23 April 2005
The Freedom from Debt Coalition criticizes the Energy Regulatory Commission for allowing Napocor to increase its rates despite serious questions raised by the public on Napocor’s basis for seeking rates increases.
What ERC has demonstrated in its decision is contrary to its supposed reason for being – to protect the interest of the public. Its decision is a blatant show of the Commission’s bias against the interest of the consumers.
Yesterday, the ERC released its final order allowing the National Power Corporation (Napocor) to increase its rate by P0.0556 per kilowatthour, on top of the provisional increase of P0.9798 per kilowatthour. This decision results in a total power rate hike of P1.0354 per kilowatthour, P0.8346 lower than Napocor’s original P1.87 per kilowatthour applied for.
On top of NPC’s rate increase, the ERC granted Napocor’s Generation Rate Adjustment Mechanism (GRAM) and the Incremental Currency Exchange Rate Adjustment (ICERA) applications. The GRAM resulted in an average increase to P0.42 per kilowatthour, with Mindanao having the largest increase at P0.48 per kilowatthour.
On the other hand, the ICERA resulted in an average increase in Napocor’s generation rate to P0.003 per kilowatthour, with Luzon sharing a huge chunk at P0.18 per kilowatthour.
By granting Napocor rates increases, the ERC simply accepted Napocor’s claims that it needs the power rates increase to be able to finance its huge losses, entice private power companies to come in, and to comply with the requirements of its creditors.
For us, these bases do not address the real reason for Napocor’s financial hemorrhage. We vehemently oppose such increase because we deem it unnecessary for Napocor to increase its rates. The reason for its huge losses is that it continues to pay the expensive and grossly burdensome contracts with the independent power producers.
Napocor’s power rates increase is unjust.
We were deceived by the government that power rates were reduced by the implementation of the P0.40/kwh cap on Napocor’s fuel and purchased power cost adjustment beginning 2002. However, the losses from this reduction will also be recovered from us through this recent Napocor rates increase.
While the ERC granted a lower rate than what NPC had applied for, it glossed over the more fundamental issues on why NPC continues to incur financial losses -- Napocor’s onerous contracts with independent power producers (IPPs). The power rates increase included payments for onerous IPP contracts. Even those ineligible contracts – those not approved by the ERC on or before December 31, 2001, were also included in the rate base of Napocor. Among these contracts found onerous by the government’s interagency in 2002 are the Casecnan and San Roque projects—both having excessively high power rates.
Consumers have long been suffering from high electricity rates, but this government has remained deaf and blind to our plight. What we have gotten before are palliative measures. Now, the government is showing outright disregard to the public’s grievances against oppressive power rates.
FDC reiterates its call for the government to cancel the onerous IPP contracts. Unless the government cancels these contracts, the people will suffer Napocor’s continuing rates increases.