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Regulators have given National Power Corp. (Napocor) the green light to increase its power rates this month to allow the state-owned company to recover fuel and foreign currency exchange cost.
In separate decisions, the Energy Regulatory Commission (ERC) approved Napocor's petition for its 10th to 17th Generation Rate Adjustment Mechanism (GRAM) and 15th to 16th Incremental Currency Exchange Rate (ICERA), which would collectively redound to an increase of P0.69, P0.61 and P0.04 per kilowatt-hour in Luzon, Visayas and Mindanao, respectively.
The ERC allows Napocor to adjust its rates based on the GRAM and ICERA petitions. These take into account changes in the latter's variable costs that are affected by price movements in the international market, such as for fuel and forex, which are not reflected immediately in consumers' electricity bills.
Napocor's 10th to 17th GRAM covers fuel cost adjustments from January 2007 to April 2010. The company's 15th to 16th ICERA, on the other hand, is for forex adjustments from July 2009 to December 2009.
For the said periods, the power firm incurred a total cost adjustment for fuel worth P26.28 billion, P7.71 billion and P1.91 billion; and forex worth P8.49 billion, P277.43 million and P298.04 million in Luzon, Visayas and Mindanao, respectively.
To recover the said amounts, the ERC allowed Napocor to add adjust its rates in Luzon by P0.36 per kilowatt-hour (96 months) for fuel and P0.33 per kilowatt-hour (120) for forex; the Visayas by P0.12 per kilowatt-hour (60 months) for fuel and P0.49 per-kilowatt-hour (126 months); and Mindanao by -0.01 per kilowatt-hour (36 months) and P0.05 per kilowatt-hour (54 months).
The impact of the rate hike on consumers would depend on the volume of power their distribution utilities and electric cooperatives sources from Napocor plants and contracted independent power producers.
For the country's largest power distributor, Lawrence S. Fernandez, utility economics head of Manila Electric Co., said that the company's customers will bear only less than half of the rate increase because Napocor only supplies a portion of the electricity the utility dsitributes.
"The impact on our customers will be diluted and much less. The final impact will depend on the actual share of [Napocor], which typically is around 40 percent though this varies month to month," he said.
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