DOE vows to use Malampaya fund to cut power rates

Published August 1, 2017, 10:00 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/08/01/doe-vows-to-use-malampaya-fund-to-cut-power-rates/

The Department of Energy (DOE) is bent on reducing electricity rates with the use of the Malampaya fund, but it has its hands tied with the legislation on this policy still pacing on its take-off point.

Energy Undersecretary Felix William Fuentebella stopped short of admitting that such proposal cannot be depended upon for now – even with the latest regulatory ruling on the pass-on of P37 billion worth of stranded liabilities of the Power Sector Assets and Liabilities Management Corporation (PSALM).

So as not to ignite social backlash, the Energy Regulatory Commission (ERC) calculatedly spread the cost recovery on stranded debts over nine years, so the peso-per-kilowatt hour equivalent impact would not be as burdensome when reflected in the bills.

Notably, the energy department previously indicated that it wants the Energy Resource Development Fund (the bulk of which accounts for the State’s royalty share from the Malampaya project) to retire significant part of PSALM’s colossal financial obligations.

That could have spared Filipino consumers from burdening add-on costs on universal charges in their electric bills – but for now, this remains a lofty goal without the underpinning legislative measure on it.

“Legislation must be passed if it will be utilized for other purposes, like that of addressing the universal charge – stranded contract costs and stranded debts,” Fuentebella said.

Nevertheless, he qualified that such is a matter that only Congress can decide on – and that the DOE can only advance such proposal for their consideration.

Jurisprudence, based on a Supreme Court decision on the Belgica case, so far dictates that “the fund must be utilized for energy resource exploration and development only.”

The energy official further indicated that based on their updated records, the energy resource fund — from State’s share on the development of indigenous energy resources –has about P210 billion of portended cash hoard.

Of the total amount, he emphasized that P193 billion accounted for royalty remittances out of the Malampaya gas field project.

The pass-on of the adjusted universal charges of PSALM will start this August billing cycle- and depending on the final rate that will be passed on, such may still trigger some degree of socio-political agitation.