PSALM seeks to recover P27.7 B

By Danessa Rivera (The Philippine Star) | Updated July 11, 2016 - 12:00am

http://www.philstar.com/business/2016/07/11/1601444/psalm-seeks-recover-p27.7-b

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) is seeking regulatory approval for power rate adjustments to cover the stranded debt of the National Power Corp. (Napocor) as well as the fuel and foreign exchange costs incurred last year.

In its first filing, PSALM wants to recover P27.67 billion worth of stranded debt of Napocor in 2015 to end-users across the country through the universal charge (UC).

It proposed to recover the said amount in 9.5 years, equivalent to an additional UC-stranded debt (UC-SD) rate of P0.0283 (2.83 centavos) per kilowatt-hour (kwh). 

PSALM said the rate was calculated based on the 977,206 gigawatt-hour (gwh) projected energy sales from January 2017 to June 2026.

PSALM is the entity created under the Electric Power Industry Reform Act of 2001, the law that restructured the power industry by privatizing the government-owned assets under the Napocor.

Under the law, it is allowed to recover through UC the payment of Napocor’s stranded debt and stranded contract costs.

Napocor’s stranded contract cost refers to the excess of the contracted cost of electricity under the eligible contracts of Napocor with independent power producers over the actual selling price of the contracted energy output of such contracts in the market.

Meanwhile, stranded debts refer to any unpaid financial obligations which have not been liquidated by the proceeds from the sales and privatization of Napocor assets.

PSALM pays for its operations, as well as Napocor debts and obligations, through privatization of generating assets, sales of electricity from remaining assets and borrowings.

“If PSALM will be allowed to immediately recover the UC-SD under this petition through provisional approval, new loans and refinancing to service maturing debts and lease obligations would lessen. This would redound to the benefit of electricity end-users due to reduced borrowing costs, effectively reducing the UC burden,” it said.

In another filing, PSALM is seeking approval for a refund of P69.47 million to Luzon customers, a recovery of P161.74 million from Visayas end-users and a refund of P2.11 billion to Mindanao consumers under its application for Adjustments of Fuel and Purchased Power Costs and Foreign Exchange covering the 2015 period.

The adjustment, which will be for one year, is equivalent to a rate decrease of P1.70 per kwh in Luzon, an increase of P0.44 per kwh in Visayas and a decline of P0.37 per kWh in Visayas.

For the fuel purchase costs, PSALM said the application covers the Malaya Thermal Power Plant in Luzon; Power Barges 101, 102 and 103 in Visayas; and PB 104, IPPs Southern Philippines Power Corp. and Western Mindanao Power Corp.

Meanwhile, foreign exchange related costs are computed as the difference between the principal debt payments using the actual exchange rate as of payment date and using the base foreign exchange of P44.0494 to a dollar.