Napocor assures no power rate hike in off-grid areas

MANILA, Philippines - The National Power Corp. (Napocor) has assured there would be no power rate increase in off-grid areas being served by its Small Power Utilities Group (SPUG) this holiday season.

Any power rate hike would take at least a year before being acted upon by the Energy Regulatory Commission (ERC) because the petitions have to undergo several public hearings, Napocor president and CEO Ma. Gladys Cruz-Sta. Rita said.

“[Napocor] normally files its rate adjustment every year to recover the adjustments in fuel costs and dollar exchange but it is not automatically or immediately approved,” she said.

“And with ERC’s intervention, there is hardly an increase in the rates granted to Napocor. It is usually spread out over several years. In fact, the ERC-approved basic fuel cost that [Napocor] is collecting from its power consumers is still based on year 2003 level of oil prices. So, imagine the huge difference in dollar and fuel rates,” she added.

Earlier this month, the state-owned corporation sought the regulatory approval to recover around P1.9 billion in operational and foreign exchange costs incurred in the delivery of power to off-grid areas in the first six months of 2014.

In its generation rate adjustment mechanism (GRAM) application, Napocor is seeking back P1.893 billion incurred from January to June 2014 to be recovered in two years.

It proposed to impose additional charges of P2.0627 per kilowatt-hour for off-grid customers in Luzon, P2.3236 per kwh for those in Visayas and P1.4584 per kwh for those in Mindanao.

For incremental currency exchange rate adjustment (ICERA), Napocor is seeking regulatory clearance to recover P8.775 million incurred also from January to June 2014. 

This will translate to an additional charge of P0.0178 per kwh to be recovered over 12 months in the monthly bills of end-consumers in missionary areas.

Earlier this week, Bayan Muna party-list Rep. Neri Colmenares vowed to block the proposed power rate hike of Napocor supposedly for its recovery-cost adjustments.

However, Sta. Rita noted in the past 10 years, basic power rates that the state-run agency is collecting from its missionary areas remain the same.

She also said GRAM and ICERA are the only ERC-approved adjustment mechanisms Napocor can tap to recover its incurred costs brought by fuel and foreign exchange adjustments in its missionary operations.

“Let me reiterate that these are actual adjustments in allowable fuel cost based on ERC heat rate cap and dollar exchange,” she explained.

Moreover, Napocor’s applications will undergo public hearings and all interested parties can participate by filing interventions or oppositions, which will be ERC’s basis for approving or rejecting its petition.

Sta. Rita also stressed operational funds of the state-owned firm is sourced from the recovery costs, and not from the National Government.

Therefore, blocking the said petitions will reduce funding for SPUG operations and will lead to power interruptions and the inability to pay for fuel deliveries to SPUG plants and subsidy requirements, she said.

“We are confident that once we explained to them the entire rate recovery process and Napocor’s missionary electrification program, they will not only understand our situation but also support our rate recovery applications. Rest assured that our petition will benefit the off-grid communities that we serve as we continue to improve our services,” Sta. Rita said.