NPC urged to work on lowering electricity costs

October 21, 2024 | 12:00am

MANILA, Philippines — The National Power Corp (NPC) should work to reduce the universal charge for missionary electrification (UCME) subsidy to possibly bring down electricity rates for consumers connected to the main transmission grid, according to Sen. Sherwin Gatchalian.

During a recent Senate hearing on the proposed budget of the NPC, Gatchalian said the government-owned and controlled corporation is mandated by law to energize far-flung, off-grid areas and islands in the country.

“Look for ways to reduce the UCME. I know that hybridization is one and connecting to the grid could be another,” he told NPC officials.

The UCME is used to subsidize the more expensive cost of providing electricity in off-grid areas.

“I’m very optimistic that one day, the benefit of hybridization and rationalization of the UCME would translate to lower subsidy,” the senator said.

Gatchalian, the vice-chair of the Senate committee on energy, however, noted that the UCME subsidy has steadily increased over the years, from P7.34 billion in 2015 to P24.62 billion in 2024.

At present, the NPC is pushing to accelerate the hybridization of its small power utilities group diesel power plants using renewable energy resources.

NPC officials said hybridization lowers the cost of energy by P2 to P3 per kilowatt hour.

The NPC said that with the completion of the hybridization for 16 projects, the power firm expects to generate up to P1.3 billion in savings from fuel costs by 2025.

The NPC, however, accounts for only 30 percent of the energy supply in missionary areas, while 70 percent is provided by new power providers (NPPs).

“How do we convince the NPPs, which account for 70 percent, to hybridize? I understand they have supply contracts, so we should explore the possibility of incentivizing or compelling them, if necessary, to hybridize. The UCME subsidy is steadily increasing,” Gatchalian said.

At the same time, the senator urged the NPC to pursue a rationalization study of the UCME that the Department of Energy has conducted.