TransCo explores options to stabilize FIT-All fund

MANILA, Philippines — State-run National Transmission Corp. (TransCo) is exploring options to stabilize the feed-in tariff allowance (FIT-All) fund amid delays in regulatory approvals caused by the COVID-19 pandemic.

In a virtual forum held earlier this week, TransCo president and CEO Melvin Matibag said there is a need to stabilize the FIT-All fund to minimize the impact of delays on the collection of FIT-All.

“We have challenges that point to regulatory delays that prioritize consumer welfare over the welfare of suppliers,” Matibag said.

He was referring to the delay in approval of the FIT-All rate application that may potentially lead to the depletion of the FIT-All fund.

The Energy Regulatory Commission (ERC) has required TransCo to file the FIT-All annually to fund the FIT.

The delays in payments impact both the developers and consumers as delays in developers’ expected revenues resulted in non-compliance of their covenants with lenders, while consumers would have to add more contributions to pay for the interest charges of delayed payments to RE FIT developers.

The volatile prices in the Wholesale Electricity Spot Market (WESM) add more uncertainties.

Among the options being looked at by TransCo include the possibility of tapping the Renewable Energy Trust Fund (RETF) of RE Law. The RETF is collected and managed by the Department of Energy (DOE) to enhance greater use of RE resources.

Matibag said the state-run firm would request DOE to be granted access to the RETF of the RE Law for the sustainable administration of the FIT-All Fund, which supports RE development.

TransCo likewise welcomed the recommendation to establish a committee or technical working group (TWG) which will determine the benefit of renewable sources of energy over the conventional sources.

Another option which TransCo will explore is the possible use of its corporate funds as fund administrator, subject to interest-charges in compliance with government rules for the use of GOCC funds, and the Development Partners Green Fund, where the corporation shall pursue donation fund and zero-interest global Green Funds of development partners of the United Nation Framework Convention for Climate Change (UNFCCC).

In December last year, the ERC allowed TransCo to collect a FIT-All equivalent to P0.0983 per kilowatt-hour (kWh) from all on-grid consumers, which is an increase from P0.0495 per kWh. The approved amount is lower than what TransCo sought in its 2020 FIT-All application, which is P0.2278 per kWh.

Last year, TransCo asked the ERC to approve its proposed FIT-All rate for 2021 amounting to P0.1881 per kWh.

FIT-All is a uniform charge billed to all on-grid electricity consumers, reflected as a separate component in their monthly electricity bills, to cover payments to renewable energy developers under the FIT system aimed at accelerating development of emerging RE resources.

The FIT-All collections are remitted to the FIT-All Fund established and administered by TransCo which keeps the fund in a government financial institution.