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Gatchalian scores ERC for ₱6.6 billion FiT payment backlog

PASAY CITY, Philippines – Senator Win Gatchalian speaks at the hearing of the Joint Congressional Power Commission (JCPC) at the Senate, 9 May 2017, on the status and implementation of the provisions of the Renewable Energy Act. Gatchalian chairs the Senate Committee on Energy. Photo by Mark Cayabyab/OS WIN GATCHALIAN

Senator Win Gatchalian took to task the Energy Regulatory Commission (ERC) for regulatory inaction that has resulted in a whopping ₱6.6 billion backlog in feed-in tariff (FiT) rate payments owed by government to renewable energy developers for the year 2016, including ₱230 million in interest payments alone.

Gatchalian, the chairman of the Senate Committee on Energy, linked the payment backlog to the sluggish action of ERC commissioners on applications of the National Transmission Corporation (Transco) to collect higher FiT-All rates aimed at augmenting its subsidy to eligible RE developers and allowing it to pay its obligations.

“I hate to say it, but because of the delays of ERC, we will be paying ₱230 million in interest payments. That’s why I am quite adamant in getting a definitive timetable (when the applications will likely be approved) from you [ERC] because I know that the amount will grow bigger. Every day it piles up,” Gatchalian said during a hearing of the Joint Congressional Power Commission (JCPC) on the status and implantation of the provisions of the Renewable Energy Act.

“In line with attracting investors and promoting RE…we will never get serious investors if we don’t fulfill our contractual obligations, and FiT-All is one of them,” he added.

In December 2015, Transco sought to increase the FiT-All rate for 2016 to 12 centavos per kilowatt hour (₱.12/kWh). Before the application can be approved, Transco filed another application in December 2016, this time asking to further hike the rate to 22 centavos per kilowatt hour (₱.22/kWh).

ERC officials told members of the JCPC that it is set to issue its final approval of the 2016 application on June 9. On the other hand, they are also set to convene the first jurisdictional and expository meeting for the 2017 rate application on May 15, Tuesday, and its approval by September 2017.

“These unwarranted delays in the ERC approval is the reason why Transco has not been able to pay the RE developers. And because of these delays, we have to pay consequential costs,” Gatchalian stressed.