BAGUIO CITY – Member-consumer-owners (MCOs) of electric cooperatives and private distribution utilities git a timely Christmas present with projected lower and cheaper power rates following the latest decision of the Energy Regulatory Commission (ERC) to temporarily suspend the collection of feed-in tariff allowance (FIT-ALL) from the monthly power bills.
Under ERC Resolution No. 12, series of 2022, the ERC stated that in the light of the rising level of inflation and cost of living affecting millions of Filipino households, the government is introducing remedies to ease the effects of inflation pressure on its citizens, including those that address the ability to pay for the rising cost of electricity due to external pressures.
The FIT-All fund balance as of November 7,2022, inclusive of the CRR collections in November 2022, showed a healthy fund balance that can sufficiently cover the FIT-All payment requirements for 3 months, assuming the same average CRR collection.
The Commission, upon receipt of pertinent collection and settlement reports on FIT-All disbursements and collections, shall undertake a review by January 2023, of the status of the FIT-All fund to determine the feasibility of extending the period for the suspension of collection of the FIT-All.
Subsequently, the Benguet Electric Cooperative (BENECO) issued an advisory announcing its compliance to the suspension of the temporary collection of the FIT-All incorporated in the monthly power bills of the consumers which will translate to much cheaper power rates, especially in the next 3 months that the aforesaid collection has been suspended.
The suspension on the collection of the FIT-All shall be effective in December 2022, January 2023 and February 2023.
The FIT-All mechanism was established pursuant to the Renewable Energy Act of 2008 which aims to spur the development of emerging renewable power sources such as wind, solar, run-of-river hydro, and biomass facilities. The FIT-All is a uniform charge in PhP/kWh payable by all electricity users that is calculated and set annually. Distribution utilities (DUs), the National Grid Corporation of the Philippines (NGCP), and Retail Electricity Suppliers (RES) serves as collecting agents, and the proceeds go to the FIT-All Fund which is being administered by the Transco.
Further, feed in tariff is a policy is a policy mechanism designed to accelerate investment in renewable energy technologies by offering long-term contracts to renewable energy producers. This means promising renewable energy producers an above market price and providing price certainty and long-term contracts that help finance renewable energy investments.
Typically, FITs award different prices to different sources of renewable energy in order to encourage development of one technology over another. For example, technologies such as wind power and solar PV are awarded a higher price per kWh than tidal power. FITs often include a “degression”: a gradual decrease of the price or tariff in order to follow and encourage technological cost reductions.