Power rates to go up in May

By Neil Jerome Morales, The Philippine Star

Posted at Mar 29 2012 07:40 AM | Updated as of Mar 30 2012 12:31 AM

MANILA, Philippines - Consumers will have to pay more for electricity in May – ranging from 4.42 centavos to 69.04 centavos per kilowatt-hour (kwh).

The Energy Regulatory Commission (ERC) approved on March 26 the rate adjustment to enable the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (PSALM) to recover costs incurred from 2007 to 2010.

Based on the ERC decision, electricity rates for Luzon are up by 69.04 centavos per kwh; Visayas, 60.60 centavos; and Mindanao, 4.42 centavos.

“These fuel, purchased power, and foreign currency costs are legitimate costs already incurred by Napocor and PSALM in their supply of power to their various customers,” said ERC executive director Francis Saturnino Juan.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, Napocor and PSALM may apply for generation rate adjustment mechanism (GRAM) and incremental currency exchange rate adjustment (ICERA) to recover costs. The adjustments are then passed on to consumers.

“Customers will see this in their bills in May,” Juan said.

“The ERC has already mitigated the impact of these adjustments by spreading their recovery over a longer period and by coming out with this decision at the soonest to avoid additional carrying charges to be included in the recoverable amounts,” Juan said.

Under GRAM, grids in Luzon will have to pay additional 32.67 centavos per kwh. Those in the Visayas will have to pay 48.47 centavos per kwh; and Mindanao, 5.36 centavos per kwh.

For ICERA, ERC allowed the markup of 36.37 centavos per kwh for Luzon and 12.13 centavos for Visayas, while requiring a refund of 0.0094 centavos for the Mindanao grid.

“Recovery period is eight to 10 years,” Juan said in a phone interview. “The use of the funds they will recover will depend on Napocor and PSALM.”

Juan said Napocor and PSALM will implement additional charges to distribution utilities next month.

Under the EPIRA, Napocor should privatize its power plants.

After the privatization of its power facilities, Napocor would be left with the function of operating power plants not sold by PSALM. PSALM also manages Napocor’s power plants and debt.