Meralco junks bid for full-rate compensation to net metering customers, warns of higher generation cost to other end-users

Meralco’s net metering program sees 7% growth in installations

Power distribution utility firm Manila Electric Company (Meralco) rejected a proposal to compensate the residential net metering customers at full rate as it will cause higher power rates for all Meralco customers.

“The proposed higher compensation for exported energy of net metering customers will be recovered from all other customers through the generation charge. A higher rate of compensation for exported energy automatically means a higher generation charge for all captive customers of the DU [distribution utility],” Meralco Vice President and Utility Economics Head Lawrence Fernandez was quoted in a BusinessMirror report.

Under the net metering program, end-users with renewable energy installations are allowed to sell excess electricity they generated directly to their DU.

A net metering participant is charged for their consumed net electricity while also credited for any overall contribution to the electricity grid.

Under DOE’s “Policies to Enhance the Net-Metering Program for RE Systems and other Mechanisms to Ensure Energy Security,” which is the department’s latest draft circular, it is proposed that excess generation from a billing period be as energy per kilowatt hour and kept as credits that offset consumption in subsequent billing periods. The remaining credits will be forfeited by the end of the year.

Fernandez said there are various components in a monthly electricity bill such as generation, transmission, supply, metering. Adding to that are the universal charges, feed-in-tariff allowance and lifeline subsidy.

Net metering customers’ excess solar PV production contributed only to the generation component.

“More and more regulators and policy-makers in other countries that implement net metering have determined that it is only fair that NM customers share in such costs because, for example, they use distribution facilities to import energy from and export energy to the grid,” said Fernandez.

The Electric Power Industry Reform Act (EPIRA) states that DUs charge based on cost service. Fernandez said that to ensure equity and fairness, NM customers which will use DU’s line should be charged with DU cost, which is also in line with the DOE’s Causer’s Pay Policy.

The power distribution firm also told DOE to carefully consider the possible effect of allowing those with facilities more than 100 kilowatts (kW) to inject their excess energy generation into the grid.

“The anticipated benefits to the few large customers of the proposed measure should be weighed alongside the burden that the rest of the customers will have to carry to support the program,” said Fernandez.

A net metering agreement (NMA) will be signed to ensure that the DU will take in excess generation from the customer’s solar PV facilities and compensate the customer for it.

Fernandez expounded that the NMA is pre-approved by the ERC. I has no expiration and will be in effect until the participant is no longer a customer of the DU.

“This proposal means allowing nonresidential customers [such as manufacturing plants and warehouses] with large-scale solar PV facilities to enjoy the benefit of a pre approved NMA, whose costs will be passed on to other customers, particularly residential end-users, of the DU,” Fernandez said.

The DOE is still seeking industry stakeholders’ comments for the draft circular.

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