NPC seeks P1.078-billion recovery cost adjustment from fuel-price fluctuations

By Lenie Lectura – March 13, 2017

from Business Mirror

The National Power Corp. (NPC) has filed an application for recovery cost adjustments worth P1.078 billion.

The amount represents additional operating costs incurred by NPC-SPUG (Small Power Utilities Group) as a result of the fluctuation of fuel prices used in power generation.

Off-grid or missionary areas locations not connected to the grid are served by NPC’s SPUG. The state firm is allowed to recover this deferred fuel costs through the Generation Rate Adjustment Mechanism (Gram).

In its eight-page filing with the Energy Regulatory Commission (ERC) last month, the state firm proposed to recover this amount spread over two years by imposing the Gram directly to consumers in NPC-SPUG areas.

If approved, the proposed rates will be implemented over two years to fully recover P1,078,243,310 worth of deferred fuel costs to mitigate the impact on NPC customers in the missionary areas.

In particular, NPC asked to collect P1.0982 per kilowatt -hour (kWh) in Luzon, P1.0541 per kWh in the Visayas, and P0.7657 per kWh in Mindanao.

NPC said the proposed 15th GRAM, covering the period of January to July December 2015 is “fair and reasonable,” as it was computed in line with the Gram rules and consistent with the principles of free and competitive electricity market as provided under RA 9136.

“The proposed 15th Gram application was approved for filing by the NPC Board on February 8, 2017,” the NPC said.

Further, the NPC said it has fully complied with the Gram’s monthly reportorial requirements in support of the calculated allowable costs covering the billing period.

NPC President Ma. Gladys Cruz-Sta. Rita had said it normally takes at least one year before any petition may be acted upon because any petition has to undergo several public hearing before being endorsed.

“NPC normally files its rate adjustment every year to recover the adjustments in fuel costs and dollar exchange 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,” she said.