Napocor sees added losses of P9.6B yearly

The National Power Corp. (Napocor) will incur additional losses amounting to P9.6 billion yearly as a result of the Energy Regulatory Commission (ERC)’s decision to reduce the rates charged by the state-owned power corporation.

Instead of granting Napocor’s petition for an unbundled rate hike of P0.1719 per kilowatt-hour, the ERC ordered the state power firm yesterday to reduce its rate by seven centavos.

Napocor OIC-president and chief executive officer Rolando S. Quilala, said they respect the ERC ruling even as they are contemplating on filing a motion for reconsideration with the regulatory board.

"We will respect the decision of the ERC on our unbundled rate petition but since our proposed rates were not approved as filed, that will have serious repercussions on our financial viability," Quilala said.

Napocor’s tariff division estimates that the ERC’s order for a seven-centavos rate reduction will result in a loss of 24-centavos per kWh or a revenue loss of P9.6 billion each year based on the projected annual energy sales of 39,000 gigawatthours (gWh).

Quilala said the unbundled petition they filed with the ERC is just enough for them to recover what they would be spending for their operations. "As we have reiterated Napocor’s petition to unbundled or itemize the power rates will not allow us to enjoy additional profits but will only offset higher operating expenses due to increased investments, higher foreign exchange rate and additional purchased power contracts since our last basic rate adjustment," Quilala said.

He said the rate unbundling will allow the company meet the objectives of the power reform program to reflect the true cost of electricity and adopt a more transparent way of pricing electricity.

Napocor vice president and general counsel Rainier Butalid said since the ERC’s decision would have an adverse financial impact on the power firm, it has an option to file a motion for reconsideration if the Napocor’s board so decides.

ERC’s decision which came out last June 26, will apply to Napocor’s billing starting Sept. 26 this year. – Donnabelle Gatdula