Government owes P1.2 billion to RE developers under FIT

MANILA, Philippines — Unpaid billings to renewable energy (RE) developers under the feed-in tariff (FIT) system has reached over P1.2 billion as state-run National Transmission Corp. (TransCo) has not yet secured regulatory approval to raise FIT-allowance collection from consumers.

The state-run firm has started to experience a FIT-All fund deficit starting last month, TransCo compliance monitoring department manager Dinna Dizon said in a text message to The STAR.

“Remaining unpaid balance is P1.27 billion, representing 85 percent of the billed amount due for payment on April 5, 2021,” she said.

The depletion of the FIT-All fund is attributed to the low FIT-All rate approved by the Energy Regulatory Commission (ERC) and its pending action on the latest application of TransCo.

“The FIT-All rate remains low relative to the requirement of the fund.  So, the delay in approval will further contribute to the level of unpaid balance,” Dizon said.

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 for in its 2020 FIT-All application, which is P0.2278 per kWh.

TransCo had also asked the ERC last year to approve its proposed FIT-All rate for 2021 amounting to P0.1881 per kWh. The ERC’s decision on the application is still pending.

ERC officials were not immediately available for comment when asked for a timeline on the regulator’s decision on the application.

TransCo also pointed to the generally low wholesale electricity spot market (WESM) prices last year as another reason for draining the FIT-All fund.

“Plus, low settlement prices at the WESM, meaning more incremental funds needed to fill the FITs of the eligible RE developers,” Dizon said.

Prices at the WESM averaged at P1 to P2 per kilowatt-hour (kwh) last year due to ample supply and the crash in power demand due to the imposition of lockdowns to control the spread of COVID-19, the Independent Electricity Market Operator of the Philippines (IEMOP) said.

In a virtual forum held last 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 also prioritize the consumer welfare over the welfare of suppliers. We are therefore in search of how to balance the competing challenges and needs of consumers and suppliers,” Matibag said.

TransCo has been designated to assume the role of FIT-All fund administrator by the ERC in November 2012, pursuant to RE Act of 2008.

With the designation, the state-run firm is tasked with the establishment, management, administration, and disbursement/settlement (thru the trustee bank) of the FIT-All fund for the benefit of FIT-eligible RE developers.

As administrator, TransCo is tasked to file the rate application before the ERC for the annual FIT-All rate determination.

TransCo said it has been filing the petition for the approval of FIT-All annually but has been facing delayed approvals, placing the FIT-All fund to on “catching mode” and has also resulted in delayed payments to RE FIT developers.

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.

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