State-run National Power Corp. warned on Monday about year-long daily power interruptions affecting 1.3 million households in remote islands and off-grid areas because of high fuel prices and funding deficit.
NPC, suffering from funding shortages, proposed to reduce the operations of 156 power plants under the Small Power Utilities Group (SPUG), which could affect 450,000 households.
It said delayed payments to new power providers and qualified third parties might also result in power outages affecting about 835,000 households.
“The idea that was presented is to ration available fuel throughout the entire year effectively. We had initially announced the rationing to start as early as February, but we have not finished the consultations, so, we decided to defer it for consideration in March,” NPC president Fernando Martin Roxas said.
Roxas said the fuel rationing program would mean “equal misery.”
“We won’t favor anybody. We will dispense the available fuel as much as possible, fairly,” Roxas said.
Based on the reduced electricity schedule, SPUG power plants running 24 hours would operate at 15 hours, while those running 16 hours would be available for only 12 hours. Those operating below 16 hours would run for only five hours.
The Department of Energy said NPC’s approved and allocated funds for fuel expenses and subsidies of new power providers and qualified third-party parties in 2023 are insufficient to cover the requirements for the entire year amid high fuel costs.
NPC’s outstanding fuel payables for the operation of SPUG power plants and barges amounted to P1.031 billion for the billing months of November and December 2022, while payables to NPPs and QTPs reached P5.508 billion, representing three to four months of unpaid billings which are due and demandable.
Energy Secretary Raphael Lotilla said the government was working on short- and medium-term measures to sustain the operations and ensure the continued delivery of power by the NPC in off-grid areas.
“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 the NPC,” Lotilla said.
The NPC 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 NPC’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 agenda.
NPC, along with the private sector through the NPPs and QTPs, is responsible for the power generation function in 169 off-grid areas in the country. At the same time, the electric cooperatives and some local government units assume the role of distribution utilities.
The NPC board and the DOE are working on a P5-billion borrowing by the NPC from government financial institutions this month, which would require special authority from the President.
“The DOE and NPC are also working with the Development Budget Coordination Committee to program funds that would support NPC’s funding deficit for this year, 2023, which amounts to P14.205 billion,” Lotilla said.
The DOE said it was expecting the Energy Regulatory Commission to act on the petition by the NPC on the universal charge for missionary electrification of about P0.15 per kilowatt-hour.
The NPC is also working on its long-term sustainability plan to mitigate the impact of high fuel prices on operations.
This includes the accelerated hybridization of SPUG power plants with renewable energy resources, preparations for “UCME Graduation” through the interconnection of major island grids to the main grid, and preparations for “UCME Rationalization” through customer classification in the missionary areas.
“We assure NPC customers that the government is undertaking remedies to ensure the delivery of its mandates despite several factors it cannot control,” Lotilla said.
