Philippines: PSALM gets regulator's nod to collect P37 billion from NPC

Philippines: PSALM gets regulator's nod to collect P37 billion from NPC

THE Energy Regulatory Commission (ERC) has allowed the Power Sector Assets
and Liabilities Management (PSALM) Corp. to collect from consumers a total
of P37 billion, representing the stranded debts and stranded contract costs
(SCCs) of the National Power Corp. (NPC).

Stranded debt refers to the NPC's unpaid obligations that were not
liquidated by proceeds from the sale of its assets.

SCCs refer to the excess of NPC's contracted cost of electricity with
independent power producers over the actual selling price of the output.

Consumers are the ones who shoulder these through the universal charge (UC),
a separate line item in the electric bills.

As provided under Section 34 of the Electric Power Industry Reform Act
(Epira), the UC will be imposed on all electricity consumers to cover
payment of NPC's stranded debt and SCCs.

The approved stranded debt amount for 2011 and 2012 by the ERC stood at
P24,198,852,235.17. To cushion the impact to the consumers, only P0.0265 per
kilowatt-hour (kWh) will be collected over a period of nine years.

"The approved rate would mitigate the impact to the consumers, while also
giving [the] Psalm allowance to fully recover before the end of its
corporate life," the ERC in it 36-page decision said.

The ERC decision orders all distribution utilities and the National Grid
Corp. (NGCP) to collect the P0.0265 per kWh from consumers starting on the
next billing period and remit the same to the Psalm on or before the 15th
day of the succeeding month until the amount of stranded debt for 2011 and
2012 have been fully recovered.

Separately, the commission approved a total of P12.877 billion worth of
stranded-contract costs for the period 2011 up to 2013. The ERC allowed a
10-month recovery period at the existing rate of P0.1938 per kWh .

Accordingly, all distribution utilities and the NGCP are directed to
continue to collect from the consumers the amount of P0.1938 per kWh
starting July 2017 billing period, the ERC said in a separate decision.

In the same decision, the ERC said it merely extended the recovery of the UC
for SCC, which is now at P0.1938 per KWh thus there is no rate increase in
that portion of the bill.

"The Commission allows PSALM a 10-month recovery at the existing UC-SCC rate
of P0.1938 per kWh.

There would be no rate increase/decrease in the UC-SCC rate as the
collection of the existing UC-SCC rate shall only be extended for another 10
months starting July 2017 billing period," it said.

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Link to Original Article:
http://www.businessmirror.com.ph/psalm-gets-regulators-nod-to-collect-p37-bi
llion-from-npc/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com