Napocor may raise rates to fund SPUG projects

State-run National Power Corp. (Napocor) may seek higher yearly “subsidy” in the next five years to cover the funding requirements of its operations and ensure adequate supply of electricity in off-grid, remote parts of the country.

The said subsidy comes in the form of universal charge for missionary electrification (UCME), which is charged by Napocor on consumers served by the country’s power grids.

Based on the 2012-2016 Missionary Electrification Development Plan (2012 MEDP), Napocor will need to increase the 11.63-centavo per kilowatt-hour UCME to 15.38 centavos this year to finance its capital projects and operations.

Under the plan, Napocor will have to further increase the rate to 19.03 centavos per kWh in 2013; 22.32 centavos per kWh in 2014; 26.05 centavos per kWh in 2015; and 27.06 centavos per kWh in 2016.

The previous MEDP pegged the UCME at only 4.54 centavos per kWh from 2009 to 2013. However, Napocor filed for additional subsidies under a true-up mechanism to recover any shortfall in its missionary electrification operations, jacking up the current UCME to 11.63 centavos per kWh.

The total value of the targeted UCME collections between this year and 2016 was not indicated in the 2012 MEDP but Napocor president Froilan A. Tampinco earlier said that within the next 10 years, the state power firm would need up to P16 billion to put up new generating facilities and the necessary transmission assets to provide electricity in the SPUG [small power utilities group] areas.

Of the P16 billion, about P9.5 billion will be used for power generation projects while P6.06 billion will be used for the construction of transmission assets. This budget is expected to add another 145 megawatts in new capacities in far-flung, off-grid areas in the country.

Tampinco said Napocor would file with the Energy Regulatory Commission an application for an increase in the UCME this year to reflect more accurately the funding requirements of the SPUG areas.

The 2012 MEDP stressed the need for Napocor to be able to collect these subsidies as any substantial shortfall in UCME “would lead to delays in the rehabilitation and/or repair of aging generation facilities and in the construction of transmission lines.”

The document also contained other initiatives that would allow the Department of Energy to “implement some enhancements in existing policies to rationalize the UCME, while providing better electricity services in missionary areas.” The measures included raising power rates to increase reliability of facilities, implementation of interclass subsidies and provision of incentives for the use of renewable energy sources.

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.