PSALM clarifies that the dismissed petitions to recover stranded contract costs and stranded debts were filed prior to the Murang Kuryente Act

27 Jun 2020

The Power Sector Assets and Liabilities Management Corporation (PSALM) wishes to clarify that the petitions for the recovery of its stranded contract costs (SCC) and stranded debts (SD) through the Universal Charge (UC) that were recently dismissed by the Energy Regulatory Commission (ERC) are petitions that have been pending with the ERC even before the enactment of the Murang Kuryente Act or Republic Act No. 11371. These petitions covering SCC and SD incurred in years 2014 to 2018 were annually filed with the ERC in years 2015 up to 2019, respectively. None of these petitions were filed after the passage of the Murang Kuryente Act.

Unfortunately, despite the timely filing of the said petitions and the evidence presented by PSALM, the ERC did not resolve the petitions right away and as a consequence, the petitions were thus overtaken by the passage of the Murang Kuryente Act on 8 August 2019 and its Implementing Rules and Regulations (IRR) on 5 May 2020.

ERC’s dismissal is not because there are no valid SCC and SD but rather, because the Murang Kuryente Act was already passed into law before the ERC was able to act on PSALM’s petitions.

The Murang Kuryente Act intends to reduce electricity rates through the allocation of P208 billion of the proceeds of the government share from the Malampaya funds for the payment of SCC and SD that PSALM assumed from the National Power Corporation (NPC). Instead of passing on these SCC and SD to electricity consumers through the UC, the amount from the Malampaya fund as provided in the Murang Kuryente Act and its IRR, will be allocated yearly to PSALM and utilized to liquidate the SCC and SD.

The IRR of the Murang Kuryente Act provides that PSALM shall not file with the ERC any new petition for UC SCC and SD until the said allocated P208 Billion amount is exhausted and no other allocations are made by Congress. The UC SCC and SD petitions of PSALM dismissed by the ERC are not “new petitions” which have been recently submitted, but these are petitions which were timely filed and have undergone a number of ERC public hearings in Luzon, Visayas and Mindanao.

It is also important to stress that PSALM has not yet officially received all the ERC Orders mentioned in the ERC press release and only two (2) Orders pertaining to a 2018 UC SCC petition and a 2018 UC SD petition, both dated 28 May 2020, were transmitted by the ERC to PSALM on 23 June 2020. ###