Philippines' Napocor Seeks Higher Power Surcharge to Fund Off-Grid Areas
Key Takeaways
- •Napocor filed an application with the Energy Regulatory Commission seeking approval to collect an additional 10.82 billion pesos from on-grid electricity consumers to fund subsidies for power providers in areas not connected to the main grid.
- •The proposal would add 0.0939 pesos per kilowatt-hour to the universal charge for missionary electrification, lifting the rate from 0.2763 to 0.3702 pesos per kilowatt-hour, an increase of roughly 34%.Napocor proposed recovering the amount over 12 months, from August 2026 to July 2027, to balance its subsidy needs against the rate impact on consumers.
- •The additional funding addresses subsidy requirements of new power providers whose agreements were approved after Napocor's initial 2026 rate application, with payment backlogs having reached four to five months.
- •Napocor also requested provisional authority to recover the charges while regulatory proceedings continue, and any decision on the interim request and the rate increase now rests with the ERC.
MANILA — State-run National Power Corp. (Napocor) has asked regulators for approval to collect an additional 10.82 billion Philippine pesos from on-grid electricity consumers to cover its subsidy obligations to power providers serving areas outside the main grid.
In an application filed with the Energy Regulatory Commission (ERC), Napocor proposed an additional 0.0939 pesos per kilowatt-hour (kWh) on the universal charge for missionary electrification (UCME). If approved, the rate would rise to 0.3702 pesos per kWh from the current 0.2763 pesos per kWh — a roughly 34% increase that would be borne by all customers connected to the main grid.
The state-run company proposed recovering the amount over 12 months, from August 2026 to July 2027, in order to spread the additional cost among electricity consumers.
"A twelve-month recovery period provides a reasonable balance between Napocor's need to recover legitimate subsidy obligations and the need to avoid an undue rate impact on consumers," Napocor said in its application.
The UCME, authorized under the Electric Power Industry Reform Act of 2001 (EPIRA), is a charge collected from on-grid electricity consumers to subsidize power supply in areas not connected to the main transmission grid. Napocor is responsible for providing electricity in remote and island communities through its Small Power Utilities Group (SPUG).
According to Napocor, the additional 10.82 billion pesos is intended to cover the subsidy requirements of new power providers whose power supply agreements were approved by the ERC after the company submitted its initial 2026 rate application. The company said subsidy claims had exceeded the available UCME funds, resulting in payment backlogs of four to five months — a gap that sits at the heart of the current request, since the universal charge must absorb subsidy obligations that the original 2026 filing did not anticipate.
"Absent the approval and recovery of these additional subsidy requirements, the provision of reliable electric service in the affected missionary areas shall be adversely affected," Napocor said.
The state-run company also sought provisional authority, or interim relief, from the ERC to allow recovery of the additional charges while the application undergoes regulatory proceedings. Any decision on that interim request, along with the final ruling on the rate itself, now rests with the ERC. The proposed increase remains subject to ERC approval.
— Sheldeen Joy Talavera, BusinessWorld
Source: BusinessWorld
