Napocor seeking rate hike

MANILA, Philippines – The National Power Corp. (Napocor) has sought approval from the Energy Regulatory Commission (ERC) to increase its basic rate by 36.85 centavos per kilowatt-hour.

In an eight-page application last June 8, Napocor said it needed to adjust its Luzon grid rates from P3.89 to P4.26 per kWh after privatizing three power plants: the 112-megawatt Pantabangan-Masiway hydroelectric power plant, 360-MW Magat hydroelectric power plant, and 600-MW Masinloc coal-fired thermal power plant.

“The privatization of these power plants would require an immediate adjustment in the existing Luzon grid average generation rate of P3.8966 per kWh in order for the applicant to be able to reasonably recover the operating expenses of the remaining power plants under its control and/or ownership as well as attain a reasonable return on rate base as authorized by the ERC,” read Napocor’s application.

Customers of the Manila Electric Co. (Meralco), the largest buyer of power from Napocor, will bear about 35 percent of the rate adjustment.

At present, Meralco is sourcing an average of 35 percent or 14.8 centavos per kWh of its requirement from Napocor.

Meralco customers consuming 200 kWh will pay an additional P30 per kWh a month under the proposed rates.

The last time Napocor got a basic rate adjustment was in June 2005 when the ERC approved a P1.0354 per kWh increase.

This basic rate adjustments came from two approvals of 97.98-centavo increase in September 2004 and 0.0556 centavos in June 2005.

In its application, Napocor proposed to adopt a revised TOU rate schedule for Luzon grid to replace the TOU rates schedule approved by ERC in April 2005.

“In deriving the revised TOU hourly rates contained in the proposed revised TOU rates schedule, applicant simply added the required P/kWh adjustment to 36.85 centavos per kWh the 24 hourly TOU rates under both the Monday to Saturday and Sunday/holiday rates schedules,” read the application.

TOU rates are designed to reflect the fact that as demand increases during the day the cost of generation increases.

For many, the hours of the highest demand are between 5 p.m. and 9 p.m. 

These are the hours when electricity costs the most.

Under the TOU scheme, end-users will be encouraged to shift to the so-called “off-peak” hours (usually from 10 p.m. to 7 a.m. the following day) when rates are generally at the lowest. 

As a rule, rates are also lower during Sundays and holidays, compared to Mondays to Saturdays.

There is a need to revise the TOU rates to make the privatization of the power plants more attractive to investors. 

The transition supply contract (TSC) attached to the sale of the power plants of Napocor is pegged on TOU rates. The attachment of the TSC is crucial as this will provide a ready market for buyers of the power plants.

Napocor said it did not include the impact of other power plants that have been sold, particularly Talomo, Agusan, Barit, Cawayan and Loboc hydroelectric power plants.

These power plants were not included in the computation of the new basic rate because the ERC has imputed the impact of their sale in the approval of the existing generation rates in the Luzon grid, the power firm added. The impact of the sale of these small hydro plants is very minimal to affect the average generation rate, Napocor said.