Napocor seeks new rate hike

After failing to get approval for a basic rate hike, the National Power Corp. (Napocor) has applied for adjustments in rates by 57 centavos per kilowatt-hour (kWh) in Luzon under its 12th generation rate adjustment mechanism (GRAM) and 11th incremental currency exchange rate adjustment (ICERA).

In a rate hike petition lodged at the Energy Regulatory Commission (ERC), Napocor and the Power Sector Assets and Liabilities Management Corp. (PSALM) asked to increase by 81 centavos per kWh rates in Visayas and 12 centavos per kWh in Mindanao.

The GRAM and the ICERA are cost recovery mechanisms allowed by the ERC to cover fluctuations in fuel and foreign currency exchange costs on a quarterly basis.

With a regulatory lag, Napocor’s latest GRAM and ICERA filing covers the period July to September 2008.

In its application, Napocor said during this period, it incurred costs of P3.13 billion in Luzon, P1.08 billion in the Visayas, and P250.10 million in Mindanao that should warrant its petitioned rate adjustments, which it has proposed to recoup over three months.

The ERC is now crafting a way for Napocor to recover costs on a monthly basis.

It will hold a series of public consultations on the proposed rules in the first weeks of January 2009.

The commission said the rules will ensure the timely recovery of allowable fuel and purchased costs of Napocor.

It said this would also enable the state-owned power firm to ensure transparent and reasonable prices of electric power service in a regime of free and fair competition and achieve greater operations and economic efficiency.

The ERC said this would also protect the public interest as it is affected by the rates and services of Napocor.

The new rules on costs recovery, it said, will also help maintain the security, reliability, and quality of electric power.

Due to regulatory lags, it takes time for Napocor to recover its costs, making its rates less competitive than others in the industry.

These “uncompetitive” rates of Napocor are one of the reasons being cited by some investors as a major turnoff in pouring in capital into the country’s power sector.

Citing lower rates of Napocor, the Calaca power plant sale has not been consummated up to now.

The winning bidder of Calaca, Suez Energy, wants the government to do something about the Napocor rates before it closes the deal.