DoE asks Napocor to defer off-grid rate hike

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Department of Energy (DoE)

THE DEPARTMENT of Energy (DoE) yesterday asked the National Power Corp. (Napocor) to defer its application to increase electricity rates in off-grid areas until it has improved its operating efficiency as well as reduced power generation costs and missionary subsidies.

In a statement, the agency said Energy Secretary Alfonso G. Cusi had sent a memorandum to Napocor President Pio J. Benavidez expressing “serious concern” over the power generation charge of P8.5544 per kilowatt-hour (kWh) compared with P5.25/kWh in Manila.

The DoE said the generation charge is a heavy burden on Filipino consumers in the poorer, off-grid islands, and is contrary to the government’s mandate to keep power rates affordable under the law.

The agency said it came out with the order after looking at Napocor’s application with the Energy Regulatory Commission (ERC) to increase the missionary generation charge in off-grid islands in Luzon by a total of P2.9140/kWh. The application will raise the charge to P8.5544/kWh from P5.6404/kWh.

Mr. Cusi also ordered Napocor “to reduce missionary subsidies instead of passing on to these poorer areas the costs of excess taxes and fuel and other costs that will cause this 51% increase in their P5.6404 SAGR (subsidized approved generation rate).”

In its application, Napocor also wanted to pass on the added excise taxes on fuel being used to generate power in off-grid islands at P1.9648/kWh to consumers. This is on top of its previous application for an increase of P0.9492/kWh, bringing the total increase to P2.9140/kWh.

Napocor is the administrator of the missionary subsidies provided by the government to consumers through local electric cooperatives.

Under the law, it can cover its missionary subsidies by charging consumers in those areas a missionary generation rate called the subsidized approved generation rate. The remainder is also passed on as a universal charge for missionary electrification

Mr. Cusi in his memorandum to Napocor said the DoE “will review the power supply contracts of existing private power generators to identify and possibly eliminate onerous provisions.”

He asked Napocor to submit existing contracts “at the soonest possible time, and 30 days to submit its action plan on the matter.” — Victor V. Saulon