ERC tells Napocor to implement new rates immediately

The Energy Regulatory Commission (ERC) said the National Power Corp. (Napocor) should implement its unbundled rates adjustment before the regulatory body acts on the state-run power firm’s bid to push for higher power rates.

Manuel R. Sanchez, chairman of the ERC, stated in a letter to Edgardo M. del Fonso, president and chief executive officer of the Power Sector Assets and Liabilities Management Corp. (PSALM) that the commission’s order last May 14 is "immediately executory."

Sanchez said that under the rules of practice and procedure governing hearings before the ERC, Napocor/PSALM, cannot ignore its order unless an appeal or petition for certiorari has been filed before the Supreme Court.

Napocor has refused to implement ERC’s order and insisted that it will continue to use its existing generation schedule approved by the ERC in a ruling issued last Sept. 6, the billing period covers April 26 to May 25 and succeeding billing periods.

Instead, Napocor filed with the ERC a motion for reconsideration that seeks to increase power rate charges to the Luzon, Visayas and Mindanao grids.

In its motion, Napocor proposed a revised generation rate schedule as follows: P3.0075 per kilowatthour (kwh) for Luzon; P2.3465 per kwh for Visayas, and P1.4546 per kwh in Mindanao.

These rates are higher than the ERC-approved generation rate schedule of P2.1258 per kwh, P2.2412 per kwh and P1.0262 per kwh for Luzon, Visayas and Mindanao, respectively.

In its motion, Napocor legal counsels led by its vice-president for legal affairs Rainier B. Butalid said: ‘’The revised Napocor generation rate schedule fails to take into account legitimate costs incurred by Napocor which would inevitably endanger electricity prices to the detriment of end-users."

The ERC’s approved generation charges were based on the adoption of the generation rate adjustment mechanism (GRAM) and incremental currency exchange recovery adjustment, but Napocor said the charges will not allow the state-run power firm to recover the legitimate costs of generation.

Napocor added that the setting or generation rates at "inordinately low levels" without considering the true, reasonable and realistic costs runs counter to the privatization efforts in the electricity industry.

Other consequences cited by Napocor included the potentially damaging impression such policy could send to investors. It said that setting of unrealistic rates discourages the private sector from acquiring any of Napocor’s plants, or from putting up additional generation facilities as the rates do not provide for a reasonable return on investment.

The ERC chief said earlier sanctions might be imposed on Napocor for refusing to carry out the regulatory body’s directive.

"Napocor has to implement our order pending the resolution of its motion for reconsideration. It has to execute the order until such time that the ERC has resolved the issues it cited in its motion. Until then, it cannot refuse or reject our order," said Sanchez.