A NON-GOVERNMENT organization wants the Energy Regulatory Commission (ERC) to junk the petition filed by state-run Power Sector Assets and Liabilities Management Corp. (PSALM) for a rate increase to pay for National Power Corp.’s (Napocor) debts.

The Freedom from Debt Coalition asked the ERC to scrap PSALM’s petition for a P0.40 per kilowatt-hour combined rate increase.

The FDC said the consumers should not pay for the onerous contracts entered into by Napocor with independent power producers with whom it has to settle its debts.

PSALM is mandated under Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (Epira) to calculate the amount of stranded debt and stranded contract costs of Napocor.

Job Bordamonte, FDC power campaign coordinator, said that privatization of assets held by government-owned entities—in this case Napocor—“strands” certain costs.

This is because obligations incurred in pre-existing expenses/debts pertaining to acquisition and maintenance of those assets would have been recovered by Napocor through its return-on-rate-base.

“But these could no longer be recovered when the assets were sold to private entities and could no longer be operated by Napocor for electricity-generation,” Bordamonte said.

The rate increase would be used to pay for Napocor’s stranded debts and contract costs amounting to almost P140 billion.

The ERC is hearing two separate petitions by PSALM to recover the said obligations of Napocor. The amount will be collected via the universal charge in consumers electricity bills.

If approved, households consuming 200 kilowatt-hours a month will see their electricity bills rise by P79.58. The Philippines already has the highest power rates in Asia, according to reports.

PSALM, in particular, seeks to recover some P74 billion in stranded contract costs accumulated from 2007 to 2010, which translates into a P0.36 per kilowatt-hour rate hike. The state firm also wants to recover more than P65 billion in stranded debts.