THE GOVERNMENT has cut the subsidy under next year’s national budget for debts of the National Power Corp. (Napocor) that are now being charged on consumers.
The Budget and Finance departments lowered the Power Sector Assets and Liabilities Management Corp.’s (PSALM) subsidy by 86% to P8 billion.
State-owned PSALM had proposed a P46.04-billion subsidy budget but it was lowered further “due to limited fiscal space,” the state-owned company said in a statement.
PSALM, which was created by a law reforming the power industry, inherited Napocor’s debt and stranded contract costs.
A measure enacted in August last year ordered the allocation of P208 billion to cover PSALM’s stranded contract costs and debt that are being charged on consumers as universal charges in their electricity bills.
The subsidy will come from the government’s share in the Malampaya natural gas project in Palawan province. The government will also pay for shortfalls incurred from settling the debt.
PSALM is not recovering stranded contract costs but is still collecting the P0.0428 per kilowatt-hour for its stranded debt.
The application to collect the latter was approved before the so-called Murang Kuryente law was passed, and it will still be collected until the end of its corporate life, according to the Energy Regulatory Commission.
Stranded contract costs are 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.
PSALM cannot file for new applications to collect these charges from consumers until the government subsidy is exhausted.
However, it is still collecting the P0.0428-per-kilowatt-hour stranded debts charge which the Energy Regulatory Commission (ERC) signed off before the law became effective. The bill portion will be collected until the end of the agency’s corporate life in 2026.
Last week, consumer group Laban Konsyumer said the government must refund PSALM’s universal charges on consumers.
The Department of Budget and Management last week submitted to Congress the P4.05-trillion National Expenditure Program for 2021.
Speaker Alan Peter S. Cayetano said the House would try to approve the budget by September. — Adam J. Ang