By Myrna M. Velasco – February 13, 2019, 10:00 PM
from Manila Bulletin
When the propounded legislation authorizing the use of the Malampaya fund to retire power sector debts will finally be enacted into law, state-run Power Sector Assets and Liabilities Management Corporation (PSALM) will be asked to withdraw its pending applications for universal charges (UCs) entailing pass-on of up to P113.139 billion in the consumers electric bills.
The government-run firm has three pending cost recovery applications with the Energy Regulatory Commission (ERC) for universal charges for stranded contract costs (UC-SCC) totaling P16.269 billion.
For UC on stranded debts (UC-SD), PSALM has five pending petitions with the industry regulator for a whopping P96.870 billion.
The universal charges line items in the consumers’ electric bills have “upward adjustment effect” on the overall tariff they have been paying for on a monthly basis; thus, Congress opted for the use of the Malampaya to fully retire these PSALM liabilities.
Senate Committee on Energy Chairman Sherwin T. Gatchalian said “if the law will be approved, PSALM will need to withdraw its applications from the ERC, because there’s no more need for it when the Malampaya fund is applied to retire the universal charges.”
During the proposed law’s deliberations, he noted that they have seen the UC rate components still going up to the level of P0.82 to P0.83 per kilowatt hour (kWh) from P0.22 per kWh currently, but since the Malampaya fund will already be earmarked to fund PSALM’s deficit on these obligations, the consumers will already be spared from paying the adjustments until the end of the state-owned power company’s life cycle in 2026.
“We saw the cash flow, so in the next six years, PSALM will have huge deficit and that deficit should have been covered by us consumers through our universal charge payments. But that will no longer be a responsibility for the consumers if the Murang Kuryente Act becomes a law,” the lawmaker explained.
The yearly allotment of Malampaya fund to cover PSALM’s deficit relating to UCs will be done via the General Appropriations Act (GAA).
And since the fund is reported to just be leaning on “book entry” at this point and there’s really no cash that can be easily pulled out from it, Gatchalian noted that the Department of Finance (DOF) can tap borrowings to cover cost on PSALM’s deficit, but that shall be charged against the Malampaya fund.
“They (PSALM) are proposing to borrow anyway to fund their deficit, so we can let DOF borrow, but the consumers will no longer shoulder that in their bills,” Gatchalian averred.
Congress is authorizing the utilization of P207 billion worth from the Malampaya fund to cover financial obligations of PSALM that have rate-hike impact on its universal charges owing to stranded liabilities.