Business World Online
Posted on 11:15 PM, September 23, 2010
POWER INDUSTRY regulators have slashed the universal charge on power bills used to subsidize missionary electrification after finding out that National Power Corp. (Napocor) had bloated its expenditure tally and entered into deals without approval.
State-owned Napocor sought a P0.23 per kilowatt-hour (kWh) increase in the Universal Charge for Missionary Electrification (UCME) in July supposedly to recover losses, but the Energy Regulatory Commission (ERC) instead cut the rate to P0.0454/kWh from P0.0978/kWh in an Aug. 16 decision released only yesterday.
This translates to a P2.8-billion subsidy for the firm’s Small Power Utilities Group (SPUG), which provides electricity to areas off the main power grids, over a three-year period. Napocor sought P8.196 billion for operations for 2010, on top of the 2009 request of P4.9 billion.
The ERC, however, found that some items should not have been included in the calculation of operational expenses of SPUG areas.
"The commission excluded other [purchased power supply] amounting to P279.9 million, considering that the power supply agreement entered into by [SPUG] was not approved by the commission; depreciation, since this is a non-cash item; and other benefits and allowances and miscellaneous operating costs amounting to P102.7 million and P956.4 million since [SPUG] failed to submit sufficient evidence to substantiate these expenses," the ERC said.
Napocor also sought to recover P10.5 billion in losses from 2003 to 2007 through the UCME.
The ERC noted that Napocor borrowed money without prior clearance from regulators, and said losses should be recovered under a quarterly scheme instead of the UCME subsidy.
ERC executive director Francis Saturnino C. Juan said it was up to Napocor to propose how it would recover its losses.
"What happened is that these losses from the subsidy were accumulated over six years. Past losses are not included in the determination of the UCME because it is used to subsidize the operation of SPUG areas. It’s up to Napocor what it will propose to the commission to recover the losses. It would be in some other petition," Mr. Juan said.
Napocor spokesman Dennis S. Gana said Napocor might file a motion for reconsideration.
"Once we formally receive the decision it would have to be studied first. But we may file a motion for the ERC to reconsider their decision. Operations of SPUG need continuous funding and loans are a faster way for us to provide continuous service. In fact, if recoveries aren’t approved it would have a huge impact on SPUG operations since there are really no other sources of funding for it," Mr. Gana said.
The P2.8-billion subsidy will be released by the Power Sector Assets and Liabilities Management Corp. but would be paid by all electricity end users for at least three years. The UCME is a "non-bypassable charge" that is collected on a monthly basis. -- E. N. J. David
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