P8.69 per kWh under the FiT-Solar 1 and 2; P8.53 per kWh and P7.4 per kWh under the FiT-Wind 1 and 2; P6.63 per kWh for biomass; and P5.9 per kWh for ROR (run-of-river) hydro.
The ERC earlier issued a degressed FiT rate of P5.8705 per kWh and P6.5969 per kWh for hydro and biomass plants, respectively.
However, Montañer noted that the FiT and degressed rates are still expensive.
“First of all, the degressed FiT rates as a cap, the FiT rate where the degressed rates are anchored is based on the 2012 (figures). Those are higher. Any decrease in the cost of technology will not be taken into account in the degressed FiT rates.
Second point, we only have degressed rates for run-of-river and biomass. We never had degressed rates for solar and wind because we only have round two rates but, not degressed rates,” she said.
