LKI position paper in the JCEC April 27, 2021

April 26, 2021

Joint Congressional Energy Commission

Congress of the Philippines

Attn.: Senate Energy Committee

           House Energy Committee

Re:      Power Demand and Supply  Outlook for the Summer

            Republic Act No. 9513 or the Renewable Act of 2008

Sir/Madam:

       Thank you once again for the invitation to participate in the JCEC . We respectfully submit the position paper of the Laban Konsyumer Inc. on the power supply outlook and renewable energy law.

1.  Power Supply Outlook for the Summer

Our evaluation ,  analysis  and recommendations are as follows :

1. There was a  long delay in  the  publication and release of the 2021 to 2023  Grid Operating and Maintenance Program or GOMP.
   1. The GOMP  was uploaded on  April 21, 2021 in the website  of the National Grid Corporation of the Philippines ( NGCP)  and the Department of Energy  ( DOE ) .

• The GOMP should have been issued in October 2020.

•  Because of the long delay, there are not much  meaningful time for the stakeholders to prepare for the coming red and yellow alerts .

• The  2021  Weekly Demand, Supply and Reserve  Profile as of April 15, 2021  shows three ( 3 ) Red Alerts and (  5 )  Yellow Alerts  for the summer months April, May and June .
  • The red Alerts are the periods April 23 to 29, May 28 to June 3 and June 4 to 10.
  • The yellow alerts are the periods April 16 to 22, April 30 to May 6,May 7 to  13 and June 11 to 17.
  • Per DOE Circular  No.  2020-02-0004 ,there should be no maintenance schedule  during peak quarter. But you have to look at the charts for Luzon, and the power situation does not look good as April, May and June have planned outages, whether unplanned, original and revised schedules .There are too many power plant outages being projected for the coming weeks and months and this situation  will heavily burden  consumers thru higher generation charges .
  •  Meralco said spot market prices increased by Php  2.5991 per kwh for the April billing month .
  •  The prohibited plant outages , whether unplanned , original  and revised schedule of the Power  Supply and Demand for the peak quarter are  as follows :

-BCF Unit 1 300 MW March 31 to April 7

          -Please Unit 1 647 MW, April 7 to April 30

          -SBPL, 506 MW, April 3 to April 27

          -Limay PH 1 ,150 MW, Feb 26 to April 1

         -GN Power  36 MW ,March  1 to May 23

         – Petron 36 MW , Unit 3 , May 1 to May 26

         -Pagbilao  382  MW,   June 12 to July 11

         – Petron  Units 1 to 4, 36 MW each , June 1 to 7

         – SLPGC, Unit 1,  150 MW,  June 15 to July  30

         -SLPGC, Unit 2 ,150 MW , June 1 to  July  15

         – Limay ,  PH 1 ,150 MW June 15 to June 30

         – Limay ,PH 3, 150 MW, June 15 to June 30

         -Malaya ,350MW  June 1 to June 30

     11.Transmission facilities nationwide have almost negligible  or isolated maintenance schedule in the summer months .

      12. In sum ,  consumers face  price hikes and rolling brown outs this summer .

     I3. The DOE should explain why Maintenance  of plants are authorized  during the peak quarter in violation of their Circular .

     14. The  market operator  should quickly spot plant owners that will take advantage of prices and impose fines on erring firms .

• Republic Act 9513  or the Renewable Act of 2008  

     We respectfully  propose to repeal  the incentives granted by the Renewable Energy  Act of 2008 especially the Feed in Tariff or FIT that are paid to the renewable energy developers  as well as the Feed in Tariff Allowance of Fit Allowance  that are collected from all on grid electricity consumers  for the following reasons :

1. The Secretary of Energy Alfonso G.  Cusi in the Virtual Economic Briefing of  the Philippine Embassy in Washington D.C. held on April 15, 2021  Philippine time, relating to the Philippine Energy Plan of 2018-2040 ,   announced that “ we have stopped the Feed in Tariff or FIT which proved to be a big mistake as it forced electricity prices in the country upwards . We cannot have our consumers shoulder the financial burden of such subsidies any longer .This holds true most especially since RE technologies and their market competitiveness have significantly progressed in the past decade “
   1. There are supervening events and new implementing rules in DOE Circular No DC 2018-02-0003  that ensures power rates are reasonable , competitive , transparent and subject to public scrutiny , which are unlike the FIT system of the Renewable Energy Act.
   1. The enactment of the CREATE law or Republic Act No. 11534 had improved the income tax liabilities of the Renewable Energy developers and the  lower corporate income taxes at  25% is effective July 2020 and such savings on taxes  should be passed on to the consumers immediately thru a lower Feed in Tariff Allowance .
   1. Congress may  amend the Murang Kuryente Act or Republic Act No. 11371 to   subsidize  Fit Allowance . Only Php 8 Billion of the Php 200 Billion allocated for the MKA  had been appropriated. The current Fit Allowance is Ph0.0983 pkwh. The present pending application is to increase to Php 0.2008 pkwh.

Finally ,  for the information of the JCEC , as authorized by the Energy Regulatory Commission in May 2020, FIT for solar energy had increased from Php 9.68 to Php 11.2758 per kwh  while wind energy had increased from Php 8.53 to Php 9.89⁷6 per kwh , and all these upward adjustments had been made retroactive to 2016. The increases were authorized despite ERC approved degression rate of 6 % after year 1 for solar energy  and 0.5  % after year 2 for wind energy .

 Our consumer group  had  filed a petition in the ERC to annul the FIT increases in ERC Case No. 2021-001 RM which was docketed in January 13, 2021. The petition had been endorsed to the proper division of the ERC.

Thank you very much.

Very truly yours,

Atty. Victorio Mario A. Dimagiba, AB, LLB, LLM

President, Laban Konsyumer Inc.