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PIA Press Release
2007/04/04

Great expectation for another power rate cut

Tacloban City (April 4) -- Word is out that after the very solemn atmosphere of the Holy Week, consumers will have a reason to celebrate, not only because Christ is Risen on Easter Sunday but because electricity rates are expected to go down in the coming months, by as much as 36.26 centavos per kilowatt-hour.

The state-owned National Power Corporation (Napocor) filed a petition with the Energy Regulatory Commission (ERC) to adjust its 8th Generation Rate Adjustment Mechanism (GRAM) and its 7th Incremental Currency Exchange Rate Adjustment (ICERA).

The rate adjustment application was similar to the rate cut petition Napocor filed in November 2006 which resulted in a 30 centavo rollback in power rates.

The stable foreign exchange rate and the minimal use of oil-fired power plants were the main reasons why the power firm was able to file twin reductions in the GRAM and ICERA.

It was added that the combined impact of the state firm's 8th GRAM and 7th ICERA applications will lead to reductions of P0.0430 per kWh in Luzon; P0.3151 per kWh in Visayas; and P0.0045 per kWh for Mindanao.

It was explained that the Generation Rate Adjustment Mechanism (GRAM) represents recoveries for the actual increased costs of fuel and power obtained from Napocor's independent Power Producers (IPP), which are both local and foreign currency-dominated.

The ICERA, on the other hand, takes care of the effects of the fluctuations in international currency exchange rates on Napocor's cost of debt services and operating expenses such as spare parts, insurance costs and other generation-related costs.

The expected power rate cut will have great impact in all sectors of the society, from the investors, to manufacturers and producers, to the disadvantage Filipino in the hinterlands, who are all affected by the high cost of electricity.

When realized, the expected reduction of electricity rates will be written in history as another fruit of the economic growth being achieved by the country, which will flow down to the people and which will further increase investor confidence in the country. (PIA 8) [top]

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