Tuesday, August 9, 2011

Meralco warns of rate hikes with RE's feed-in-tariff

August 4, 2011, 3:42am

MANILA, Philippines — As public hearings on the feed-in-tariff (FIT) for renewable energy technologies formally kicked off, power utility giant Manila Electric Company (Meralco) also started raising alarm bells that this will result in higher rates to be billed to its customers.
In its position paper submitted to the Energy Regulatory Commission, the utility firm forthrightly stated that “the entry of RE will translate to higher cost of electricity.”
As some RE developers have been batting for “the-sky-is-the-limit” return on their investments, the forthcoming scenarios portend of electricity rates shooting through the roof further – that is considering that Filipino consumers are already paying the highest rate across Asia.
As a matter of fact, discussions are still confined within the scope of FITs per technology type as stakeholders have not gone explicitly yet on prospective add-on costs, such as reserve and back-up capacities for intermittent REs and the additional investments of the power utilities for the RE sources’ integration.
Meralco itself has filed its motion for intervention in the application of the National Renewable Energy Board (NREB) on the FITs for RE technologies that will eventually be passed on to consumers.
Most of the DUs similarly aired, that apart from the higher cost of electricity that will be unilaterally imposed on the hapless consumers, the entire RE integration policy may also disturb the whole chain of the country’s electricity systems – with the needed adjustments in planning to additional investments to be made by utilities just to accommodate renewable energy in the mix.
Meralco noted that while its supports the government’s direction towards a clean energy portfolio, it is also a lingering concern that “RE technologies remain today as relatively more expensive than conventional sources of energy.”
As distribution utilities are front-liners in dealing with customers’ concerns, especially on any adjustments in the cost components being billed to them, Meralco recommends that “the implementation of mechanisms that will lead to additional charges on consumers be carefully calibrated.”
When the Department of Energy (DoE) slashed to 760 megawatts the installation target for RE that must be integrated into the grid by 2014, the resulting FIT Allowance (FIT-All) charge as calculated by the NREB would be at P0.105 per kilowatt hour.
Beyond the cost impact on consumers, Meralco sounded off apprehensions that the mandated ‘priority connection’ of RE technologies will merit changes in their planning strategies and may also entail adjustments in their system of operations, especially with the intermittent nature of some resources.
“The RE Act mandates DUs to provide priority connection and to accommodate, without discrimination, any resources wishing to connect to the DU’s system. To comply with this mandate, DUs must be prepared to take in the capacity of the RE resources that will connect to their systems,” Meralco said

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