DOE proposes to use ERD funds to avoid passed-on charges to consumers

By Philippine News Agency – April 1, 2017, 5:43 PM

from Manila Bulletin

Instead of passing on a 19-centavo universal charge on consumers, the Department of Energy (DOE) has proposed to use the Malampaya or Energy Resource Development (ERD) funds to cover the cost.

The department has already presented the proposal to Congress and reported that reactions were favorable.

“The bills have already been filed. It’s only a matter of scheduling or prioritizing. Legislators are now analyzing cause-benefit,” Energy Undersecretary Felix William Fuentebella has said in a recent interview.

The 19-centavo universal charge passed on to consumers is part of a scheme to reduce the total financial obligations of the National Power Corp. (Napocor), which has already amounted to P830.7 billion and reached P1.24 trillion by the time the Electric Power Industry Reform Act (EPIRA) was passed in 2001.

Adding to the cost is the peso devaluation by 8 percent, amounting to P55.50 to USD1, and capital expenditure of P79.1 billion for additional lines and substations, plus a Power Purchase Adjustment (PPA) cost of P0.40 per kilowatt-hour (kWh) from 2002 to 2004.

There are also debts incurred by electric cooperatives (ECs), which were assumed by the government, that amount to P18 billion.

Fuentebella said that the DOE proposed before the cabinet and Congress to utilize a portion of the ERD, amounting to more than P200 billion, to address stranded debts and the ballooning debts of the Power Sector Assets and Liabilities Management Corp. (PSALM), which are currently being passed on to the consumers.

The DOE is studying all possibilities while making its stand of policy-making while protecting the consumer, he said.

”We already formed the task force for the parties to discuss inputs on how to approach the matter, looking into contracts of Power Supply Agreements,” Fuentebella said.