ERC clarifies NPC rate adjustment

The Energy Regulatory Commission (ERC) clarified that the rate increase reported in one of the major newspapers on April 22, 2004 is not an increase but a mere recovery of foreign exchange currency costs incurred by the National Power Corporation (NPC).

Moreover, the amount declared in the report is overstated as the actual ICERA recommended for approval by the Commission is only 29.34 centavos per kilowatt-hour instead of 33.63 centavos as proposed by NPC. “In fact, the change in the ICERA is only 7.27 centavos per kilowatt-hour from 22.07 centavos previously approved by the ERC,” Chairman Rodolfo B. Albano, Jr. pointed out.

The ERC Chief also refuted the statement in the news item that ICERA is a form of hedge for companies that make use of foreign exchange. “ICERA is revenue neutral. It merely allows NPC to collect foreign currency exchange adjustments deferred for collection from customers. ERC first reviews the validity of the charges prior to pass on to customers to protect their interest,” the chief regulator averred.

Distribution utilities (DUs) with no existing Currency Exchange Rate Adjustment (CERA) will automatically adjust the FOREX component of its Generation Charge (whether upward or downward) based on the rates approved by ERC relative to NPC’s ICERA. On the other hand, DUs with CERA will apply with ERC its own ICERA before it can change the same.

April 23, 2004