The Energy Regulatory Commission deferred acting on the pending universal charge for missionary electrification (UCME) applications of National Power Corp. as it studies whether the state firm is allowed to recover a 12-percent return on rate base (RORB).
ERC chairperson Monalisa Dimalanta said the commission would evaluate further the “open items” in NPC’s applications from 2017 to 2022, including true up applications which would have a significant impact on their decision.
Dimalanta said one of these items is whether NPC is entitled to receive 12-percent RORB on top of its cost recovery for missionary electrification.
“The commission had previously denied the claim, given that the UCME is already a subsidy provided by end users but NPC asked for reconsideration,” she said.
Dimalanta said NPC’s position is that the Electric Power Industry Reform Act of 2001 did not repeal the provision in its charter as regards to RORB.
“So their claim is that as a rule they are still entitled to RORB every year,” the ERC chair said.
NPC cited Sec. 43 of the EPIRA that allows the recovery of just and reasonable costs and reasonable RORB to enable it to operate viably.
NPC is the implementing agency for missionary electrification, and the agency said it is duty-bound to ensure the provision of the UCME subsidy requirements in the missionary areas from the UC to be collected from the end-users as determined by the ERC.
It said that given the power shortage in the small island grids, and with the connection of the households in these areas to the main grid not being financially feasible due to low demand, low population density and geographical constraints, it is a challenged for NPC to bring the areas to their viable level.
NPC said the costs involved in off-grid electrification are also often beyond the capacity of most household consumers to pay because of lack of resources.
“NPC believes that through the mandated UCME subsidy, the provision of electricity becomes affordable and, at the same time, spurs economic activity, in addition to the fact that it facilitates the delivery basic services to the off-grid consumers,” it said.
It said the UCME subsidy is an avenue to support the government’s thrust of total electrification.