Napocor seeking new power rate cut

State-owned National Power Corp. (Napocor) is set to file an application with the Energy Regulatory Commission (ERC) for another power rate reduction.

Napocor sources disclosed that the power firm would file applications to reduce its generation rate adjustment mechanism (GRAM) and currency exchange rate adjustment (ICERA) covering 2005 to 2006.

It was during this period that Napocor enjoyed foreign exchange gains, so it is possible that the state-owned power firm would apply for lower ICERA, sources pointed out.

It was also during this period that purchases from independent power producers (IPPs) of Napocor also improved.

"It is possible that the ICERA could be lower. There was also a noted lower fuel cost during these periods," sources said.

Napocor earlier applied for a total reduction of eight centavos per kilowatt-hour due to the huge foreign exchange gains. More rate cuts are expected as the company has yet to pass on all its forex gains to its customers.

In a statement, Napocor confirmed its move to file by the end of the month its next GRAM and ICERA applications covering February to June 2006.

But the power firm did not indicate how much reduction it would seek.

Napocor said its petition for deferred accounting adjustments (DAAs) in its rates is based on a directive of the ERC.

Napocor, however, stressed it has no plans of delaying the filing of the DAAs.

"We are in fact scheduled to file for another application for these DAAs, in compliance with the ERC order, as mandated by the Electric Power Industry Reform Act (EPIRA)," it said.

Napocor said filing of DAAs, comprising the GRAM and ICERA, are revenue-neutral cost adjustments aimed at recovering actual costs on an incremental basis of its power purchases from suppliers in the case of GRAM, and fluctuations in foreign exchange used for its operations in the case of ICERA.

"These costs are actual historical costs. We are recovering them through the GRAM and ICERA, incrementally; and as such, may either be an increase or a decrease in these adjustments," Napocor said.

"In the case of the last GRAM and ICERA approved by the ERC, which covered the period November 2006 to January 2007, the adjustment was a decrease," it said.

Napocor explained they have no control over the process that ERC enforces in filing the applications for rate adjustments.

"We have religiously complied with the ERC’s directives on the procedures and processes of filing for rate adjustments, as well as on other requirements. Like any power generator, transmission company, distributor or cooperative, any concern regarding power rates has to go through the ERC for decision," it said.

Napocor further explained that based on ERC’s GRAM and ICERA guidelines, the power company is required to file the recovery of its actual costs on a quarterly basis.

Since the implementation of the EPIRA, Napocor has been providing direct discounts to household consumers in the form of a 30-centavo mandated rate reduction (MRR).

The discounts, however, vary depending on how much electricity was purchased by distributors from Napocor.

"We wish to assure the public that we in Napocor are continuously implementing and formulating ways and means to provide power electricity service to our customers at the most optimal cost," Napocor said.

"Although it is our customers that directly benefit from any decrease in the DAAs that is approved by the ERC, we believe that these benefits should be passed on to their own customers and consumers as well," it said.

Napocor pointed out the GRAM and ICERA applications are required to undergo ERC approval before these are passed through as adjustments to customers.

"Likewise, it is the ERC that determines the appropriate level of adjustment we can include in our billings to our customers and when these amounts shall be fully recovered, regardless whether it’s an increase or a decrease," Napocor said.