The Energy Regulatory Commission (ERC) approved an increase in the feed-in-tariff allowance (FIT-All) rates to make renewable energy (RE) incentives sustainable.
ERC said in a statement over the weekend that the new rates will mean an additional P0.0351 per kilowatt hour (kWh) in consumers’ power rates in on-grid areas.
FIT-All is sourced from electricity consumers who pay a premium for RE projects that receive incentives from the government through feed-in-tariff (FIT) and the Green Energy Auction.
The rate is adjusted yearly after evaluations made by ERC whether an increase or a decrease is justified.
ERC approved the National Transmission Corp.’s (TransCo) application for the FIT-All 2024, setting the rate at P0.1189 per kWh starting March 2025 billing.
During the regulatory body’s regular commission meeting on February 19, the ERC approved a rate lower than the P0.1220 per kWh sought by TransCo but higher than the current P0.0838 per kWh FIT-All.
ERC said such an increase is needed with the depletion of the FIT-All fund due to sustained low prices in the Wholesale Electricity Spot Market (WESM).
The regulatory body said the lower-than-expected WESM prices adversely affected the fund’s capacity to cover FIT payments, necessitating adjustments in the FIT-All computation to ensure its sustainability.
ERC said the FIT differential, representing the difference between FIT rates payable to RE and WESM prices, was revised from TransCo’s forecast of P13.64 billion to P10.13 billion as actual generation data for January to December 2024. ERC said this was utilized rather than forecasted figures to ensure a more accurate assessment.
ERC chair Monalisa Dimalanta assured that despite the FIT-All increase, monitoring of the status of the FIT-All fund will continue, adding that collection for this may be placed on hold especially when spot market prices are high.
“We can assure the public that we continue to monitor the status of the fund and the payments required to our RE FIT suppliers. If the collection is not needed, such as when WESM prices are high, we can suspend implementation similar to what we did in December 2022,” Dimalanta explained.
Meanwhile, Jose Layug Jr., Developers of Renewable Energy for AdvanceMent Inc. president, said the ERC move gives investors confidence as it is compliant with the RE Law.
“This further cements the confidence of the RE developers and the private sector in the Philippine EE (energy efficiency) industry. This ERC move is consistent with the recent Supreme Court decision promulgated last August 13, 2024, upholding the constitutionality of the Renewable Energy Act of 2008 and the FIT system towards encouraging the development of renewable energy resources as tools to effectively prevent or reduce harmful emissions and thereby balance the goals of economic growth and protection of health and environment,” Layug expressed.
Based on TransCo’s application, the generation of electricity this year for power plants under FIT and GEA is expected to reach 5,416.42 gigawatt hours.
