November FIT hike set to shield RE payments

Electricity consumers will see a slight increase in their bills starting in November after the Energy Regulatory Commission (ERC) approved a higher Feed-in Tariff Allowance (FIT-All) rate for the year to sustain payments to renewable energy developers.

The FIT-All, a universal charge collected from all power users, will rise to 20.73 centavos per kilowatt-hour (kWh) from 11.89 centavos/kWh, according to an ERC order that seeks to prevent mounting interest charges from delayed payments to renewable energy suppliers.

Speaking to reporters at a media briefing on Monday, ERC Chairperson and CEO Francis Saturnino C. Juan said the decision was necessary to prevent the FIT fund from running out and pushing electricity costs even higher in the future.

“There are difficult decisions that we have to make because, first, we have issued policies on the implementation of the feed-in tariff system, which is also mandated by law,” Juan said.

“Under the feed-in tariff system rules issued by the ERC, there is a guarantee for feed-in eligible plants to be paid the approved feed-in tariff for them.”

The FIT-All fund, managed by the National Transmission Corp. (TransCo), is nearly depleted. Records as of 5 September showed total cash inflows of P17.52 million against cash outflows of P17.517 million, leaving just P3 million in available funds.

TransCo also holds around P9 million in other cash accounts, but this amount remains tight given that payments to renewable energy developers fall due every 15th of the month.

To prevent further delays in payments, the ERC said the approved rate will cover the P19.06-billion FIT differential while maintaining a P3.74-billion working capital allowance to ensure timely remittances to renewable energy suppliers. As of 5 September, TransCo reported that 97.6 percent of FIT obligations, or P215.27 billion, had already been settled.

Juan explained that delaying the FIT-All adjustment would have worsened the financial strain.

“If we cannot fully pay our FIT-eligible plants for the electricity they generate, then they will have a claim for interest… and this will further increase the FIT-Allowance in the future,” he said.

Despite the increase, the ERC stated that it attempted to mitigate the impact on consumers.

“Although it is a bit high, we are hoping that with lower demand, cooler weather, and hopefully no supply disruptions, it will not lead to higher electricity prices,” Juan said.

To ensure accountability, the ERC has ordered an immediate audit of the FIT-All fund, requiring power distributors and grid operators to provide records for review.