MERALCO: RE POLICY BAD FOR ELECTRICITY FIRMS, USERS

A PROPOSED renewable energy (RE) policy will force distribution utilities (DU) to choose a more costly power source instead of cheaper one, a move that would negatively impact consumers, Manila Electric Co. (Meralco) claimed.

In a position paper submitted to the Department of Energy (DoE), Meralco said the policy— the Renewable Portfolio Standards (RPS)—“will create an artificial sellers’ market, to the detriment of consumers, and disregards the least cost mandate of DUs.”

“As its core, the RPS will be a government imposition that will investors in a few chosen powerplant technologies,” it added.

Under the policy, DUs or suppliers of last resort (SoLR) would be forced to acquire a prescribed share of its power requirements from certain generators. They would be severely penalized if they don’t take the share, which would increase over time.

Meralco said such procuments “will have to be made, whether or not the power is actually needed by the DU or SoLR.”

This “will eventually defeat the objectives of the Competitive Selection Process (CSP) Guidelines currently being drafted by the” DoE, it added.

The RPS may force the DU to forego a cheaper power source for a more expensive arrangement simply to adhere to the policy’s regulatory targets, even if the CSP - fers the least cost alternative for customers under the distributor’s franchise area.

“Mandating the RPS at this developers’ incentive to be more cost-effective, to the detriment of consumers,” the company said, adding that RE projects have started to become price-competitive, even without government mandates.

Also, setting an arbitrary 35-percent share in the generation mix by 2030 that’s not supported by any economic and technical study poses a serious concern, especially when attaining such a target becomes the sole consideration in adjusting the minimum annual requirement.

While the RPS target is set at the national level, Meralco explained that there is a need for the mandated participants to fully understand the details of the rules and how it would impact their customers.

DoE to provide a sample computation and the draft of the standards to guide participants in understanding the RPS formula and that simultaneous be already performed for all on-grid electric cooperatives and DUs.

Meralco reiterated its support for “the industry’s goals of reducing greenhouse emissions, enhancing energy security, and providing reliable and quality electric supply at a reasonable price,” which can be attained by providing “wellthought and well-crafted policy mechanisms.”