NPC asks for ERC approval of power rate adjustments
By Lenie Lectura – September 30, 2024
from Business Mirror
THE National Power Corp. (NPC) is seeking to recover P6.8 billion in fuel cost incurred in 2022 through the Generation Rate Adjustment Mechanism (GRAM) over a two-year period for an average of P6.3647 per kilowatt hour (kWh).
In a filing with the Energy Regulatory Commission (ERC), the state firm asked that it be granted a provisional authority for the immediate implementation of the proposed rates for the immediate recovery of deferred GRAM adjustments—P7.3327 per kWh in Luzon, P5.0016 per kWh in Visayas, and P5.6033 per kWh in Mindanao.
The application stemmed from additional operating costs as a result of fuel price increases used in power generation. NPC is mandated to provide electricity in off-grid islands via Small Power Utilities Group (SPUG) plants, which are mostly powered by diesel. Napocor is allowed to recover additional costs in the operation that are beyond the approved rate.
“Since these expenses were already incurred in 2022, immediate recovery of the needed adjustment would help alleviate the operational funding of NPC.
This operational funding is actually insufficient even if the subsidized approved generation rates (SAGRs) and the universal charge for missionary electrification (UCME) were adjusted in 2019 and 2023 due to the persistent rise of the price of fuel in the market,” NPC said.
SAGRs were adjusted to an average of P6.66 per kWh in 2023 and P7.15 per kWh in 2024 or to an equivalent annual amount of P3.1 billion and P3.6 billion, respectively. UCME was adjusted in 2023 to the rate of P0.1805 per kWh or to an equivalent annual amount of around P18 billion.
The projected collection from both will only be around P24 billion while the projected UCME requirement for 2025 for the entire missionary electrification is set at P30 billion.
“Clearly, the current rates of SAGR and UCME are not sufficient to meet the funding requirements for missionary electrification,” NPC said.
