POWER consumers can only hope that the amount of stranded contract costs (SCC) and stranded debts (SD) the Power Sector Assets and Liabilities Management Corp. (Psalm) would collect from consumers under a universal charge wouldn’t be as penny-pinching as it could be.
The agency said it is currently finalizing the amount of SCC and SD of the National Power Corp. (Napocor) to be recovered through the universal charge (UC) in compliance with the deadline set by the Energy Regulatory Commission (ERC).
Emmanuel Ledesma Jr., Psalm president and chief executive, said they will be filing the UC application in time for the June 30 deadline set by the ERC.
He added that Psalm will follow the revised guidelines released by the ERC on March 7.
Ledesma said the initial filing was originally set on March 15, but since the amended guidelines were released only a week before the deadline, the ERC also extended the last day for filing upon Psalm ’s request.
Under the Electric Power Industry Reform Act (Epira), Psalm is required to calculate the amount of the SD and SCC of Napocor. After an extensive review of Psalm’s UC-SD and SCC applications, the ERC will determine, fix and approve the UC to be collected from electricity consumers.
As part of determining the SD and SCC amounts, Psalm recently conducted a series of workshops aimed at educating stakeholders and partner agencies on the dynamics of the UC, and at soliciting ideas and opinions on interpreting the amended guidelines for the SD-SCC computation.
Sponsored by the Asian Development Bank (ADB), the workshops were attended by representatives from the Department of Finance, Napocor, the Department of Energy, the National Economic and Development Authority, the Bangko Sentral ng Pilipinas and the Department of Budget and Management.
In its report, ADB pointed out that the collection of the UC—which is seen as a viable way of settling the debts of Napocor—must be a concerted effort of all involved agencies to considerably ease the financial obligations of the Philippine government.
Ledesma said with the collection of the UC, coupled with the privatization of the remaining power assets, Psalm’s obligations may significantly be reduced from an estimated $3.78 billion by the end of its corporate life.
To soften the impact of the UC collection on electricity consumers, Ledesma stated that options, such as spreading out its implementation over a number of years, are also being explored.
The Epira defines stranded debts as any unpaid financial obligation of Napocor that has not been liquidated by the proceeds from the privatization of its assets. Stranded contract costs, on the other hand, are defined as the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of these contracts in the market.
Based on simulations conducted by Psalm, ERC said Napocor’s stranded debts were estimated at P470.87 billion by the end of 2005. To start recovering this amount, it proposed a level stranded debt charge of up to P0.3049 per kilowatt-hour (kWh) to be imposed on all electricity consumers.
On June 29, 2010, ERC said Psalm simulated the stranded debts to reach P54.898 billion or at the rate of P0.8677/kWh. At the same time, Psalm filed a similar petition to recover the stranded contract costs for 2009 amounting to P26.685 billion or equivalent to P0.5720/kWh as additional UC.
Ledesma earlier noted that they are reviewing the petition and that they are looking at a rate of P0.15/kWh for the stranded debts recovery, which was 50-percent lower than the previous filing. “Initial simulation indicates that the universal charge may be cut almost in half to P0.12 to P0.15/kWh, but that is only an estimate,” Ledesma said.
