"We expect Napocor to file a new application (for incremental currency exchange rate adjustment). We believe the consumers deserve more than what we have already approved, but we are waiting for Napocor to apply for that," ERC chairman Rodolfo B. Albano Jr. said.
Albano said under the ERC rules, power generators and distributors should pass on to consumers whatever gains or losses they incur from operations.
At present, ICERA is being used by Napocor to recover its losses whenever there is a movement in foreign exchange.
The P2 per kWh Napocor rate cut is being considered under a deferred rate cut from Napocor’s forex gains in 2005.
Since Napocor continues to post gains from foreign exchange, more reductions are expected.
Napocor is expected to register a net earnings of P90 billion in 2006 due largely to the appreciation of the peso against the dollar.
Albano noted that the ERC is just awaiting the move of Napocor to reflect these reductions in their rates.
But the ERC chief noted that there was some legal impediments to the automatic pass on of these gains to consumers.
It was learned that the ERC is expecting Napocor to apply the rates immediately but may have been hesitant due to a previous Supreme Court decision requiring application, public hearing and publication of rate adjustments, including escalation due to generation costs and foreign exchange movements.
"Because of that SC decision, Napocor can afford to have a deferred accounting adjustment (DAA) on its forex gains," the ERC head said.
The ERC has already given the Napocor a total rate reduction of eight centavos.
The eight centavos power rate reduction will start in Feb. to March billing cycle.
The ERC has also approved succeeding power rate adjustments.
The next rate reduction will be 8.13 centavos per kWh for billing period April 26-May 25, 2007.
The succeeding cuts are 12.21 centavos per kWh for June 26-July 25 billing cycle; and 7.9 centavos per kWh for Aug. 26-Sept. 25, 2007.