Hike in Net Metering Rates to Raise Power Cost – Meralco

INCREASING the compensation of end users participating in the government’s net metering program must be thoroughly studied, as doing so will lead to higher power generation charges, Manila Electric Co. (Meralco) said.

“Meralco will continue to actively support the net metering program, but we think proposals that will lead to higher power rates should be carefully studied… Any increase in compensation to net metering participants will automatically mean a higher generation charge,” Meralco Vice-President and Head of Utility Economics Lawrence S. Fernandez told BusinessWorld on Viber last week.

The higher remuneration for participants under the program will be reflected in the power bills of other electricity consumers, he said.

Previously, Richard B. Tantoco, president and chief operating officer of Energy Development Corp. said in a BusinessWorld Insights event that a policy change enabling higher or what he referred to as “more equitable” net metering rates will encourage consumers to invest in solar technology for their establishments.

The government’s net metering scheme allows qualified customers to generate their own electricity through renewable energy (RE) facilities with a capacity of up to 100 kilowatts. Participants can then export excess power to distribution utilities (DUs), for peso credits which will offset their power bills.

“[The] rate of compensation is governed by ERC’s (Energy Regulatory Commission’s) net metering rules, as amended. It is at the prevailing generation cost of the host DU,” Mr. Fernandez said.

The Meralco official explained that there are cheaper ways to obtain energy from solar technology.

“Instead of forcing consumers to pay [more] for net metering energy, DUs like Meralco have entered into power supply agreements with solar plants at P5/kWh (per kilowatt hour) or even less,” he said, referring to the firm’s deals with Bulacansol and Solar Philippines Tarlac.

If higher net metering rates are implemented, the government, DUs or power generation firms will eventually have to shoulder the additional costs, Terry L. Ridon, convenor of a public policy think tank said.

“We’d like to see the math on the proposal for a more ‘equitable’ net metering system, because some entity will ultimately have to bear the cost difference between the current net metering arrangement and the proposal for a more equitable scheme,” he told BusinessWorld in an e-mail over the weekend.

For him, household solar technology prices must be competitive enough to let end users do without relying on the power grid for most of their electricity consumption.

As long as the prices for these types of solar technologies remain expensive, they will remain as lifestyle choices among Filipino households, rather than compelling economic options, according to Mr. Ridon.

For Center for Renewable Energy and Sustainable Technology (CREST), net metered solar PVs (photovoltaics) can offset electricity during peak hours or when DUs source power from peaking plants at a “premium rate.”

“Reducing demand from peaking plants will significantly reduce the generation cost [which makes up] roughly 50% of the electricity bill,” CREST President Riedo A. Panaligan told BusinessWorld in an e-mail over the weekend.

“A higher net metering compensation will encourage more qualified end users to install a solar PV rooftop and apply for a net metering program. Both net metering and non-metering customers will enjoy the benefit of lower generation costs due to reduced demand for peaking plants,” he added.

Mr. Panaligan explained that customers who set up their own solar PVs want to reduce their own power consumption, adding that any excess energy exported to the grid is incidental.

“Since the government [and] DUs treat net metering customers as power generators, then they must be compensated equitably. Solar PV rooftops offset electricity sourced from peaking plants, paid at a premium rate, and as such these should be the reference price for exported energy,” he said.

Department of Energy estimates showed that a total of 3,795 qualified end users have registered for the net metering program with a total rated capacity of 30 megawatts-peak, as of end-2020. — Angelica Y. Yang

Source: bworldonline