ERC sets phased approval of NPC’s P30.8-B UCME cost recoveries

By Myrna M. Velasco – January 20, 2023, 3:28 PM
from Manila Bulletin

The Energy Regulatory Commission (ERC) will be targeting phased approval of the P30.8 billion worth of cost recoveries that state-run National Power Corporation (NPC) has lodged via its series of universal charge for missionary electrification (UCME) applications.

ERC Chairperson Monalisa C. Dimalanta indicated “we are targeting to resolve at least two true-up cases every quarter” – that will be out of the eight UCME applications that NPC had filed with the Commission.

ERC said as threats of worsening blackouts are already apparent to hit off-grid areas starting next month.

Dimalanta noted that approval may be rendered by the regulatory body starting first quarter this year, hence, that is expected to partly ease the extreme financial strain crippling the operations of the state-run power firm, primarily for services being extended by its Small Power Utilities Group (SPUG) to the off-grid areas.

Dimalanta emphasized that the NPC applications for UCME cost-recoveries covered 2014-2020, mostly piled up prior to the current Marcos administration.

On top of the UCME cost recoveries, the ERC chief qualified that the power firm is also batting for P39.1 billion adjustment on its basic rate – as anchored on the company’s projected expenses for 2023.

In the process of evaluating NPC’s filings, Dimalanta stated that ERC is also addressing the “true-up of past expenses first.” In addition, there are also “forex (foreign exchange) adjustments that need to be factored in, among others.”

The ERC acknowledged that it is being bombarded with complaints and concerns relating to the delay in the adjustments of the UCME billings of NPC, which subsequently restrained it from settling the warranted subsidy costs to its power suppliers.

The UCME is a separate line item in the electric bills, passed on to all ratepayers nationwide. The UC collections, in turn, will be remitted to NPC which will then utilize these amounts to subsidize the rates of electricity service for consumers it has been catering to in the SPUG areas.

So far, NPC has repeatedly sounded off in various fora that its coffers had already been depleted because of the rising costs of fuel it has been purchasing, while its applications for cost recoveries had been stricken with regulatory lag.

“As the regulatory body tasked with the duty of protecting and promoting consumer interest, the Commission is faced with the challenge of balancing the interests of our consumers and end-users in missionary areas, on one hand; and on-grid users who shoulder the burden of subsidizing UCME on the other,” the ERC stressed.

The targeted cost recoveries of NPC for it to beef up cash resources for its fuel procurements is highly anticipated to trigger rate hikes that will come as added financial pain to on-grid consumers who are already pounded with tariff spikes due to tight supply conditions, especially in the Luzon grid.