ERC flags ‘possible legal impediments’ in DOE’s draft circular on net metering

By Lenie Lectura -December 11, 2019
from Business Mirror

THE Energy Regulatory Commission (ERC) on Tuesday said it called the attention of the Department of Energy (DOE) in connection with its draft circular on-net metering scheme.

“Upon perusal of the draft department circular, we were of the opinion that there are possible legal impediments in the implementation of the DOE circular.  The cross-cutting concerns of energy security, affordability, and reliability also needs to be considered and addressed,” said ERC Chairman and CEO Agnes VST Devanadera.

The DOE’s draft circular entitled, “Policies to Enhance the Net-Metering Program for Renewable Energy Systems and Other Mechanisms to Ensure Energy Security” should be imposed on all types of renewable-energy sources, the commission noted.

The ERC pointed this out in a letter it sent to the DOE. It averred that the Net-Metering Rules should be made applicable to all types of RE and not just focused on a certain type of technology or resource.

“The Commission fully supports the development of the RE Program, and we commend the DOE for coming up with its draft department circular that seeks to encourage and promote electricity end-users participation into the Net-Metering Program.  The department circular, however, should not veer away from the confines of the law that it seeks to implement,” Devanadera stated.

The ERC raised the following possible legal drawbacks of the DOE’s draft circular: The proposed multiple compensation mechanism is not consistent with the provisions of the RE Act and the Electric Power Industry Reform Act (Epira); Sections 6 (Own-Use RE Systems with Above 100 kW capacity) and 7 (Own-Use RE Systems as Emergency Supply Option) are not supported by the express provisions of the RE Act; and  the responsibilities imposed upon ERC under Section 11 have already been addressed with the promulgation of the Amended Net-Metering Rules.

The DOE draft rules also cited the use of retail rate as one of the compensation mechanisms, as opposed to the use of blended generation cost that the ERC adopted. This, the ERC pointed out, will consequently increase the generation cost of the distribution utility through the net-metering program.

This was based on the simulation it conducted on the impact of using the retail rate as the price of export at different levels of net-metering penetration.  “The resulting retail rate of P13.8528/kWh at the 30-percent maximum net-metering penetration level is even higher than the last Feed-In-Tariff [FiT] rate set at P8.69/kWh, and this runs contrary to the Epira’s policy to provide the least cost power options to captive consumers,” the ERC noted.

The commission earlier amended its Net-Metering Rules. It asserted that it has the mandate to issue rules and regulations pertaining to Net-Metering and it has fulfilled such mandate in its promulgation of the Net-Metering Rules in 2013 and the Amended Net-Metering Rules last October 2019.

The recent amendments to the Net-Metering Rules of the ERC sought to: improve the interconnection setup to take advantage of new technologies and to implement the Renewable Portfolio Standards (RPS); simplify permitting procedures; reduce installation soft costs; minimize the rate impact on non-net-metering customers; address the subsidy impact on the non-net-metering customers; rationalize entitlement to the lifeline subsidy rate; and implement a stringent reporting process.

The DOE has yet to comment on the ERC letter.