Napocor seeks higher adjustment on universal charge

MANILA, Philippines — State-run National Power Corp. (Napocor) is seeking a higher adjustment on the universal charge (UC) to cover more than P17 billion in subsidies to power up off-grid areas next year and on account of higher fuel cost as a result of the additional excise tax under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

In its application filed with the Energy Regulatory Commission (ERC), Napocor is proposing a universal charge-missionary electrification (UCME) subsidy requirement of P17.805 billion for calendar year 2019.

It asked the power regulator to increase its UCME charge from P0.1163 per kilowatt-hour to P0.1948 per kwh.

Napocor said the proposal would result in an increase of P0.0768 per kwh in UCME, factoring in the impact of TRAIN and additional Renewable Energy Developer-Cash Incentive (RED-CI) of P0.0017 per kwh.

“The proposed Basic UCME rate of P0.1948/kwh inclusive of RE Cash Incentive for CY 2019 is necessary in order to cover the required subsidy requirements and at the same time maintain a reliable and stable funding source for its operating costs requirements including a sufficient subsidy for payment to NPPs/QTPs and RE Developers,” Napocor claimed.

The higher missionary electrification subsidy would sufficiently cover the estimated requirements for areas served by NPC-Small Power Utilities Group (SPUG), New Power Providers (NPP) and Qualified Third Parties (QTPs) in off-grid areas.

It will also cover the operating costs in mini-grids including the fixed cost of transmission/substations, cash incentive payment to RE Developers and the impact of excise tax on fuel.

Napocor also said this would ensure the timely payments to Napocor suppliers to avoid non-delivery of fuel supply and timely payment of NPPs & QTPs subsidy, fulfillment of the missionary electrification functions in SPUG areas, implementation of power development plans for each island or grid, and provision of CI amount for payment to RE Developers.

“There is a need to meet the customer’s electricity requirements through the implementation of the proposed improvement of NPC’s generation function aimed to provide a sustainable development in the off-grid areas and to be able to connect electricity to the unserved communities in far-flung areas including those whose electric services were waived by the electric cooperatives. The same can be done by bringing the gap between cost and revenue closer,” it said.

Napocor said it was prohibited by the Department of Justice (DOJ) to borrow funds or enter into a loan agreement to cover additional requirements.

“The lack of funds from the UCME subsidy and from supposedly transitory funds which can be sourced thru loans will definitely affect flexibility in NPC’s funding and operation,” it said.