New power-rate increase looms

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MONDAY, 24 JANUARY 2011 21:12 PAUL ANTHONY A. ISLA / REPORTER

CUSTOMERS of the National Power Corp.-Small Power Utilities Group (Napocor-Spug) may be in for another increase in their power bills.

Napocor-Spug has petitioned the Energy Regulatory Commission (ERC) to allow it to recover from its customers more than P2 billion for its fuel and foreign-currency costs.

Napocor-Spug asked the ERC to grant its petition, under its 6th Generation Rate Adjustment Mechanism (Gram) application, to recover P2.139 billion in fuel costs from its customers.

 The amount covers the January-to-December 2009 period that Napocor-Spug proposed to recover in two years. It wants to collect an average of P1.3169/kWh, P1.4959/kWh and P1.2660/kWh from Napocor-Spug customers in Luzon, Visayas and Mindanao, respectively.

Napocor-Spug also made it clear that it will only recoup underrecoveries for fuel costs from its customers in 31 Spug areas all over the country.

Napocor-Spug noted that as it performs its electrification functions, it incurs additional fuel-operating costs because of the fluctuation of fuel prices used in power generation and purchased-power costs.

Napocor-Spug said additional fuel and purchased-power costs, which it bears if allowed to escalate without the benefit of any recovery through rates, would result in a deterioration of Napocor’s financial condition.

Napocor-Spug also asked the ERC to approve its cost recovery on a per-province basis, as well as the proposed corresponding rates for each of the 31 provinces.

Napocor-Spug said its petition was done on a per-province basis to reflect the true fuel cost per province and to eliminate cross-subsidy among provinces within the area.

In a separate petition, Napocor-Spug also sought for the ERC’s approval to recover P153.97 million in incremental costs on foreign- currency exchange fluctuations under the incremental currency-exchange rate adjustment mechanism.

Napocor-Spug petitioned to also increase its rates P0.1982/kWh to recover its currency-exchange expenses in 12 months.

Napocor-Spug said it incurred additional operating costs (or savings) due to foreign-exchange fluctuation that affects the costs of servicing foreign-currency debts and/or foreign-exchange related expenses, such as insurance of imported power plant/transmission parts.

Napocor-Spug also proposed to recover (refund) the deferred accounting adjustments corresponding to additional costs or savings from foreign-exchange fluctuations in the settlement of debt service and operating expenses and corresponding carrying charges for the billing period January to December 2009 for Luzon, Visayas and Mindanao grids.