Napocor seeks rate increase in off-grid areas

State-run National Power Corp. has sought permission to increase electricity rates within the off-grid areas in Luzon by P2.1380 a kilowatt-hour, P1.5339 a kWh in the Visayas and P1.07777 a kWh in Mindanao over the next four years.

In a statement issued Friday, Napocor said it wanted to increase its rates to recover P3.08 billion under the 7th installment of the Generation Rate Adjustment Mechanism (GRAM) and another P45.85 million under the 7th installment of the Incremental Currency Exchange Rate Adjustment (Icera).

GRAM is a mechanism that allows utilities like Napocor to recover costs associated with fuel and purchased power, while the Icera allows them to recover foreign exchange-related costs.

Should these recoveries be approved, power consumers within the off-grid areas will have to pay higher electricity rates ranging from P7.1839 a kWh to P9.1005 a kWh.

But unlike its previous filings, Napocor has proposed to spread the recovery of these costs over the next four years instead of the usual one year, according to the application it filed yesterday before the Energy Regulatory Commission.

“We have filed for a recovery period of four years for the 7th GRAM and 7th Icera because we do not want our consumers to be saddled with high power costs,” Napocor said.

Napocor said the filing of GRAM and Icera was part of its compliance with the directives of the power regulator. These filings are necessary because these will help alleviate the power generator’s own financial position, should these be approved by the ERC.

“The amount we are proposing to be recovered in the 7th GRAM and 7th Icera are actual historical costs that we have incurred in generating electricity that we sell to our customers and consumers. The two are what we collectively refer to as Deferred Accounting Adjustments or DAAs, and are just pass-through costs, meaning we do not profit from them in any way,” Napocor explained.

“We hope our consuming public understands that we have to recover these costs because it will help us sustain our operations and continue providing our services to them. In turn, we will continue to implement improvements to make our services better, more reliable and more sustainable,” the company added.