Caution urged on green-energy tariff

By Lenie Lectura – August 2, 2019
from Business Mirror

A CONSUMER group said it remains cautious on the planned green energy tariff program of the Department of Energy (DOE), which it said should not burden consumers by way of granting subsidy to renewable-energy (RE) developers.

“The DOE is mulling over a green rate for renewable-energy players. The DOE is planning to set a ceiling price for new renewable-energy players to attract investors and promote competition in the subsector, but LKI is cautious about this,” said LKI President Victor Dimagiba.

Instead, the group urged the agency to focus on the possible rate impact should the proposal is implemented.

“DOE should show that there is no subsidy with RE under their proposal. Hopefully, this is not an innovation of the feed-in-tariff and FiT allowance power rate scheme, which the consumer group had consistently opposed,” Dimagiba said.

He also urged the DOE to first conduct public consultations so consumers can participate in crafting the proposed policy.

“There is already CSP [competitive selection process], and that is why CSP is put in place. CSP is there to ensure lower rates so now we are questioning the objective of the green rate,” he added.

Energy Secretary Alfonso Cusi said last month that his office plans to auction about 2,000 megawatts (MW) of renewable-energy capacity under the proposed program. The tariff will be auctioned off among the renewable-energy developers, depending on the type of power that their respective projects are capable of delivering.  He added that a price ceiling will be implemented to achieve the lowest rate possible.

“We will put a [price] ceiling, then they compete, offer the lowest. [It is] not per technology, but per type of power, whether peaking or mid-merit,” Cusi said.

“We want to build 2,000 MW of RE in 10 years. DOE has already asked NREB [National Renewable Energy Board] to review the concept of giving an allocation to RE.  DOE will make a green energy tariff rate that will be auctioned among them. We will put a ceiling and then [they will] compete [in terms of who offers the lowest] rates. It’s not per technology, but rather per type of power, if peaking or mid-merit,”explained Cusi.

NREB is the advisory body tasked by the law to recommend policies, rules and standards to govern the implementation of the law, which granted fiscal and nonfiscal incentives to RE projects.

Earlier, Sen. Sherwin Gatchalian on Thursday urged the DOE and NREB to conduct more studies on the planned green energy tariff program.

“The DOE and NREB must conduct a careful study on the program, especially when it comes to the implementation of the green energy tariff rate, taking into consideration the declining costs of RE technologies.

“Will this new tariff require subsidy and if so, how much will the rate effect on consumers be? These are some of the things that the DOE needs to thoroughly study before they push through with the plan,” commented the senator who leads the Senate energy committee.

Further studies, he added, would ensure success and prevent any unnecessary pass on charges to consumers.

The proposed RE capacity auction veers away from the FiT program, a system that provides guaranteed payments in the form of power rates given to RE developers for 20 years.

FiT is basically an incentive in the form of fixed rate per kilowatt-hour (kWh) for emerging power sources such as solar, wind, biomass and hydro. It was meant to encourage RE developers to invest at the initial stage and hasten deployment of RE.

However, the consumers are the ones who shoulder the FiT rate via a uniform charge per kWh. At present, 22 centavos per kWh is being collected from consumers.