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Due process not followed in FiT adjustment, NGO claims

CONSUMER RIGHTS advocacy group Laban Konsyumer, Inc. (LKI) has sought to nullify an Energy Regulatory Commission (ERC) resolution to adjust the feed-in tariff (FiT) allowance, claiming that it was issued without the required notice and hearing in violation of procedural due process.

The FiT is a fixed subsidy paid by the government to renewable energy (RE) developers to partially compensate for the risk in taking on new technology. The subsidy costs are passed on to consumers via the FiT-All uniform charge.

Last year, the FiT rate for solar projects increased to P11.2758 per kilowatt-hour (kWh) from the P9.68/kWh set in 2014. Meanwhile, the FiT for wind projects increased to about P9.8976/kWh last year from P8.53/kWh.

The LKI, in its petition, questioned the ERC resolution issued in May 2020.

According to a copy of the petition obtained by BusinessWorld, due process was not observed because the resolution was “solely based” on the information given by two groups of RE developers, the Developers for Renewable Energy Advancement and Wind Energy Developers Association of the Philippines.

“The other stakeholders of the power industry like the distribution utilities, other market participants or generation companies, electric cooperatives and consumer groups were deprived of due process of law to participate in a public hearing mandated by the Electric Power Industry Reform Act (EPIRA), FiT Rules and the ERC RPP (Rules of Practice and Procedure) on a matter of public interest,” according to the petition.

LKI also said that electricity consumers stood to be affected by the adjustments of the FiT rates.

The petition also claimed the absence of a quorum as one ERC member did not take part in the signing, and two others retired from office while the resolution was not in effect.

SunAsia Energy, Inc. Chief Executive Officer Tetchi Cruz-Capellan told BusinessWorld that she believed that “all RE developers placed their trust in the sanctity of the contract when they invested in plant construction.”

“If we change the rules after the plants have been built, and after the wholesale market prices have benefitted (from) lower power cost due to the low prices dispatched by solar at daytime peak, how will investors — both foreign and local — recover their capital expenses? How do we expect them to invest in infrastructure in the future if we do not respect the terms of the contract? These are the issues we need to think about.” Ms. Capellan said.

She said the idea that power rates will increase solely due to RE is a “false narrative.”

“With or without RE, power rates will increase to account for adjustments in O&M (operations and maintenance) cost,” she said.

Asked for comment, LKI President Victorio A. Dimagiba, who filed the petition, said that no rules were being changed.

“Exactly, (the) LKI petition (would) apply to the existing rules,” he told BusinessWorld in a Viber message.

He maintained that the FiT adjustments in wind and solar last year contributed to a rise in consumers’ power bills as the National Transmission Corporation recovered the allowance paid by consumers.

Meanwhile, ERC Commissioner-in-charge Floresinda G. Baldo-Digal told BusinessWorld in a text message Friday that the commission will announce the schedule of the hearing on the petition by this week. — Angelica Y. Yang

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