Napocor seeks rate increase

STATE-OWNED National Power Corp. (Napocor) is seeking higher rates to recoup deferred foreign exchange and fuel costs. In separate petitions jointly filed before the Energy Regulatory Commission (ERC), Napocor asked the regulator to allow it to recover from its customers a total of P8.8 billion in fuel and contracted independent power producer costs, and P8.5 billion in foreign exchange costs incurred over a six-month period.

The application for higher rates is in line with Napocor’s 16th Generation Rate Adjustment Mechanism (GRAM) and 15th Incremental Currency Exchange Rate Adjustment (ICERA)—two cost recovery mechanisms that allow the state firm to pass on or give back to its customers fluctuations in its fuel and forex costs.

Should its 16th GRAM petition be approved, Napocor’s rates would increase by about P0.63 a kilowatt-hour for Luzon, P0.10 a kwh for the Visayas and P0.11 a kwh for Mindanao.

The approval of Napocor’s 15th ICERA petition would redound to another P0.64 a kilowatt-hour for Luzon, P0.07 per kilowatt-hour for the Visayas and P0.40 per kilowatt-hour for Mindanao.

Napocor asked the ERC’s approval of the implementation and/or recovery of the balances from its 12th to 14th ICERA for Luzon and 19th to 14th ICERA for the Visayas and Mindanao, as well as its 5th, 13th and 14th GRAM for Luzon, and 5th and 10th to 14th GRAM for the Visayas and Mindanao.

The total impact of the said rate adjustment applications would depend on the final amount and the length of time the regulator will allow Napocor to recover or give back to its customers.

Napocor produces the power requirements of over 260 industrial customers and electricity distribution utilities across the country. Its biggest customer is the country’s largest distribution utility Manila Electric Co., which sources less than half of its requirements from the state firm.

The government, through Power Sector Assets and Liabilities Management Corp. (Psalm), has privatized over 80 percent of Napocor’s assets generating capacity, but the supply contracts with its customers are attached to its disposed plants as “transition supply contracts” whose electricity rates are indexed to the company’s own.

These contracts, however, will lapse once open access and retail competition starts in the power sector, allowing consumers to choose their suppliers.

This will commence after PSALM sells 70 percent of Napocor’s contracted capacities with independent power producers—the remaining unmet mandate of the Electric Power Industry Reform Act of 2001 (Epira).

Psalm has already reached a 68-percent privatization threshold and would only need to sell at least one Napocor contracted output to achieve the Epira’s mandate. –EUAN PAULO C. AÑONUEVO REPORTER, Manila Times