Business World Online
Posted on 06:58 PM, October 08, 2010
CONSUMERS FACE the prospects of paying higher electricity bills due to unpaid debts of the state-owned power company, a research group said Friday.
IBON Foundation said in a statement that the Department of Energy is planning to pass the burden of paying P932.21 billion worth of debts incurred by the National Power Corp. (Napocor) to consumers through universal charge.
"It is estimated that the rate hike to cover portion of these debts could reach an initial amount of Php1.86/kWh," IBON said, eclipsing the one-peso drop in generation charge that will be reflected in the October billing statement.
IBON said the looming rate hike is a result of the Electric Power Industry Reform Act, which allows debts incurred by Napocor to be passed on to consumers.
The privatization of Napocor assets is managed by Power Sector Assets and Liabilities Management Corp. (PSALM).
"These debts are called stranded debts and stranded contract costs. Stranded debts refer to any unpaid financial obligation of Napocor which have not been liquidated through the proceeds from the sale and privatization of its assets," IBON said.
The group said Napocor’s debts should have been settled by proceeds from the privatization of power plants and other assets.
"This, however, did not happen as the sale of power plants has been greatly delayed and investor appetite has been hampered by, among others, lack of guaranteed markets through supply contracts and irregularities in the bidding process," it said.
It added that PSALM also incurred "privatization-related expenses" that were included in calculating recoverable stranded costs.
"These include a privatization bonus for PSALM officials and employees amounting to P80.9 million as well as privatization consultancy fees worth P118 million," IBON said.
Sought for comment, Ivanna G. dela Peña, head of utility economics at Manila Electric Co. (Meralco), told BusinessWorld the rate hike referred to by IBON is still pending at the Energy Regulatory Commission (ERC).
"It still depends on how the ERC will rule on the petition of PSALM for stranded costs," she said.
Meralco has announced that generation charge for October has dropped to P4.31per kilowatt-hour (kWh) from P5.41/kWh.
"There were extraordinary developments last month that resulted [in] the very low generation charge this month. In addition to the adjustment in Napocor billing, the dispatch of the independent power producers were at a record high of 93.9%, an improvement of 2.8% from the 91.1% registered in August," Meralco has said in a statement. -- Jo Javan A. Cerda
"It is estimated that the rate hike to cover portion of these debts could reach an initial amount of Php1.86/kWh," IBON said, eclipsing the one-peso drop in generation charge that will be reflected in the October billing statement.
IBON said the looming rate hike is a result of the Electric Power Industry Reform Act, which allows debts incurred by Napocor to be passed on to consumers.
The privatization of Napocor assets is managed by Power Sector Assets and Liabilities Management Corp. (PSALM).
"These debts are called stranded debts and stranded contract costs. Stranded debts refer to any unpaid financial obligation of Napocor which have not been liquidated through the proceeds from the sale and privatization of its assets," IBON said.
The group said Napocor’s debts should have been settled by proceeds from the privatization of power plants and other assets.
"This, however, did not happen as the sale of power plants has been greatly delayed and investor appetite has been hampered by, among others, lack of guaranteed markets through supply contracts and irregularities in the bidding process," it said.
It added that PSALM also incurred "privatization-related expenses" that were included in calculating recoverable stranded costs.
"These include a privatization bonus for PSALM officials and employees amounting to P80.9 million as well as privatization consultancy fees worth P118 million," IBON said.
Sought for comment, Ivanna G. dela Peña, head of utility economics at Manila Electric Co. (Meralco), told BusinessWorld the rate hike referred to by IBON is still pending at the Energy Regulatory Commission (ERC).
"It still depends on how the ERC will rule on the petition of PSALM for stranded costs," she said.
Meralco has announced that generation charge for October has dropped to P4.31per kilowatt-hour (kWh) from P5.41/kWh.
"There were extraordinary developments last month that resulted [in] the very low generation charge this month. In addition to the adjustment in Napocor billing, the dispatch of the independent power producers were at a record high of 93.9%, an improvement of 2.8% from the 91.1% registered in August," Meralco has said in a statement. -- Jo Javan A. Cerda
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