Power rates seen to rise in 2017

Consumers may face higher power bills in 2017 if the energy regulator clears the petition of the National Power Corp. (Napocor) to cover over P10 billion worth of subsidies for missionary electrification next year.

In the application filed with the Energy Regulatory Commission (ERC), the state- run firm is seeking a provisional authority for the proposed universal charge for missionary electrification (UCME) rate of P0.1248 per kilowatt-hour (kwh) for calendar year 2017.

The proposed rate includes cash incentives for renewable energy (RE) developers in offgrid areas.

Napocor said it would need P10.32 billion to cover projected fuel costs, operating expenses and demand in missionary areas next year.

The firm said the higher rate would replace the existing basic UCME rate of P0.1163 per kwh.

“The proposed basic UCME rate of P0.1248 per kwh is necessary in order to cover the subsidy requirements and at the same time, maintain a reliable and stable funding source for its operating costs requirements including a sufficient subsidy for payment to NPPs (new power producers)/QTPs (qualified third parties) and RE developers,” Napocor said.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, UCME is collected from end- users which will be used for the electrification of remote communities or areas not connected to the main transmission grid.

Napocor is the implementing agency for missionary electrification through its unit Small Power Utilities Group (SPUG).

The UCME is one of Napocor’s sources of funds under the law, apart from energy sales collected from electric cooperatives.

The state-run firm raised the need to meet customers’ electricity requirements by improving its generation function to off-grid areas, as well as connect electricity to underved communities in far-flung areas.

Napocor said the granting of provisional authority will also “limit the disparity between the UCME subsidy granted and the actual subsidy required based on proposed requirements.”

The state-run firm had noted the approved UCME subsidies are not sufficient to cover the difference between its cost of operation and the revenue collected from its sales.

“The lack of funds from the UCME subsidy and from supposedly transitory funds which can be sourced through loans will definitely affect flexibility in Napocor’s funding and operation,” Napocor said.

Napocor services around 800,000 households through its 290 Small Power Utilities Group (SPUG) plants.