Power firms seek new rate increase

MANILA, Philippines - If you think power costs are too high, brace yourself for more bad news.

Two of the country’s power utilities, the National Power Corp. (Napocor) and Manila Electric Co. (Meralco), have sought approval from the Energy Regulatory Commission (ERC) to increase power rates, ostensibly to cover their costs.

Napocor wants a power rate hike of 62.51 centavos per kilowatt-hour (kwh) for the Luzon grid to recover its deferred foreign exchange and fuel costs under its 16th generation rate adjustment mechanism (GRAM).

Napocor, in its application, said the adjustments for 15th incremental currency exchange rate adjustment (ICERA) would result in an increase of 63.61 centavos per kwh for Luzon, 7.04 centavos per kwh for the Visayas, and 3.99 centavos per kwh for Mindanao.

It also sought to increase its rates under the GRAM by 9.73 centavos and 1.1 centavos for the Visayas and Mindanao, respectively.

If approved by the ERC, these rate hikes will enable Napocor to recoup a total of P8.8 billion in fuel and contracted independent power producer costs, and P8.5 billion in foreign exchange costs within a six-month period.

On top of these, Napocor asked the ERC to allow it to implement and/or recover the balances from its 12th to 14th ICERA for Luzon and 19th to 14th ICERA for the Visayas and Mindanao, and its 5th, 13th and 14th GRAM for Luzon and 5th and 10th to 14th GRAM for the Visayas and Mindanao.

Meralco, on the other hand, is seeking ERC approval to adjust its rates by another P1.71 per kwh for 2012, P1.77 per kwh for 2013, P1.85 per kwh for 2014, and P1.90 per kwh for 2015 under the five-year maximum average price application under the performance-based rate (PBR) mechanism.

In a petition to the ERC, Meralco proposed a total revenue requirement of about P52 billion for 2012, P55 billion for 2013, P58 billion for 2014, and P61 billion for 2015.

The application covers Meralco’s third regulatory period under the PBR, a rate-setting scheme to be approved by the ERC based on a utility’s quality of service to its customers.

The PBR also allows power utilities like Meralco an annual adjustment on its tariffs to take into account the inflation and foreign currency exchange fluctuations as well as its obligations to its franchise area.

In its application, Meralco said its proposed revenue requirement for the next five years will be used as capital, operating and maintenance expenditures for its power distribution network, which covers Metro Manila and outlying provinces.

According to Meralco, the revenue requirement takes into consideration a forecast increase in energy consumption in its franchise area from 28,828,174 megawatt-hours (MWh) in 2011 to 29,863,941 MWh in 2012; 30,938,016 MWh in 2013; 32,061,696 MWh in 2014 and 33,190,873 MWh in 2015.

Moreover, the ERC “may amend one or more of the parameters on which the calculations of the proposed Annual Revenue Requirement are based. The actual approved price path is therefore likely to differ,” Meralco said.