Napocor to implement unbundled rate this month

The National Power Corp. (Napocor) will start implementing its unbundled rate this month as ordered by the Energy Regulatory Commission (ERC).

"Though we may disagree on some points, we shall fully abide with the ERC on the matter. With all due respect while there may be a disagreement on the view of the ERC and Napocor, as they are the regulatory body we are obliged to follow the decision," Napocor general counsel Rainier Butalid said in an interview.

But Butalid said Napocor will continue to convince ERC to act on their motion for reconsideration asking for higher unbundled rates.

"We will still proceed with our motion for reconsideration since ERC came out already with an order last May 14, so be it," the Napocor lawyer said.

Last Monday, ERC chairman Manuel Sanchez said Napocor should implement the commission’s May 14 order. He said the rules are clear that Napocor cannot ignore its order unless an appeal or petition for certiorari has been filed before the Supreme Court.

The ERC had warned that sanctions might be imposed on Napocor if it continues to refuse to implement the regulatory body’s directive.

The state-owned power firm 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.

Viewing the approved ERC rates as "very low", Napocor decided to file a motion for reconsideration a few weeks ago.

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 charge schedule of P2.1258 per kwh, P2.2412 per kwh and P1.0262 per kwh for Luzon, Visayas and Mindanao, respectively.

In that motion, Napocor argued that the ERC’s approved rate "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 said 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.

The power firm also said that setting 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.