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LKI 2020-041 Press Statement- 2 ERC Orders will increase power rates


July 7, 2020


Consumer Group Laban Konsyumer Inc. (LKI) recently stated that “suspiciously, while many, individuals, business , parties and even legislators , including the Energy Regulatory Commission (ERC) themselves were attending and speaking at the latest Congressional Hearings on Energy, the  Energy Regulatory Commission  released  two  (2 )  Orders and  Resolutions increasing the  power  rates and Feed in Tariff ( FIT ).

The group highlighted how “This FIT is the rate that TransCo will pay the FIT-eligible generation companies. So, TransCo’s payments to generation companies will go up, apart from the back billings the generation company owned by San Miguel ,  will charge. In turn, TransCo will turn around and ask ERC for a higher FIT-All, to fund the additional FIT, and this will be passed on to the consumers”.

LKI President Atty. Vic Dimagiba complained that “This may lead to a higher FIT-All to fund the additional payments to FIT eligible generation companies. For the solar batch 1, the FIT went up from P9.68/kwh in 2015 to P11.2758/kwh in 2020. For wind batch 1, the FIT was increased from P8.53/kwh in 2015 to P9.8976/kwh in 2020. These are significant increases, any way you look at them. And this will definitely have an impact on the final rates that consumers have to pay because it will surely be passed on to our detriment. This was all indicated in the resolution approving the adjustment to the Feed In Tarriff.”

LKI explained that what worries the group is that “at the end of the day if these FIT rates continue to go up, this will only mean that consumers will be charged more, having more to pay for their electricity bills. This seems to be terrible timing, considering that our country is still trying to survive this current pandemic, lockdown and global crisis. We believe there should be a hearing on this first before we increase the rates.

 These are too many rate increases being forced upon the consumers by ERC. In fact, this is also coming on the heels of the ERC Order favoring the three (3) Power Supply Agreements owned by  San Miguel power plants with Meralco .  ERC allowed an increase in the kwh Provisional Authority issued by ERC in  December 2019 at the rate of Php 4.0459 /kwh. The increase will input escalation clause as well as the plant capacity  as factors that will increase the  Provisional Authority . Worst,  the increases are  retroactive to December 2019.

Dimagiba added that ERC should   take a direct hand and consider  whether  San Miguel backbilling can be amortized going forward, to minimize rate impact.  Generation charge is the biggest component of the electricity bill, and the largest rate that customers have to pay for, and these three (3) PSA San Miguel plants will add their higher rates during this GCQ. We hope all these rate increases can be looked into, and we hope that they can be prevented for the time being. We cannot afford another pandemic in higher rate increases .”

Dimagiba concluded “People are losing jobs, and do not have the means to pay for higher electricity rates, and these are FIT-All rates if ever… a cost that we do not even kow if we are enjoying the power that we are paying for with these costs. The resolution was also released when a Senate Hearing was going on, so this all appears very strategic in our eyes. Perhaps government should also look into these moves by the regulator, increasing FIT costs. We are trying to protect consumer welfare here, and ensure that consumers are paying fair rates.”