Published
By Myrna M. Velasco
The Energy Regulatory
Commission (ERC) has approved the application of Independent Electricity Market
Operator of the Philippines, Inc. (IEMOP) for a new loan that it could utilize
to refinance funding for the establishment of market management system (MMS),
or the information technology-enabled trading platform of the Wholesale
Electricity Spot Market (WESM).
The original filing
with the ERC was done through precursor-firm Philippine Electricity Market
Corporation (PEMC), but regulatory imprimatur was granted on having that
application substituted by IEMOP following the spot market operations’
restructuring process last year.
In the ERC approval, it
was stipulated that the WESM operator had been given authority “to enter into a
facility agreement with a commercial bank for a reasonable interest rate to
refinance the MMS loan repayment.”
The first loan availed of for the WESM trading platform had been from state-run
Power Sector Assets and Liabilities Management Corporation (PSALM) amounting to
P816.858 million.
On IEMOP’s loan
refinancing bid, the ERC decreed that the market operator can impose additional
market fees – to be recouped from trading participants in Luzon and Visayas
markets.
The industry regulator
added that the costs can be allocated to the specified trading participants
“based on their respective utilization of the MMS and collect the corresponding
monthly AMF (additional market fees) rate,” within the prescribed billing
period.
While in the process of
negotiating for a new loan, the market operator has also been allowed to utilize
its unused budget and other income for the repayment of its PSALM loan.
The WESM operator’s
unused budget amounted to P510.138 million, therefore, that leaves a balance of
P306.719 million vis-à-vis the total MMS credit facility of P816.858 million.
The ERC, in particular, has approved an interest rate payment of 5.63 percent
on the MMS loan, contrary to the 12 percent interest rate that PSALM had
imposed.
“PEMC (as substituted
by IEMOP) shall pay PSALM the principal amount plus an interest rate of 5.6323
percent based on the Bangko Sentral ng Pilipinas average lending rates for the
past five years,” the power industry regulator has ordered.
Inclusive of the
ERC-authorized interest rate, the total balance that IEMOP can collect from
market participants would be P323.994 million, which it proposed to be passed
on over one year.
“The MMS loan to PSALM
was already due and must be settled. Hence, a shorter recovery period of one
year is reasonable as it would indeed lessen the amount of interest to be paid
redounding to the interest of electricity end-users,” the ERC stressed.
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