22 Feb 2012
The Power Sector Assets and Liabilities Management (PSALM) Corporation is pursuing the approval by the Energy Regulatory Commission (ERC) of the full amount of the Universal Charge (UC) for stranded debts (SD) and stranded contract costs (SCC) determined at PhP0.03 per kilowatt hour (kWh) and PhP0.36 per kWh, respectively.
PSALM filed the petitions for the UC rates for SD and SCC last June 2011. The Corporation stressed the importance of the UC in paying off a significant portion of its stranded obligations and, consequently, lessening its dependence on foreign borrowings.
PSALM President and Chief Executive Officer Emmanuel R. Ledesma, Jr. said the Corporation will continue to seek the approval of the UC petitions despite the exploration of the option to use the Malampaya funds as an alternative source for paying PSALM's financial obligations. The collection of the UC for stranded financial obligations is a fact recognized by lawmakers who drafted the reform law as a mandatory action to cover the deficit between the privatization proceeds and the debts.
"We see the UC as a viable tool that will strengthen PSALM's resolve to reduce its deficit as mandated in the Electric Power Industry Reform Act," he pointed out.
Despite the significant reduction in the UC-SD and UC-SCC amounts filed in 2011, Ledesma said PSALM remains committed to finding ways to mitigate the impact of these charges on electricity consumers. The latest UC filing to recover total SD and SCC amounting to PhP139 billion is significantly lower than the PhP518 billion previously filed with the ERC in 2009 and 2010.
"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 the National Power Corporation's debts," Ledesma pointed out.
PSALM has also proposed to the ERC that the UC-SCC be recovered over 15 years compared to the four-year recovery period stated in the commission's amended guidelines. The longer recovery period will bring down the UC-SCC to PhP0.06/kWh.
Ledesma explained that PSALM has generated around USD10.210-billion proceeds from the successful sale of the power and transmission assets and the transfer of IPP contracts to IPP Administrators. Of this amount, PSALM has so far collected USD5.472 billion of which USD5.477 billion (including income interest) was used to settle its maturing obligations.
"PSALM is yet to collect USD9.99 billion in additional proceeds from the transfer of IPP contracts to private administrators as of September 2011," Ledesma said. "PSALM is also in the process of expediting the collection of USD2.81-billion remaining payment for the concession of the country's sole transmission business."
Ledesma said the remaining privatization proceeds will be reflected in the subsequent UC filings. He pointed out that the UC charges may further decrease if PSALM's operations will generate more income.
"The decrease in the UC charges will hinge on the completion of the privatization program and the efficiency of PSALM's liability management program," he said.
Strategic Communications and Partnership Division |