Un-FIT

Here’s another ploy whereby consumers will be screwed and carpetbaggers rewarded immensely.

Sometime ago, power generators came up with an insidious idea: collect feed-in tariffs (FIT) from electricity consumers and use the fund to subsidize investors in so-called “renewable energy.” Our policy-makers, like blind rats, fell for the idea. The proposal, now law, is so insidious that even power plants still on the drawing board will be compensated. The tariff will be collected from consumers over a 20-year period.

FIT comes into effect this February. The tariff might seem small: P0.04 per kWh. Total collections from this ploy, however, will add up into billions.

This is such a brilliant ploy. The real beneficiaries, the generation companies (gencos), will not collect the tariff themselves. Because of the way our power sector is set up, the distribution utilities like Meralco and the electric cooperatives will be responsible for collecting the tariffs. The money will then be handed over to the National Transmission Corporation (Transco). Transco then hands over the collections to the gencos investing in renewable energy.

In this set-up, the distribution utilities and the Transco make nothing from collecting the FIT on behalf of the gencos. The gencos, in turn, will make tremendous profits without having to stand at the frontline, facing public ire.

The justification for the FIT might seem so politically correct at first glance. The scheme is supposed to encourage investments in renewable energy. That, in turn, will help us avert global warming.

The justification is deceptive.

First, fully 30% of our power comes from renewable energy, including hydroelectric plants and geothermal facilities. The impressive share of renewable energy in our country’s power profile was achieved without such subsidies as FIT. Any additional investment in fancy renewable energy sources will be marginal.

Second, the Philippines accounts for less than 1% of global carbon emissions causing global warming. FIT will have only minimal effects on carbon emissions. The biggest culprits are emissions caused by inefficient transport systems. The billions (possibly trillions over 20 years) collected for FIT will be more efficiently used if the funds are used to improve transport systems. Just tightening controls on vehicular emissions will help reduce our carbon footprint a thousand times more effectively than subsidizing newfangled “renewable energy” sources.

The costs of FIT are immense.

The scheme will raise our power costs even more, making our industries even less competitive than they already are. Thousands of manufacturing jobs might be lost as we compete with neighboring countries whose policies help manufacturing growth by subsidizing industrial power costs.

The additional costs imposed on consumers could cause some of our electric cooperatives to suffer from higher default rates and actually go into bankruptcy. The money that goes to FIT will cut into the disposable income of our people, raising poverty rates and hobbling commerce.

To be a more competitive economy, we should cut power costs. FIT raises power costs for our consumers. It will be a factor contributing to economic stagnation.

The Energy Regulatory Commission might save our economy from disaster by looking into the economic repercussions of a scheme that enriches only the very rich. The agency should hear consumers out before finalizing the rules on FIT.

Conflicted

The credibility of those objecting to the continued use of the PCOS system for the next elections is undermined by the fact that the shrillest critics are conflicted. A group advocating for a shift to another format for automated polls, specifically the so-called Open Election System (OES), leads in the campaign against the PCOS system and its principal supplier Smartmatic.

The proposed alternative OES system does not conform to the specifications of the Automated Elections Law (R.A. 8436). On that point alone, the alternative system must be taken off the table.

We have just over a year before the next electoral exercise. That is barely enough time to prepare the technologies to be used. Yet those proposing an alternative format seem to be bent on setting up roadblocks to getting the existing system ready for next year’s crucial exercise.

For instance, the diagnostics and repair of the 81,000 PCOS machines in Comelec storage will require at least eight months of work. The poll body ruled that the diagnostics and repair work are part of the supplier Smartmatic’s extended warranty. Inasmuch as the Supreme Court has twice upheld the contract with Smartmatic, Comelec officials ruled that no bidding was required in asking Smartmatic to do the diagnostics and repair work in the framework of an extended warranty.

P300 million was agreed upon as the cost of doing the diagnostics. Up to P900 million is available for any of the repairs that need to be done. If no repairs need to be done, that amount remains in Comelec’s pockets.

Those opposing the award of the diagnostic work to the original supplier want a public bidding exercise. If that is done now, it will delay the diagnostics and repair for about six months. The system will not be ready for the May 2016 polls.

For better or for worse, the Comelec is stuck with Smartmatic. It does seem logical to turn to the original supplier and owner of the technology for the diagnostics and repair of the system.

I drive an Isuzu and, quite naturally, bring my vehicle to the Isuzu shop for periodic maintenance. It does not strike me as logical to bring my vehicle to a Toyota shop, for instance, even if they might charge me less for maintenance work.

It seems to me, in the absence of compelling evidence to the contrary, that Comelec followed the same commonsensical course in deciding the original supplier should do the maintenance procedures.