DOE asked to consider ‘just transition’ in cutting subsidies for off-grid areas

AN energy and development think tank is urging the Department of Energy (DOE) to draft and present a just transition plan for off-grid communities as the government eyes removing subsidies for these areas.

The Center for Energy, Ecology, and Development (CEED) warned the DOE that without clean, affordable alternatives, removal of off-grid subsidies might drastically increase electricity prices, fueling greater energy poverty in such areas.

“While the gradual removal of subsidies for ‘rich off-grid areas’ might mean lesser universal charges for consumers in Metro Manila, it might mean raising electricity prices in Palawan, Mindoro, and Romblon to an unreasonable and unaffordable level, particularly for impoverished families in these areas,” CEED Executive Director Gerry Arances said.

“As most of these off-grid areas rely on diesel, it is quite likely that end-users in the area would not be able to keep up with prices stipulated in already existing power supply agreements (PSAs),” Arances noted.

“A review of existing power supply agreements (PSAs) in the areas should be part of the plan to transition them away from subsidy, to ascertain what its effects on the cost will be and what role alternative energy sources should play,” he concluded.

“Rather than merely distinguishing between ‘rich’ and ‘poor’ off-grid areas, DOE must also distinguish between consumer classifications based on income level. Residential consumers from classes D and E will most certainly have a hard time coping with an increased electric bill regardless of their area’s classification,” Arances stressed.

Arances noted that a transition towards becoming energy-independent would better suit off-grid communities, but it would take more than just removing subsidies. “The best way to make communities independent from subsidies is to make them independent from costly fuel,” he emphasized.

“The development of renewable energy sources for areas not connected to the grid have been consistently found to deliver more affordable electricity rates for communities, especially when it is managed by the communities themselves,” Arances said. “Communities must be enabled to tap into indigenous renewable energy sources already available to them so as to not be vulnerable to the instability of imported fuel prices,” he added.

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