FEF Position on Unfair Power Price Hike

Our Position

on RA 9513RA 9513

Foundation for Economic Freedom, Inc.

What is renewable energy?What is renewable energy?• Energy from resources that do

not have an upper limit on the total quantity to be used.

• Such resources are renewable on a regular basis, and whose renewal rate is relatively rapid to consider availability over an indefinite period of time.

• These include, among others, biomass, solar, wind, geothermal, ocean energy, and hydropower conforming with internationally accepted norms and standards on dams, and other emerging renewable energy technologies. (RA 9513)

Fast Facts: the Philippine SituationFast Facts: the Philippine Situation

• 34%34% of the country’s energy mix is renewablerenewable or around 5,300 MW out of the 15,000 MW installed capacity

• Contrast to the Global average: less than 10%

• Philippines contributes only 0.48%0.48% to global carbon pollution (NREB)

Fast Facts: the Philippine SituationFast Facts: the Philippine Situation

• Transportation is the country’s top polluter

Power plants belong to the bottom ten polluters

Renewable Energy Act of 2008Renewable Energy Act of 2008• Signed into law in December 2008, supposedly to

provide incentivesprovide incentives for investorsfor investors to engage in RE projects in the country

• Department of EnergyDepartment of Energy (DOE) - lead agency

• Energy Regulatory CommissionEnergy Regulatory Commission (ERC) – an independent quasi-judicial regulatory agency supposed to issue FIT (feed-in-tariff) rulesFIT (feed-in-tariff) rules in consultation with the National Renewable Energy Board (NREB) created under Sec.27

What is FIT?What is FIT?

• An RE policy that guarantees payments on a fixed rate per kwh for emerging RE sources: solar, biomass, wind, solar, run-of-river hydro

• A fancy term for the amount that the government wants to add to our electricity bills to encourage more use of new RE

For all intents and purposes,

FIT IS A TAXFIT IS A TAX

What is FIT?What is FIT?• A subsidy to make up for what the RE

technologies cost:Solar – PHP 17.95 kw/hr Wind-PHP 10.37 kw/hrBiomass – PHP 7.0 kw/hrRoR-PHP 6.15/kwhr … vs conventional (PHP 5.0 kw/hr)

• We do not oppose REWe do not oppose RE. We oppose the plan to make Filipino consumers and industries pay PHP 8B annually for the next 20 years to subsidize and guarantee the profits of RE developers.

Our PositionOur Position

•It is more prudent to waitwait, given advances in technology, until the until the cost of solar and wind cost of solar and wind power drops to paritypower drops to parity with conventional sources which are more efficient.

Our PositionOur Position

• We can increase our share of RE by rehabilitating and improving existing rehabilitating and improving existing hydro and geothermal sourceshydro and geothermal sources, which produce energy far cheaper than wind or solar.

• We support solar for OFF-Grid small solar for OFF-Grid small island areasisland areas where the avoided cost is much higher (PHP 11/kwhr) due to the use of diesel

Our Disagreements with NREBOur Disagreements with NREB

• DOE recommended 20 MW for solar but NREB increased it to 100 MW. This means an additional surchargeadditional surcharge on consumers.

• Why should FIT be imposed for 20 years20 years when the minimum proposed by law is only 12 years?

• No competitive biddingNo competitive bidding whether from among the different RE technologies or within a specific technology.

Our Disagreements with NREBOur Disagreements with NREB

• No biddingNo bidding for terms of less than 20 years. No bidding, period. All contracts are negotiated.

• FIT Rate determined by a “risk-adjusted” rate of return. = guaranteed super-profitsguaranteed super-profits

• Subsidy will not go to “cheapest first” but allRE developers are guaranteed subsidy, even high costing wind and solar.

• RE Developers are guaranteed cash flow, RE Developers are guaranteed cash flow, profits, collection and against technological profits, collection and against technological obsolescence for 20 years.obsolescence for 20 years.

Our Disagreements with NREBOur Disagreements with NREB

• NREB hiding onerous charge against consumers by submitting FIT Rate under the “rule-making” power of ERC.

• Ergo, no public hearing, no publicationno publication, just “public consultation” EVEN IF THE FIT RATE WILL INCREASE CHARGES FOR ALL INCREASE CHARGES FOR ALL CONSUMERSCONSUMERS. This is a clear violation of the letter and spirit of EPIRA and the mandate of ERC.

They say; we sayThey say; we say

They say…We have to diversify.

We say…Solar and wind are unreliableSolar and wind are unreliable and can’t be basis for energy diversification.

We need around 5,000 MW in the next few years to supply growing energy demand

Old RE is still available that is yet to be Old RE is still available that is yet to be untappeduntapped -15,000 MW (hydro and geothermal)

They say…It is good for the environment.

We say…The Philippines has no obligationno obligation to reduce its carbon emissions. Our contribution to global pollution is almost negligiblenegligible.Transportation is the top pollutant; power plants rank in the bottom ten.We are already producing more than 30% of our power from Renewables, more than the US at 10 %.

They say…Energy independence and security

We say…Better results; cheaper cheaper alternativealternative.Solar and wind are rather inefficient and unsteady since they are dependent on weather and other climatic conditions. Conventional sources are more Conventional sources are more reliablereliable and cost only PHP 5 per kilowatt hour

We still have 15,000 MW of 15,000 MW of untapped hydro and geothermaluntapped hydro and geothermal

They say…Solar energy is good.

We say…We don’t oppose solar energy per se, but they should go to off-grid small island areas where the avoided cost (about PHP 11/kwhr) is high due to the use of diesel.

They say…What is PHP 12 centavos per kilowatt hour?

We say… It only covers the generation charge.

There are hidden hidden costscosts. NGCP will also need to install new transmission lines and it may require further rate hikes for distribution utilities.

Why does it concern you?Businesses, which already suffer from the

highest power cost in Asia, will have to suffer more unnecessarily. This will make them less competitive.

Investors will not come to the country if power cost will become higher still.

No investments, no jobs.No investments, no jobs.Consumers are being taxed without them

knowing it just to subsidize the profits of these wealthy RE developers.

What can you do?What can you do?File a comment using the official

comment form at the ERCFile a petition for intervention/relief

Make noise in social media. “Like” our page: NO to Electricity NO to Electricity

HIKE for FilipinosHIKE for Filipinos

PROTEST, PROTEST, PROTEST!PROTEST, PROTEST, PROTEST!

Annex A

P1.6 billion - Daang Hari-South Luzon Expressway link

P10.59 billion - NAIA expressway P21 billion - North Luzon-South Luzon

expressway link P10.5-billion - Cavite-Laguna

expressway

Annex B