Monday, July 21, 2008 ERC: Napocor rate hike hearings may take long
THE Energy Regulatory Commission (ERC) admitted that with a lot of objections, the target date to complete the hearing for the rate hike petitions of state-run National Power Corporation (Napocor) might not be met.
"The reality is, when there are a lot of oppositions, there might be some extended hearings because we need to hear all the parties concerned," said ERC director Francis Saturnino Juan.
However, he assured that the ERC "will seriously weigh and balance the need of investors to be financially afloat and the consumers' concern for affordable power rates."
Napocor, earlier, filed five to six mixed petitions for rate adjustments with ERC that could have rate increases or rate reductions. But the sum will not be higher than their existing rates now -- which are around P4.11 to P4.15 per kilowatt-hour (kWh).
"Even if you add or minus these rates, we do not see any spike or any increase in power rates of Napocor," Napocor president Cyril del Callar said.
In its petition, Napocor is asking the ERC to adjust by P0.3685 per kWh its basic generation charge to P4.2651 per kWh from P3.8966 per kWh.
Should the ERC grant Napocor's petition, residential customers of Manila Electric Company (Meralco) will pay additional P0.148 per kWh or a total of P30 for 200 kWh users.
Juan made the statement after winning bidder for the 600 megawatt (MW) Calaca coal-fired power facility -- the Suez Energy Asia asked the Power Sector Assets and Liabilities Management Corporation (Psalm) on the rate adjustment of Napocor as a precondition to the closing of the US$787-million Calaca transaction.
The ERC likewise received a letter from the investors raising concerns on the Calaca transactions.
It was also known that financial institutions and fund managers of the French-Belgian firm were reportedly not keen on drawing down the loans for the Calaca acquisition because the Napocor rates, which were used as reference for the attached transition supply contracts (TSCs), are "not reflective of the true costs of electricity."
Earlier, Psalm president Jose Ibazeta told reporters that they expect to close the transaction with Suez Energy by August 4.
But an executive of Psalm said the August 4 date "is a deadline for Psalm to complete all of its deliverables in the transaction."
The "burden to reflect true cost of electricity" is now being evaluated on whether it should be treated as "government deliverables" in the Calaca deal since Psalm viewed the concerns of the buyer and its lenders "as valid".
The Calaca asset is the last transaction that has not been closed by Psalm from the successful biddings it had last October 16, 2007.
As of July 10, Psalm already raised US$15-billion proceeds from the privatization of Napocor assets.
Ibazeta said when he assumed post last year, his task was to dispose 20 plants of Napocor as mandated under the Electric Power Industry Reform Act (Epira) law to pave the way for the open access and retail competition in order to give consumers cheaper and affordable electricity rates by giving them the chance to choose their distribution utilities. (MSN/Sunnex)
