Latest Stories

PSALM expects financial position to improve

Collection of universal charges to provide boost


MANILA, Philippines—State-run Power Sector Assets and Liabilities Management Corp. (PSALM) expects its cash flow to improve  over the next four years, after regulators allowed it to collect P53 billion in universal charges for stranded contract costs from all power consumers.

In a statement, PSALM president and chief executive officer Emmanuel R. Ledesma Jr. said the Electric Power Industry Reform Act (Epira) allowed PSALM to collect universal charges to cover stranded contract costs.

“The proponents of the Epira recognized the fact that the privatization proceeds would not be enough to cover National Power Corp.’s financial obligations,” he said.

“PSALM also continues to incur losses from the operation of the remaining state generating assets and independent power producer (IPP) plants. The authors of the law allowed the collection of universal charges to bridge the gap,” Ledesma explained.

Early this week, the Energy Regulatory Commission issued a decision allowing PSALM to recover stranded costs, translating to an increase of 19.38 centavos per kilowatt-hour on one’s power bill. This will be collected through the UC-SCC.

Stranded contract costs referred to the difference between the contractual payment obligations and the revenue earned from the sale of the contracted energy for eligible, government-managed independent power producers (IPPs).

The ERC, however, rejected PSALM’s petition to recover P65 billion worth of stranded debts, which would have raised power rates by another 3.13 centavos per kWh over a a period of 15 years. Nevertheless, the ERC allowed PSALM to file for an annual true-up adjustment.

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 exclude P200 billion worth of Napocor obligations that were earlier assumed by the government.

Ledesma pointed out that the stranded debts were obligations incurred by Napocor prior to the enactment of the Epira. The debts were incurred to finance the construction of power plants which were needed to meet the country’s rising power requirements.

“These financial obligations included additional debts incurred by Napocor to subsidize plant operations in light of the rate capping measures previously implemented by the government to ensure more affordable electricity costs to consumers at that time,” he added.

For this year alone, PSALM is raising P60 billion to fund maturing obligations and other operational requirements. As of the end of September, PSALM is managing obligations worth $15.28 billion.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Consumer Issues , government offices and agencies , Power Sector Assets and Liabilities Management Corp. (PSALM) , stranded contract costs , universal charges

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Nebraska toddler gets stuck inside claw machine
  • Philippine eagle rescued by Army turned over to DENR
  • Gunmen attack Iraq military base, kill 10 soldiers
  • South Korea president shouted down by distraught parents
  • Classmates celebrating 60th birthday among missing in ferry sinking
  • Sports

  • Nadal passes clay landmark with 300th victory
  • Wawrinka waltzes through with Monte Carlo walkover
  • Power Pinays smash India in Asian Women’s Club volleyball opener
  • PH youth boxers off to stumbling start in AIBA World tilt
  • Durant has 42, Thunder beat Pistons 112-111
  • Lifestyle

  • Pro visual artists, lensmen to judge Pagcor’s photo contest
  • ‘Labahita a la bacalao’
  • This is not just a farm
  • Clams and garlic, softshell crab risotto–not your usual seafood fare for Holy Week
  • Moist, extra-tender blueberry muffins
  • Entertainment

  • Jones, Godard, Cronenberg in competition at Cannes
  • Will Arnett files for divorce from Amy Poehler
  • American rapper cuts own penis, jumps off building
  • Jay Z to bring Made in America music fest to LA
  • Why Lucky has not bought an engagement ring for Angel
  • Business

  • Total says makes ‘very promising’ oil find off Ivory Coast
  • ‘Chinese Twitter’ firm Weibo to go public in US
  • World stocks subdued, Nikkei flat on profit taking
  • Asia stocks fail to match Wall Street gains
  • Fired Yahoo exec gets $58M for 15 months of work
  • Technology

  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Filipinos #PrayForSouthKorea
  • Taylor Swift tries video blogging, crashes into fan’s bridal shower
  • DOF: Tagaytay, QC best at handling funds
  • Smart phone apps and sites perfect for the Holy Week
  • Opinion

  • Editorial cartoon, April 17, 2014
  • A humbler Church
  • Deepest darkness
  • ‘Agnihotra’ for Earth’s health
  • It’s the Holy Week, time to think of others
  • Global Nation

  • Malaysia quarantines 64 villagers over MERS virus
  • DFA: 2 Filipinos survive Korean ferry disaster
  • PH asks airline passengers to check for MERS
  • Syria most dangerous country for journalists, PH 3rd—watchdog
  • Japan says visa-free entry still a plan
  • Marketplace