THE Power Sector Assets and Liabilities Management Corp. (PSALM) has sought regulatory approval to pass on to end-users the stranded debt of the National Power Corp. (Napocor) through the universal charge (UC).
In a petition filed before the Energy Regulatory Commission (ERC), PSALM asked to collect P0.0013 per kilowatt hour (kWh) for a true-up adjustment of P1.35 billion for 2014 for a period of 10.5 years.
The equivalent rate of the 2014 universal charge-stranded debt (UC-SD) true-up adjustment was calculated based on the projected energy sales of 1.05 million gigawatts per hour (GWh) for January 2016 to June 2026.
As provided under Section 34 of the Electric Power Industry Reform Act (Epira), UC will be imposed on all electricity consumers to cover payment of Napocor’s stranded debt and stranded contract costs.
Stranded contract costs refer to the excess of Napocor’s contracted cost of electricity with independent power producers over the actual selling price of the output. Stranded debt refers to Napocor’s unpaid obligations that were not liquidated by proceeds from the sale of its assets
The UC, which is a separate line item in consumers’ electric bills, has different subcomponents, depending on the utilization of the funds as specified in the UC collection.
According to PSALM, if the aggregate amount is collected, it would lessen additional loans to be incurred by the agency in behalf of Napocor.
“Provisional approval of this UC-SD will also keep PSALM from resorting to refinancing to service its maturing debt and lease obligations, thus reducing, if not totally eliminating, additional borrowing costs so as not to increase the UC burden,” said PSALM.
PSALM, the state agency tasked to privatize Napocor’s power assets to help generate funds to pay off Napocor’s debts, is authorized to impose UC from all end users to compensate for any remaining deficit.
It is also mandated by law to calculate the amount of the stranded debts and stranded contract costs of NPC, which shall be the basis for the ERC in determining the universal charge.
On June 28, 2011, PSALM filed a petition for the recovery of Napocor’s SD portion of the universal charge as of December 31, 2010, seeking ERC’s approval to collect a US-CD amounting to P0.0313/kWh.
But the ERC disapproved the petition on January 28, 2013 and set the recoverable stranded debts to zero.
Then PSALM filed on September 30, 2013 a petition for true-up adjustments of the Napocor’s stranded debts portion of the Universal Charge for the years 2011 and 2012.
It sought the ERC’s approval to collect the UC-SD for the years 2011 and 2012 amounting to an aggregate of P41.1 million over a 12.5-year period, or P0.0383/kWh. The case was submitted for resolution.
On July 31, 2014, PSALM submitted to the ERC a UC-SD true-up adjustment for 2013 amounting to negative P49.5 million.
PSALM had requested for an extension of the deadline to file a true-up adjustment of Napocor’s stranded debts portion of the universal charge for 2014 from March 15 to July 31, 2015. This was because the certified financial statements of PSALM were set to be available only by April 2015, aside from the unavailability of the Variance Analysis Report that would be used to support the True-up adjustment.