Philippines: PSALM cleared to recover P5.5 billion from universal charge

Philippines: PSALM cleared to recover P5.5 billion from universal charge

The Power Sector Assets and Liabilities Management Corp. (PSALM) has secured
clearance to recover P5.5 billion through the universal charge for stranded
contract cost (UC-SCC) to trim the financial obligations of the National
Power Corp. (Napocor).

In an order, the Energy Regulatory Commission (ERC) has authorized PSALM to
collect the under recovery of UC-SCC amounting to P5.48 billion.

This allows the state-run firm to continuously implement the UC-SCC rate of
P0.1938 per kilowatt-hour (kwh).

There will be no change in consumers' electricity bills since PSALM will
only extend the implementation of the same rate to grid customers.

Stranded contract costs refer to the excess of Napocor's contracted cost of
electricity with independent power producers over the actual selling price
of the output.

PSALM, the entity created under Republic Act 9136 or the Electric Power
Industry Reform Act of 2001, is allowed to recover through UC the payment of
Napocor's stranded debt and stranded contract costs.

PSALM was cleared to collect P53.85 billion which covers the National Power
Corp.'s stranded contract costs from 2007 to 2010.

ERC allowed the recovery under a four-year period ending in February.

However, PSALM was only able to remit P48.38 billion, resulting in a
shortfall of P5.47 billion.

"Uninterrupted implementation of the P0.1938 per kwh approved UC-SCC rate
would ensure continuous revenue streams for (PSALM), enabling it to fulfill
its mandate under Republic Act 9136 of liquidating all Napocor's financial
obligations," it said.

If not cleared, PSALM may resort to borrowings to refinance portion of its
maturing obligations not covered by privatization proceeds and revenues from
operations.

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Link to Original Article:
http://www.philstar.com/business/2017/04/08/1688629/psalm-cleared-recover-p5
.5-billion-universal-charge

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com