NPC seeks recovery of ₱7.56-B subsidy for off-grid electrification

State-run National Power Corporation (NPC) is seeking regulatory approval on the pass-on of ₱7.562 billion worth of under-recoveries on universal charge for missionary electrification (UCME), or that subsidy component being passed on to all ratepayers to fund energization of off-grid and far flung areas.

If that petition will be given gosignal by the Energy Regulatory Commission (ERC), the corresponding pass-on cost in the consumers’ electric bills will be at ₱0.0720 per kilowatt hour.

Based on the government-owned firm’s petition, the ERC has scheduled public hearings on several dates from May 7 to June 11 this year – to be carried out in various parts of the country, so affected stakeholders could be apprised and be given the venue to raise their concerns on such UC costs that NPC will recoup.

The power firm noted that once ERC approval is granted, it proposed to collect that scale of UCME “from the nationwide electricity end-consumers within a period of 12 months.” The company said the targeted cost recovery “would be reasonable and timely for NPC to augment its financial requirements and to provide up-to-date recovery and adjustment of the ensuing years’ subsidy requirements.”

It added that the amount being recouped “is already an incurred cost of NPC and within the reasonable cost of servicing the consumers in the missionary areas, considering the nature of operation and level of demand in the off-grid areas.”

NPC emphasized that on its fuel expenses alone, there is already a huge disparity on the magnitude of its actual spending to that of the revenues it has been generating from sales.

The state-run firm stated that actual fuel cost it shelled out within the proposed recovery period had been at ₱4.502 billion; while actual revenue from sales just fetched ₱2.193 billion; hence, there’s a mammoth difference of ₱2.308 billion.

NPC indicated that while the ERC allowed an extended recovery of the previously granted UCME, “the provisional approval is not sufficient to cover the expense incurred in calendar year 2019.”

The company thus pleaded that it will need provisional approval on its new application “to ensure an uninterrupted electricity supply as this would fully augment the funding requirements given the increasing demand for energy in line with the government’s thrust of economic development in the off-grid areas.”