PSALM wants stranded debts in power bills removed
By Myrna M. Velasco – June 14, 2021, 6:30 AM
from Manila Bulletin
State-run Power Sector Assets and Liabilities Management Corporation (PSALM) said it will formally ask the Energy Regulatory Commission (ERC) to scrap the universal charge for stranded debts (UC-SD) component in the electric bills of consumers, once it can secure a supplemental budget of P3.2 billion from the national government.
The additional allocation sought from the Department of Budget and Management (DBM), with a recommendation from the Department of Finance (DOF), will cover for the shortfall in collection of the UC-SD that PSALM has been expecting for this year.
“PSALM shall immediately submit to the DOF and DBM a request for supplemental allocation from the MKA (Murang Kuryente Act) fund to cover the P3.2 billion expected to be raised from the UC-SD collection for fiscal year 2021,” the government-run company expounded.
The MKA or Republic Act 11371 is a law that was passed in 2019, targeting to expunge the universal charges for stranded debts (UC-SD) and stranded contract costs (UC-SCC) in the power bills — and such must be covered instead by P208 billion subsidy from the Malampaya fund.
PSALM noted it will only apply with the ERC for a removal of the UC-SD pass-on in the electric bills once the DBM gives go-signal on its request for additional budget for the MKA.
“When the supplemental allocation is approved and the corresponding funding is transferred to the MK-SAGF (Special Account in the General Fund) for release to PSALM, PSALM shall request for the ERC to issue directive to the UC collecting entities and PSALM to suspend the collection of UC-SD,” the state-run firm stressed.
The UC-SD is a separate line item in the electric bills that is currently pegged at P0.0428 per kilowatt hour (kWh), and that was anchored on previous approval by the ERC.
The collection of UC-SD from all consumers was prescribed under the Electric Power Industry Reform Act (EPIRA) and that accounts for the scale of debts of state-run National Power Corporation and its successor-company PSALM that had not been fully covered by the proceeds of privatization from NPC’s power assets.
As further explained by PSALM, the additional allocation “shall form part of the aggregate annual amounts for the payment of UC-SCC and SD, including anticipated shortfalls, to be deducted from the total MKA allocations.”
Upon the ERC’s issuance of a directive on the suspension of UC-SD collection, PSALM stated that it will subsequently stop the collection of such pass-on charge in the electric bills.
“This is to avoid additional shortfall and prevent serious financial and legal consequences in the event PSALM is unable to pay any of its maturing obligations for 2021,” the company stressed.
The original allocation of the national government to subsidize the non-collection of UC-SD and UC-SCC this year had been at P8.0 billion, but PSALM reckoned that the amount will not be enough, hence, it is batting for the release of additional budget.
