Napocor justifies rate hike petition

By Danessa Rivera (The Philippine Star) | Updated February 1, 2016 - 12:00am

http://www.philstar.com/business/2016/02/01/1548272/napocor-justifies-rate-hike-petition

MANILA, Philippines - The National Power Corp. (Napocor) has defended its petition for a higher power rate adjustment amid decreasing fuel prices, saying prevailing rates date back as far as 2009.

An oil executive has slammed the state-run agency’s proposal for a power rate hike under the universal charge component of bills.

The current approved fuel cost component in all universal charge for missionary electrification (UCME) approvals beginning 2012 is still based on our average fuel cost in 2009 of P24.54 per liter though actual fuel cost is higher, Napocor president and CEO Ma. Gladys Cruz-Sta. Rita said in a statement to The STAR.

She also noted the average fuel cost in 2014 was P38.72 per liter.

“Imagine the huge fuel cost differential of around P14/liter that Napocor has to advance before it can finally recover its incurred fuel costs. We need to recover this balance annually for us to sustain the operations of our missionary areas,” Sta. Rita said.

The official also explained the price of oil only started to continuously decrease in the latter part of 2014, averaging at P38.72 per liter for the year, which gave rise to a reduced fuel cost of P27.92 per liter for the year.

However, this fuel cost reduction would only be reflected by Napocor in its UCME recovery petition for 2015 given the period to get the approval of the Energy Regulatory Commission.

If Napocor would not regularly apply its actual incurred cost, the government corporation mandated to provide electricity in far-flung areas will not have sufficient funds to perform its function, which is to provide electricity in off-grid areas through the collection of subsidy requirements, Sta. Rita said.

“The operating funds of Napocor do not come from the national government but from its revenues in missionary areas and the UCME collected from all electricity users. The calls to block and question the needed power rate recovery petitions of the NPC before the ERC will only mean delay in cost recovery and reduced funding for our Small Power Utilities Group (SPUG) operations. This will affect our ability to pay for fuel deliveries to our SPUG plants and subsidy requirements of New Power Providers (NPPs) and Qualified Third Parties (QTPs), which eventually will lead to power interruptions,” she added.

In its recent petition, Napocor sought for the approval of an additional P0.0788 per kilowatt-hour (kWh) to recover P5.896 billion in under-recoveries for its missionary electrification subsidies incurred in 2014.

Following this proposal, Eastern Petroleum chairman and CEO Fernando Martinez questioned this added cost to consumers, highlighting the over 60 percent drop in fuel prices for that year. 

However, Sta. Rita belied the insinuations that the corporation is incompetent in the delivery of its services, when the agency has maintained transparency in all its transactions and is under scrutiny by the ERC.

She also pointed out the additional power rate would not be reflected in consumers’ electricity bills immediately because it will take almost one year to compile all documentation on Napocor-SPUG’s incurred expenses to support the filing and at least another year for the petition to undergo several public hearings to get approval from the ERC. 

“NPC normally files its petitions for rate adjustment every year to recover changes in fuel costs, dollar exchange and UCME shortfall but it is not automatically or immediately approved. And with ERC’s intervention, there is hardly an increase in the rates granted to NPC. It is usually spread out over several years,” Sta. Rita said. 

For the last four years since 2012, the approved UCME rate has been pegged at 15.44 centavos per kWh. However, only 4.54 centavos per kWh is considered basic rate which can be automatically collected. The balance of about 11.63 centavos has to be recouped yearly by way of our UCME true up applications.

“We are confident that once we are able to explain the entire rate recovery process and NPC’s missionary electrification program, he will not only understand our situation but also support our rate recovery applications. Rest assured that our petition will benefit the off-grid communities that we serve as we continue to improve our services,” Sta. Rita said.