The demand projection for island grids is made using historical data provided by the National Electrification Administration. The electricity demand depends on the household penetration of distribution lines and the commercial and industrial connections. The non-residential demand is estimated based on the observed relationship between residential and non-residential demand. In the absence of actual number of commercial and public building/industrial loads, it is assumed that commercial-toresidential demand ratio and public building/industrial-to-residential demand ratio are 50% and 5%, respectively. The forecast of future peak demand begins with projection of the energy sales and load factors based on the 5-year historical data.

The present rates, which are based on the Subsidized/Approved Generation Rates (SAGR) were approved by the ERC on 04 December 2004 through its Order on ERC Case No. 2004-449. The schedule of new rates are shown in Error! Reference source not found.. However, these are still far below SPUG’s production cost which averaged 13.7906 per kWh in 2006.

Per ERC orders, the approved 2nd Generation Rate Adjustment Mechanism (2ndGRAM) and the approved 2nd Incremental Currency Exchange Rate Adjustment (2ndICERA) shall be charged to the Universal Charge (UC).This is about P 863.35 Million and 1.062 Billion respectively. As of to date, only P 198.39 Million of the said amount was charged to UC due to non-availability of funds. The GRAM and ICERA were adopted by the Energy Regulatory Commission (ERC) in February 2003 to allow for the deferred recovery of costs due to fluctuations in fuel prices and foreign exchange rates.

SPUG also currently implements GRAM and the ICERA, which allow for the deferred recovery of costs due to fluctuations in fuel prices and foreign exchange rates, respectively. The GRAM and ICERA were adopted by the ERC in February 2003.

SPUG is vigorously pursuing optimum utilization of new and renewable energy sources using commercially viable technologies to lessen its dependence on imported fossil fuel. It provides electricity to the remote barangays (villages) using solar photovoltaic systems. At present, it has already electrified 2,080 households using solar powered battery charging stations as shown on Annex X – Barangay Electrification Projects. Wind resource assessment is being conducted in 12 islands for possible integration of wind turbine generators to existing diesel generating units.

The operation of SPUG, particularly in the island grids, is still being pursued despite the tremendous subsidies it incurs – totaling P3.2 billion in 2004 – in fulfillment of the government’s commitment to the total electrification of the country.