Power rate hikes in May as Napocor jacks up generation charge

MANILA, Philippines—Power consumers should brace for higher electricity rates starting May, after the state-run National Power Corp. was allowed by a regulator to jack up its generation charge in Luzon by 69.04 centavos per kilowatt-hour (kWh), Visayas by 60.60 centavos per kWh and Mindanao, by 4.42 centavos per kWh.

The Energy Regulatory Commission said in a statement that these approvals covered the pending joint applications filed by Napocor and the Power Sector Assets and Liabilities Management Corp. (PSALM) under the Generation Rate Adjustment Mechanism (GRAM), which allows utilities to recover costs associated with fuel and purchased power, and Incremental Currency Exchange Rate Adjustment (Icera) Mechanism, which allows utilities to recover foreign exchange-related costs.

In a separate interview, ERC executive director Francis Saturnino Juan explained that the approvals to recover fuel and foreign exchange costs incurred from January 2007 up to April 2010 covered the 10th to 17th installations of the GRAM and the 15th to 16th installations of the Icera.

“These fuel, purchased power, and foreign currency costs are legitimate costs already incurred by Napocor and PSALM in their supply of power to their various customers. By law, they are entitled to recover these costs as part of the price of electricity they sell to their customers,” Juan explained.

“The ERC has already mitigated the impact of these adjustments by spreading their recovery over a longer period and by coming out with this decision at the soonest to avoid additional carrying charges to be included in the recoverable amounts,” he further stressed.

Juan, however, pointed out that the full impact of the increases on Napocor’s effective rates would not be shouldered by grid consumers since the distribution utilities and electric cooperatives have not been purchasing their full electricity requirements from Napocor, since the divestment of state-owned power facilities.

Currently, Napocor’s effective rate for Luzon stands at P5.0160 per kWh; P4.0740 per kWh in Visayas; and only P2.9321 per kWh in Mindanao.

However, the power rate hike could be considered untimely as Mindanao has been experiencing outages of at least two hours a day. The power situation on the island is likely to worsen by April 9, when the shutdown of the Pulangi 4 facility for repairs and maintenance will shed off 120 MW of crucial capacity in Mindanao.

Add to that, the use of more diesel-fired facilities would likely hike power prices in Mindanao by another 50 to 80 centavos per kWh—amid the rotating brownouts—Energy Secretary Jose Rene D. Almendras said on Tuesday.

Luzon and Visayas will, meanwhile, be spared from brownouts this year, given healthy reserves of roughly 2,000 MW and 500 MW, respectively.