The Energy Regulatory Commission (ERC) has approved an increase of as much as 40 percent in basic electricity rates of the National Power Corporation (Napocor).
The ERC gave Napocor the provisional authority to raise its basic rates by P0.4682 per kilowatt-hour (kWh) for Luzon, P1.1460/kWh for Visayas and P0.7147/kWh for Mindanao.
The move is seen to help lift the financial condition of ailing Napocor.
With the adjustments, Napocor's new average basic rates are P4.3648/kWh for Luzon, P4.0339/kWh for Visayas and P2.8177 for Mindanao. These would take effect in the February 26 to March 25 billing period.
The adjustments did not cover some of Napocor's costs, including those in relation to its plants that were already privatized and those associated with its spot sales.
The central bank said the rise in rates was already factored in to its inflation forecast of 6-8 percent this year. Inflation hit a 10-year high of 9.3 percent in 2008.
"We already recognised that it is one of the upside risks," Diwa Guinigundo, central bank deputy governor, told reporters on Thursday.
ERC executive director Francis Saturnino Juan said the commission's mandate was to set rates that allow power firms to reasonably recover operating costs.
Philippines power rates are among the highest in Asia and a politically sensitive issue because of their impact on the poor, who make up about a third of the 90 million population.
Napocor is expected to post a net loss in 2008 after three years of profitability, reflecting foreign exchange losses and higher fuel costs. With a report from Reuters