Senator Sherwin Gatchalian asked state-run National Power Corporation (NPC) to reduce the universal charge for missionary electrification (UCME) subsidy to help bring down electricity rates for consumers connected to the main transmission grid.
“Look for ways to reduce UCME. I know that hybridization is one and connecting to the grid could be another,” Gatchalian told NPC officials during a recent Senate hearing.
NPC is mandated to energize far-flung, off-grid areas and islands in the country. It plans to hybridize or utilize renewable energy to help bring down the cost of diesel in the missionary areas.
The UCME is used to subsidize the more expensive cost of providing electricity in these areas.
Gatchalian, vice-chair of the Senate Committee on Energy, said the UCME subsidy steadily increased over the years, rising to P24.62 billion in 2024 from P7.34 billion in 2015.
NPC is pushing to accelerate the hybridization of its Small Power Utilities Group (SPUG) diesel power plants using renewable energy resources to help bring down power costs in the missionary areas.
NPC officials said the hybridization lowers the cost of energy by P2 to P3 per kilowatt-hour, and the completion of hybridization for 16 projects would generate up to P1.3 billion in savings from fuel costs by 2025.
NPC, however, accounts for only 30 percent of the energy supply in missionary areas, while 70 percent is provided by new power providers (NPPs).
“How do we convince the NPPs, which account for 70 percent, to hybridize? I understand they have supply contracts, so we should explore the possibility of incentivizing or compelling them, if necessary, to hybridize. The UCME subsidy is steadily increasing,” Gatchalian said.
Gatchalian urged the NPC to pursue a rationalization study of the UCME that the DOE conducted.
“I am not suggesting that we impose the true cost of energy because if you do that, it might discourage business establishments, and they might leave and cause massive unemployment. But we need to find the right balance,” he said.
According to the DOE, the islands of Palawan and Mindoro account for about 60 percent of the UCME subsidy.
“I’m very optimistic that one day, the benefit of hybridization and rationalization of the UCME would translate to lower subsidy,” he said.
