NPC to adjust its basic rates
The Energy Regulatory Commission (ERC), on 16 February 2009, provisionally authorized the National Power Corporation (NPC) to increase its basic rates by an average of PhP0.4682/kWh for Luzon; PhP1.1460/kWh for Visayas; and PhP0.7147/kWh for Mindanao. The provisional relief granted to NPC and its co-applicant, the Power Sector Assets and Liabilities Management Corporation (PSALM), is intended to immediately alleviate NPC's current financial difficulties given its current costs of generating power, including the costs of the discounts that it is mandated to extend to certain customers.
With the adjustment, NPC's new average basic rates are PhP4.3648/kWh for Luzon, PhP4.0339/kWh for Visayas, and PhP2.8177 for Mindanao, effective NPC's 26 February 2009 to 25 March 2009 billing period.
NPC and PSALM jointly filed their application for adjustments in NPC's basic rates on 16 January 2009. In their application, NPC and PSALM proposed a PhP.8332/kWh increase in Luzon, or from the existing PhP3.8966/kWh toPhP4.7298/kWh. For the Visayas, they sought an increase of PhP1.3815/kWh, or from the existing PhP2.8879/kWh to PhP4.2694/kWh, while for Mindanao, they prayed for an additional PhP1.0686/kWh, to bring up the existing approved rate of PhP2.1030/kWh to PhP3.1717. Instead of giving NPC and PSALM the full adjustments they prayed for, however, the ERC disallowed some of the cost items in NPC and PSALM's proposal, among them, those that relate to NPC's plants that were already privatized and those associated with its spot sales or those sold in the Wholesale Electricity Spot Market.
In support of their application, NPC and PSALM cited the figures contained in NPC's Financial Statements that were duly audited and validated by the Commission on Audit (COA). These COA-audited Financial Statements detailed NPC's actual costs of operations for the test year 2007, which applicants proposed. The data showed that NPC's costs have significantly increased from the 2002 to 2004 cost levels on which the last rates approval was based.
"The ERC's mandate is to set the rates at such level that will allow recovery of just and reasonable costs in the provision of the service and a reasonable return on the capital employed in the business subject to regulation. The ERC cannot shirk this responsibility if it becomes difficult and unpopular to do so," ERC Executive Director Francis Saturnino C. Juan emphasized.
The provisional rates may still change depending on the outcome of the hearings to be conducted on the rate application and the evidences to be submitted by applicants, as well as those that will participate in the proceedings as interveners. If it turns out in the final evaluation by ERC that NPC and PSALM are not entitled to the adjustments that were provisionally authorized, they are obligated to refund any excess in recoveries.
The jurisdictional, expository and pre-trial hearings in Luzon will take place on February 24, 2009 at 9:30 A.M. It will be followed by evidentiary hearings on March 3, 9 and 16, 2009 at 2:00 P.M. Venue of the hearings will be at the ERC Hearing Room, 15th Floor, Pacific Center Bldg., San Miguel Avenue, Ortigas Center, Pasig City.
In Visayas, the jurisdictional, expository and pre-trial hearings will be on March 19, 2009 at 9:00A.M., while evidentiary hearing will be on March 20, 2009 at 9:00A.M. to 5:00P.M. Venue will be at the 2nd Floor, Annex Hall, Holiday Plaza, F. Ramos Street, Cebu City.
For Mindanao, the jurisdictional, expository and pre-trial hearings will be done on February 25, 2009 at 2:00 P.M. The evidentiary hearing will be held on February 26, 2009 at 9:00A.M. These hearings will be held at the Function Room (Ground Floor) of the Sequiaoa Inn, Monteverde Street, Davao City.
"The ERC's mandate is also to protect and promote the consumers' interests. This is served by ensuring the viability of NPC's operations, by letting it continue to generate power for the consumers," Executive Director Juan concluded.
February 19, 2009