Napocor wants rate hike to recover shortfalls

MANILA, Philippines - The National Power Corp. (Napocor) wants to collect almost seven centavos per kilowatt-hour (kwh) in additional rates from all electricity end-users.

In a public notice, the Energy Regulatory Commission (ERC) said Napocor is seeking regulatory approval to recover shortfalls in the subsidies for electrification in far-flung areas.

“(Napocor) proposes to recover the shortfall within 12 months in order to augment its financial requirements and to provide up-to-date recovery and adjustment of the succeeding years’ subsidy requirements,” the ERC said.

Napocor has filed a true-up petition for a 6.97 per kwh increase in electricity rates for the next 12 months.

It wants to collect 6.49 centavos per kwh for the shortfall in the Universal Charge for Missionary Electrification (UCME) in 2010.

It also wants to charge consumers 0.48 centavos per kwh for subsidy payments to new power producers from 2008 to 2009.

“The UCME subsidy received for 2010 did not sufficiently cover its expenses,” Napocor said.

The collections from the projected sale of 64.017 million megawatt-hours of electricity will result in a total of P4.462 billion in additional funds for Napocor.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, UCME collections from end-users will be used for the electrification of remote communities not connected to the main transmission grid in Luzon, Visayas and Mindanao.

The required UCME is the cost differential between the sales revenues and operating expense and capital expense for expansion, rehabilitation and facilities for new areas of development.

To date, Napocor collects 4.54 centavos per kwh, on top of the 7.09 centavos per kwh true-up, under the UCME for 2009-2013.

In 2010, the ERC reduced UCME level to 4.54 per kwh from 9.78 per kwh.

Napocor said the shortfalls in the missionary electrification subsidy have dire consequences on its finances.

“(The funds) will enable [Napocor] to continue its operations in the off-grid areas and prevent the shortage of fuel and the consequent shutdown of the power plants,” the company said.

Last month, Napocor applied for the UCME subsidy adjustment of 8.51 centavos per kwh recoverable for 12 months.

This will allow the firm to recover the shortfall in the UCME subsidy for 2011, Napocor said.

Under the EPIRA, Napocor will have to privatize its power plants.

After the privatization of power facilities, Napocor would be left with the function of operating the Small Power Utilities Group (SPUG) and power plants that will not be sold.