PSALM seeks power rate hike

Business World Online

Posted on July 28, 2013 11:57:17 PM

By Claire-Ann C. Feliciano, Reporter

STATE-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) is seeking regulatory approval to recover P17.685 billion in National Power Corp. (Napocor) stranded contract costs (SCC) for 2011 to 2012.

In a petition published on Saturday, PSALM asked the Energy Regulatory Commission (ERC) to approve the collection of the amount via a P0.1274 per kilowatt-hour (kWh) increase in the universal charge for two years.

“The aggregate amount... would enable PSALM to recover SCC, which was funded through loans/borrowings, and to service... maturing loan obligations,” the petition states.

“Provisional approval... will also keep PSALM from resorting to refinancing to service and maturing obligations, thus reducing, if not totally eliminate, additional borrowing costs,” it adds.

The SCC was defined as the “excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of such contracts ...”.

PSALM claimed to have incurred gross contract costs amounting to P62.741 billion in 2011 and 2012. These covered capacity fees, fixed operating and maintenance fees, other operating expenses and the variable fees of state-owned power facilities.

On the other hand, it earned P31.611 billion from the sale of the contracted capacities of state-owned power plants and another P13.444 billion from the privatization of eligible independent power producer (IPP) contracts.

The difference between the costs and revenue represents the SCC that needs to be recovered, PSALM said, adding that the proposed universal charge adjustment was determined by dividing the recoverable amount of P17.685 billion by a two-year energy sales forecast based on the 2012-1023 Power Development Plan.

Last February, the ERC approved PSALM’s petition to recover P53.581 billion covering Napocor’s SCC for 2007-2010. This led to a P0.1938/kWh universal charge increase.

Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) provides that a universal charge be imposed on all electricity end-users for the payment of the SCC.

PSALM was formed under the EPIRA to assume ownership of and manage all of Napocor’s assets, liabilities, IPP contracts, real estate and other disposable assets.   source