* This is my article in BusinessWorld yesterday.
The government should step back from price intervention
and price control, grid prioritization of intermittent and unstable energy
sources via legislation. Consumer interest of cheaper and stable electricity
should be higher than corporate interest of guaranteed pricing for 20 years,
lots of fiscal incentives and other privileges that are marks of cronyism. RA
9513 is anti-consumers, anti-industrialization and hence, it should be abolished
soon.
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Last May 15, Transmission Corp. of the Philippines
(Transco) presented at the Energy Regulatory Commission (ERC) its petition of
Feed-in-Tariff Allowance (FiT-All) for 2017 of 26 centavos/kWh. Very fast
adjustments from 4.06 centavos/kWh in 2015, rose to 12.40 centavos in 2016, and
soon 26 centavos starting mid-2017, all “to save the planet.”
The ERC still has to conduct public hearings in Visayas
and Mindanao until early June and likely to make an order by late June, to be
reflected in our monthly electricity bills starting July 2017.
The feed-in-tariff (FiT) provision in the Renewable
Energy (RE) Act of 2008 (RA 9513) is very anomalous on the following grounds:
(1) guaranteed price locked in for 20 years despite technology improving very
fast these days, (2) the FiT rates are rising (see table below) yearly due to
inflation and forex adjustments, (3) FiT rates of P8+ to P10+ per kWh for
wind-solar are way high compared to current Wholesale Electricity Spot Market
(WESM) average prices of P2-P3/kWh, (4) current capacity installations for wind
and solar are higher than what was allotted, and (5) even consumers in Mindanao
who are not part of WESM, not connected to the Luzon-Visayas grids, are paying
for this.
The total forecast cost revenue of FiT-eligible plants
would be (in P Billion): 10.22 in 2012-2015, 18.54 in 2016, 24.44 in 2017, and
26.14 2018. The bulk of this will go to wind and solar plants.
(a) Wind: 6.32 in 2012-2015, 8.00 in 2016, 9.20 in 2017,
9.20 in 2018.
(b) Solar: 1.50 in 2012-2015, 5.88 in 2016, 7.03 in 2017,
7.00 in 2018
(c) Biomass: 1.86 (2012-2015), 3.95 (2016), 6.69 (2017),
6.79 (2018)
Hydro is small, only 1.52 in 2017 and 3.15 in 2018.
(Source: ERC, Case No. 2016-192 RC, Docketed April 27,
2017, Table 4)
Below are the beneficiaries of expensive electricity via FiT scheme by virtue of their hugeness and higher FiT rates.
Many renewable firms were not able to snatch the limited
FiT eligibility but they can still make money from expensive electricity via
the renewable portfolio standards (RPS) provision of the RE law. The RPS
coerces and forces distribution utilities (DUs) like electric cooperatives and
Meralco to purchase a minimum percentage of their electricity supply from these
expensive renewables, the price differential with cheaper conventional sources
they will pass to the consumers. If DUs will not do this, they will be penalized
and the cost of penalty they will still pass on to the consumers.
See also:
BWorld 117, Energy bureaucracy, electric cooperatives and NEA, March 28, 2017
BWorld 120, Five myths of solar-wind energy, April 08, 2017
BWorld 129, Open pit mines and the DENR Secretary, May 12, 2017
BWorld 130, Mobility of goods, capital, and people in Asia, May 13, 2017
BWorld 130, Mobility of goods, capital, and people in Asia, May 13, 2017
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