PSALM seeks ERC approval to recover 2018 stranded debt of P4.72B

June 24, 2019 | 12:03 am
https://www.bworldonline.com/psalm-seeks-erc-approval-to-recover-2018-stranded-debt-of-p4-72b/

THE Power Sector Assets and Liabilities Management Corp. (PSALM) is seeking approval from the Energy Regulatory Commission (ERC) to pass on to end-users the P4.72 billion in stranded debt (SD) of the National Power Corp. (NPC) in 2018.

The state-run agency, which is tasked to privatize the NPC’s power assets, said the Universal Charge (UC)-SD true-up adjustment cost is equivalent to P0.0063 kilowatt per hour (kWh), covering a six-year-and-a-half recovery period.

The cost is calculated by dividing the total stranded debt by the Department of Energy’s projected energy sales from January 2020 to June 2026.

The ERC defines stranded debt as financial obligations which have not been liquidated by proceeds from the sale of state power assets.

PSALM said revenue from the sale of electricity of remaining assets does not suffice to cover operational costs and provide funds for the payment of NPC debt and obligations.

“To address the funding gaps, PSALM is forced to resort to temporary solutions by borrowing, which entails borrowing costs, which in turn will form part of the UC-SD, effectively increasing the UC burden of all electricity end-users,” PSALM said.

As such, PSALM is also petitioning for the provisional authority “to charge, collect the computed UC-SD true-up rate or such amount granted by the [ERC].”

“[I]f 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,” PSALM said in its petition.

The agency is also requesting that the ERC deem its true-up adjustment for 2011 and 2012 in “full compliance” with the ERC’s June 27, 2017-issued resolution.

Under the resolution, the ERC authorized PSALM to recover P24.298 billion at the rate of P0.0265 kWh. The ERC ordered all distribution utilities and the NGCP to collect this rate starting August 2017 billing period.

The amount under recovery as of end-2018 for the 2011-2012 true-up adjustment stood at P21.545 billion.

PSALM has an annual March 15 deadline to request a true-up adjustment but the company sought an extension of up to June 30 this year. — Janina C. Lim