Napocor gets go-signal to increase power rates

State-run National Power Corp. (Napocor) has been allowed by a government regulator to increase its electricity rates in off-grid areas by P1.43 per kilowatt-hour (kWh) for every user, or P4.1 billion in sum, over the next four years, which will translate to heftier power bills for consumers in some areas next year.

The approval of the rate increase will allow Napocor to recover P3.6 billion under the fourth, fifth and sixth installments of the Generation Rate Adjustment Mechanism (GRAM) and P508 million under the same installments of the Incremental Currency Exchange Rate Adjustment (Icera), according to the two separate decisions issued by the Energy Regulatory Commission (ERC).

Purposes

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.

Specifically, Napocor has been allowed to start collecting from its off-grid consumers P1.2532 per kWh to recover fuel and purchased power costs incurred from December 2007 to December 2009 and another 17.50 centavos per kWh to recover foreign exchange costs incurred during the same period.

Collection

Napocor may start collecting these additional costs, to appear as a separate item in consumers’ electricity bill, starting in the January 2012 billing period (Dec. 26, 2011 to Jan. 25, 2012).

Napocor currently maintains several small power facilities in the remote, far-flung areas through its small power utilities group (SPUG), which is mandated by law to provide electricity in areas that are not connected to any of the three main power grids, or what are called “off-grid areas.”

The Napocor-SPUG operates 232 generating units with a total capacity of

about 175 megawatts. It serves 214 island and isolated grids, providing electricity to 47 customers, consisting of 39 electric cooperatives, seven local government units and one multipurpose cooperative.

Early this month, Napocor has sought permission from the ERC to increase electricity rates within the off-grid areas in Luzon by P2.1380 a kWh, P1.5339 a kWh in the Visayas and P1.07777 a kWh in Mindanao over the next four years.

Increase plans

Napocor said it wanted to increase its rates to recover P3.08 billion under the 7th installment of the GRAM and another P45.85 million under the 7th installment of the Icera.

Should these petitions 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, over the next four years.