ERC approves hike in FIT-All charge
By Myrna M. Velasco – May 20, 2018, 10:01 PM
from Manila Bulletin
The feed-in-tariff allowance (FIT-All) item in the electric bills that is being used to subsidize renewable energy (RE) projects will increase by P0.0733 per kilowatt hour-(kWh), according to a decision by the Energy Regulatory Commission.
That will then hike the overall RE subsidy rate in the electric bills to P0.2563 per kWh from what is currently billed at P0.1830 per kWh.
Nevertheless, the ERC ruling emphasized that such will just cover calculated FIT-All pass-on rate for calendar year 2017, excluding yet any adjustments that may have already been incurred in the initial 4-5 months this year.
“The Commission authorizes National Transmission Corporation (TransCo) to collect the FIT-All equivalent to P0.2563 per kWh, which is equivalent to P0.0733 per kWh increase from the current P0.1830 per kWh FIT-All rate,” the ERC ruling has stipulated.
The regulatory body explained that the adjusted FIT-All factored in the actual total billing of the RE developers in 2017 at P13.880 billion; plus the under-recovery of P4.428 billion in 2016, as reflected in the books of TransCo.
State-managed TransCo is the duly designated FIT Fund administrator, hence, it takes charge of settling the FIT claims of qualified RE projects. TransCo has estimated P26.150-billion total FIT payout to all RE developers this 2018.
The uptrend in the RE subsidy rate also integrated costs relating to disbursement allowance paid to the Land Bank of the Philippines (LBP) and the Bangko Sentral ng Pilipinas (BSP), primarily accounting for their supervision fee amounting to P1.095 million.
In its verdict, the ERC indicated that the FIT-All Fund is still “insufficient to cover all obligations.” As a matter of fact, the level of FIT-All collection in the 2017 adjustment warranted by ERC will just hover at P20.220 billion.
That is in contrast to the P40.120 billion aggregate claims that were lodged by the RE developers to FIT administrator TransCo, which was reckoned as of February this year.
Of the total amount, the regulatory body expounded that “only 82-percent has been paid, and 18-percent or P7.378 billion remains unpaid.”
The ERC further stated that due to the accrued unpaid obligations to the RE developers, interest charges also swelled by as much as P527 million to-date. “This is 195-percent higher than the January 2016 level when the Commission approved the P0.1830 per kWh 2016 FIT-All rate,” the Commission said.
It reiterated that the FIT-All Fund already incurred interest, albeit emphasizing that this is not yet part of the calculation in this round of adjustment, because “the FIT-All Formula in the FIT-All payment and collection guidelines does not provide for any projection in interest.”
The Commission added “the condition has exacerbated to the detriment of the consumers since interest is also charged in the FIT-All Fund.” With that as a premise, the ERC opined that the grant of the adjustment is justified.”
The Commission propounded that in estimating the FIT-All adjustment for 2017 collections, it used the “actual cost recovery rate” from January to October 2017, then the forecasted November-December 2017 cost recovery rate – that were all referenced on actual November-December 2016 data.
In turn, the forecast on cost recovery rate prescribed by applicant-TransCo had been based on the 36-month load weighted average price (LWAP) at the Wholesale Electricity Spot Market (WESM) for the period August 2013 to August 2016 at average P4.9331 per kWh for Luzon grid; and P3.5409 per kWh – and applicable to all technologies. For Mindanao calculation, it looked at the weighted average generation cost of sample distribution utilities.
