Tuesday, August 19, 2008 ERC urged to resolve Napocor’s plea for power rate hike
THE Power Sector Assets and Liabilities Management Corp. (Psalm) asked the Energy Regulatory Commission (ERC) to hasten the resolution of the automatic cost recovery adjustment filed by state-run National Power Corporation (Napocor).
In a petition, Psalm urged the ERC “to adopt the Proposed Rules for the Automatic Recovery of Napocor generation assets’ monthly fuel, purchased power and foreign exchange-related costs.”
Psalm said allowing Napocor to do the automatic cost recovery will address problems relating to deferment of costs under the existing Generation Rate Adjustment Mechanism (Gram) and the Incremental Currency Exchange Rate Adjustment (Icera) schemes
It said several dilemmas have been arising for Napocor, including: delays in filing cost recovery applications; regulatory lag; and non-matching of prices vis-à-vis costs in operating the plants.
Aside from the mentioned problems, other problems related to the imposition of carrying charge to compensate the generator for the cost of money attributed to delayed cost recoveries and uncertainty in the recovery period.
With Napocor’s proposed rate increase, its basic generation tariff will be adjusted to P4.26 per kilowatt hour (kWh) from P3.89 per kWh. The power firm said this will bring its rates closer to the true cost of generating electricity taking into account soaring fuel prices and higher operating costs.
Psalm is reportedly pushing for the approval of Napocor’s rate adjustment due to the problems it has been suffering for its privatization program, primarily in closing the US$787 million Calaca privatization deal.
While the 270 days count to sunset date for the Calaca acquisition already lapsed last August 4, Psalm has not closed the transaction until now.
According to Psalm, it has yet to settle “general issues” on the deal, but it was indicated that winning bidder Suez Energy is waiting for the ERC’s final approval on the Napocor's rate increase before settling its financial obligation in the asset’s acquisition, thus the de facto extension of its payment date.
For its part, the ERC vowed to fast-track the hearing and resolution of the Napocor’s pending rate increase petitions.
Lawyer Francis Saturnino Juan, executive director of ERC, said the hearing for the Napocor’s application started last July 31.
He said they will hear Napocor’s petition to adjust by P0.3685 per kWh its basic generation charge to P4.2651 per kWh from P3.8966 per kWh following the privatization of its big plants.
Aside from the Luzon grid where Napocor is seeking P0.37 per kWh rate adjustment, Juan said they likewise scheduled the hearing for the Visayas and Mindanao petition.
“We will hear and study (also) how we could adjust the time-of-use (TOU) rate in the Visayas and Mindanao,” he said.
Napocor is asking the ERC to adjust by P0.3685 per kWh its basic generation charge to P4.2651 per kWh from P3.8966 per kWh. Should the ERC grant Napocor’s petition, residential customers of the Manila Electric Company (Meralco) will pay additional P0.148 per kWh or a total of P30 for 200 kWh users.
But Napocor president Cyril del Callar maintained that the P0.3685 increase they are asking would not have an impact on the consumers because they also filed their Gram and Icera which would offset the increase once their petition is approved by the ERC. (MSN/Sunnex)
