DOE eyeing to cut universal charge

by Lenie LecturaJuly 26, 2016

from Business Mirror

To reduce consumers’ monthly electricity bill, the Department of Energy (DOE) is considering the possibility of slashing the universal charge (UC), a pass-on charge collected from consumers every month.

“The Department of Energy is studying all options [on] how to lower the universal charge being passed on to consumers. This is one of the mechanisms that the DOE is considering to lower the price of electricity. We hope to come up with a win-win solution for all affected stakeholders,” DOE Spokesman Wimpy Fuentabella said.

The purpose of UC, among others, is to pay for the stranded debts and stranded contract costs of National Power Corp. (NPC), as well as qualified stranded contract cost of distribution utilities.

On the average, P0.35 per kilowatt-hour (kWh) is collected from consumers every month. The agency, however, did not provide any further details on how it plans to bring down the UC.

Based on DOE data, UC collection as of May amounted to P0.468 billion. As of May 31, remittances of collecting entities (CEs) to Power Sector Assets and Liabilities Management Corp. (PSALM) amounted to P94.817 billion, with interest earnings from deposits and placements of UC funds amounted to P0.147 billion. On the other hand, UC fund disbursement amounted to P94.496 billion, data showed.

Accounting for the inflows and outflows of the UC fund leaves it with a balance of about P0.468 billion as of May 31, the DOE said.

Relatedly, the DOE said San Miguel Global Power, through its South Premier Power Corp. (SPPC), should pay its unpaid obligations for the generated capacity of its Ilijan power plant. Otherwise, any amount not paid by SPPC to the PSALM will be passed on to consumers via the UC.

The unpaid amount of the SPPC forms part of the privatization proceeds to be utilized to liquidate the financial obligations of the NPC pursuant to the Electric Power Industry Reform Act.

This was noted by the Commission on Audit in its opinion for the PSALM’s 2014 Annual Report, where it cited that collections from SPPC are not sufficient to pay for the capacity fees and energy fees due the independent power producer (IPP), fuel expenses and other related expenses necessary for the operation of the said power plant, and for the amortization of the outstanding loans of the PSALM, the DOE said.

SPPC, the DOE added, has the obligation to pay the PSALM generation payments and fixed monthly payments.

Meanwhile, the DOE, PSALM and the Department of Finance (DOF) are in close coordination to sell the remaining power assets of the government. Proceeds would be utilized to repay NPC’s debts.

The DOE said it anchors its directions on the merits of the Epira, like in the case of Malaya Thermal, which is targeted to be bid out by 2018, while the privatization of the Agus-Pulangi Hydro Complexes would still have to go through legislative consultation.

Meanwhile, the sale of Bataan Thermal and Bataan Gas Turbines is still pending subject to the resolution of the court involving their assets, it said.

Based on the list, Malaya plant is scheduled for bidding in the first semester of 2018, with turn-over slated in the second semester of the same year; Agus 1, 2, 4, 5, 6, 7 and Pulangui hydro facilities are up for bidding in 2017; the decommissioned Sucat plant in the second semester of 2016; Bataan thermal and Bataan gas turbines are also slated for biding subject to resolution of court cases.