DOE lines up measures to prevent power interruptions

MANILA, Philippines — The Department of Energy (DOE) has lined up measures aimed at preventing rotating power interruptions in off-grid areas due to ongoing National Power Corp. (Napocor) budget constraints.

Energy Secretary Raphael Lotilla, in a virtual briefing yesterday, said the government is working on short- and medium-term measures to sustain the operations and ensure the continued delivery of power supply by Napocor in off-grid areas.

Napocor, for its current fiscal year, faces constraint in its corporate operating budget, posing a major problem in sustaining its operations in off-grid areas.

Cited as a major constraint is the continued rise in the prices of petroleum products, particularly oil, which is the primary fuel used by Napocor’s Small Power Utilities Group (SPUG) power plants.

Napocor has proposed a reduction in the operating hours of SPUG power plants starting March 1 to extend fuel inventory up to the end of the year.

The proposed reduced operations of 156 existing SPUG power plants as well as the delayed payments to concerned new power providers (NPPs) and qualified third parties (QTPs) are expected to affect about 1.3 million households in  the islands and off-grid areas through a potential year-long daily power interruptions.

Napocor, however, said there would be no reduction in SPUG operating hours provided that it could have a budget augmentation to procure additional fuel that could last up to Dec. 31.

“To avoid rotating power interruptions in the islands and off-grid areas, we are taking steps to fund a sustainable solution to address the financial woes that are crippling the operations of Napocor,” Lotilla said.

According to the DOE, Napocor secured last week the approval of the Department of Budget and Management to use the prior year’s national government subsidy amounting to P1.112 billion to cover the state-owned corporation’s due and demandable fuel payables.

The prior year’s national government subsidy is a special provision in the General Appropriations Act that authorizes the use of subsidy release for programs and projects to cover the additional funding requirements of activities or projects under the agency’s program.

Napocor’s outstanding fuel payables for the operation of SPUG power plants and barges amount to P1.031 billion for the billing months covering November to December 2022.

Its payables to the NPPs and QTPs, meanwhile, amount to P5.508 billion, representing three to four months unpaid billings, which are due and demandable.

The DOE and Napocor board are also working on effecting a P5-billion borrowing with government financial institutions, which will require special authority from President Marcos.

Lotilla said the DOE and Napocor are likewise working with the Development Budget Coordination Committee to program funds that support Napocor’s funding deficit of P14.205 billion this year.

Further, the DOE expects the Energy Regulatory Commission to act swiftly on the petition by the Napocor on the Universal Charge for Missionary Electrification (UCME) of about P0.15 per kilowatt-hour.

The proposed UCME rate is the commitment of Napocor to ensure the required volume of fuel that will be timely paid to suppliers, payment to NPPs and QTPs, and ensure the continued operation of existing units.

If approved by the ERC, the DOE said the proposal would help Napocor deliver its commitment to provide a reliable and sufficient power supply and efficient operation of its plants and associated power delivery systems consistent with the specific programs in the missionary areas that Napocor serves.

Under the Electric Power Industry Reform Act, Napocor can cover its missionary subsidies by charging the consumers in those areas a missionary generation rate passed on as the UCME.

“We assure Napocor customers that the government is undertaking remedies to ensure the delivery of its mandates despite several factors it cannot control,” Lotilla said.