MANILA - Power consumers should not automatically be made to shoulder the cost of rising fuel prices in the world market, a renewable energy player said on Wednesday.
Following the Supreme Court ruling chastising the Energy Regulatory Commission (ERC) for postponing competitive bidding for power supply agreements (PSAs), Allotrope Partners said ERC should next look at removing the "automatic pass through" provisions of these power deals.
Marlon Apanada, Philippine managing director for Allotrope Partners, said removing these provisions would level the playing field for renewable energy players.
Apanada said automatic pass through means that whenever the cost of fuel, such as coal, goes up in the world market, power producers and distributors could simply pass this higher cost on to consumers instead of looking for cheaper alternative power sources.
"Right now no one is incentivized to procure diligently and efficiently because all fuel cost and all foreign exchange fluctuations are passed through to the consumers," Apanada said in an interview with ANC.
Apanada said utility-scale solar power plants could now produce power at P3 per kilowatt-hour (kWh) which is competitive with coal plants that output power at P5/kWh.
But he added that renewables, which don't consume any fuel, could better compete with fossil fuel technologies if automatic pass through provisions are removed.
"That would be the next step for us to have a level playing field," he said.