By Lenie Lectura – August 2, 2018
from Business Mirror
THE Power Sector Assets and Liabilities Management Corp. (PSALM) is seeking regulatory approval to pass on to end-users the stranded debts (SD) of the National Power Corp. (NPC) amounting to P11.8 billion and the stranded contract costs (SCC) amounting to P5.22 billion through the universal charge (UC).
PSALM, tasked to privatize the power assets of NPC, filed two applications before the Energy Regulatory Commission (ERC) last month. These applications were made public on Thursday.
First, it asked the ERC to issue a provisional authority (PA) to charge and collect the UC-SD True-Up rate for 2017.
“Petitioner respectfully prays of this Honorable Commission that, after due notice and hearing approve the calculated True-Up Adjustment/ Under Recovery for the NPC SD portion of the UC for 2017 amounting to P11,804,635,030.22, with an equivalent rate of P0.0152 per kWh based on a seven and one half years recovery period,” PSALM said in a 23-page application.
PSALM said it has vigorously pursued its mandate of privatizing the generation assets and the power facilities. However, revenues from the sale of electricity of the remaining assets are not enough to cover its operations and provide funds for the payment of NPC debts and obligations.
To address the funding gaps, PSALM is forced to resort to temporary solution by borrowing, which entails costs, which, in turn, will form part of the UC-SD, effectively increasing the UC burden of all electricity end-users.
If PSALM will be allowed to immediately recover the UC-SD under this petition through provisional approval, new loans and refinancing to service maturing debts and lease obligations would lessen. This would redound to the benefit of electricity end-users due to reduced borrowing costs, effectively reducing the UC burden.
“PSALM humbly seeks the commission’s indulgence to grant the PA to enable it to immediately recover the SD and accumulate sufficient funds to service its financial obligations. Early SD recovery will likewise translate to substantial savings on borrowing costs, as PSALM need not resort to refinancing to service its maturing financial obligations,” PSALM said.
The state firm also asked the ERC in a separate petition to approve the NPC SCC portion of the UC for 2017 in the amount of P5,228,678,356.46. This is equivalent to a one-year collection of P0.0582 per kWh to recover the full amount.
PSALM said the True-Up Adjustment of the NPC SCC portion of the UC for 2007-2013 resulted to an under recovery in the amount of P5,953,286,073.27 for the remittance period April 2013 to December 2017. In its 16-page application, PSALM asked for the issuance of a PA or interim relief allowing it to charge and collect the computed NPC SCC portion of the UC for 2017 or such amount determined by the ERC.
“The instant petition covers the UC-SCC for 2017. The issuance of PA for this petition would enable PSALM to immediately recover SCC, and use the UC-SCC proceeds to service maturing loan obligations that were incurred for the eligible IPP [independent power producer] contracts,” it said.
PSALM said the provisional approval of SCC will also reduce its refinancing requirements to service these maturing obligations, thus lessening additional borrowing costs.
As provided under Section 34 of the Electric Power Industry Reform Act (Epira), UC will be imposed on all electricity consumers to cover payment of NPC’s SD and SCC.
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