ERC flags legal drawbacks in DOE’s net metering policy

The Energy Regulatory Commission (ERC) has flagged several legal drawbacks in the proposed net metering policy of the Department of Energy (DOE), which it opined could dampen investment flows in the renewable energy (RE) sector.

The ERC, in its correspondence to the DOE, has stipulated that “the net metering rules should be made applicable to all types of renewable energy resource and not just focused on a certain type of technology or resource.”

What it fears as probable legal snags could delve with “the multiple compensation mechanism” and this is also deemed by the ERC as not in consistent with the relevant provisions of the Renewable Energy Act and the Electric Power Industry Reform Act.

Further, the ERC noted that Section 6 of the proposed DOE policy (on own-use RE systems with above 100-kilowatt capacity); as well as Section 7 (on own-use RE systems as emergency supply option) are not supported by the express provisions of the law.

The regulator similarly pointed out that the responsibilities being imposed upon ERC under Section 11 of the DOE’s version of net metering policy, had already been addressed in the regulatory agency’s newly promulgated and amended net metering rules.

ERC Chairperson Agnes T. Devanadera stated in her letter to the energy department that “there are possible legal impediments in the implementation of the DOE Circular.”

The chief energy regulator thus noted that “the cross-cutting concerns of energy security, affordability and reliability also needs to be considered and addressed.”

ERC primarily opined “that the use of retail rate as one of the compensation mechanism, as opposed to the use of blended generation cost that the ERC adopted in its recently promulgated amended net metering rules, will consequently increase the generation cost of the distribution utility through the net metering program.”

The agency specified that its position had been “based on the simulation it conducted on the impact of using the retail rate as the price of export at different levels of net metering penetration.”

It cited in particular that “the resulting retail rate of ₱13.8528 per kwh at the 30 percent maximum net metering penetration level is even higher than the last feedin-tariff (FIT) rate set at ₱8.69 per kwh.”

The ERC added such also “runs contrary to the EPIRA’s policy to provide the least cost power options to captive consumers.”

The regulatory body further defended its move on the recent issuance of the amended net metering rules, arguing that “it has the mandate to issue rules and regulations pertaining to net metering.”