Government owes P6.6 B to renewable energy developers Gatchalian

MANILA, Philippines -  The Philippine government owes P6.6 billion in payments to renewable energy developers under the feed-in tariff (FIT) system.

The amount, which includes P230 million in interest payments, is a result of the regulatory inaction of the Energy Regulatory Commission (ERC) on the application of the National Transmission Corp. (TransCo) to collect higher FIT-allowance (FIT-All) rates in 2016, Sen. Sherwin Gatchalian said.

“I hate to say it, but because of the delays of ERC, we will be paying P230 million in interest payments. That’s why I am quite adamant in getting a definitive timetable (when the applications will likely be approved) from you (ERC) because I know that the amount will grow bigger. Every day it piles up,” Gatchalian said during a hearing of the Joint Congressional Power Commission (JCPC).

“In line with attracting investors and promoting RE…we will never get serious investors if we don’t fulfill our contractual obligations, and FIT-All is one of them,” the lawmaker added.

A uniform charge billed to all on-grid electricity consumers, the FIT-All will cover payments for renewable energy projects eligible to receive FIT incentives. It is part of the implementation of the Renewable Energy Law promulgated in 2008, which will serve as an incentive to RE developers to further pursue developments in the sector.

It was in December 2015 when TransCo filed an application with ERC to increase the FIT-All rate for 2016 to 12 centavos per kilowatt hour (kwh) to augment its subsidy to eligible RE developers and allowing it to pay its obligations.

Previously, TransCo implemented a FIT-All rate of 4.06 centavos per kWh.

Even before the ERC can give a final decision on the 2016 rate, the state-run firm has applied for another increase in the FIT-All rate for 2017, this time asking to further hike the rate to 22 centavos per kWh.

ERC officials told members of the JCPC that it is set to issue its final approval of the 2016 application on June 9.

Meanwhile, they are also set to convene the first jurisdictional and expository meeting for the 2017 rate application on May 15 and its approval by September 2017.

“These unwarranted delays in the ERC approval is the reason why TransCo has not been able to pay the RE developers. And because of these delays, we have to pay consequential costs,” Gatchalian said.