Department of Energy (DoE) Secretary Alfonso Cusi asked National Power Corporation (NPC) President Pio Benavidez to improve the corporation’s operating efficiency and reduce the true costs of generation and missionary subsidies in off-grid areas before moving to increase generation rates to be shouldered by electricity consumers.
This directive came after careful consideration of the formal application filed by the NPC with the Energy Regulatory Commission (ERC) to increase the missionary generation charge in off-grid islands in Luzon by a total of P2.9140 per kilowatt hour (kWh). This would raise said charge from the current rate of P5.6404 to P8.5544/kWh.
In his memorandum to NPC President Benavidez, Secretary Cusi expressed serious concern over the generation charge of P8.5544/kWh, compared to the P5.25/kWh charge in Manila, being a heavy burden to Filipino consumers in the poorer, off-grid islands. This is contrary to the government’s mandate to keep power rates affordable under the Electric Power Industry Reform Act (Epira) of 2001.
He further directed the NPC “to reduce missionary subsidies instead of passing on to these poorer areas the costs of excess taxes and fuel and other costs that will cause this 51 percent increase in their P5.6404 SAGR.”
Under ERC Application No. 2018-048RC, the NPC also applied to pass on the added excise taxes on fuel being used to generate power in off-grid islands (P1.9648/kWh) to consumers. This is on top of its previous application for an increase of P0.9492/kWh, bringing the total increase to P 2.9140/kWh.
The NPC is the administrator of the missionary subsidies provided by the government to consumers through the local electric cooperatives. Under the Epira Law, NPC can cover its missionary subsidies by charging the consumers in those areas a missionary generation rate called the subsidized approved generation rate (SAGR), with the remainder likewise passed on as the universal charge for missionary electrification, or UC-ME.