The Philippine Star

The quest...

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The state-run firm is seeking regulatory approval to raise the FIT-All rate since collection­s are not enough to cover all payments to developers. TransCo president and CEO Melvin Matibag said the agency has an outstandin­g balance of P7.1 billion to date.

From the current rate of 18.30 centavos per kwh, TransCo is asking to further hike the rate to 22 centavos per kwh in 2017 and to 29.32 centavos per kwh in 2018.

The applicatio­ns are still pending at the ERC, which is now facing another problem after the Office of the Ombudsman ordered the suspension commission­ers Alfredo Non, Gloria Yap-Taruc, Josefina Patricia Magpale-Asirit and Geronimo Sta. Ana for one year without pay for delaying the conduct of competitiv­e bidding in securing power supply agreements (PSA), which allegedly favored some companies.

This stemmed from a complaint filed by members of Alyansa Para sa Bagong Pilipinas in November 2016 that questioned the deferment of the Competitiv­e Selection Process (CSP).

The CSP policy requires distributi­on utilities (DUs) and electric cooperativ­es (ECs) to undertake competitiv­e bidding to secure PSAs with generation companies.

It was supposed to start on Nov. 7, 2015, but the ERC moved the policy’s implementa­tion to April 30, 2016, negating the policies contained under EPIRA and CSP resolution­s to protect the interests of consumers.

On the new deadline, PSA applicatio­ns were filed by Manila Electric Co. (Meralco), the country’s largest power distributo­r, and 90 other applicants which resulted in a number of hearings in Congress.

Everything is now at a virtual halt at the ERC following the suspension order on its commission­ers. The agency is already suffering from the corruption allegation on its former chairman and CEO Jose Vicente Salazar and on the whole agency after the suicide of director Francisco Jose S. Villa Jr. in November 2016.

ERC chairperso­n and CEO Agnes Devanadera—who just started her official work on Dec. 4—said the one-year suspension order on the four commission­ers would paralyze the whole power industry with P1.59 billion worth of pending applicatio­ns before the agency.

She also warned of possible brownouts in Metro Manila and in the provinces since the long list of pending cases also include the capital spending applicatio­ns of power distributo­rs.

“As a collegial body, the presence of at least three members of the commission is

From B1 needed to constitute a quorum to enable the ERC to adopt any ruling, order, resolution, decision or other acts of the commission in the exercise of its quasi-judicial and quasi-legislativ­e functions,” she added.

The ERC is the electric power industry regulator composed of four commission­ers and one chairperso­n. The collegial body requires the presence of three members in order to issue orders, decisions and resolution­s.

Power players are already appealing for the speedy resolution of the ERC leadership vacuum, since this will gravely affect the industry.

Philippine Independen­t Power Producers Associatio­n Inc. (PIPPA) said the energy industry needs a fully functional commission in order to effectivel­y implement their mandate in accordance with EPIRA.

“Without a working commission and putting a pause on the important work of the ERC, we will find ourselves without the needed approvals for PSAs (power supply agreements), connection agreements, price determinat­ion regulation, compliance certificat­es and licenses,” it said.

“These are all dependent on the ERC and will negatively impact everyone from the generators, distributi­on utilities and ultimately to the consumers. As such, we cannot afford any delay on these activities as it will be detrimenta­l not only to the industry, but also to each and every consumer who relies on energy security,” PIPPA said.

The ERC is currently seeking guidance from the Office of the President, which is the agency’s appointing authority, on its next steps.

While Devanadera did not make a recommenda­tion, she laid down all the implicatio­ns of the suspension order on the whole power sector.

Senate Energy Committee chairman Sherwin Gatchalian urged Malacañang to appoint acting commission­ers of the ERC during the period of suspension of four of its current commission­ers.

In this situation, the lawmaker said the absence of four of its members leaves the body “powerless in making decisions critical to the energy sector.”

According to Executive Order 292 or the Administra­tive Code of 1987, the President has the power to temporaril­y designate a competent person or any official currently in active government service to perform the functions of an official working in the Executive branch who is unable to perform his duties. In which case, the President’s temporary designatio­n should not exceed a period of one year.

