Republic of the Philippines


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ERC Approves a Lower Feed in Tariff Allowance

The Energy Regulatory Commission (ERC) approved with modification, the application of the National Transmission Corporation (TransCo) for the approval of the Feed-in Tariff Allowance (FIT-All) for Calendar Year 2020.  In its Decision, the ERC authorized TransCo to collect a FIT-All equivalent to PhP0.0983/kWh effective in the next billing cycle.

“The ERC-approved FIT-All for Calendar Year 2020 in the amount of PhP0.0983/kWh is lower by PhP0.1295/kWh as compared to TransCo’s proposed rate of PhP0.2278/kWh.  We came up with a lower FIT-All rate in view of the fact that the Commission used some actual figures as bases in our computations, among others.” ERC Chairperson and CEO Agnes VST Devanadera clarified.   

ERC’s calculation resulted to a lower FIT-All rate, vis-à-vis TransCo’s proposed rate, in view of the variance in the computation of FIT-All components particularly the following: (1) FIT Differential; (2) Working Capital Allowance; (3) Administration Allowance; (4) Disbursement Allowance; and (5) Forecast National Sales.

Specifically, the following parameters under the FIT Differential mainly contributed to the significant difference on ERC’s calculation to TransCo’s: (1) Capacity under FIT (MW); (2) Forecasted Generation for 2020; (3) Forecast Cost Recovery Rate (FCRR); and (4) Amount of Over recoveries.  TransCo used the FIT-eligible capacity of 1,375.78 MW from the list of DOE as of July 2019, whereas ERC used the DOE list with Certificate of Endorsement (COE) as of 31 December 2019.  Further, TransCo forecasted the generation for 2020 at 4,098,632,000 kWh, while ERC used the combination of actual generation from January to March 2020 and forecasted generation from April to December 2020, equivalent to 3,414,953,807.2 kWh.  Moreover, on the Forecast Cost Recovery Rate, TransCo used the 36-month Load Weighted Average Price (LWAP) for Luzon and Visayas for the period April 2016 to March 2019 and used the blended generation rates for Mindanao, whereas ERC used the combination of Actual Cost Recovery Rate (ACRR) for 1 January to 31 March 2020 and the Forecast Cost Recovery Rate (FCRR) from 1 April to 31 December 2020.   Furthermore, TransCo also included the over-recovery amount of PhP3.5 Billion, while ERC made use of the amount of PhP7.3 Billion as of 5 May 2020.

In its Decision, the ERC also directed TransCo, the Distribution Utilities (DUs), Retail Electricity Suppliers (RES), National Grid Corporation of the Philippines (NGCP), and Philippine Electricity Market Corporation (PEMC) to make available their records to the Commission, pertinent to the implementation of the FIT-All as part of the FIT-All audit which shall be undertaken by the Commission immediately.    Furthermore, TransCo must ensure that the FIT-All Fund and its sub-accounts operate as intended, as stated in the FIT-All Guidelines, and must provide the Commission with an update or report on the status of drawn or borrowed amount from the FIT Differential (FD) account and payments made thereto within thirty (30) days from receipt of the Commission’s Decision.

“The implementation of the FIT has increased supply of renewable energy by 1,262.491MW as of 28 December 2020.  We have witnessed the reduction in the price of electricity in the WESM because of the entry of this additional renewable energy capacity as a result of the merit order effect.  The FIT-All collection ensures not just the sustainability of this additional capacity, but also attracts additional investments for a clean and sustainable energy industry”, ERC Chair Devanadera added.


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