In NPC’s power generation charges
Wednesday, June 28, 2006
ERC allows pass-on of Ilijan costs
By MYRNA M. VELASCO
The Energy Regulatory Commission (ERC) has granted final authority for National Power Corporation (NPC) to pass on to consumers the generation charge of the electricity supplied from the 1,200 -megawatt Ilijan natural gas-fired power facility.
The regulatory body specified that the costs accounting for the Ilijan facility’s energy conversion agreement (ECA) shall be recovered via the state-run power firm’s generation rate adjustment mechanism or GRAM.
In view of a provision set forth under Section 32 of the Electric Power Industry Reform Act, NPC was initially prohibited from passing on generation cost for some plants, including Ilijan, of which rates have not been approved by the defunct Energy Regulatory Board (ERB) based on the prescribed cut-off date of December 31, 2000.
Though such provision in the law has still to find merit, this weighed down on NPC’s finances because of its inability to pass on the rates of some of its contracted independent power producers; as it has to absorb and refinance these costs.
In the case of Ilijan alone, NPC has to shoulder P8.6 billion in capacity payments in year 2003 and 2004; without recovering these from end-users.
On top of that, it is also saddled with P26.196 billion (as of end-December 2004) of banked gas in the take-of-pay gas supply deal with Shell Philippines Exploration B.V. This accrued because of the very low utilization of the Ilijan gas plant (mostly at 50percent dispatch) since its commercial operation in June 2002.
In ERC’s ruling, it was emphasized that the Ilijan capacity fee to be lumped in NPC’s charges shall be denominated in US dollars at a rate of $ 7.25376 per kilowatt-hour on a monthly basis.
Fixed operating and maintenance fee, on the other hand, shall be set two-tiered - with one pegged in US dollars and the other in local currency; and fixed at $ 0.76112 per kWh/month plus P7.25 per kWh/month.
The same rule of currency denomination in charges applies to energy fees; with base energy rate estimated at $ 0.00013 per kWh plus P0.0012 per kWh.
Evaluating the parameters of the project’s relevance to consumers, ERC deemed it reasonable to pass on the cost of the Ilijan project, noting that this will result in "lower bills compared to existing similar plants."
The Ilijan project is under a 20-year Build-Operate-Transfer agreement with Kepco Ilijan Corporation (Keilco), a local subsidiary of Korea Electric Power Corporation, commencing February 5, 1998.
The regulator further pointed out that the Ilijan project yields benefit to the Philippine government via royalty share from the utilization of gas fuel from the Malampaya field; and at the same time, in providing job opportunities for the Filipinos.
By the same token, utilizing gas as a fuel likewise provide quantitative benefits in terms of reduced emissions and in creating much-needed opportunity for the country to further trim down reliance on imported energy resources.
posted by philpower @ 7:35 AM,
