MANILA, Philippines - State-run National Power Corp. (Napocor) will raise its rates in off-grid areas by 50 centavos per kilowatt-hour (kWh) starting this month following approval by the Energy Regulatory Commission (ERC).
In its 3-page decision, the ERC said it approved Napocor's rate hike application to enable it to continue providing electricity to remote islands and barangays throughout the country.
"[It is] cognizant of the fact that in the performance of its missionary electrification program, Napocor-Small Power Utilities Group (SPUG) needs to ensure that it has efficient, continuous and reliable supply of power," the regulator said.
SPUG is the missionary electrification arm of Napocor that operates 157 power plants with a combined capacity of almost 200 megawatts in far-flung areas that are not connected to any of the main grids.
SPUG's recently approved rate hike falls under its third Generation Rate Adjustment Mechanism (GRAM) petition to recover P2 billion from 2004 to 2005.
"Period covered is January 2005 to December 2005. The average rate adjustment prayed for is around P1.38 per kWh at two-year recovery period. The total amount of under recovery for the different SPUG areas is P2.065 billion," ERC executive director Francis Saturnino Juan said.
Power rates in the SPUG areas are highly subsidized and result in significant losses for Napocor yearly.
"Without a recovery mechanism to address these costs, Napocor's financial condition will inevitably continue to deteriorate, to the prejudice of its consumers," the ERC said.
The ERC order comes on the heels of an appeal by the Association of Isolated Electric Cooperatives to Malacañang to help solve the looming power crisis in the SPUG areas, which it said will affect close to 700,000 rural households or roughly 3.2 million Filipinos.