NPC warns of reduced supply without ERC approval

By Alena Mae S. Flores – October 10, 2024, 8:00 pm
from manilastandard.net

KUALA LUMPUR, Malaysia—State-run National Power Corp. (NPC) warned it would be forced to curtail operating hours of the Small Power Utilities Group (SPUG) operations by March 2025 if it is unable to receive approval from the Energy Regulatory Commission for its pending cost recovery petitions.

NPC president Fernando Martin Roxas said at the sidelines of Enlist Asia 2024 Conference and Exhibition here that they sent a letter to the Department of Energy (DOE) to help secure approval from the ERC for its applications as it needs P11.5 billion for fuel costs this year.

“If the ERC will not allow us to collect, we have no choice. Otherwise, we will curtail. And that’s bad on an election year. I already sent a memo to DOE telling them that if we don’t get an approval, we will have no more money to pay by March 2025 and we will start cutting operations,” Roxas said.

Roxas said he sought the DOE’s help because of the new leadership at the ERC, which could further delay action on NPC’s applications. He said that for every P1-billion deficit in fuel costs, there would be 2.1 hours of no power.

“We won’t be able to buy any fuel because our hybridization is also delayed. It’s been 22 months delayed since I first proposed…Hopefully we can execute it as quickly as possible so that the burden on the finances of the government will be reduced,” he said.

NPC asked the ERC to recover P27.79 billion for foreign exchange current fluctuations costs and deferred fuel costs.

NPC, in separate fillings to the ERC, asked for approval to recover P20.998 billion, equivalent to the proposed incremental currency exchange rate mechanism (ICERA) deferred accounting adjustment (DAA) of P0.0384 per kilowatt-hour for the SPUG areas over a 12-month period.

NPC said that in the performance of its missionary electrification function, SPUG incurs additional cost/savings as a result of the fluctuation of the foreign exchange which affects the costs of servicing foreign current developments and foreign exchange related expenses such as insurance and imported power transmission parts.

The application covers January to December 2022, involving the adjustments corresponding to forex fluctuations in the settlement of debt service and operating expenses as well as carrying charges.

Meanwhile, NPC also applied for approval of its 25th generation rate adjustment mechanism (GRAM) covering the same period.

NPC sought approval for the recovery of the DAA for fuel costs amounting to P6.8 billion, recoverable for a two-year period to mitigate the impact to customers in the missionary areas.

The company said that since these expenses were already incurred in 2022, immediate recovery of the needed adjustment would help alleviate its operational funding.