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Energy dep’t releases draft rules for law that will slash electricity rates

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THE ENERGY DEPARTMENT has released the draft implementing rules and regulations (IRR) for the Murang Kuryente Act, the law that allowed the use of the existing and future government share in the Malampaya gas-to-power project as payment for government debt now shouldered by consumers.

“The Department of Energy (DoE) is hereby requesting all interested parties to submit their comments on the working Draft Implementing Rules and Regulations to Republic Act No. 11371, An Act Reducing Electricity Rates by Allocating a Portion of the Net National Government Share from the Malampaya Natural Gas Project for the Payment of the Stranded Contract Costs and Stranded Debts,” the agency said.

The DoE said it was accepting comments until Nov. 22 through Mario C. Marasigan, director and officer-in-charge of the DoE’s Electric Power Industry Management Bureau. A public consultation is also scheduled that day.

The IRR of R.A. 11371, which was approved on Aug. 8, is expected to bring down the cost of power after its signing by the secretaries of the Energy and the Finance departments.

Senator Sherwin T. Gatchalian, chairman of the Senate energy committee, had said that he expected the law to remove the P0.09 per kilowatt-hour being paid by consumers as “universal charges” to pay the stranded debts and stranded contract costs when the government built energy-related projects to avoid power crises in the past.

He had said in the next six years, the universal charges that consumers find in their monthly electricity bill could go as high as P0.90/kWh.




The charges being collected from consumers are remitted to state-led Power Sector Assets and Liabilities Management Corp. (PSALM), which previously expected the universal charges to rise to P0.86/kWh.

For PSALM, the law meant savings from incurring additional borrowing costs in order to settle the maturing obligations of the National Power Corp. (Napocor), the government company that led the construction of the energy-related projects of the past.

PSALM said for families consuming an average of 200 kWh per month, the law meant about P172 of monthly savings from reduced electricity cost or about P2,064 of savings per year.

The Malampaya funds would cover PSALM’s shortfalls on a yearly basis and it would not have to seek additional universal charge impositions on electricity consumers.

Under the IRR, the Murang Kuryente Fund will be set up to fund the payment of all anticipated shortfalls after applying PSALM’s collections from the privatization of Napocor’s assets, independent power producer contracts, and proceeds from operations of existing assets.

Annual allocations from the Murang Kuryente Fund as intended in the act will be included in the General Appropriations Act starting with fiscal year 2021 until the exhaustion of the allocated amount.

Originally, the Malampaya fund was intended to be used for exploration and development, but with the new law, its use has been expanded to include the payment of the loans incurred by Napocor. The law says that after these loans had been paid, the fund will go back to its previous coverage, which is for oil exploration and development.

Murang Kuryente Fund refers to the amount of P208 billion taken from the Malampaya fund that has been allocated specifically for R.A. 11371.

“In the event that Anticipated Shortfalls are fully paid before the exhaustion of the Murang Kuryente Fund, the remainder of the amount allocated shall be utilized to finance energy resource development and exploitation programs pursuant to Presidential Decree No. 910,” the draft IRR reads.

The Murang Kuryente Fund will cover the anticipated shortfalls for the years 2020 up to the end of PSALM’s corporate life.

Mr. Gatchalian previously said that the outstanding Napocor loans that consumers were paying was about P450 billion and it is staggered over the next six years. — Victor V. Saulon

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