State-run National Power Corp. (NPC) is seeking regulatory approval to recover P27.79 billion in costs related to foreign exchange fluctuations and deferred fuel expenses.
The NPC, in separate filings with the Energy Regulatory Commission (ERC), requested approval to recover P20.998 billion as an incremental currency exchange rate mechanism (ICERA) deferred accounting adjustment (DAA) of P0.0384 per kilowatt-hour for the Small Power Utilities Group (SPUG) areas over a 12-month period.
NPC said that due to its missionary electrification function, SPUG incurs additional costs or savings resulting from foreign exchange fluctuations. These fluctuations affect the costs of servicing foreign debt, foreign exchange-related expenses (like insurance and imported power transmission parts), and carrying charges.
The application covers January to December 2022, addressing adjustments related to forex fluctuations in debt service, operating expenses, and carrying charges.
NPC also applied for approval of its 25th generation rate adjustment mechanism (GRAM) for the same period. The company seeks to recover P6.8 billion in DAA for fuel costs over a two-year period to mitigate the impact on customers in missionary areas.
NPC said that since these expenses were incurred in 2022, immediate recovery of the necessary adjustment would help alleviate its operational funding.
The company said its operational funding is insufficient, even with the adjustments to the subsidized approved generation rate (SAGR) and universal charge for missionary electrification (UCME) in 2019 and 2023 due to persistently rising fuel prices.
The SAGR was adjusted to an average of P6.666 per kWh in 2023 and P7.1549 per kWh in 2024, equivalent to P3.1 billion and P3.6 billion, respectively. The UCME was adjusted in 2023 to P0.1805 per kWh or an equivalent annual amount of P18 billion.
NPC noted that the projected collection from SAGR and UCME would only be around P24 billion, while the projected requirement for entire missionary electrification is P30 billion.
