First Gen Corp. on Wednesday urged regulators to act promptly on the cost recovery mechanism of power companies using imported liquefied natural gas (LNG), saying the dilly dallying is causing financial pain and sends signals that only discourage the entry of more investors.
The call has reference to regulatory strictures allowing clean energy providers like First Gen merely to pass on to consumers the landed cost of LNG and not much else. According to First Gen, the prohibition to collect such other costs as storage and processing tells the prospective investor to think twice about providing industrial, commercial and household consumers the clean electricity they require from service providers.
Only in March this year, the Energy Regulatory Commission (ERC) ruled fixed costs resulting from the storage, testing and commissioning of First Gen’s LNG facility require a separate petition for cost recovery.
“It’s a painful restriction because we end up absorbing these costs, but we hope for a resolution because the LNG itself” is a critically important commodity in power generation, Francis Giles Puno, First Gen president and chief operating officer, told reporters in Taguig City on Wednesday.
Puno said First Gen has since asked both the Department of Energy and the ERC to be allowed to recover allied costs given that the LNG import terminal is an energy sector infrastructure with national significance.
According to him, continued regulatory inaction on cost recovery “sends the wrong signal to investors (as to) why build new capacity.”
“So in a lot of ways we’re in a situation today where we need to provide the correct signals to investors, including First Gen, to continue to grow and invest in new assets. But we have to be given the correct signals,” Puno said.
First Gen has a combined capacity of 3,668.2 megawatts (MW) from a portfolio of assets using natural gas, geothermal, hydroelectric, wind and solar power.
The company aims to grow total capacity to 13,000 MW in the next six years and spend as much as $20 billion until 2030 to achieve this.
