01 Jul 2011
The Power Sector Assets and Liability Management (PSALM) Corporation is actively seeking ways to further bring down the Universal Charge (UC) imposed on electricity consumers. PSALM filed on 28 June 2011 with the Energy Regulatory Commission (ERC) its UC application for stranded debt (SD) and stranded contract costs (SCC) at Php0.0313 per kilowatt-hour (kWh) and Php0.3666/kWh, respectively. If approved by the ERC, the UC will be an additional item in the electricity bill to be shouldered by consumers.
PSALM likewise proposed to the ERC that the UC-SCC be recovered over 15 years compared to the four-year recovery period mandated in the ERC amended guidelines. The longer recovery period will bring down the UC-SCC to Php0.06/kWh.
According to PSALM President and Chief Executive Officer Emmanuel Ledesma, Jr., despite the significant reduction in the UC filed this year compared to those in previous years, PSALM is still relentlessly finding ways to mitigate the impact of the UC to electricity consumers. The recent UC filing done by PSALM to recover total SD and SCC amounting to PhP139 billion is significantly lower than the PhP518 billion previously filed with the ERC.
Ledesma said he will aggressively spearhead and push harder for the privatization of the existing power plants and generation assets previously owned by the National Power Corporation (NPC) to fulfill PSALM's mandate under the Electric Power Industry Reform Act. These plants were transferred to PSALM with the objective of privatizing the assets and using the sales proceeds to liquidate existing NPC debts and obligations.
Ledesma stressed that PSALM can bring down the UC if the remaining assets will be sold as soon as possible and at the best possible price. He explained that aside from the privatization proceeds to be earned from the sale, PSALM will also be able to avoid incurring further losses in operating and maintaining these power plants. PSALM will start the bidding process for the sale of the generating capacity of the Naga Power Plant Complex in July 2011. The sale of the generating capacities of the Unified Leyte Geothermal Plants and the Casecnan Hydroelectric Power Plant will immediately follow. Bidding for the Power Barges 101-104 will also commence before the year ends.
Ledesma also mentioned that PSALM is continuously implementing its liability management program to refinance the existing NPC obligations. "This will enable us to attain the most appropriate currency mix and average maturity of these debts to avoid foreign exchange losses and bring down interest costs," he said.
Further, Ledesma stressed that PSALM is currently evaluating all relevant factors to arrive at the most advantageous terms for the prepayment of the privatization proceeds from the Independent Power Producer Administrators and the National Grid Corporation of the Philippines. This prepayment will allow PSALM to meet its cash flow requirements and avoid incurring additional loans for payment of maturing obligations. Shortfall in cash flow arises due to the mismatch in the timing of the collection of these receivables and the maturity of debt obligation payments.
Ledesma likewise noted that to further mitigate the impact of the UC, PSALM has also pushed for the extension of its corporate life for another 10 years. This will consequently result in the extension of the recovery period of the UC from 15 years to 25 years. The Department of Energy, in coordination with PSALM, has submitted a priority bill on this matter before the Joint Congressional Power Committee and the Legislative-Executive Development Advisory Council.
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