Napocor-PSALM deal won’t hike power rates

The Energy Regulatory Commission (ERC) has assured the public that its approval of the joint application of the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corporation (PSALM) for a gas supply and purchase agreement (GSPA) will not have an upward impact on current electricity rates. 

"The reported P26.195-billion natgas (natural gas) costs pertain to the shortfalls (i.e. gas not taken) incurred for the period October 2001 to December 2004 which were not at all charged to customers.  Instead, the Napocor was only allowed to recover the actual fuel consumption," ERC chairman Rodolfo B. Albano Jr. said. 

The actual fuel consumption pertaining to natgas are being recovered and adjusted through the generation rate adjustment mechanism (GRAM) which were charged to Napocor’s customers starting 2004 when the GSPA application was granted provisional approval. 

Such tariffs will run until another application for recovery of the natgas fuel costs is filed by Napocor through the GRAM and approved by ERC.  natgas fuels had been integrated and charged in the fifth GRAM filing of the Napocor and was carried on until the sixth and seventh GRAM.  

The approval of the GSPA promotes public interest in terms of sufficient and efficient power supply and in support of the government’s thrust to reduce the country’s reliance on imported fuel and provide alternative environment-friendly fuel for power generation. 

The GSPA as approved by the ERC features, among others:  specified quantity of natgas purchased by Napocor to be used for the generation of electricity in the Ilijan natural gas combined cycle power plant Napocor’s annual and daily contracted capacity; sellers’ option to source the gas from another reservoir or through regasified liquefied natural gas in cases of failure to deliver the contracted amount of gas due to early depletion of the reservoir; and sellers’ liability to pay or replace the fuel in case Napocor opts to use an alternative fuel.