By Myrna M. Velasco – August 28, 2019, 10:00 PM
from Manila Bulletin
The government is exploring borrowings to replenish the Malampaya fund that will then be used to wipe out the universal charges which are separate items collected by state-run Power Sector Assets and Liabillities Management Corporation (PSALM) in the electric bills.
Since the Malampaya fund was previously revealed as just a “book entry” by the Bureau of Treasury, Energy Undersecretary Felix William B. Fuentebella indicated that they will discuss with the Department of Finance (DOF) if there’s really cash left in the fund; and if there’s none, what are the probable options to be taken.
He said fund sourcing – which may include fresh state borrowings – will have to be incorporated in the implementing rules and regulations (IRR) of Republic Act 11371 or the Murang Kuryente Act.
“We have to put that in the IRR because we have to ensure that the sourcing of funds will be prudently identified,” the energy official said, adding that government borrowings as well as other forms of recourse will have to be explored so the UC items in the bills will already be eradicated or reduced.
The new “Murang Kuryente” law signed by President Rodrigo Duterte targets to reduce power rates by roughly P0.86 per kilowatt-hour (kWh) for the Filipino consumers – and these generally account for the UC stranded contract costs and stranded debts pass-on of PSALM.
But as concerned government agencies have uncertain track yet on fund sourcing, it was opined that as if the consumers were just given a “blank check” because the budget to subsidize the targeted reduction in electricity rates had not been fully identified or accounted for.
Republic Act 11371 will purportedly cut power rates using the Malampaya fund, but during the law’s deliberations, the Bureau of Treasury indicated to Congress that what was deemed as “balance in the fund” is just a book entry, and it needs to be replenished if it will be used to cut electricity tariffs.
Even the framers of the law cannot exactly pinpoint where the budget will come from – they just opted to relax the tenor of the fund allocation, so it will just cover the annual shortfalls of PSALM’s universal collections.
And since the yearly budget for such “cash shortfall plug” will have to be integrated into the deliberations of the General Appropriations Act (GAA), the lawmaker-framers of the Murang Kuryente Act said they will have a way to scrutinize how the allocations will be made starting this year until the end of PSALM’s corporate life in 2026.
On the calculation of the Senate Committee on Energy, the reduction in electricity bills of end-users within the 200-kilowatt hour consumption will be at P172 if the budgeting process for the new law will be concretized.
Essentially, the measure targets to lessen if not totally expunge the universal charges (UCs) for stranded contract costs and stranded debts as components in the consumers’ electric bills.
Nevertheless, on the part of PSALM being the administrator of the UC collections, it is being hoped that this targeted funneling of funds from the Malampaya fund will not serve as an “initiative sucker” on its task to continually privatize the remaining power assets under the government’s charge. Under the Duterte administration, PSALM has been extremely sluggish on keeping up with this mandate.
The state-run company said the law “will unburden power customers from paying additional universal charges for stranded contract costs and stranded debts that could possibly amount to P0.86 per kWh.”
PSALM President and CEO Irene Joy Garcia said “RA 11371 will lower electricity rates,” with her noting that this “will also save PSALM from incurring additional borrowing costs in order to settle the maturing NPC obligations.”
She insisted that the Malampaya fund will cover PSALM’s shortfalls on a yearly basis; and the company “will not have to seek additional UC impositions on electricity consumers.”