by Myrna Velasco July
24, 2016
The Energy Regulatory
Commission (ERC) will subject to deeper scrutiny the petition of Power Sector
Assets and Liabilities Management Corp. (PSALM) for P27.7 billion in stranded
debts recovery cost, which is expected to hike consumers’ electric bills by
P0.0283 per kilowatt hour (kWh).
ERC Chairman Jose
Vicente B. Salazar vowed to closely examine PSALM’s petition.
“PSALM made a public
appeal for the ERC to act on its petition for the true-up adjustments of NPC’s
(National Power Corporation) stranded debt portion of the universal charge for
calendar year 2015,” Salazar told reporters.
“The ERC needs to study
this (petition) meticulously and with a lot of caution since this is a proposal
for pass-on charges,” he said.
With the amount being
applied for, the propounded length of pass-on to consumers would be nine-and-a-half
years, or the duration of PSALM’s remaining corporate life.
“I would like to assure
PSALM that the ERC is giving this concern a priority,” Salazar has further
indicated to media.
He stressed “we
understand the importance and urgency of the matter at hand and we are
committed to help PSALM address this.”
For the industry
watchers though, it is difficult to reconcile where the stranded debts recovery
is being drawn from because PSALM previously reported of privatization proceeds
it has been investing – primarily in the form of government securities, because
these amounts are supposedly not needed yet for debt payments.
Additionally, there are
still assets due for privatization that could help trim PSALM’s or NPC’s debt
level – hence, the UC on stranded debts could still be reduced or wiped out
prior to the winding down of PSALM’s corporate life by year 2026.
“While we are acting on
this with dispatch, the proposed pass-on will have to be evaluated on the basis
of reasonableness and affordability,” Salazar has emphasized.
PSALM officer in charge
Lourdes S. Alzona explained the estimated stranded debts cover “net payments of
principal and interest to creditors and bondholders as well as lease
obligations of some IPP (independent power producer) contracts that matured
last year.”
She noted that onward
proceeds from asset divestments could not be applied to that portion of cost
recovery “because the future privatization proceeds will be utilized for debts
to be due at the time of collections.”
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