PSALM seeks to recover P10.8 B from consumers

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. is proposing to recover P10.8 billion from consumers to cover the stranded contract costs (SCC) and stranded debts (SD) of National Power Corp.

The company will be filing applications with the Energy Regulatory Commission within the week for the recovery of P6.12 billion in SCC and P4.72 billion in SD for calendar year 2018 through the universal charge (UC), PSALM president and chief executive officer Irene Joy Besido-Garcia said in an interview following the state-run firm’s 18th anniversary celebration yesterday.

The proposed UC-SCC rate amounts to P0.062 per kilowatt-hour (kwh) recoverable for one year while the UC-SD rate is P0.0063 per kwh to be recovered until 2026.

Besido-Garcia said the filing of applications is in compliance with the ERC’s deadline to recover through UC.

“The reason why we need to file this is because if we don’t file it, we will be forfeiting the opportunity because it has a June 30 deadline,” Besido-Garcia said.

The UC is a pass-on rate to consumers to cover Napocor’s SD and SCC, missionary electrification and the environmental fund.

SCC refers to the excess of Napocor’s contracted cost of electricity with independent power producers over the actual selling price of the output.

On the other hand, SD refers to any unpaid financial obligations which have not been liquidated by the proceeds from the sales and privatization of Napocor assets.

However, this latest filing may no longer be charged to consumers if the implementing rules and regulations (IRR) of the Murang Kuryente Act are issued.

Currently, the Murang Kuryente Act—which aims to reduce electricity rates by using part of the government’s P204-billion share from the Malampaya Fund to pay for the SD and SCC passed on to consumers—is awaiting the signature of President Duterte.

“This is just a filing of the petition and it can be covered by the Murang Kuryente (Act) if they (Department of Energy and Department of Finance) were able to come up with the IRR and we start with the funding from the Malampaya,” Besido-Garcia said.

If passed into law, the Murang Kuryente Act will allow PSALM to draw money from the Malampaya fund to pay off maturing debts of Napocor.

However, it does not mean PSALM will be debt-free because of the legislation. As of end-May, the state-run firm still has P433.7 billion remaining payables.

“I will not say that we are debt-free because the idea is to continue the activities of PSALM to privatize, raise money to be able to fund. It is really just the shortfall that’s being covered,” Besido-Garcia said. “Hopefully there will be no new debts and they will not incur additional debts.”

PSALM is the agency mandated by Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001 to handle the sale of the remaining state-power assets and the financial obligations of Napocor. It has seven years left in its corporate life ending in 2026.

Under EPIRA, it is allowed to recover through UC the payment of Napocor’s SD and SCC.