PSALM cleared to recover P5.5 B from universal charge

MANILA, Philippines -  The Power Sector Assets and Liabilities Management Corp. (PSALM) has secured clearance to recover P5.5 billion through the universal charge for stranded contract cost (UC-SCC) to trim the financial obligations of the National Power Corp. (Napocor).

In an order, the Energy Regulatory Commission (ERC) has authorized PSALM to collect the under recovery of UC-SCC amounting to P5.48 billion.

This allows the state-run firm to continuously implement the UC-SCC rate of P0.1938 per kilowatt-hour (kwh).

There will be no change in consumers’ electricity bills since PSALM will only extend the implementation of the same rate to grid customers.

Stranded contract costs refer to the excess of Napocor’s contracted cost of electricity with independent power producers over the actual selling price of the output.

PSALM, the entity created under Republic Act 9136 or the Electric Power Industry Reform Act of 2001, is allowed to recover through UC the payment of Napocor’s stranded debt and stranded contract costs.

PSALM was cleared to collect P53.85 billion which covers the National Power Corp.’s stranded contract costs from 2007 to 2010.

ERC allowed the recovery under a four-year period ending in February.

However, PSALM was only able to remit P48.38 billion, resulting in a shortfall of P5.47 billion.

“Uninterrupted implementation of the P0.1938 per kwh approved UC-SCC rate would ensure continuous revenue streams for (PSALM), enabling it to fulfill its mandate under Republic Act 9136 of liquidating all Napocor’s financial obligations,” it said.

If not cleared, PSALM may resort to borrowings to refinance portion of its maturing obligations not covered by privatization proceeds and revenues from operations.