A group of electric cooperatives has filed an urgent plea for the Energy Regulatory Commission (ERC) to reconsider its recent decision to give the National Power Corporation to implement a 25 percent increase in generation rate on island cooperatives starting this November 2025.
In its motion for reconsideration filed Oct. 8, 2025, the Association of Isolated Electric Cooperatives (AIEC), including the First Catanduanes Electric Cooperative, Inc. (FICELCO), asked the ERC to issue an order deferring the implementation of its Sept. 23, 2025 order.
The earlier directive granted “interim relief” to NPC to implement its proposed Subsidized Approved Generation Rate (SAGR) for commercial and industrial customers in so-called missionary areas, all island provinces like Catanduanes.
In the order, NPC will be allowed to increase its existing SAGR of P7.3900 per kilowatt-hour by P0.9282 in the first year starting November 2025, followed by a similar P0.9282 hike by November 2026.
This would raise the power firm’s generation rate for commercial and industrial users of its customer ECs by 25 percent next month and by another 11 percent next year, or a net increase of 25 percent over the existing SAGR.
While NPC supplies only 6.5 percent of FICELCO’s power demand, the balance of 93.5 percent delivered by the co-op’s private power supplier, Sunwest Water & Electricity Co. (SUWECO), with its generation rate based on NPC’s SAGR.
If implemented, the SAGR hike would affect 2,389 commercial users of FICELCO that accounts for about four percent of its total connections but a nearly a fifth of power sales.
Based on its petition covering Small Power Utilities Group (SPUG) cooperatives) filed in November 2023, Napocor sought a proposed new SAGR even higher than that provisionally granted by the Commission.
It asked for an increase of P1.2082/kwh for residential consumers and P2.6588/kwh for commercial and residential users in Catanduanes and other co-ops, equivalent to 16 percent and 36 percent, respectively.
While the recent order did not include the SAGR adjustment for residential consumers, the possibility that the latter might bear the burden of a similar rate increase is still there as ERC Chairperson and CEO Francis Saturnino Juan said the final SAGR rate for all types of power consumers will be determined in its final decision on the matter.
In its urgent motion, the 14 island cooperatives said that the increase in SAGR constitutes a violation of the Electric Power Industry Reform Act or RA 9136, which mandates NPC to ensure the delivery of affordable, reliable and sustainable power to unviable off-grid areas.
The approved interim SAGR adjustments, it said, effectively transforms the missionary electrification from an instrument of progress into a barrier against it, AIEC stated, arguing that the mandate to eventually reduce subsidies in off-grid areas cannot be construed as NPC’s authority to unjustly seek an increase in the SAGR based merely on the alleged improvement in the area’s economic condition.
“Rather, such mandate imposed an obligation to undertake concrete measures to reduce the True Cost of Generation Rate (TCGR) through efficiency improvements, renewable energy integration, and least-cost generation,” the motion stressed.
Instead of increases in SAGR that would only further burden the already economically depressed consumers in off-grid areas, the island co-ops urged the implementation of alternative measures such as interconnection of the major islands, particularly those demonstrating significant growth in electricity demand, to the main grid transmission system.
It also urged the deployment and utilization of renewable energy resources in the off-grid areas to reduce the NPC’s TCGR.
The petitioners likewise pointed out that the interim increase in SAGR has no factual or legal bases, as it was issued with no proper study and assessment of the existing SAGR of SPUG areas taking into account the economic development in said areas.
It cited a NEDA finding in November 2023 that the proposed methodology used in the determination of the SAGR increase was observed to have a number of flaws, notably redundant and irrelevant parameters and improper use of inflation.
AIEC expert witnesses also testified that simulations show that the new SAGR would depress output of most economic sectors, cause inflationary pressures on many goods and services, cause net job loss especially in agriculture, and increase poverty and hunger by 1.5 percentage points based on a decline in income of around 3-5 percent.
Furthermore, the group underscored, the interim SAGR was issued without a transparent methodological basis as the assailed ERC order approved the same without any explanation, discussion or presentation of the basis, parameters, or methodology used.
There is also no clear and uniform guidelines in the implementation of the interim SAGR, it stated, particularly on the determination of the classification of consumers and the corresponding billing arrangements among the distribution utilities, generation companies, and the NPC.
“…(I)f the Order granting the interim rate increase in the SAGR is implemented pending the final evaluation of the application, commercial and industrial consumers adversely affected will already have suffered grave and irreversible injury, such as higher manufacturing, overhead and operational costs, which will definitely cause a slowdown in business activities, and, worst, the eventual relocation or closure of the businesses in the areas,” AIEC warned.