by Myrna Velasco – July 24, 2016
from Manila Bulletin
The Energy Regulatory Commission (ERC) will subject to deeper scrutiny the petition of Power Sector Assets and Liabilities Management Corp. (PSALM) for P27.7 billion in stranded debts recovery cost, which is expected to hike consumers’ electric bills by P0.0283 per kilowatt hour (kWh).
ERC Chairman Jose Vicente B. Salazar vowed to closely examine PSALM’s petition.
“PSALM made a public appeal for the ERC to act on its petition for the true-up adjustments of NPC’s (National Power Corporation) stranded debt portion of the universal charge for calendar year 2015,” Salazar told reporters.
“The ERC needs to study this (petition) meticulously and with a lot of caution since this is a proposal for pass-on charges,” he said.
With the amount being applied for, the propounded length of pass-on to consumers would be nine-and-a-half years, or the duration of PSALM’s remaining corporate life.
“I would like to assure PSALM that the ERC is giving this concern a priority,” Salazar has further indicated to media.
He stressed “we understand the importance and urgency of the matter at hand and we are committed to help PSALM address this.”
For the industry watchers though, it is difficult to reconcile where the stranded debts recovery is being drawn from because PSALM previously reported of privatization proceeds it has been investing – primarily in the form of government securities, because these amounts are supposedly not needed yet for debt payments.
Additionally, there are still assets due for privatization that could help trim PSALM’s or NPC’s debt level – hence, the UC on stranded debts could still be reduced or wiped out prior to the winding down of PSALM’s corporate life by year 2026.
“While we are acting on this with dispatch, the proposed pass-on will have to be evaluated on the basis of reasonableness and affordability,” Salazar has emphasized.
PSALM officer in charge Lourdes S. Alzona explained the estimated stranded debts cover “net payments of principal and interest to creditors and bondholders as well as lease obligations of some IPP (independent power producer) contracts that matured last year.”
She noted that onward proceeds from asset divestments could not be applied to that portion of cost recovery “because the future privatization proceeds will be utilized for debts to be due at the time of collections.”