Power rate hikes seen as Napocor seeks recovery of subsidy funds

MANILA, Philippines—Power consumers will have to brace for further hikes in their electricity bills if the state-run National Power Corp. is allowed to recover money used as higher yearly subsidies worth a total of P87 billion between now and 2016.

The amount will be used to help finance the power-generation operations of Napocor’s missionary electrification arm, the Small Power Utilities Group, within the so-called off-grid, remote areas in the country.

At the same time, Napocor has also sought to recover P5.7 billion worth of funding requirement shortfalls last year, according to a petition it filed before the Energy Regulatory Commission.

If approved, both amounts (P87 billion and the P5.7 billion) will be reflected under the universal charge for the missionary electrification (UCME) component of a grid-connected consumer’s power bill. At present, the UCME being collected from all power consumers connected to the grid stands at 11.63 centavos per kWh.

The petition stated that Napocor has proposed to collect a higher rate this year of 19.62 centavos per kilowatt-hour equivalent to P12.707 billion, and P22.62 per kWh in 2013, equivalent to P15.177 billion.

To include the proposed under-recoveries worth P5.7 billion, the proposed UCME this year will be even much higher at 28.13 centavos per kWh, and 31.12 centavos per kWh in 2013.

For 2014, Napocor wants to collect 32.93 centavos per kWh, which is equivalent to P22.101 billion; 33.18 centavos per kWh in 2015 (P22.269 billion); and 22.56 per kWh in 2016 (P15.142 billion).

These amounts, according to Napocor, accurately reflect the funding requirements that will ensure the continued operation of the power facilities being operated by its missionary electrification arm, the Small Power Utilities Group (SPUG) and that which will help avert power outages in these off-grid areas.

“Be it noted that the opinion rendered by the Department of Justice that limits and suspends the authority of Napocor to borrow funds or enter into a loan agreement really affects Napocor’s flexibility in its funding and operation. Historically, the UCME subsidy granted to Napocor are not sufficient to cover the difference between its cost of operation and the revenue collected from its sales,” the petition stated.

“Thus, the lack of funding from the UCME subsidy and from the supposedly transitory funds sourced through loans, debilitated and further delayed the development of other missionary areas and restricted sustainability of operation in the existing off grid areas,” it added.

Napocor stressed the necessity of limiting the disparity between UCME subsidy being granted for the year and the actual UCME subsidy required to guarantee continuous power supply and sustainable development of the off-grid areas and to support the improvement of far-flung communities.

“Thus, Napocor proposes the level subsidy within which it can efficiently and effectively operate and will further support the intent of encouraging participation of new power producers in the off grid areas,” it further noted.

The power firm has also committed a “prudent and efficient” use of its funds and the UCME subsidy through the efficient operation of its plant.

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