Napocor seeking hike in generation charges

The National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (PSALM) have filed a rate hike petition with the Energy Regulatory Commission (ERC) covering the country’s three main grids. The petition was filed last Dec. 28, 2009 for Napocor’s 14th Incremental Currency Exchange Rate Adjustment (ICERA), and 15th Generation Rate Adjustment Mechanism (GRAM). ICERA is a mechanism to recover the state power generator’s foreign exchange fluctuation costs, while the GRAM recovers the cost of fuel and of electricity bought from privately owned power plants. The GRAM and ICERA petitions seek total rate increases amounting to P1.7033 per kilowatt hour (kWh) in Luzon, P1.3545/kWh in the Visayas, and P0.2254/kWh in Mindanao. The proposed Mindanao rate hike is lower, since cheaper hydro-power supplies 90% of the island’s electricity requirement. The present generation rates, as approved by ERC in February last year and which took effect the following month, are P4.3658/kWh for Luzon, P3.7255/kWh for the Visayas, and P2.8177/kWh for Mindanao. The 14th ICERA and 15th GRAM petitions cover the billing period April-June 2009 which was not covered by the automatic rate adjustment rule that took effect in November last year. ERC ruled in August last year to allow Napocor/PSALM to automatically implement rate adjustments pertaining to GRAM and ICERA without prior application with the regulator. The automatic adjustments are subject to yearly reviews. ERC Executive Director Francis Saturnino C. Juan, however, said in a phone interview that Napocor/PSALM have yet to implement the automatic adjustment scheme as they await further clarification. PSALM is the state firm that handles the major grid operations and finances of Napocor’s plants, as the state power generator now focuses on off-grid electrification by its Small Power Utilities Group. PSALM is also mandated by the Electric Power Reform Act of 2001 to sell the assets of Napocor as well as manage its liabilities. Manila Electric Co., the country’s largest power utility, currently sources about 40% of its electricity requirements from state-owned plants. The 12th ICERA and 13th GRAM applications have yet to be decided by the ERC. If approved without change, the two applications will result in an increase by P0.1720/kWh in Luzon and P2.0207/kWh in the Visayas, but will cause a cut of P0.3711/kWh in Mindanao. The 13th ICERA and 14th GRAM petitions also still await ERC ruling. If approved as is, these will cause a hike of P1.5058/kWh in Luzon and P1.3382/kWh in the Visayas, but a reduction of P.0952/kWh in Mindanao. -- Jose Bimbo F. Santos, BusinessWorld