Last of the loot

By: Conrado Banal – @inquirerdotnet, Feb 23, 2017

This is a tough one: At this very moment we are staring at another awful increase in electricity rates of at least 16 centavos per kwh.

It comes in a special package called FIT (feed in tariff), the subsidy the government applies on power projects called REs (renewable energy).

Word goes around that some influential groups—aka oligarchs—already launched an all-out lobby for the Duterte administration to back the FIT increase.

In fact, the government firm called Transco already jumped the gun and recommended the 16-centavo increase.

At the same time, RE companies initiated the campaign for “green” energy such as solar, vilifying coal power plants as the dirty rotten scoundrel of the power sector.

Here is the thing: The FIT today amounts to more than 12 centavos per kwh, triple the original rate of about 4 centavos per kwh.

If the lobby for higher FIT wins, the total will reach 28 centavos per kwh—or eight times the original rate.

All of us, rich and poor alike, from Batanes to Tawi-tawi, will pay for such a hefty FIT, and the burden will remain with us in the next 20 to 30 years or longer.

In effect, the FIT guarantees RE companies that they will make money—tons of it—in the next couple of decades, at our expense!

Unfortunately, only the Department of Energy seems to be rejecting openly the FIT increase. The usually noisy business organizations are quiet.

The DOE is still conducting its review of the FIT scheme. The motor-biking Duterte Harley wants to lower our electricity rates, hailed as among the highest in all of Asia. The DOE thus wants to be careful in imposing subsidies like the FIT.

From what I gathered, the DOE already unearthed some questionable deals in the latest awarding of FIT subsidies.

Last year, the Aquino (Part II) administration awarded subsidies to 17 solar projects, which imposed the FIT increase to 12 centavos per kwh. It was nevertheless a limited subsidy, not enough for all the RE companies. Thus, they had to hurry up their projects to get the FIT allocation. The process was actually a race.

Somebody therefore had to act as judge in the race, which was supposed to be the DOE that would validate the data and the claims of the RE companies.

Surprise, the FIT-approving body, ERC (Energy Regulatory Commission), did not wait for the DOE validation. The ERC just relied on the “request” of the National Renewable Energy Board, which did not even have the authority to validate the claims of RE companies. Nice!

One rule for instance required RE projects to register with the electricity open market called WESM, as proof that they were ready for commercial operation.

The DOE found out that, on this one rule alone, three RE projects already failed, because they received all the approvals even before the WESM registration.

They included solar projects in Lian town in Batangas, Cabanatuan City in Nueva Ecija and Palauig town in Zambales.

The DOE also uncovered some fast-track techniques, to put it kindly, that were used by RE companies to get their clearance certificates for the FIT.

For instance, the solar projects in Cabanatuan City and in Calatagan town in Batangas already got their clearances way ahead of the other applications—several months in advance. Again, it was supposed to be a fair race!

As expected, many RE companies did not get their share of the FIT, so they complained and threatened to expose the whole darn mess.

Our heroes in the government thus announced the additional FIT, the 16-centavo per kwh hike, which would raise our bills by 28 centavos per kwh!

Hmmm, let me see—and so several RE companies joined the FIT race, in which some of them lost, but the government still wanted them to win by ordering all of us to put up the prize money—is that it?

To think, it cannot be the last of the loot from FIT; there is more to come.

Let us get this straight: Does it mean that no investor in his right mind will go into RE without the government allowing him to steal money from us?

Read more: http://business.inquirer.net/225052/last-of-the-loot#ixzz4ZTHT2KNA
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