MANILA, Philippines – The Power Sector Assets and Liabilities Management Corporation (PSALM) plans to collect from consumers a universal charge of P0.0429 per kilowatt hour (kWh) a month for one year, in a bid to pay off the P3.7-billion stranded debt of the National Power Corporation (Napocor).
PSALM is now seeking approval from the Energy Regulatory Commission (ERC) for the planned move. This was stated in PSALM's petition for the availment of Napocor's stranded contract costs (SCC) portion of the universal charge for 2016.
It was in 2008 when the government transferred Napocor's assets and debt to PSALM.
"The calculated universal charge-SCC for the calendar year 2016 amounts to P3,686,192,736.05, which is equivalent to P0.0429 per kWh covering a one-year recovery period," PSALM said.
PSALM added that the 2016 universal charge-stranded debt adjustment was calculated based on the projected energy sales of 85,935 gigawatt-hours (GWh).
"The universal charge-SCC rate for 2016 is derived by dividing the calculated 2016 SCC by one-year electricity sales forecast for 2018 based on the Power Development Plan 2015-2030," the petition read.
Under Section 34 of the Electric Power Industry Reform Act (EPIRA), a universal charge will be imposed on all electricity consumers to cover payment of Napocor's stranded debt and SCC.
Stranded contract costs are the excess of Napocor's contracted cost of electricity with independent power producers over the actual selling price of the output. Stranded debt, meanwhile, is Napocor's unpaid obligations that were not liquidated by proceeds from the sale of its assets. (READ: Politics behind P30-B power coops' debt to PSALM?)
The universal charge is a separate line item in consumers' electric bills. It has different subcomponents, depending on the utilization of the funds as specified in the universal charge collection.
PSALM said the revenues from the sale of electricity of its remaining assets are not enough to cover its operations and provide funds for the payment of Napocor's loan obligations.
To address the funding gap, PSALM said it is "forced to resort to temporary solution by borrowing that entails borrowing costs, which, in turn, will form part of the universal charge-stranded debt (UC-SD), effectively increasing the universal charge burden of all electricity users."
"But if PSALM would be allowed to immediately recover the UC-SD under its petition through provisional approval, new loans and refinancing to service maturing debts and lease obligations would lessen," it added.
PSALM said it wants the ERC to grant provisional authority, which would enable it to accumulate sufficient funds to service loan obligations that were incurred for the eligible independent power producer (IPP) contracts.
"Early SCC recovery will likewise translate to substantial savings on borrowing costs, as PSALM need not resort to refinancing to service the eligible IPP obligations and maturing debts," PSALM's petition read.
PSALM is the state agency tasked to privatize Napocor's power assets to help generate funds to pay off Napocor's debts. It is authorized to impose the universal charge on all end-users to compensate for any remaining deficit.
It is also mandated by law to calculate the amount of the stranded debts and stranded contract costs of Napocor, which is the basis for the ERC in determining the universal charge. – Rappler.com