News Update Napocor seeks to recover costs by raising electric rates

National Power Corp. (Napocor) is asking the Energy Regulatory Commission (ERC) for permission to recoup P3.12 billion in generation cost, which means increasing electricity bills in Luzon by more than P2 per kilowatt-hour . In its application with the ERC, Napocor said it has filed for the 7th Generation Rate Adjustment Mechanism (GRAM) and 7th Incremental Currency Exchange Rate Adjustment (ICERA) to recover cost and comply with the directives of the industry regulator. The application falls under the recovery schemes under the Electric Power Industry Reform Act (EPIRA), which allows Napocor to apply for generation cost recovery by passing on the cost to consumers. “We have filed for a recovery period of four years for the 7th GRAM and 7th ICERA because we do not want our consumers to be saddled with high power costs," Napocor said, in a statement Friday. In its previous filings, Napocor sought to recover its generation cost within a year after its application has been approved. “The amount we are proposing to be recovered in the 7th GRAM and 7th ICERA are actual historical costs that we have incurred in generating electricity that we sell to our customers and consumers. The two are what we collectively refer to as Deferred Accounting Adjustments (DAAs), and are just pass-thru costs, meaning we do not profit from them in any way," Napocor said. These applications will help Napocor improve its financial position once approved by the ERC, the state-owned power producer said. Napocor intends to recoup P3.121 billion in DAAs, which include P3.075 billion under the 7th GRAM and P45.846 million under the 7th ICERA. The four-year spread will reduce the yearly average recovery to P780 million, according to Napocor. As a result, the Napocor applications — once approved — will mean higher electricity rates in the missionary areas, including P2.1380 per kWh in Luzon, P1.5339 per kWh in the Visayas, and P1.07777 per kWh in Mindanao. The corresponding adjustments will raise Napocor rates ranging from P7.1839 per kWh to P9.1005 per kWh. “We hope our consuming public understands that we have to recover these costs because it will help us sustain our operations and continue providing our services to them. In turn, we will continue to implement improvements to make our services better, more reliable and more sustainable," Napocor said. — VS