Republic of the Philippines


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ERC Issues Final Decision on 2016 FIT- Allowance

The Energy Regulatory Commission (ERC) issued its final approval of the petition of the National Transmission Corporation (TransCo) for a Feed-in Tariff Allowance (FIT-All) for Calendar Year 2016.  The additional FIT-All adjustment to be collected from all on-grid customers is PhP0.0590/kWh, from the current rate of PhP0.1240/kWh.  The adjustment will take effect in the immediately succeeding billing period following TransCo’s receipt of the ERC Decision.      

The FIT-All is a uniform charge that is calculated annually and is applied to the kilowatt-hours billed to all on-grid consumers that are supplied with electricity through the distribution or transmission network.  The FIT-All mechanism was established pursuant to the Renewable Energy Act of 2008 which aims to spur the development of renewable power sources such as wind, run-of-river hydro, solar, and biomass facilities. 

The ERC took cognizance of the need to update the FIT-All rate in order to address the inability of the FIT-All Fund to pay in full the claims of FIT-eligible Renewable Energy (RE) Generators.  As of April 25, 2017, the total FIT revenue claim was about PhP24.3 Billion, of which only 72.69% has been paid, while the total unpaid claims amounted to some PhP6.6 Billion.  As a result, the FIT-All Fund incurred late payment interest charges equivalent to PhP230 Million.

The ERC also noted several factors that contributed to the insufficiency of the fund to pay the FIT revenues, among others the 30% growth in the generation capacity of FIT-eligible generators from December 2016 until March 2017.  Consequently, the FIT differential claim has increased and will continue to increase.  In addition to that, there is a growing disparity between the Forecast Cost Recovery Rate (FCRR) and the Actual Cost Recovery Revenue (ACRR) due to the downward trend in the market prices brough about by the Merit Order effect. Moreover, collection efficiency of the FIT-All Collection Agents have deteriorated, thus contributing to the deficiency in the FIT-All fund.  

“It is crucial to adjust the FIT-All rate being charged to all end-users to enable TransCo to pay FIT-eligible RE plants and stop the ballooning interest to be charged by RE generators from the unpaid claim due to the delay in the disbursement of the FIT,“ Officer-In-Charge (OIC) Commissioner Alfredo J. Non explained.  


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