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ERC Comments on DOE’s Draft Policy to Enhance Net-Metering

In its recent letter to the Department of Energy (DOE), the Energy Regulatory Commission (ERC) expressed its views on the former’s draft department circular entitled, “Policies to Enhance the Net-Metering Program for Renewable Energy Systems and Other Mechanisms to Ensure Energy Security”.  The ERC, in the said letter, averred that the Net-Metering Rules should be made applicable to all types of renewable energy resource and not just focused on a certain type of technology or resource, among others.

"Upon perusal of the draft department circular, we were of the opinion that there are possible legal impediments in the implementation of the DOE circular.  The cross cutting concerns of energy security, affordability, and reliability also needs to be considered and addressed”, said ERC Chairperson and CEO Agnes VST Devanadera.  

The ERC raised the following possible legal drawbacks of the DOE’s draft circular:  (1) the multiple compensation mechanism as proposed, is not consistent with the provisions of the Renewable Energy (RE) Act and the Electric Power Industry Reform Act (EPIRA); (2) Sections 6 (Own-Use RE Systems with Above 100 kW capacity) and 7 (Own-Use RE Systems as Emergency Supply Option) are not supported by the express provisions of the RE Act; and (3) the responsibilities imposed upon ERC under Section 11 has already been addressed with the promulgation of the Amended Net-Metering Rules.

The ERC commented that the use of retail rate as one of the compensation mechanism, as opposed to the use of blended generation cost that the ERC adopted in its recently promulgated Amended Net-Metering Rules, will consequently increase the generation cost of the distribution utility through the net-metering program.  ERC’s comment was based on the simulation it conducted on the impact of using the retail rate as the price of export at different levels of net-metering penetration.  The resulting retail rate of PhP13.8528/kWh at the 30% maximum net-metering penetration level is even higher than the last Feed-In Tariff (FIT) rate set at PhP8.69/kWh, and this runs contrary to the EPIRA’s policy to provide the least cost power options to captive consumers.  

Moreover, ERC asserted that it has the mandate to issue rules and regulations pertaining to Net-Metering and it has fulfilled such mandate in its promulgation of the Net-Metering Rules in 2013 and the Amended Net-Metering Rules last October 2019.

The recent amendments to the Net-Metering Rules of the ERC sought to:  (1) Improve the interconnection set-up to take advantage of new technologies and to implement the Renewable Portfolio Standards (RPS); (2) Simplify permitting procedures; (3) Reduce installation soft costs; (4) Minimize the rate impact to non-net-metering customers; (5) Address the subsidy impact on the non-net-metering customers; (6) Rationalize entitlement to the lifeline subsidy rate; and (7) Implement a stringent reporting process.

“The Commission fully supports the development of the RE Program, and we commend the DOE for coming up with its draft department circular that seeks to encourage and promote electricity end-users participation into the Net-Metering Program.  The department circular, however, should not veer away from the confines of the law that it seeks to implement”, Chair Devanadera stated.


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