RENEWABLE ENERGY DEVELOPMENT NOT LIKELY TO PUSH UP POWER RATES – CUSI

MANILA, Philippines — Energy Secretary Alfonso Cusi said the pursuit toward renewable energy (RE) development would not result in higher power rates.

He said the agency is implementing safety nets in the form of the Renewable Portfolio Standard (RPS) policy.

“The RPS for on-grid rules outlined various safety nets to protect the electricity end-users and to ensure that this new venture will not result in higher electricity rates,” Cusi said.

The Energy chief signed Department Circular DC2017-12-0015 which prescribes the rules and guidelines in the establishment of RPS for on-grid areas.

The circular mandates distribution utilities (DUs), retail electricity suppliers including power generation companies serving directly-connection customers to source or produce a certain percentage of their electricity requirements from eligible renewable energy resources.

It also provides that eligible renewable energy participants may use biomass, waste-to-energy technology, wind energy, solar energy, run-of-river hydroelectric power systems, impounding hydroelectric power systems, ocean energy, and geothermal energy, among the other systems as defined in the RE Act.

The RPS for on-grid areas is initially anchored on the country’s aspirational target of 35 percent RE share in the energy mix by 2030, which will be reviewed under the forthcoming updating of the National Renewable Energy Program (NREP).

The DOE said the minimum RE sourcing would not be imposed immediately, considering 2018 and 2019 as transition years only to prepare the mandated participants in developing their compliance plans to the minimum RPS requirements.

Cusi also said a holistic information, education and communication (IEC) campaign and hands-on training will be undertaken to guide the DUs and other relevant stakeholders with an aim to impart various developments in the implementation of the policy and the other pertinent policy issuances of the DOE.

To further protect consumers, the RPS policy will also be complemented by the Competitive Selection Process (CSP) policy, which requires all DUs and other mandated participants to undertake competitive bidding in sourcing their compliance to ensure the “no higher rates” policy.

Cusi said the requirement to comply with the CSP ensures a transparent mechanism that ascertain least cost procurement of power supply and ensure competition among the players.

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Reference:

Rivera, D. (December 31, 2017). Renewable energy development not likely to push up power rates – Cusi. The Philippine Star.

CUSI ORDERS MERALCO TO EXPLAIN P0.08 PER KWH POWER RATE INCREASE

Energy Secretary Alfonso Cusi has asked Manila Electric Co. to explain its computation of a P0.08 per kilowatt-hour increase in electricity rates following the implementation of the Tax Reform for Acceleration and Inclusion, or TRAIN, tax package.

“… I asked Meralco how did it  arrive at P0.08 per kWh,” Cusi told reporters.

Cusi directed Energy Undersecretary Jesus Posadas to study the impact of the TRAIN on the power sector.

“That is the role of DoE, we set the policy, we make sure that everybody will follow the policy,” the energy chief said.

Meralco head of utility economics Lawrence Fernandez said early this week the company was waiting for the billing of National Grid Corp. of the Philippines to reflect the lifting of the value added tax exemption that would increase rates by P0.07 per kilowatt-hour.

Fernandez said the impact of the higher excise tax on coal was around P0.01 per kWh.

Cusi said the department was also studying the impact of the TRAIN on the Small Power Utilities Group, or the missionary areas of National Power Corp.

“These people are scrutinizing all of those to make sure that the consumers are protected,” he said.

Cusi said he had a responsibility to the public to ensure the rates passed on the utilities were accurate.

Fernandez said NGCP was previously exempted from the VAT on transmission wheeling charges until it was repealed by the TRAIN.

“For NGCP, the TRAIN is in effect January 1. We expect them to apply the VAT on transmission wheeling charges, Fernandez said, adding a 12 percent percent VAT would add P0.07 per kWh to the electric bills of consumers.

He said the earliest Meralco could pass on the TRAIN impact to consumers would be in the February billing.

“If NGCP incorporates it in their January billing, we should expect by February that it will be effective,” Fernandez said.

He said the impact of higher excise tax on coal on Meralco customer was estimated at P0.01 per kWh.

“For generators, it will depend on their stock of coal if they bought it new or in stock. Our expectations is they will stagger the implementation of the coal tax,” he said.

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Reference:

Flores, A. M. S. (January 12, 2018). Cusi orders Meralco to explain P0.08 per kWh power rate increase. Manila Standard.