Higher power rates loom in early ’13

PSALM may start collecting P140B in stranded debtsBy Amy R. Remo
Philippine Daily Inquirer

9:43 pm | Monday, December 3rd, 2012

The state-run Power Sector Assets and Liabilities Management Corp. expects to start collecting the P140 billion worth of universal charges for stranded debts and contract costs from all grid-connected power consumers early next year.

This followed reports that the Energy Regulatory Commission might release by January 2013 the much-awaited decision regarding PSALM’s application to collect the universal charge (UC), according to PSALM president Emmanuel Ledesma Jr.

Should PSALM’s application be approved, consumers can expect to pay another 36 centavos a kilowatt-hour over the next four years and a separate 3 centavos a kWh over a 15-year period to help pay the debt of another cash-strapped government firm, National Power Corp. (Napocor).

The 36 centavos a kWh that PSALM wanted to pass on to consumers would cover the payment of “stranded contract costs,” while the 3 centavos a kWh would be used to settle “stranded debts.” With the 39 centavos a kWh from the universal charge, PSALM will be able to collect about 25 billion a year to help settle its outstanding obligations.

PSALM, however, is hoping to collect the universal charge for stranded contract costs (UC-SCC) for a longer period of 15 years, instead of the current four years set by the ERC, to ease the burden on consumers.

Should the ERC allow PSALM to recover the universal charge for 15 years, the additional increase would be equivalent to 6 centavos a kWh. This means that the total universal charges for both stranded contract costs and stranded debts will amount to 9 centavos a kWh over the next 15 years. At 9 centavos a kWh, PSALM will be able to collect an additional P5 billion from consumers annually.

According to Ledesma, PSALM also wanted to extend its corporate life by another 10 years as this would further reduce the universal charge burden to about 6.5 centavos to 7 centavos a kWh over a longer period.

“Extending the corporate life of PSALM is not necessary but it would be nice because we’re trying to mitigate the impact to the consumers—it will be for the benefit of the consumer,” Ledesma stressed.

PSALM has been seeking to extend its corporate life to 2036, intended only to mitigate the impact of the collection of the P140 billion in universal charges on all power consumers.    source