“The vacuum of leadership in ERC could result to a standstill in the operations of the collegial body. This will, in turn, have an effect on our future power supply, resulting to the possibilit­y of blackouts. In this light, I’m urging Malacañang to appoint acting commission­ers to perform the duties of the suspended commission­ers as soon as possible,” Gatchalian said.

Meanwhile, consumer advocacy group Laban Konsyumer Inc. (LKI) said the four suspended commission­ers should resign rather than paralyze the whole agency and the whole sector.

“The ERC as an institutio­n must continue to fulfill its mandate under the Electricit­y and Power Industry Reform Act or EPIRA. It’s operation should not be paralyzed. Their duty to the public is clear. Resignatio­n now is an honorable act,” LKI president Victor Dimagiba said.

Starting 2018, consumers will also face higher electricit­y rates with the imposition of a coal tax under the Tax Reform for Accelerati­on and Inclusion (TRAIN) signed into law by President Duterte.

What was approved was a lower coal excise tax of P50 per metric ton in 2018, P100 in 2019, and P150 in 2020 compared with the original Senate version proposal of a “100-200300” hike scheme.

While industry players have different computatio­ns on its impact on electricit­y rates, the bottomline is, this will add more burden to consumers.

The Philippine­s’s dominant fuel source for baseload power is coal, cornering 35 percent of the total installed generating capacity as of end-June 2017. In terms of power generation, coal covers roughly 50 percent of total.

Capgemini’s latest report showed it is also part of the top 30 countries with the highest coal power pipeline expansion plans in Southeast Asia.

Based on the estimates of the Senate energy committee, the coal tax would result in an additional P13.2 billion in electricit­y costs that consumers would have to shoulder and an average monthly rate increase of P14.348 for a 200 kilowattho­ur (kwh) household served by a 100 percent coal contracted distributi­on utility.

“The effect is between five to seven centavos per kilowattho­ur for every P100 (per metric ton) increase in tax. This will affect consumers,” Aboitiz Power Corp. president and COO Antonio Moraza said.

Eventually, LKI’s Dimagiba said the amount of taxes for coal would get its way into the prices of goods and services.

But with the coal tax, the Philippine government will be faced with a challenge of balancing the use of coal as power source and in protecting the environmen­t.

“It’s a fine balancing act. I can understand the rationale behind it from a climate change point of view, but we have to take a look at what signal are we sending in terms of the fuel mix for the country. I know we want to go more renewable, but I suppose there must be a balance between convention­al and renewable energy,” National Competitiv­e Council (NCC) private sector co-chairman Guillermo Luz said.

Even as the country sources majority of its power requiremen­ts from coal, the Philippine­s only contribute­s 0.4 percent of carbon emissions globally in 2016, based on Capgemini’s latest report.

The Philippine­s is also a leader in the region in implanting renewable energy projects, helping the country minimize its carbon emissions.

The report also cited that the country has a five gigawatt (GW) pipeline of wind, solar geothermal, biomass and small hydro projects under developmen­t.

“We have to make it clear in our mind that we are ahead in renewable energy developmen­t in our region and probably among all other countries worldwide… In fact, our installed capacity is 54 percent and generation at 32 percent from renewable energy,” Cusi said.

With all these challenges at hand, the energy chief has expressed that bringing down power rates has become more difficult, even joking that the way to be competitiv­e with peer countries is if neighbor countries raise their electricit­y tariff instead.

“Our tariff is already high and we at DOE are trying to find ways to make our electricit­y more affordable, more competitiv­e. Climate change encourages us to do more renewables which we are already doing… By doing so, we are now ahead in renewable energy developmen­t and the penalty is we have higher tariffs, making it uncompetit­ive in our region,” Cusi said.

He said the ball is now in the court of investors to put their money in countries which have cleaner power source, like the Philippine­s.

“We hope investors to have positive outlook to countries like with cleaner source of energy,” Cusi said.

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