Napocor to get P6.3B in subsidy to feed SPUG

State-run National Power Corp. will be getting an additional P6.3 billion in subsidy to ensure stable power supply for its Small Power Utilities Group (SPUG), which operates in far-flung off-grid areas.

In a decision, the Energy Regulatory Commission said the amount would be collected from all grid-connected power consumers within 17 months through the universal charge missionary electrification (UCME) component of the power bill.

The P6.32 billion will be equivalent to an additional charge of 7.09 centavos per kilowatt-hour (kWh), as previously reported. This means that the UCME to be collected from power consumers will increase to 11.63 centavos per kWh.

The P6.32 billion represented the remaining amount to be recovered from the P10.8 billion worth of fuel purchase and foreign-exchange costs under the fourth to sixth installments of the incremental currency exchange rate adjustment (Icera) and the generation rate adjustment mechanism (GRAM).

These are costs incurred by Napocor to supply power to off-grid areas covered by SPUG, the state generator’s missionary electrification arm that provides electricity to remote islands and far-flung communities.

Supposedly, the grid-connected consumers would shoulder only half of the P10.8-billion costs (equivalent to P4.2 billion) that the Napocor is seeking to recover through the GRAM and Icera mechanisms. The remaining half (equivalent to P4.2 billion) was supposed to be added to the generation charges being collected from consumers within the SPUG areas.

However, the ERC decided in July that the costs should instead be recovered fully from the main grid consumers to “mitigate the impact of the rate adjustment on consumers within the SPUG areas.”

This “will enable Napocor SPUG to recover its true-up adjustments in a timely manner so that it will have sufficient funds to address its operational expenses, particularly the fuel cost and its maturing obligations,” the ERC stated in two other separate orders it issued in July, prior to the issuance of the decision.

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.