ERC rejects new power rate hike bid

PSALM petition to recover P65B in ‘stranded’ debts

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02:48 AM February 21st, 2013

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By: Amy R. Remo, February 21st, 2013 02:48 AM

Consumers can heave a sigh of relief as the Energy Regulatory Commission rejected the petition of the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) to collect another P65 billion worth of so-called stranded debts.

“This means that no additional universal charge will be imposed on top of the universal charge for stranded contract costs, which was recently fixed at 19.38 centavos per kilowatt-hour,” the ERC said in a statement issued Wednesday.

On Tuesday, the ERC ruled that PSALM could collect a total of P53.58 billion from all power consumers through a new component in electricity bills to be called universal charge for stranded contract costs (UC-SCC).

According to the ERC, it denied the petition of PSALM to recover P65 billion worth of stranded debts and collect 3.13 centavos a kWh over a 15-year period through another universal charge.

Based on the affected parties’ submissions and records of the case, the ERC ruled that certain expenditure items—including the proposed operating expenses for National Transmission Corp. and the projected capital expenditures for the rehabilitation of the remaining hydropower plants of the state-run National Power Corp.—should not be recovered through the proposed universal charge for stranded debts.

After excluding these items, the ERC concluded that “no stranded debts will be incurred.”

Stranded debts refer to any unpaid financial obligations of Napocor that have not been covered by the proceeds from the sale of its power assets. These debts already excluded P200 billion worth of Napocor debt that was earlier assumed by the national government.

PSALM, however, will be allowed to submit annual “true-up applications” on or before March 15 of each year to seek the recovery of what it deemed as stranded debts through the universal charge collection.

Meanwhile, ERC executive director Francis Saturnino Juan said in a phone interview on Wednesday that PSALM could also file a motion for reconsideration should it want to push for the collection of the universal charge for stranded debts (UC-SD). The appeal, if any, would similarly be subjected to ERC proceedings.

PSALM president and CEO Emmanuel Ledesma Jr. declined to comment on the ERC ruling and on what steps the agency planned to undertake. “We are still discussing internally what are our next steps [will be],” Ledesma said in a text message.

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