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Electricity is too expensive
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Neil Honeyman
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LAST week, it was announced that the Central Negros Electric Cooperative (Ceneco) would be collecting P0.183 per kilowatt hour (kWh) for the Feed-in Tariff Allowance, or the FIT-All. This is a subsidy given to the renewable energy companies so as to encourage renewable energy activity.
The subsidy is not unique to Ceneco. It is a national subsidy. Everybody pays. Panay Electric Company (PECO) is implementing the same change.
It does not matter that neither Ceneco nor PECO purchases much, if any, renewable energy. Every kilowatt hour purchased by consumers is subject to this subsidy.
P0.183 per kilowatt hour may not sound too onerous but over the past years it has been climbing rapidly. It started at P0.0406 per kilowatt hour. Who knows where it will end? A typical household using 300 kWh per month is now paying an extra P55 per month for renewable energy electricity which we do not use.
This is because both Ceneco and PECO acquire most of their electricity as a result of bilateral contracts with electricity supply companies. These contracts were ratified by the Electricity Regulatory Commission (ERC).
On Dec. 26, 2010, the Energy Secretary Jose Rene Almendras announced the opening of the Visayas Wholesale Electricity Spot Market (WESM). He said that this market would be vigorous and that the price of electricity acquired in this market would be reasonable. He has been proved correct. Local electricity distributors typically obtain WESM electricity at around P2 per kWh cheaper than the negotiated price of the bilateral contracts.
When Energy Secretary Alfonso Cusi took office on July 1, 2016, he said that he would make electricity prices as low as possible. Good! Electricity in the Philippines is more expensive than most countries in Asia and is almost as expensive as in Japan.
There have been some excesses which should be addressed. In 2014 when President Aquino opened San Carlos Solar Energy Inc, Energy Secretary Petilla said that he would increase the amount of solar electricity which would attract FIT-All from 50 megawatts (MW) to 500 MW. The additional 450 MW has a FIT-All of P8.69 per kilowatt hour. The calculation was undertaken by the National Renewable Energy Board (NREB) which has been excessively generous towards the solar energy suppliers. This is because technological advances in solar energy production have been rapid. In fact one solar energy CEO, Mr. Leviste, says that solar energy can now compete on a level playing-field with fossil fuel energy. This means that the solar energy FIT-All should now be zero and not P8.69 per kilowatt hour.
Our renewable energy policy is in a mess.
Unless we get our act together soon, we shall not be adhering to our signed commitment to the Paris Accord on climate change.
Shame!/PN
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