ERC adjusts generation charge of NPC

The Energy Regulatory Commission (ERC) approved the new generation charge of the National Power Corporation (NPC) in the Luzon, Visayas, and Mindanao grids. Electricity users in Luzon will now pay P2.2802/kWh for generation cost while customers in the Visayas will be charged P2.5238/kWh. In Mindanao, the new rate will be P1.5101/kWh. Originally, the generation rates for the three grids were, P2.1435/kWh, P2.2907/kWh, and P1.1283/kWh, respectively. The new rates will start with the May 26 to June 25, 2004 billing of NPC.

The change in generation rates was triggered by upward adjustment in fuel prices and the deterioration of the value of the Philippine peso against the US dollar. “We have no other recourse but to grant the rate adjustment application of the generating companies that include the NPC to help them stay viable and continue providing safe, adequate, reliable and quality electricity service,” ERC chairman Rodolfo B. Albano, Jr. explained.

Distribution utilities (DUs) with approved unbundled rates sourcing power solely from NPC were authorized by ERC to automatically adjust its generation rates accordingly. DUs with suppliers other than NPC, on the other hand, shall recover the adjustments through the Generation Rate Adjustment Mechanism (GRAM).

GRAM is an adjustment recovery mechanism, which replaces the automatic recovery adjustment mechanism of NPC, which is the Fuel and Purchased Power Cost Adjustment (FPCA) and distribution utilities’ Purchased Power Adjustment (PPA). It will allow the periodic (quarterly) adjustment to the Generation Rate to reflect changes in fuel and IPP costs after a review by the ERC before costs are passed on to customers.

DUs that still have bundled rates shall reflect the rate modification using its current Purchased Power Adjustment (PPA) formula. The rate change shall be made effective on the first billing cycle after the effective date of the revised NPC generation charge.

June 10, 2004