NPC seeks recovery of forex, generation rate adjustments

Customers of the National Power Corporation may expect lower power rates in the future.

This after the NPC filed at the Energy Regulatory Commission for its 7th Incremental Currency Exchange Rate Adjustment (ICERA) last April 2, and its 8th Generation Rate Adjustment Mechanism (GRAM) last March 30.

Due to the delay of more than a year in the recovery of incurred costs by the NPC under ERC-approved mechanisms, however, the NPC is only recovering GRAM and ICERA expenses for the period February 2006 to June 2006.

The NPC, in a statement, did not specify the proposed adjustment in its charges but clarified that these will have a combined impact of lower deferred accounting adjustments in the bills of its customers.

The GRAM and ICERA are ERC-approved cost adjustment mechanisms that allow a delayed recovery by the NPC of its incremental generation costs from operations and servicing its foreign borrowings.

The GRAM represents the recoveries for the actual incremental costs of fuel and power sourced from NPC’s independent power producers, both local and foreign currency dominated.

The ICERA takes care of the effects of fluctuations in the international currency exchange rates on NPC’s cost of currency-dominated debt services and operating expenses such as spare parts, insurance costs and other generation-related costs.

NPC also explained that it could not just easily adjust its rates because it has also to consider the interest of the consuming public. As such, the ERC places caps or limitations on the recovery from both GRAM and ICERA.

In compliance with the Electric Power Industry Reform Act, the NPC furnished a copy of its application to the City Council.

The EPIRA law requires the applicant to furnish a copy of its application or petition, including its annexes and accompanying documents to the local government unit where it principally operates.

The NPC, in its letter to the council last March 28, also invited affected customers to present their concerns for consideration before the ERC approves the application. —Wenna A. Berondo/RAE