MANILA, Philippines – An oil industry official has questioned National Power Corp.’s proposal for an increase in the universal charge component of bills amid the steep drop in oil prices since the middle of 2014.
In a statement, Eastern Petroleum chairman and CEO Fernando Martinez urged consumers to question the proposed electricity rate under the universal charge component to cover under-recoveries.
As a power consumer himself, he said he is questioning Napocor’s motives to increase rates, citing that domestic and international fuel prices have significantly decreased as much as 60 percent in the last 18 months.
“Given the substantial decrease in fuel costs, we strongly believe that their operational costs should have decreased and their existing universal charge for missionary electrification (UCME) of P0.0454/kwh should suffice to eventually recoup their under-recoveries in the last two years,” Martinez said.
In the global market, crude prices have dropped over 60 percent to around $20-30 per barrel recently from over $100 per barrel in early 2014.
In its petition, Napocor said the additional costs would help them in recouping P5.896 billion in under-recoveries for its missionary electrification subsidies.
The state-run agency said the huge shortfall is due to the very low basic UCME of P0.0454 kwh which translates to only P2.7 billion per year.
If approved by the Energy Regulatory Commission (ERC), consumers will have to cough up an additional P0.0788 per kwh in their electricity bills.
However, Martinez said Napocor should instead maintain its current charges and reduce the subsidies it allocates for missionary electrification.
He added he is willing to attend ERC hearings and question how Napocor derived these figures.
“Napocor should review its operational costs and the subsidies it allots to its Small Power Utilities Group (SPUG) given that domestic and international fuel prices have been on a 12-year low. Thus, why should consumers be burdened by these alleged under-recoveries borne out of their incompetence?” Martinez noted.