by Myrna Velasco May 15, 2016 (updated)
State-run National Power Corporation (NPC) is seeking to pass-on P10.324 billion worth of subsidies for its Small Power Utilities Group (SPUG) service domain, that will result in P0.1248 per kilowatt hour (kwh) hike in electricity rates.
The company said this amount will account for the level of subsidies that it will need to funnel to ‘missionary’ or island-grid areas for year 2017.
The cost recoveries had been calculated three-tiered: P6.929 billion for direct subsidy of the NPC’s missionary areas; P3.143 billion for payments to qualified third parties (QTPs) of new power providers (NPP) which are generally private sector players; and Renewable Energy (RE) development cash incentive.
The cost impact will be P0.0838 per kwh for NPC subsidy; P0.0380 per kwh for private NPPs; and P0.0030 per kwh for RE cash subsidy.
This will be reflected in the universal change for missionary electrification (UCME) component in the electric bills borne by ratepayers. But prior, this needs to go through the approval of the Energy Regulatory Commission.
“The proposed base UCME rate of P0.1248 per kwh inclusive of RE cash incentive for CY 2017 is necessary in order to cover the required subsidy requirements and at the same time maintain a reliable and stable funding source for its operating cost requirements, including a sufficient subsidy for payment to NPP-QTPs and RE developers,” NPC said.
It, nevertheless, qualified that the RE cash incentive will be remitted to the Power Sector Assets and Liabilities Management Corporation (PSALM), thus, the scale of UCME to be managed by NPC will be net of that component.
The power firm further noted that the level of subsidies it petitioned for would ensure that “the required volume of fuel will be timely paid to (its) suppliers to avoid non-delivery of fuel supply.”
Additionally, this will guarantee that payments to private power providers in missionary areas “are timely made.”
The state-run firm further asserted that if such cost recoveries are given the go-signal, “the missionary electrification functions in SPUG areas are fulfilled through continued operation of existing generating units and implement power development plans for each island grid.”
NPC explained that lack of funds can severely affect the efficiency of its operations, primarily because it has already been prevented from procuring new loans, as based on a legal opinion issued by the Department of Justice.