ERC approves PSALM’s petitions for cost adjustments covering prior years

28 Jul 2017

The Energy Regulatory Commission (ERC) has given its go signal to the Power Sector Assets and Liabilities Management (PSALM) Corporation to effect the approved cost adjustments relative to fuel, purchased power and foreign exchange-related costs incurred in the operation of its power plants way back in 2007 until 2014.

The ERC, in two separate Orders dated 20 June 2017, allowed PSALM to recover said incurred costs in the total amount of around PhP21.47 billion, the bulk of which is the resumption of the implementation of the Deferred Accounting Adjustments (DAA) on Generation Rate Adjustment Mechanism (GRAM) and Incremental Currency Exchange Rate Adjustment (ICERA) amounting to PhP15.55 billion and PhP2.88 billion (net of refund), respectively, and the True-Up Adjustments under the Automatic Cost Recovery Mechanism (ACRM) amounting to PhP3.04 billion (net of refund).

The GRAM and ICERA DAAs were approved by the ERC in its decision dated 26 March 2012 but the implementation was deferred pending ERC’s resolution on the recovery/refund scheme submitted by PSALM on 21 June 2012.

The ERC approved with modification PSALM’s proposed GRAM and ICERA DAA recovery scheme and cost allocation for each National Power Corporation (NPC)/PSALM customer per grid, while for the ACRM True-Up Adjustments, PSALM was directed to submit a mechanism/scheme as to how the approved amounts per grid will be managed and implemented.

These approved cost adjustments will be recovered from/refunded to customers who drew power from NPC/PSALM during the said test periods (2007 to 2014), for an implementation period of sixty (60) months or five (5) years effective next billing period.

While bulk of the recoveries will come from PSALM’s customers in the Luzon and Visayas grids, Mindanao customers, on the contrary, should expect a refund from PSALM amounting to a total of PhP7.58 billion, over the 5-year implementation period.

The infusion of PhP21.47 billion approved cost recoveries spanning five years will in part address funding requirements for the servicing of PSALM’s maturing debts, which is fitting considering that costs being recovered were funded from financial obligations during the said test periods.

Corporate Communications Division
Tel. No. (632) 9029067