HISTORICAL BACKGROUND
The change in Philippine leadership sometime in 1986 was followed by an economic recovery, which laid the foundation for sharp surges in energy demand all over the country. In the process, NPC was directed to take-over the electricity generation assets of the electric cooperatives in 1988. Energy demand in these areas eventually leveled-off and electricity sales settled at about 6% per annum from 1998. The energy growth curve was however characterized by cyclical spikes thereafter. Except for areas with relatively mature or booming economies, energy demand in small, far-flung areas can be created and developed or made to grow only if the required electricity generation capabilities are put-up. This is the mandated role of SPUG as NPC’s missionary arm to spur countryside economic development.
SPUG operations remains heavily subsidized because it cannot appropriately charge its true cost of generation. Being rural in character, areas being served by SPUG have the least developed economies. Logistical difficulties inherent in widely dispersed geographical locations of SPUG plants, coupled with scarcity or absence of indigenous energy resources and general lack of facilities due to inadequate financial resources are among the primary constraints in SPUG operations. The government through NPC nonetheless has to continuously pursue the economic development of these areas by way of providing electricity at affordable rates and to make operating the power plants attractive to private sector as viable business interest in due time. From 2003 to 2006 alone, NPC has subsidized a total of nearly Pesos 9.0 Billion for SPUG operations.
The missionary electrification function of SPUG was eventually more fully defined with the enactment of R.A. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA). Section 70 of the EPRIA specifically mandates SPUG to undertake missionary electrification, which is to be funded from SPUG revenues and from the universal charge to be collected from all electricity end-users. Rule 13 and Rule 18 of the Implementing Rules of the EPIRA further stipulates the obligations of SPUG to implement the Missionary Electrification Development Plan, which is developed by DOE, and to file a petition with the ERC for the corresponding Universal Charge for Missionary Electrification.
