Napocor seeks rate hike to fund off-grid units

State-run National Power Corp. (Napocor) is seeking to collect an additional 6.79 centavos per kilowatt-hour from all electricity consumers connected to the main grids, to help fund the power firm’s operations in far-flung, remote islands and ensure adequate supply of electricity.

Napocor filed before the Energy Regulatory Commission its application for the so-called “true-up mechanism” to recover within a 12-month period a total of P4.46 billion in shortfalls in the missionary electrification subsidy in 2010.

Should this petition be approved, Napocor will be able to increase the universal charge for missionary electrification (UCME) component in one’s electricity bill to 18.42 centavos per kWh from the current UCME of 11.63 centavos per kWh.

“To enable Napocor-Small Power Utilities Group (SPUG) to continue its present operations in the off-grid areas and prevent the shortage of fuel and the consequent shutdown of the power plants, there is an urgent need for the issuance of a provisional authority allowing the recovery of the shortfall as proposed for approval,” Napocor stressed.

The state power generator further warned that Napocor may incur a bigger cash deficit by the end of this year if a provisional authority is not issued soon.

Early last year, some of the remote and off-grid areas where the SPUG operates encountered power supply shortfalls because Napocor was unable to pay its fuel suppliers.

At present, Napocor is largely dependent on the UCME to fund its capital and operational expenditures every year, following the divestment of majority of the government’s power assets and contracted capacities, and also after the Department of Justice had earlier barred the cash-strapped firm from conducting any fund-raising activities such as taking out loans or issuing notes and bonds.

These developments had largely hampered the capacity of Napocor to pay off its fuel suppliers and put up new facilities within the off-grid areas.

Currently, Napocor operates and maintains 232 small power-generating units with a total generated capacity of about 175 MW, which serve 214 island and isolated grids and provide electricity to 47 customers consisting of 39 electric cooperatives, seven local government units and one multipurpose cooperative.