NPC seeks higher charge for missionary electrification

STATE-RUN National Power Corp. (NPC) is seeking to collect P44.2 billion from on-grid electricity end-users next year, as the current charge is insufficient to sustain operations for missionary electrification amid fuel price spikes.

In its filing before the Energy Regulatory Commission, NPC is proposing to collect a total of P44.2 billion as universal charge for missionary electrification (UCME).

The amount translates to an equivalent rate of P0.4405 per kilowatt-hour (kWh), a 65.5% increase from the current rate of P0.2662 per kWh for 2026.

“The aim is to further provide and guarantee sustainable economic development in the off-grid areas,” NPC said.

As authorized by the Electric Power Industry Reform Act or EPIRA, the UCME is a monthly charge collected from on-grid electricity end-users used to subsidize cost of power in off-grid areas.

NPC is mandated to provide electricity to remote and island areas not connected to the main grid through Small Power Utilities Group (SPUG) plants.

The corporation’s proposed budget for next year consists of the basic UCME subsidy for SPUG areas, as well as subsidy for new power providers, qualified third parties, and microgrid service providers.

A portion of the budget will be allocated to provide cash incentives to renewable energy developers operating in off-grid areas.

“The proposal, when approved, will allow NPC to deliver its commitment to provide a reliable and sufficient power supply and efficient operation of its plants and its associated power delivery systems consistent with the specific programs in the missionary areas that NPC is currently serving,” the company said.

NPC said the UCME subsidy will help maintain its facilities, which ensures “continued and uninterrupted supply of power” to the electricity consumers in off-grid areas.

“The provision of electricity to unelectrified, unserved and underserved off-grid areas will enable to perform its mandate and fulfill the government’s objective of total electrification,” NPC said.

The Philippine government has set a 100% electrification target by 2028.

The country’s island communities and off-grid areas usually rely on power plants operated by NPC. About 99% of the 79 NPC-SPUG power plants run on diesel.

However, diesel costs have surged due to the current global oil crunch — a challenge especially significant to the Philippines due to its heavy reliance on imported fuel.

A month since the onset of the US-Israel war on Iran, local pump prices have increased by double digits, with diesel prices reaching as high as P153 per liter.

In a statement in early March, transition and transaction advisory firm Climate Smart Ventures (CSV) warned that around 1.2 million households residing in off-grid areas face the risk of prolonged power outages as fuel prices rise.

“If oil prices continue to escalate and the conflict drags on, this can deplete the universal charge for missionary electrification fund used to subsidize fuel in off-grid areas,” CSV Head of Philippine Operations Matthew Carpio said.

To cushion the impact of oil price shocks from geopolitical conflicts, NPC is undertaking its Accelerated Hybridization Program, which aims to launch diesel-solar-battery hybrid plants this year. The initiative aims to reduce diesel consumption by at least 20% in the power plants. — Sheldeen Joy Talavera