Net metering rules: A duel of wits between unarmed opponents
Credit to Author: Ben Kritz| Date: Mon, 16 Dec 2019 16:54:18 +0000
IF you are a business or other property owner with your own supply of electricity from a renewable energy (RE) source, most countries would encourage your participation in a common and widely-used program called “net metering.” The Philippines, however, is not most countries.
Net metering is a simple scheme in which an independent source of RE — for example, a warehouse that is powered by its own rooftop solar power installation — can sell excess electricity it produces to the distribution utility. The scheme is generally only applied to RE facilities, mostly solar, but sometimes including small biomass generators, wind power, or hydropower.
It is called net metering because in practice, most such electricity producers are still connected to the regular grid, so that the RE power augments the grid-supplied energy, or vice versa; at the end of the month, the utility deducts the surplus from the amount consumed from the grid, hence, “net.”
It is not a difficult concept to grasp or for which to devise the necessary bureaucratic rules and procedures, but the two agencies responsible for it here, the Department of Energy (DoE) and the Energy Regulatory Commission (ERC), are approaching it with all the skill of a couple of pedicab drivers trying to figure out how to fly the Space Shuttle.
Net metering was mandated as part of the Renewable Energy Act of 2008 to provide an incentive for the development of small-scale RE systems. The idea ran into trouble immediately because of the typically sketchy way Philippine legislation is written; there being no useful details in the law itself, its parameters were established in the development of the implementing rules and regulations (IRR).
In the IRR, the ERC at the time somehow got it into their heads that net metering should be considered an analog of the feed-in-tariff (FiT) granted to commercial-scale RE projects. It is not; net metering is an open-ended consumption incentive, whereas FiT is a fixed production subsidy. Nevertheless, the ERC used the misapplied comparison to establish limits on net metering, the rules for which they finally released in 2013, after more than four years of dithering with them.
That set of guidelines was not well received, considered complicated and restrictive by almost everyone who had a comment on them, and so the ERC began the laborious (for them, one of the slowest-moving government agencies in the entire bureaucracy, everything seems laborious) process of amending them. The updated draft rules were finally published last October.
The new guidelines approved by the ERC mandate a 20-day processing time by distribution utilities (DUs) from initial application of a net metering “prosumer” to interconnection with the DU’s grid; removes a number of “soft costs,” such as fees for “distribution impact studies”; and sets the rate at which electricity can be sold back to the DU at the same rate as the DU’s blended generation cost.
ERC taking too long
In the meantime, however, because the ERC was taking so long to develop the net metering rules, the DoE drafted its own set of rules. Not being much more efficient than the ERC, however, these were also not produced in a timely fashion, and were only made public last week.
Immediately upon receiving the DoE’s draft, the ERC declared that it had “legal impediments” and “was not consistent with” the terms of the Renewable Energy Act and the Electric Power Industry Reform Act (Epira) of 2001. The terms of DoE’s draft that ERC took particular exception to was making the net metering rate the same as the retail rate because “that is higher than the FiT rate”; not limiting net metering to power sources generating less than 100 kilowatts; and in general, usurping ERC’s authority as the regulator to set the rates in the first place.
Neither agency exactly covers themselves in glory in handling this particular issue. The ERC is correct in pointing out that the DoE should not be attempting to set any sort of electricity rates, as the law puts that authority completely in the ERC’s hands; the DoE should concern itself with policy rather than minutiae, and the fact that it does not do so consistently might explain a great deal about why the Philippines is chronically behind in energy capacity development.
On the other hand, there is no other mechanism besides DoE to check the excesses of the ERC — an excessive amount of time taken to promulgate regulations, and excessively narrow and illogical parameters that are intended to discourage rather than encourage net metering participation.
Given the country’s thin margin of energy reserves, everyone with the capacity to do so should be encouraged to participate in the net metering scheme, and be given the incentives of easy application and connection and attractive rates for their excess power. In most countries, the responsible agencies would have figured that out in something less than 11 years since the passage of the enabling law. But again, the Philippines is not most countries.
ben.kritz@manilatimes.net
Twitter: @benkritz