24 Jun 2011
The Universal Charge (UC) that the Power Sector Assets and Liabilities Management (PSALM) Corporation will file with the Energy Regulatory Commission (ERC) on 28 June 2011 amounts to PhP0.39 per kilowatt hour (kWh).
PSALM determined the final amounts for the UC-stranded debt (UC-SD) at PhP0.03 per kWh to be collected over a 15-year recovery period and UC-stranded contract costs (UC-SCC) at PhP0.36 per kWh to be collected over a four-year period in accordance with formulas prescribed under the revised guidelines issued by the ERC.
According to PSALM President and Chief Executive Officer Emmanuel R. Ledesma, Jr., PSALM will propose to the ERC that the UC be collected over a 15-year period to mitigate the impact of the power rate increase on consumers. If PSALM will be allowed by the ERC to recover the UC-SCC over 15 years, the amount to be collected will only be PhP0.06 per kWh.
The Electric Power Industry Reform Act (EPIRA) provides that a universal charge will be imposed on all electricity end-users for the payment of stranded debt and stranded contract costs of the National Power Corporation (NPC). The ERC will determine, fix, and approve the UC to be collected from electricity consumers after an extensive review of PSALM's applications.
Ledesma also stated that PSALM seeks to recover stranded debt amounting to PhP66 billion until the end of PSALM's corporate life.
"The stranded debt sought to be recovered is now significantly lower than the PhP470 billion previously filed with the ERC. This significant decrease was mainly due to the substantial privatization proceeds generated by PSALM from the sale of generation assets and IPP (independent power producer) contracts to reduce NPC's financial obligations as mandated by the EPIRA," Ledesma said.
Ledesma also explained that financial obligations forming part of the stranded debt are actually obligations incurred by NPC prior to the enactment of the EPIRA as a result of the need to construct power plants to avoid power outage and supply the country's electricity requirements. It also includes additional debts incurred by NPC to subsidize plant operations in light of the rate capping measures previously implemented by the government to ensure more affordable electricity costs at that time to consumers.
The EPIRA defines stranded debts as any unpaid financial obligation of NPC that has not been liquidated by the proceeds from the privatization of the generating firm's assets, and stranded contract costs as the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of these contracts in the market.
Strategic Communications and Partnership Division |