Executive opposes electricity rate hike amid oil price drop

by Alena Mae S. Flores – January 27, 2016 at 11:10 pm

from Manila Standard

An oil industry executive said Wednesday National Power Corp.’s bid to increase the universal charge should not be allowed, given the drastic drop in fuel cost.

Eastern Petroleum chairman and chief executive Fernando Martinez said he was referring to the application of Napocor to recover almost P6 billion from consumers, which would translate into a power rate hike of P0.0788 per kilowatt-hour under the universal charge for missionary electrification.

He questioned Napocor’s motive to increase the rate, in the wake of low domestic and international fuel prices that fell by as much as 60 percent over the last 18 months.

“Given the substantial decrease in fuel costs, we strongly believe that their operational costs should have decreased and their existing universal charge for missionary electrification of P0.0454 per kWh should suffice to eventually recoup their under-recoveries in the last two years,” Martinez said in a statement.

He said Napocor should instead maintain its current charges and reduce the subsidies it allocated for missionary electrification.

Martinez said as a consumer, he was willing to attend hearings on Napocor’s petition filed with the Energy Regulatory Commission and question how Napocor derived the figures.

“Napocor should review its operational costs and the subsidies it allots to its small power utilities group given that domestic and international fuel prices have been on a 12-year low. Thus, why should consumers be burdened by these alleged under-recoveries borne out of their incompetence?” Martinez asked.

Napocor earlier filed a petition with ERC to hike the universal charge on consumers to recover nearly P6-billion shortfall in the missionary electrification subsidy in 2014.

Napocor proposed to recover P5.895 billion, representing the funding shortfall in 2014.

Napocor president Ma. Gladys Sta. Rita said in a statement the petition was based on the actual expenses, as against the actual approved revenue and sales from missionary areas and the universal charge for missionary electrification.

Sta. Rita said the application would “still pass through the process of public hearing and the commission’s evaluation and approval before implementation.”

Napocor said the huge shortfall in 2014 was due to the very low basic universal charge for missionary electrification at P0.0454 kWh, which translated into only P2.7 billion per year.

The state firm said the filing was one of two sources of the corporation’s funds as allowed under the Electric Power Industry Reform Act of 2001.

These include the universal charge for missionary electrification which is to be collected from all electricity consumers and energy sales collected from electric cooperatives.

Napocor said the petition was consistent with ERC Resolution 21, series of 2011, which amended the guidelines for the setting and approval of electricity generation rates and subsidies for missionary areas.

This provided that if the reconciliation resulted in Napocor’s small power utilities group having a deficiency, as confirmed by the ERC, it should be entitled to an increase in the UC-ME to cover the shortfall.

Sta. Rita also said that an additional funding through the approval of the instant petition would ensure an uninterrupted electricity supply as this would fully augment the funding requirements of Napocor.

She said given the increasing demand for energy and in line with the government’s thrust of economic development in the off-grid areas, availability of funding through the universal charge for missionary electrification particularly for fuel requirements would enable Napocor to optimize the use of available plant capacity.