Off-grid power users face more rate hikes

Power transmission lines. (INQUIRER FILE PHOTO

MANILA, Philippines — National Power Corp. (Napocor) has proposed to charge higher power rates in off-grid areas this year to account for higher fuel costs, which may force some households to pay up to P9.7068 per kilowatt-hour (kWh) or 17.54 percent more than their billing today.

The Energy Regulatory Commission (ERC) said on Monday night it would conduct public hearings until October to review Napocor’s proposed new subsidized approved generation rates (SAGR) for at least 13 small power utilities group (SPUG) areas.

SAGR refers to the generation rate paid by consumers in off-grid areas.

READ: Napocor losing P1B a month, says chief

Napocor, which currently operates at least 281 mostly diesel-fired SPUG power plants across the country, previously filed for new 2024 rates two years ago, with some areas expecting electricity rates to rise to P8.2582 per kWh from P6.2553 per kWh. The ERC approved these rates in 2023 for implementation beginning January this year.

Residential, commercial/industrial

In November 2023, however, Napocor filed for even higher rates, citing adjustments needed to reflect higher fuel costs and changes in foreign currency for commercial and industrial customers.

Napocor wants rates for its commercial and industrial customers to reach P11.0128 per kWh, suggesting a potential 33.36-percent hike.

Napocor is currently adopting the same rates for its residential and commercial/industrial customers. However, it had proposed in its November 2023 petition to significantly raise rates for the commercial and industrial users, citing “a stark difference as to the nature, usage and consumption of power between those classes of customers.”

“[The] current SAGR is still not at the optimized level” to allow it to “operate effectively in the missionary areas,” Napocor said in its petition, adding that the costs of electricity production have “significantly increased” in the past 20 years.

READ: Power hike looms as ERC allows Napocor to recover P2.6-B subsidy deficit

Missionary electrification programs

Under the ERC’s Generation Rate Adjustment Mechanism, Napocor is allowed to adjust generation rates to recover operating costs influenced by fluctuating fuel prices and foreign exchange rates.

The ERC said in a statement that it would “set schedules for the determination of compliance with the jurisdictional requirements, expository presentation, pretrial conference and presentation of evidence.”

Napocor implements missionary electrification programs for off-grid areas through its SPUG power plants.

READ: Missionary electrification projects get P1.9-B budget

These programs are funded through the ERC-approved universal charge for missionary electrification, which stood at P0.1783 per kWh in June last year.