PSALM seeks Congress OK for longer corporate life

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) will continue to push for the 10-year extension of its corporate life up to 2036, as this can help ease the burden on consumers who will pay for a portion of the stranded debts and contract costs.

“We will still be pushing for a 10-year extension for PSALM’s life since aside from payment of debts, the extension will bring down the universal charge since the impact will be mitigated due to the stretching of the time period [for collection],” PSALM president Emmanuel R. Ledesma Jr. said in an interview.

PSALM has sought to collect universal charges for stranded debts (UC-SD) and stranded contract costs (UC-SCC), worth a combined P139 billion.

In particular, it wanted to recover from all power consumers 36 centavos per kilowatt-hour within a four-year period to cover the payment of stranded contract costs and a separate 3 centavos per kWh within a 15-year period to settle stranded debts.

The extension of PSALM’s corporate life from the original expiry of 2026 will thus allow it to spread out the collection of these universal charges for stranded debts and contract costs over a longer period than what the government firm had earlier proposed.

Energy Secretary Jose Rene D. Almendras, meanwhile, disclosed that the proposed extension was still under discussion by the Joint Congressional Power Commission (JCPC). It was last year that the Department of Energy submitted a priority bill on this matter before the JCPC and the Legislative-Executive Development Advisory Council (Ledac).

“JCPC will have to act on it … but it’s more of a liability recovery period extension. PSALM will have to be dissolved. The plan is, when all the assets are sold, PSALM itself will be dissolved and the debt will be absorbed by the national government. The remaining liabilities will now be managed by the Department of Finance,” Almendras explained.

The energy chief further added that a group from PSALM will become part of the liability management group under the Department of Finance.

Almendras has since stressed the need to collect universal charges as this would allow the government to pay P139 billion worth of stranded debts and contract costs. He however assured power consumers that there are ways for the impact to be mitigated.

“We should let the Energy Regulatory Commission (ERC) decide on what is a fair universal charge and then we discuss alternatives on how to make those things work or how we can mitigate the impact,” Almendras earlier said.