Consumers face P100-B add’l cost annually

By Myrna M. Velasco – December 27, 2017, 10:01 PM
from Manila Bulletin

The proposed renewable portfolio standards (RPS) rules for the renewable energy (RE) sector that is not supported by technical and economic studies will pummel consumers with additional cost burden of more than P100 billion annually if incautiously signed by Energy Secretary Alfonso G. Cusi.

Under the RPS, distribution utilities like the Manila Electric Company (Meralco) as well as the electric cooperatives  (ECs), are mandated to secure certain percentage of their supply portfolio from RE facilities.

The massive cost impact on consumers was raised to the Department of Energy (DOE) by Meralco, noting that the calculation was even at lower RE penetration of 30-percent vis-à-vis the 35-percent level being pushed under the RPS.

“Maintaining a 30-percent RE share will cost consumers nationwide in the order of P100 billion more annually by 2030. At the 35-percent target share contained in the draft RPS Rules, the additional costs to the consumers will be even more substantial and should give policy-setting cause to step back and more carefully consider the economic implications of the proposed targets,” the utility firm noted as it emphasized the study done on Power Security and Competitiveness by the Economic Power and Development Program.

Worse, it was emphasized that the 35-percent RE installation target had been cast without the required degree of prudence, as it was not backed by proper studies.

“Setting an arbitrary target of 35-percent share in the generation mix by 2030 without support of any economic and technical studies, especially when attainment of such target becomes the sole consideration in the adjustment of the minimum annual requirement, poses a serious concern to mandated entities,” Meralco stressed.

It is the National Renewable Energy Board (NREB) that crafted the RPS Rules, but on its outcome, even the players of the RE sector are not happy on how it came to be.

Meralco further pointed out that “it is necessary for policy such as this to be based on rigorous studies as it will have far-reaching technical and economic repercussions over the next decade and more.”

It is worth noting that in the feed-in-tariff (FIT) regime of RE alone, Filipino consumers are already taking the pain of shouldering P26 billion to P28 billion worth of subsidies annually in their electric bills.

And with the RPS, it is being raised that cost burden of consumers on RE does not signify getting abated anytime soon.

Thus, it has been explained to the DOE that “while the RPS target is set at the national level, there is a need for the mandated participants to fully understand the details of the RPS mandate and how it will impact their respective customers.”

There are other industry realities ‘on-the-ground’ that the energy department has also been asked to take into account, such as the case of the fully contracted DUs as well as the entity that will take on the “supplier of last resort”  (SOLR) function.