ERC extends ‘subsidized rate’ for NPC
The subsidy rate of 0.1561 per kilowatt hour (kwh) for the off-grid and missionary areas being administered by state-run National Power Corporation (NPC) has been extended by the power industry regulator.
In a recent ruling, the Energy Regulatory Commission (ERC) stipulated that the universal charge for missionary electrification (UCME) previously approved for NPC “is hereby extended until revoked or made permanent by the Commission.”
In the earlier order of the regulatory body, it authorized NPC to collect the UCME amount of 0.1561 per kwh from January 2015 to August 2015.
Beyond the UCME, NPC similarly filed a petition for cost adjustment on its subsidized approved generation rate (SAGR) for its service areas under the Small Power Utilities Group (SPUG). The application reflects its estimated cash requirement until year 2016.
Following the mandate on extended collection of the prevailing UCME rate, the ERC thus directed “all distribution utilities and the National Grid Corporation of the Philippines to extend the collection of the provisionally-approved UCME subsidy from the consumers.”
The collections will then be remitted to the Power Sector Assets and Liabilities Management (PSALM) Corporation being the designated administrator of the UC fund.
In the same order, the ERC has mandated PSALM “to release to NPC the amount collected from the implementation of the UCME while the amount collected pertaining to the 0.0017 cash incentive shall be disbursed by PSALM to renewable energy developers.”
The ERC further stated that “the UCME and the disbursements made shall be considered in the final evaluation of (the) case and adjustments shall be made accordingly, if warranted.”
The SPUG and missionary areas are being underpinned with subsidies given that the consumers in these areas are not assessed to be all financially-equipped to pay the high cost of power service being offered in these jurisdictions.
Since their systems are not connected to the grid, the SPUG consumers cannot be afforded the relatively cheaper blended rate of grid-connected power utilities. Instead, their main source of power supply had been the cost-prohibitive diesel plants.
To balance their economic turmoil over expensive power rates, the Electric Power Industry Reform Act (EPIRA) calculatedly set some subsidy scheme for the continuity of electricity service in these areas.