30 September 2003
The petition by the National Power Corporation (NPC) to seek before the Energy Regulatory Commission an increase in the generation rate is alarming and would mean killing the impoverished consumers. NPC’s petition will result in an increase of around P0.81/kwh for Luzon, P0.68/kwh for Visayas, and P0.41/kwh for Mindanao consumers.
NPC claims in its petition that “The recoverable purchased power cost should not be limited to the PPCA – P0.40/kwh.” Behind our noses, NPC has already taken steps to lift the cap on the purchased power cost adjustment (PPCA) that has been pegged at P0.40/kwh since President Arroyo had ordered the “suspension” of the PPA in May 2002.
“The assailed Order (ERC order dated May 15, 2003) also limited NPC’s recoverable purchased power cost to P0.40/kwh on the basis of National Power Corporation Board (“NP Board”) Resolution No. 2002-61 dated May 29, 2002, wherein the NP Board directed the management to peg the Purchased Power Cost Adjustment (“PPCA”) at P0.40/kwh. This directive has been modified in NP Board Resolution No. 2003-47, dated March 26, 2003, which adopted and approved the proposed NPC revised generation rates in its Application filed on April 4, 2003.”
The petition also insists on legitimizing what we believe to be illegitimate costs – ungenerated and unconsumed electricity that NPC will still pay the IPPs based on their power purchase agreements. These costs are being passed on to the end-users.
NPC states in its petition that: “Granting arguendo that the P0.40/kwh cap were correct, calculations based on the PPCA formula should allow NPC to recover legitimate IPP costs.”
Further, the petition states that: “In NP Board Resolution No. 2003-47, the management was given authority to seek an increase in the generation rate and, consequently, to recover the difference between the actual purchased power cost and the P0.40/kwh cap through the DAA portion of the proposed generation rate.”
The Freedom from Debt Coalition (FDC) believes that in order to truly bring down the cost of electricity, the government should cancel NPC’s onerous contracts with the IPPs or at the very least renegotiate the onerous provisions in the contract such as the take-or-pay and the fuel cost guarantees which make the cost of power from IPPs unbearable.
When the government implemented last year the reduction of PPA, it knew all along that this is unsustainable. The burden of paying for the purchased power costs from IPPs will be put heavily on NPC in the meantime while payment is recovered from the consumers on a staggered basis over an extended period – 15-25 years – allegedly to temporarily reduce burden on end-users. Even so, we feel that the temporary reduction is not enough as this will still be collected from us over the years.
We say to ERC, don’t allow further increases in electricity rates. In these times of economic hardships, any further increase in the already high electricity rates that are passed on to consumers will be an intolerable burden on the people. Our income has not increased while prices of commodities and power and water utilities continue to rise. For a household earning P8,000 a month with an electricity consumption of 222 kwh (P1,320), 16% of that income is spent for electricity. Almost half of its electric bill is for electricity that it did not use, but which goes for the cost of purchased power from IPPs.
Further, we call on President Gloria Arroyo to disclose to the public the results of the review and renegotiation efforts on the IPP contracts by PSALM, DoE, NEDA, DOJ, and DoF – agencies that she tasked to bring down the cost of electricity.