Off-grid cost recovery no basis for power rate hike – Napocor

MANILA, Philippines - The National Power Corp. (Napocor) said power rates will not increase in 2017 with its application to recover over P10 billion for the cost of fuel supply in off-grid areas.

In a statement, the state-run firm said the recent application with the Energy Regulatory Commission (ERC) will actually lower the costs of universal charge for missionary electrification (UCME) in the missionary areas.

“Our current total existing rate (2016 charges) amounting to P0.1561 per kilowatt-hour (kwh) as compared to our 2017 application rate of P0.1248 per kwh if the ERC will approve,” Napocor president Gladys Sta. Rita said.

In the application, the firm said the applied rate of P0.1561 per kwh will replace the existing basic UCME rate of P0.1163 per kwh.

Sta. Rita said the UCME rate changes annually depending on the ERC-approved amount to be collected to the missionary areas based on the yearly recovery of basic rate and adjustment application of Napocor.

She also said the total amount of P10.324 billion recovery application rate to be filed by Napocor before the ERC “is meant to ensure that the required volume of fuel will be paid on time to Napocor suppliers to avoid non-delivery of fuel supply, timely payments to new power producers (NPPs) and qualified third parties (QTPs) in missionary areas, and continuous operation of existing generating units and implementation of power development plans for far-flung areas for the year 2017 only.”

 “Napocor normally files its basic UCME every year to fund the electric generation in the island grid but it is not automatically or immediately approved. The approved rates of ERC may differ from the application filed. For instance in the current rate, the 2016 basic rate applied by NPC is P0.1430 but only P0.1163 was provisionally approved by ERC,” Sta. Rita said.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, UCME is collected from end-users which will be used for the electrification of remote communities or areas not connected to the main transmission grid.

Napocor is the implementing agency for missionary electrification through its unit Small Power Utilities Group (SPUG).

The UCME is one of Napocor’s sources of funds under the law, apart from energy sales collected from electric cooperatives.

The state-run firm raised the need to meet customers’ electricity requirements by improving its generation function to off-grid areas, as well as connect electricity to undeserved communities in far-flung areas.

Napocor services around 800,000 households through its 290 SPUG plants.