PSALM Loans Pushing Rates Higher

Manila Bulletin
By MYRNA M. VELASCO
December 5, 2011, 2:37am


MANILA, Philippines — If Filipino consumers are already having aversion to the P0.39 per kilowatt hour (kWh) universal charge applied for by the Power Sector Assets and Liabilities Management Corporation, they should wait until the P75 billion borrowings of the company this year will add up to the rate hikes that will eventually be reflected in their electricity bills.


PSALM president Emmanuel R. Ledesma Jr. admitted that “the P75 billion borrowed this year will be filed as a true-up for the UC,” although he qualified that it will “only be to the extent that proceeds were used to fund the transferred assets and IPP (independent power producer) obligations.”


True-up in this case could mean adjustments in the UC cost recoveries filed by the state-run firm. And since this represented new borrowings, the company’s forward application to the Energy Regulatory Commission (ERC) apparently entails fresh round of upward adjustments in the electricity rates.


There are no specific computations given yet, although if the prescribed deadline set by the ERC will be followed, additional UC cost recoveries may be filed by PSALM anew by March 15 next year.


The debt-related UC cost recoveries of PSALM may not necessarily stop with its P75 billion loans this year, especially with the recent pronouncement of the Department of Finance (DoF) that the company will be securing additional P85 billion borrowings this year to cover debt settlements and operating cost requirements.


Ledesma explained that the company’s bid for UC recoveries is “consistent with the ERC amended guidelines”, and this included “PSALM borrowings used to finance operational shortfall of NPC (National Power Corporation) transferred assets and of IPPs.”


The initial P0.39 per kWh UC petitions of PSALM will account for P0.03 per kWh recoveries for its stranded debts (SD) and P0.36 per kWh for stranded contract costs (SCC). The recovery period, as referenced on the ERC guidelines, will be over four years.


Nevertheless, PSALM similarly presented calculations in its application that if the UC recovery for SCC will be stretched to 15 years, the cost impact to consumers will be lighter at P0.09 per kilowatt hour (given that the equivalent for the UC-SCC will be brought down to P0.06 per kWh).