National Power Corp. seeks P7.47-B fuel cost recovery

STATE-RUN National Power Corp. (NPC) is seeking approval from the Energy Regulatory Commission (ERC) to recover P7.47 billion in deferred fuel costs incurred in 2023 for supplying electricity to off-grid areas.

NPC is proposing to recover deferred accounting adjustments (DAA) for fuel expenses at an average rate of P6.35 per kilowatt-hour (kWh) over a two-year period under its application for the 25^th generation rate adjustment mechanism (GRAM), it said in a statement on Monday.

The company is proposing a recovery rate of P6.3926 per kWh for Luzon, P6.1927 for the Visayas, and P6.3257 for Mindanao.

The GRAM application covers the billing period from January to December 2023.

NPC is also seeking ERC approval to recover these amounts on top of the existing subsidized approved generation rates (SAGR) of NPC–Small Power Utilities Group (SPUG), as well as those of NPC-SPUG areas operated by new private-sector power providers.

The company is requesting continued collection of GRAM adjustments even after private-sector entities have entered a specific missionary area.

To supply power to missionary areas, NPC said it incurs additional operating expenses due to fluctuations in fuel prices.

It added that under existing rules, it is allowed to recover such costs — beyond approved rates — through the GRAM.

NPC said the expenses were already incurred in 2023 and that immediate recovery of the proposed adjustment “would help alleviate the operational funding of NPC.”

“This operational funding of NPC is actually insufficient even if the SAGR and the UCME (universal charge for missionary electrification) were adjusted starting 2019 due to the persistent rise of the price of fuel in the market,” it said.

NPC is mandated to provide electricity to remote and island areas not connected to the main grid through SPUG plants.

As of June 2024, the company operates 165 SPUG plants, mostly diesel-powered, across 155 areas.

“The proposed 26^th GRAM DAA is fair and reasonable as it is computed in line with the GRAM rules as approved by the Honorable Commission,” NPC said. — Sheldeen Joy Talavera