First Gen awaits regulatory decision on LNG cost recovery
LOPEZ-LED First Gen Corp. said it is awaiting a decision from regulators on the recovery of its costs in using liquefied natural gas (LNG).
“We’re still optimistic that people will get to the table and agree that there’s a reasonableness in what we’re trying to do, what we’re seeking, which is again the recovery of the costs,” First Gen President and Chief Operating Officer Francis Giles B. Puno told reporters on the sidelines of an event organized by Eco-Business on Wednesday.
Mr. Puno said that the investments incurred in operating LNG are “a painful transition because we end up absorbing these costs.”
“But we hope there’s a resolution because the LNG itself is needed,” he said.
LNG is seen as a “transition fuel” towards renewable energy.
In March, the Energy Regulatory Commission (ERC) said that recovery should only be based on the landed cost, subject to verification by the commission.
“Any cost other than the landed cost of LNG (such as the additional fixed costs resulting from storage, testing, and commissioning of LNG facilities) are not contemplated under the PPAs (power purchase agreements),” the ERC said.
The regulator said that allowing these requires an amendment to the PPAs, for which the parties may first seek proper approval from the commission in a separate application to allow recovery from consumers.
“We have defended our case with the DoE (Department of Energy) and with the regulators. They know it’s a project of national significance, but it’s a little strange when… you cannot get the recovery,” Mr. Puno said.
Mr. Puno said that there is a need to “provide the right signals” for investors to continue to grow and invest in new assets.
“I don’t think it’s a lack of investor interest. We want to invest more. It’s a lack of clarity in terms of us being able to predict the revenue we will generate with that investment. Because it’s a big investment,” Mr. Puno said. — Sheldeen Joy Talavera