Leap of FIT

IT WOULD probably come as no surprise to you—“you” meaning the hapless consumers of this impoverished republic—that the Aquino (Part II) administration could not be happy that we only had the second highest power rates in Asia.

From what I gathered, in a broad leap of faith, this administration would be gunning for the “No. 1” spot with the invaluable help of two government agencies: the Energy Regulatory Commission (ERC), and the National Renewable Energy Board (NREB).

OK, we almost jumped for joy over the recent huge cut in our electricity bills, computed by the power distributor Meralco at about 70 centavos per kwh.

But the venerable ERC just approved a gigantic leap in the so-called feed-in-tariff (FIT) allowance, a form of subsidy given by the government to encourage the development of so-called renewable energy (RE) such as solar and wind.

Guess who would pay for the subsidy. Hint: they should look a lot like you!

Anyway, the wonderful NREB originally limited the FIT to 50 megawatts (MW) at the most, which the ERB would have to distribute among the RE proponents.

But all of a sudden, just when our leader Benigno Simeon (aka BS) got the inspiration to appoint a new ERB chair, the same ERB approved the recommendation of the NREB to increase the FIT allocation to 500 MW in a rather secret move.

Yes, boss, that would be 10 times the original allocation!

Reports had it that RE companies pursued some, er, well, intense lobbying—as in “influence peddling”—with the Aquino (Part II) administration for the disturbing tenfold increase in FIT allocation.

Moreover, word started going around the power industry that certain groups pushed for additional FIT allocation of 200 MW, specifically for wind energy projects.

Also, said to be backing the RE firms were big businesses and their former executives, who had gained influential positions in the Aquino (Part II) administration.

That, in the wonderful word of governance, transparency and all that jazz, would be known as regulatory capture.

Not surprisingly, the NREB—the agency that the law tasked to come up with the RE rules as safeguards for consumers—again went along with the, er, “suggestion” from those big businesses.

And this was the kicker: the FIT rate would increase tremendously to P8 per kwh, compared to the current P0.04 (yes, boss, four centavos) in FIT charges in our electricity bills. Nice, no?

Well, outgoing Energy Secretary Carlos Jericho Petilla already stated his position on the FIT: All those companies could go ahead and build all sorts of expensive RE power, but they would have to make do with the FIT quota of 50 MW.

In other words, they would have to take the risks.

And did you know why Petilla resigned as energy secretary? Officially he declared that he wanted to help in the family business and all that personal stuff. But from what I gathered, Petilla got mad because our leader, BS, appointed somebody in the ERB who was obviously another “secret agent” of big business in the Aquino (Part II) administration.

According to various business organizations, the original FIT allocation of 50 MW at a rate of four centavos was in itself already a burden to the consumers, including factories and commercial establishments, of course.

Bear in mind, ladies and gentlemen, the NREB suggestion that was already approved by the ERB would be in effect for 20 years.

Let us do the math—that would be between P40 and 50 billion, no sweat!

To think, mga boss ko, those RE plants would not really run at full capacity, with the wind power estimated to be generating electricity at only 25 percent of capacity.

Unfortunately, whatever low capacity that they would deliver, we still would have to pay them for the full capacity, based on the bright thinking of the Aquino (Part II) administration.

In the business sector, they already prepared some financial models that, for the “approved suggestion” of another 200 MW in wind energy for FIT, with the plants running at 25 percent of capacity, we would actually pay for “ghost” power (something that was not delivered to us) of about P70 billion for the 20-year life of the FIT.

Now, the cheapest electricity in this country was computed at about P4 per kwh for the poorest sectors of society, and under the newly approved racket of the wind companies, those very same poor families would have to cough up P40 billion more for the FIT subsidy. Really nice!

Like it or not, no matter what our beloved senators said about how we needed clean energy and all that bull, the consumers must bear the FIT burden, particularly the bad decision of RE companies to build those expensive wind turbines.

Question: Did the Aquino (Part II) administration, aside from hijacking the budget through the DAP program, also get into the business of bailing out companies in trouble?

Methinks it would be an out-and-out robbery.