An assurance of lower, competitive and transparent electricity rates

I am printing two reply letters of Secretary Alfonso G. Cusi of the Department of Energy of October 8, 2021 and March 20, 2022.

We thank you for your letter dated 07 September 2021 raising concerns on the revised draft Green Energy Auction Program (GEAP), which proposes to partly adopt the mechanism of the Feed-ln Tariff (FIT) Program.

Please be informed that the Department of Energy (DOE) is one with you in finding solutions to reduce the power rates in the country, as well as intends to facilitate entry of new and additional generating capacities to ensure electricity demand is met.

We would also like to highlight that this proposed Guidelines will use the FIT mechanisms except on the rate determination. The selection of eligible RE plants shall be made through a competitive process or auction, thereby, resulting to a least cost of electricity for consumers.

This is consistent with the provision of Department Circular No. DC2015-07-0014 entitled “Prescribing the Policy for Maintaining the Share of Renewable Energy (RE) Resources in the Country’s Installed Capacity Through the Holistic Implementation of the Pertinent Provisions of Republic Act No. 9513 or the RE Act on Feed-ln Tariff (FIT) System, Priority and Must Dispatch, Among Others” which states as follows:

“Section 4. FIT Auction. To ensure the attainment of Section 2 of this Circular, the DOE will use the FIT installation targets. Upon the full subscription of the existing FIT installation targets, the succeeding rounds for the installation targets for FIT-eligible resources shall be made through an auction system to be adopted by the DOE x x x. “

The parameters used in the determination of FIT rates by the Energy Regulatory Commission (ERC) in 2012 have significantly changed since the cost of the emerging RE technologies (i.e., solar, wind, biomass and run-of-river hydro) have drastically reduced. Also, us RE Developers have gathered necessary project development experience and maturity resulting to lower development costs, to the extent that some can even compete with conventional. Whatever the results of the Green Energy Tariff (GET) in the auction, will reflect the current level of the technology cost.

Furthermore, additional feature shall be adopted from the original GEAP concept which is the “Opt-ln Mechanism,” wherein a DU may choose to be the sole off-taker or buyer of a particular offered capacity from the Winning Bidder. Such capacity will then be deducted from the total auctioned volume, and the payment that will be collected from electricity end-users will be reduced and thereby carved out from the pool compensable by the FIT-AII. Through this, it will facilitate a more transparent procurement of power supply contract by a DU and its price shall be based on the GET — the resulting price from the auction.

This proposed policy ensures and maintains the aspirational target of attaining 35% RE share by 2030 with the objective of facilitating increased investments, increased job creations and achieving energy security and sustainability.

We hope that this addresses the concerns of LKI.

Thank you.

Dear ATTY. DIMAGIBA

This is to acknowledge receipt of your letter dated 05 February 2022 regarding LKl’s formal opposition against the implementation of the Green Energy Auction Program (GEAP) in the Philippine. We would like to reiterate our letter sent through electronic mail on 08 October 2021 which was acknowledged by LKI on the same date, addressing LKl’s concerns on the said matter, attached hereto as Annex “A”

It is worth to note that since the implementation of the RE Act and its policy development support mechanisms including FIT Rules, the cost of RE has declined resulting to lower contracted generation rates which should be taken advantage of.

Moreover, we would like to inform LKI that the revised GEAP Guidelines has undergone thorough review and consultation with the Energy Regulatory Commission, National Renewable Energy Board, Philippine Electricity Market Corporation, Independent Electricity Market Operator, and other stakeholders on 05 and 06 August 2021 for Luzon-Visayas leg and Mindanao leg, respectively. Also, the 2000 MW capacity volume for the first auction round was announced in the said events which is intended to help address the compliance of the Mandated Participants with their RPS requirements.”

With these assurances, we shall continue the litigation we filed before the Energy Regulatory Commission and the Ombudsman against the unwarranted and illegal increases of Feed in Tariff for renewable energy plants that were eligible from 2016 to 2020.

Atty. Vic Dimagiba, AB, LLB, LLM

President, Laban Konsyumer Inc.

Email at [email protected]


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