Napocor seeking bigger missionary electrification charge for next year

THE NATIONAL POWER CORP. (Napocor) is seeking provisional approval to collect a total of P17.8 billion from electricity users next year, through a P0.1948 per kilowatt-hour (/kWh) charge in their power bills, to cover electrification of “far-flung areas” of the country.

In the petition it filed with the Energy Regulatory Commission (ERC), Napocor said the universal charge for missionary electrification (UCME), as found in consumers’ monthly electricity bill, will reflect an increase of P0.0768/kWh from the current amount.

The government- owned and - controlled firm said the proposed basic UCME “is necessary in order to cover the required subsidy requirements and at the same time, maintain a reliable and stable funding source for its operating costs requirements.”

It said the amount includes subsidy for payment to new power providers, renewable energy developers and qualified third-parties that have taken over in full or in part the power generation function of Napocor in certain areas.

Napocor is mandated by law to provide power in areas that are not connected to the country’s transmission grid.

The UCME is collected from all ongrid electricity end users under Republic Act No. 9136, or the Electric Power Industry Reform Act of 2011 (EPIRA).

“There is a need to meet the customer’s electricity requirements through the implementation of the proposed improvement of [Napocor’s] generation function aimed to provide a sustainable development in the off-grid areas and be able to connect electricity to the unserved communities in the far-flung areas,” its said.

Napocor said lack of funds from the UCME subsidy “will definitely affect flexibility in [ the company’s] funding and operation.”

In its petition, Napocor computed the proposed UCME based on, among others, projected fuel cost for 2019, which was

derived from the actual 2017 fuel cost in peso per kilowatt- hour multiplied by projected energy sales. Many of the plants in offgrid areas are diesel-fueled.

It also factored in the excise tax on fuel based on next year’s projected quantity/ volume multiplied with approved rate of P4.50 per liter under R.A. No. 10963 or the Tax Reform for Acceleration and Inclusion, or TRAIN law.

Napocor also considered other costs, including operating expenses, cost of personnel services and depreciation.

Napocor provided a breakdown of proposed use of the P17.8 billion it seeks to collect: around P9.4 billion for its own use; P7.99 billion for new power providers; P190.75 million for qualified third-parties and P224.71 million as cash incentives for renewable energy developers.

Small islands in the country are often not connected to the main grid because they are not financially feasible for having low levels of power demand, low population density and geographical constraints. —