New adjustment scheme for Napocor approved

CEBU, Philippines - The Energy Regulatory Commission recently approved a new automatic adjustment mechanism that would enable the National Power Corporation to adjust its generation rate in time with the movement in prices of fuel and during fluctuations in foreign exchange rates.

The Rules for the Automatic Recovery of Monthly Fuel and Purchased Power Costs and Foreign Exchange- Related Costs, which was co-proposed by the Power Sector Assets and Liabilities Management Corporation, is aimed at avoiding carrying or the cost of money charges.

The rules were passed for approval on August 14, 2008. 

The Rules govern how NPC may adjust its rates to reflect increases or decreases in its fuel and purchased power costs and foreign-exchange related costs, which vary every month depending on the prevailing economic conditions.

Purchased power costs relate to those incurred by NPC for the power it sources from Independent Power Producers.

Currently, Napocor is allowed periodic or quarterly adjustments to its generation rate to reflect changes in fuel and purchased power costs and foreign-exchange related costs only after a review by the ERC in accordance with the guidelines issued for the adoption of the Generation Rate Adjustment Mechanism and Incremental Currency Exchange Rate Adjustment mechanism.

ERC said it would implement true-up adjustments annually to ensure that Napocor recovers only its actual costs. — Mitchelle L. Palaubsanon/JMO      (FREEMAN NEWS)