ERC approves Napocor-Spug rate hike

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WEDNESDAY, 09 FEBRUARY 2011 20:36 PAUL ANTHONY A. ISLA /  REPORTER

THE Energy Regulatory Commission (ERC) said on Wednesday it has increased to P0.94 per kilowatt-hour (kWh) the rates it allowed the National Power Corp.-Small Power Utilities Group (Napocor-Spug) to collect in Luzon instead of the earlier P0.50/kWh on Napocor’s motion to enable it to continue providing electricity to remote islands and inland communities.

“A thorough review of the documents submitted by Napocor-Spug revealed there is a need to increase its deferred accounting adjustment to enable it to meet its fuel requirements and ensure there is efficient, continuous and reliable supply of power within the Spug areas,” said the commission.

In the decision dated January 31 but released on Wednesday, the ERC also allowed Napocor-Spug to increase rates in the Visayas and Mindanao by P1.1950/kWh and P1.4680/kWh, respectively.

The ERC added that Napocor-Spug will collect these adjusted rates starting on its January billing for a two-year period of its deferred accounting adjustment under its third-generation rate-adjustment mechanism application filed in 2007.

The law mandates Napocor to be responsible for providing power generation and associated power-delivery systems in areas that are not connected to the transmission system.

“Without a recovery mechanism to address these costs, Napocor’s financial condition will continue to deteriorate to the prejudice of its consumers,” the ERC said.

The ERC also allowed Napocor to draw on its “surplus fund” of P219.49 million to settle pending claims on missionary electrification subsidy.

The order is expected to relieve cash-strapped Napocor, which is already having difficulty sourcing its fuel requirements for its Spug operations due to budget constraints.

The commission earlier said Napocor’s fiscal flexibility has also been hampered by the transfer of Napocor plants and contracted capacities with independent power producers’ output to the Power Sector Assets and Liabilities Management Corp.  that prevents Napocor’s remaining main grid operations from advancing funds to finance Napocor-Spug operations.

At the same time, a recent legal opinion of the Department of Justice has barred Napocor from engaging in further borrowings and in fundraising activities like bond issuances.

The ERC order also comes on the heels of an appeal by the Association of Isolated Electric Cooperatives to Malacañang to help solve the looming power crisis in the Napocor-Spug areas.

The group pointed out that blackouts have already been experienced in Tablas Island in Romblon and in Polilio Island in Quezon and it fears that eventually all other areas serviced by Napocor-Spug will also experience power outages by the end of this month.