Moratorium on FIT interest extended

BY LENIE LECTURA – NOVEMBER 17, 2021
from Business Mirror

The Energy Regulatory Commission (ERC) is extending for six months the suspension of the collection of interest on delayed feed-in-tariff (FIT) revenue owed by the government to eligible renewable energy (RE) players.

“We have decided to extend the moratorium on the imposition of interest for the partial or delayed payment of the actual FIT revenue for another six billing periods starting from November 2021 to April 2022,” said ERC Chairperson Agnes VST Devanadera.

Devanadera said eligible RE plants shall not impose any interest or penalty for any partial or delayed payment of the actual FIT revenue to them by the National Transmission Corp. (TransCo) during the said extension period of the moratorium.

“When payments are delayed, eligible RE plants are entitled to interest, which is passed on to consumers. With the moratorium, no interest will be imposed. We are temporarily relaxing the application of our FIT Rules only for the said moratorium period or until April 2022,” she said.

“If the moratorium on the FIT-All will not be extended, the consumers will bear the brunt of paying these penalties and interests should the FIT-All Fund be insufficient to pay the eligible generators.”

The ERC’s decision was anchored on its projection of a shortfall in the FIT-Allowance (FIT-All) fund starting November to cover the payments to the eligible RE plants.

Also, ERC’s decision to extend the moratorium on FIT-All interest is its way of showing support to the government’s directive to start opening the economy, and the need to help the public recover from the severe effects of Covid-19 pandemic.

“Where good cause appears, the ERC may allow an exemption from any provision of these Rules, if such is found to be in the public interest and is not contrary to law or any other related rules and regulations,” the agency said. The FIT-All is a uniform charge billed to all on-grid electricity consumers, reflected as a separate component in monthly electricity bills, to cover payments to RE developers who are assured of a fixed rate per kWh for electricity generated by their projects over 20 years.

Distribution utilities, the National Grid Corp. of the Philippines, and Retail Electricity Suppliers serve as collecting agents, and the proceeds go to the FIT-All Fund, which is being administered by TransCo.

TransCo is also tasked to make an annual determination of the FIT-All rate and file its application with the ERC not later than end of July each year for the FIT-All rate that will be implemented for the following year.

Last August, TransCo asked the ERC for approval of the proposed 2022 FIT-All rate of P0.3320 per kilowatt hour (kWh), higher than the prevailing rate of P0.0983 per kWh.

TransCo’s proposed FIT-All rate for 2021 amounting to 18.81 centavos per kWh has yet to be approved by the ERC. The prevailing FIT-All rate now is the ERC approved 2020 FIT-All rate of P0.0983 per kWh. If the ERC approves TransCo’s 2022 FIT-All rate application, the rate would be P0.2337 per kWh higher than existing rate.

The grant of a provisional authority, TransCo said, will allow it to perform its duties and to make a timely payment of the FITs to FIT-eligible RE developers to which they are entitled, thereby allowing their continued operations.

TransCo has determined a total fund deficit amounting to P5,039,743,434.77. This is assuming there is no change in the prevailing FIT-All rate within the year and assuming the market prices for June to December 2021 are at the level of the cost recovery rate.

“It is estimated that the total FIT differential for 2015, 2016, 2017, 2018, 2019, 2020 and 2021 generation, amounting to P107,828,456.03, P329,586,933.24, P43,195,971.96, P43,992,871.90, P88,496,244.89, P1,293,747,092.97, and P569,166,825.70, respectively, will be due in 2022,’ it said.

The numbers represent unpaid billings to RE developers. This has ballooned overtime because TransCo’s FIT-All rate applications have yet to be approved by the ERC.

The ERC, for its part, said it needs to carefully evaluate TransCo’s applications since any amount would be collected from consumers.

The FIT-All mechanism was established pursuant to the Renewable Energy Act of 2008, which aims to spur the development of emerging renewable power sources such as wind, solar, run-of-river hydro, and biomass facilities.