NPC: Consumers won't get rate hike

MANILA, Philippines – Consumers will see no increase in their power bills until 2009 despite the petition filed by the National Power Corp. seeking a basic rate increase, the NPC assured the public yesterday.

NPC president Cyril del Callar said power rates would remain stable since there are adjustment mechanisms that could offset any increase that may be approved by the Energy Regulatory Commission (ERC).

Del Callar said they have five to six petitions of generation rate adjustment mechanism (GRAM) and incremental currency exchange rate adjustment (ICERA) that will basically help maintain the rates until 2009 to the June 2008 level of P3.89 per kilowatt-hour (kWh).

“The five to six petitions for rate adjustments pending with the ERC is a mixed petition that could have rate increases or rate reductions,” Del Callar told a news conference yesterday.

“But the sum will be not higher than our existing rates now – which are around P4.11 to P4.15/kWh (36 centavos basic rate plus P3.89 per kWh current rate),” he said.

De Callar claimed the implementation of the new rates, if approved by ERC, would not cause any increase in Napocor’s power rates.

“Whatever rate we see in June, we hope it will be what we will see until the end of the year and up to next year. It will be about P4.11/kWh, based on the annual average it will not be far from the P4.11 or P4.20 we applied for, but I cannot give any specific rate since prices change every month. Our rate petitions (GRAM, ICERA) are all combined, and my benchmark is P3.89/kWh,” he added.

Del Callar defended the petitions for rate hike increase, stressing the need for Napocor to adjust its basic rate to maintain expensive fuel-run power plants.

“We petitioned for an increase in base rate since the fuel types we use are expensive,” he said.

To clear up any possible apprehension on the impact of privatizing its assets on future rates, Del Callar remarked, “Privatization is very good.”

The 36.85-centavo petition of Napocor took into consideration the impact of privatization on its asset base.

With this, it may mean privatization, contrary to what the government has committed before, may raise power rates rather than bring them down.

“Privatization is very, very good in the sense that the government is no longer in the business of selling power and the private sector can go in,” Del Callar said.

“We are hoping that PSALM (Power Sector Assets and Liabilities Management) gets to sell the plants that use expensive fuels –such as bunker and diesel,” he said.

Del Callar said the petition is for an increase in basic generation rate owing to the successful privatization of some power plants.

“We are not competing with the private sector and we want the private sector to come in and they have to come with the real cost of power. Right now, we are seeking a clarification from the ERC, and we are hoping that they determine our rates to be in its true cost and whether or not it will be a huge or small reduction. We are heading towards the setting of the real cost of power,” he said.

Del Callar said if the buyers of the power plants of Napocor are not happy with the rates in the contracts, they could go to the wholesale electricity spot market (WESM).

He said new plant owners have the option of bidding in the WESM and running the risk of volatility in the spot market.

Del Callar urged ERC to act on its petitions in a timely manner.

“I remain optimistic that the ERC will act on our existing petition,” Del Callar said, noting that their financial standing will not be affected if the commission will not give in to its rate hike petition.

“Even without the rate increase, I will still be smiling. But we are hoping that the ERC will address all our petitions to be able to help the power sector and consumers in making the price transparent, fair and reasonable,” he said.

Napocor justified the increase as a result of the privatization of its assets. The state-owned power generator also denied it had purchased overpriced coal.

Justify the petition

Sen. Joker Arroyo said Napocor should justify its petition seeking to increase its basic rate.

Arroyo warned Napocor could face more flak from critics if it could not justify its petition seeking an increase of 36.85 centavos per kilowatt-hour.

Arroyo joined critics in saying that given the agency’s poor track record, it could expect a lot of criticisms from the public already reeling from high costs of food and fuel.

He cited a number of Napocor’s problems, including its inefficient management and the slow privatization effort as among the reasons why the agency is seeking to increase its power rates instead of bringing them down.

Arroyo noted customers of Manila Electric Co. (Meralco), the largest purchaser of electricity from Napocor, would have to bear about 35 percent of the rate adjustment.

Meralco is currently sourcing an average of 35 percent or 14.8 centavos per kWh of its requirement from Napocor.

Meralco customers consuming 200 kWh will pay an additional P30 per kWh a month under the proposed rates, he said.

“I am sure there will be many groups that will oppose the (Napocor) petition before the ERC and I will support that,” Arroyo said.

“Every time Napocor asks for increase, that is the story, that it needs to recover costs, that is the perpetual line of Napocor,” he said.

Arroyo claimed some rate increases asked by Napocor are unnecessary.

Arroyo said Napocor has poor credibility and has a lot of “baggage” to explain before the public.

For one, Arroyo said, Napocor was dragging its feet on privatization.

Arroyo added Napocor should also explain the bloated salaries of its personnel, some of whom had been rehired after getting hefty retirement pay.

“This is one big issue that they have to explain to the people, their reason is not palatable,” he said.

Arroyo said “it is very hard to sympathize” with Napocor because of its performance and “the burden is on them to explain” why it should be allowed to increase its rates.

Test for the new chief

Other lawmakers said Napocor’s petition would test the mettle of Zenaida Ducut, the new ERC chief said to be a close associate of President Arroyo.

There were allegations that Ducut’s appointment to ERC was meant to facilitate the P900-million coal contract of Napocor to an undercapitalized firm in which some of its owners are Ducuts, but the new ERC chief had denied the allegations.

Senate Minority Leader Aquilino Pimentel Jr. said he would like to see Ducut uphold public interest in deciding Napocor’s petition for power rate increase.

Sen. Alan Peter Cayetano said Ducut must promote transparency to avoid perceptions that she was appointed to the ERC to serve the interests of Arroyo allies.

Malacañang challenged Ducut’s detractors to present proof of their allegations.

Congressmen also defended their former colleague.

“It is a presidential prerogative. If Ducut does well it will be to the President’s advantage, if not, then the President will be blamed. I hope GMA (Mrs. Arroyo) made a good choice for the good of her administration,” Manila Rep. Bienvenido Abante said.

Rep. Joel Villanueva of the CIBAC party-list group said critics should give Ducut the benefit of the doubt.

 “The Commission on Appointments should not immediately block the appointment of Ducut as ERC head but should look for her credentials first,” Villanueva said.

Ducut’s successor in the second district of Pampanga, Rep. Juan Miguel Arroyo vouched for the new ERC chief.

“Her resume shows that she is very qualified, her House record as three-term congresswoman is an indication of serving beyond one’s self,” he said.

Arroyo said Ducut’s appointment could be recalled once the allegations of conflict of interest against her are proven. – Donnabelle Gatdula, Aurea Calica, Paolo Romero, Delon Porcalla