Napocor to hike power rate for Luzon customers

The Energy Regulatory Commission (ERC) has approved a P.0110 per kilowatthour additional recovery for the National Power Corp.’s generation rate adjustment mechanism (GRAM) and another P0.3687 per kwh for incremental currency exchange rate adjustment (ICERA) from Luzon customers.

The ERC said the total P0.3797 per kwh increase supercedes an earlier order for the recovery of costs to be collected from customers through deferred accounting adjustments (DAA).

The new GRAM for Luzon will be recovered for a period of nine months while the ICERA will be two-fold: the debt service and operating expenses component will be for eight months while the capacity and infrastructure fee component will be for 24 months.

The new rates will remain in effect unless the ERC subsequently approves the recovery of the deferred charges of Napocor.

GRAM is a pass-on, revenue-neutral charge allowed by the ERC for Napocor to recover from end-consumers the costs it incurred to produce electricity. The costs include fuel and power purchases from independent power producers.

ICERA, on the other hand, represents the recoveries that must be made by Napocor from customers for money it advanced to defray the cost of foreign currency exchanges adjustments resulting from fluctuations in the exchange rate.

ERC chairman Rodolfo Albano said the existing policy of the ERC only allows the recovery of GRAM and ICERA charges after thorough review.

Early last month, the ERC, instead of granting automatic implementation, extended for another 45 days the resolution of Napocor’s GRAM and ICERA for the period covering April 26 to Oct. 25, 2005.

In separate rulings, the ERC argued that the 45-day resolution deadline set by the implementing rules should not apply since the same rules provide only for a three-month recovery period.

Napocor had filed for a seven-month recovery, which the ERC said would need more time to resolve.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, Napocor is allowed to recover its costs incurred from operations and fluctuating currency from its customers. Before, Napocor and distribution utilities were allowed to automatically recover these costs and the ERC would just review it after.

Based on the current set-up, the power generators and distributors should apply quarterly for the recovery of GRAM and ICERA.