NPC applies for P1.65-B recovery-cost adjustments

by Lenie LecturaJune 29, 2016 

from Business Mirror

THE National Power Corp. (NPC) has just filed an application for recovery-cost adjustments worth P1.65 billion.

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

Off-grid, or missionary, areas are locations not connected to the grid and are served by NPC’s SPUG.

The state firm is allowed to recover these  deferred-fuel costs through the Generation Rate Adjustment Mechanism (GRAM). In its eight-page filing with the Energy Regulatory Commission (ERC), 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 P1,652,727,080 worth of deferred fuel costs to mitigate the impact to NPC customers in the missionary areas. In particular, NPC asked to collect P1.5594 per kilowatt hour (kWh) in Luzon, P2.0170 per kWh in the Visayas, and P1.2921 per kWh in Mindanao.

NPC said the proposed 14th GRAM, covering the period of July to December 2014, 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 Republic Act 9136.   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 said it normally takes at least one year before any petition may be acted upon, because any petition has to undergo several public hearings before getting 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. 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.