DoE seeks ways to bring down PSALM universal charges to consumers

By: Amy R. Remo, Philippine Daily Inquirer

6:39 pm | Thursday, June 30th, 2011

MANILA, Philippines—The Department of Energy is seeking for ways to further bring down the P139 billion worth of universal charges that the Power Sector Assets and Liabilities Management Corp. (PSALM) wants to pass on to power consumers, to help ease the burden of high electricity prices.
“All financial solutions and structures are being explored to minimize the universal charges and so far, we’ve been successful. The previous filing was very high (at over P500 billion),” Energy Secretary Jose Rene D. Almendras said in a briefing on Thursday.
“We will continue (to look for ways to bring the universal charges down). That’s what PSALM should be doing in the next 15 years—to bring down those universal charges—by trying to raise as much funds,” Almendras added.
The energy chief also said he was pushing PSALM to get the best possible price for the remaining government-owned power assets and contract capacities. Any additional proceeds from the privatization will help bring down the so-called residual debt, which is estimated to amount to $3.78 billion, or P162 billion, by the end of PSALM’s corporate life on 2026.
Almendras admitted these universal charges could further increase if the remaining assets, such as the Agus-Pulangi hydropower complex in Mindanao, were not sold and turned over to the private sector.
Of the P162 billion, P139 billion will be passed on to power consumers through the imposition of a universal charge for stranded debt and stranded contract costs.
In its petition filed before the Energy Regulatory Commission, PSALM has sought to recover from all power consumers 36 centavos per kilowatt-hour over the next four years to cover the payment of stranded contract costs and a separate 3 centavos per kWh within a 15-year period to settle stranded debts.
Almendras said that PSALM should continue to conduct refinancing activities to stretch the maturities, and accelerate the collection of receivables to bring down interest costs.
PSALM spokesperson Julie Ann B. Domino said on Monday that the government agency was planning, in particular, to sell as much as $5.87 billion worth of receivables from the National Grid Corp. of the Philippines (NGCP) to help pare down debts.
PSALM was studying the outright sale of these receivables to financial institutions —which, if found viable, might likely be conducted in 2011, Domino said.
The $5.87 billion represented the amount of receivables from the NGCP, which acquired the transmission concession of the government-owned National Transmission Corp. (Transco), including interest. The principal amount (representing bid price) was $3.95 billion.
Almendras is also pushing for the extension of PSALM’s corporate life by another 10 years from 2026 to 2036, as this would help lessen the impact of the universal charges on consumers.
“Some congressmen support the idea. But it would be too premature for me to comment… Quite a number of congressmen already understand the need to do it (extend the life of PSALM),” Almendras said.