Brace for more power hikes as Psalm collects for debts

More power bill burdens are expected as state power assets holding firm Power Sector Assets and Liabilities Management Corp. (Psalm) said it is firming up the amount that it will charge consumers for so-called stranded debts and the stranded contract costs that runs into tens of billions of pesos that state firm National Power Corp. (Napocor) owes so-called independent power producers.

These include the power purchase adjustment (PPA) costs that were suspended after former President Arroyo placed a cap on the PPA charges on electricity bills during her term.

Complying with the deadline set by the Energy Regulatory Commission (ERC), the Psalm said the final amounts of stranded debts (SD) and stranded contract costs (SCC) of Napocor will be applied to the universal charge (UC) in monthly consumer bills.

Psalm president Emmanuel Ledesma Jr. said in filing the UC applications in time for the June 30, 2011 deadline, Psalm will follow the revised guidelines released by the ERC on March 7, 2011.

The initial filing was originally set on March 15, 2011, but since the amended guidelines were released only a week before the deadline, the ERC accordingly extended the deadline for filing upon Psalm’s request.

The Republic Act 9136 or the Electric Power Industry Reform Act (Epira) defines stranded debts as any unpaid financial obligation of Napocor that has not been liquidated by the proceeds from the privatization of power assets.

Stranded contract costs, on the other hand, are defined as the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of these contracts in the market.

Psalm is mandated under the Epira to calculate the amount of the SD and SCC of Napocor. After an extensive review of Psalm’s applications, the ERC will determine, fix and approve the UC to be collected from electricity consumers.

As part of determining the SD and SCC amounts, Psalm recently conducted a series of workshops aimed at educating stakeholders and partner agencies on the dynamics of the UC, and at soliciting ideas and opinions on interpreting the amended guidelines for the SD-SCC computation.

Sponsored by the Asian Development Bank (ADB), the workshops were attended by representatives from the Department of Finance, the NPC, the Department of Energy, the National Economic and Development Authority, the Bangko Sentral ng Pilipinas, and the Department of Budget and Management.

The ADB stressed that the collection of the UC, which is a viable way of settling the debts of NPC, must be a concerted effort of all involved agencies to considerably ease the financial obligations of the Philippine government. –Daily Tribune