With Napocor rate hike, electricity to cost more

Published by rudy Date posted on February 20, 2009

Electricity rates across the country are poised to go up after the Energy Regulatory Commission (ERC) approved a petition from state-owned National Power Corp. (Napocor) for an increase in its basic generation rates.

In a 27-page decision, the regulator gave the green light to the power-generating company to increase its rates in Luzon by P0.47 per kilowatt-hour; in the Visayas by P1.15 per kilowatt-hour; and in Mindanao by P0.72 per kilowatt-hour.

The adjustments, which are to take effect next month, will jack up the rates in the Luzon, Visayas and Mindanao grids to P4.37 per kilowatt-hour, P4.03 per kilowatt-hour and P2.82 per kilowatt-hour, respectively.

The commission said it allowed Napocor to provisionally increase its rates to give it relief from its “current financial difficulties given its current costs of generating power, including the costs of the discounts that it is mandated to extend to certain customers.”

Francis Saturnino Juan, the regulator’s executive director, said, “The ERC’s mandate is to set the rates at such level that will allow recovery of just and reasonable costs in the provision of the service and a reasonable return on the capital employed in the business subject to regulation. The ERC cannot shirk this responsibility if it becomes difficult and unpopular to do so.”

The rate increase would give Napocor more than P100 million in additional revenues.

Napocor reported that it needed the rate increase because it is now forced to use to fossil-fuel powered plants that are more expensive to operate, since cheaper facilities—like hydroelectric plants—have been privatized by the government. Napocor added that it is spending more for electricity generated by independent power producers.

Rates could have been higher

In approving Napocor’s adjusted rate hike, however, the regulator did not give the full amount it had asked for.

In its joint application with the state-run privatization unit the Power Sector Assets and Liabilities Management Corp. (PSALM), Napocor had asked for an increase in its basic generation rate of about P0.83 per kilowatt-hour in the Luzon grid, P1.38 per kilowatt-hour for the Visayas grid, and P1.07 per kilowatt-hour for the Mindanao grid.

The proposed increase by Napocor would have pegged its time-of-use rates in Luzon at P4.73 per kilowatt-hour; Visayas, P4.27 per kilowatt-hour; and Mindanao, P3.17 per kilowatt-hour.

Napocor added that the provisional rates could change, depending on the outcome of the hearings to be conducted on its rate application.

If it turns out in the final evaluation of the Energy Regulatory Commission that Napocor and PSALM are not entitled to the adjustments that were provisionally authorized, then they are obligated to refund any excess in recoveries.

The increase stands to affect the power rates of 263 electric utilities and organizations across the country that are directly sourcing their power requirements from Napocor.

One of those direct buyers is the giant utility Manila Electric Co. (Meralco), whose rates will go up by P0.17 per kilowatt-hour starting April.

Officials from the country’s largest electricity distribution company said the net effect of the adjustments was lower for Meralco, because it only sourced 36 percent of its power requirements from Napocor in January. –Euan Paulo C. Añonuevo, Reporter, Manila Times

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