Power consumers brace for another rate increase

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WEDNESDAY, 31 AUGUST 2011 20:48 PAUL ANTHONY A. ISLA / REPORTER

POWER consumers may have to shell out more in settling their monthly electricity consumption bill following the filing of yet another rate-adjustment petition by the National Power Corp.-Small Power Utilities Group (Napocor-Spug) with the Energy Regulatory Commission (ERC).

In its petition, Napocor-Spug sought an additional adjustment of at least 6.93 centavo per kilowatt-hour (kWh). The additional cost will enable Napocor-Spug to continue its operations in remote areas, assure continuous fuel shortage supply and avoid possible shutdown of power plants.

The Napocor-Spug has been recently granted by the ERC a provisional authority to collect an additional 7.09 centavo per kWh from consumers through the universal charge for missionary electrification (UCME).

To date, Napocor-Spug collects 11.63 centavo per kWh from consumers through the UCME. It also asked the ERC for the approval of the return-on-rate base (RORB) to allow it to guarantee continuous operation in remote areas.

The Napocor-Spug said the provisional authority did not provide for the 12 percent RORB that would allow for at least two months cash working capital for “unrecovered” operating expenses and for capitalized maintenance expenses of generating plants.

The Napocor-Spug justified that its financial capability of sustaining its operations will be drastically impaired without a reasonable RORB.  Napocor-Spug added it paid new power providers (NPP) with a total subsidy amounting to P693.6 million last year that resulted in a deficit of P334.6 million from the approved amount of P310 million for the same year. 

From January to July this year, Napocor-Spug said its actual payment of NPP subsidy that includes claims for prior years’ adjustment amount to P498 million, while the approved UCME subsidy to NPP for 2010 to 2013 is only P310 million per year.

The Napocor-Spug said it still has additional projected requirements up to year-end of about P527 million based on the ERC-approved true cost generation rate and projected energy sales for NPPs. 

It noted that its total cash deficit that will be attributed by the full payment of subsidy to NPP will account to about P715 million.  While the provisional authority alleviated to some extent its financial woes, Napocor-Spug said the additional revenues of P359 million a month cannot support the continuing operations in remote areas.
The 7.09-centavos per kilowatt-hour provisional authority, according to Napocor-Spug, is only about 24 percent of the total applied UCME adjustment of P17.1 billion or about 30 percent of the total deferred accounting adjustments for the generation rate adjustment mechanism  and Incremental Currency Exchange Rate Adjustment (Icera) of P14.1 billion applied with the ERC. 

On May 19, 2011, Napocor filed a petition for a 27.95-centavo per kilowatt-hour adjustment to the UCME to recover the shortfall in revenues resulting from higher fuel costs and foreign exchange fluctuations, adjustments in the true-cost of generation of new power provider, and a 12-percent RORB o cover its working capital from 2003 to 2009.