ERC junks PSALM petitions on universal charge

The Murang Kuryente law allotted P208 billion of the net proceeds of the government’s share from the Malampaya Natural Gas Project to subsidize the two portions of the universal charges, as well as the anticipated shortfall or deficit incurred from paying these obligations.

By Adam J. Ang

THE Energy Regulatory Commission (ERC) has dismissed several petitions of the state-led Power Sector Assets and Liabilities Management Corp. (PSALM) on the collection of some universal charges from 2007 to 2018, relieving customers of an additional P0.25 per kilowatt-hour (kWh) charge in their electricity bills.

In an order dated June 23, the regulator said it junked eight petitions for the true-up adjustments of the National Power Corp.’s (Napocor) stranded debts (SD) and stranded contract cost (SCC), both of which form part of universal charges paid for by electricity customers, as these were deemed “moot and academic” following the enactment of Republic Act No. 11371, or the Murang Kuryente Act.

“The ERC’s dismissal of the PSALM’s petitions embodies the intent of the Murang Kuryente Act which is to lower the cost of electricity being charged to end-users,” ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said in a statement on Thursday.

“With the dismissal of the subject PSALM petitions, electricity consumers will no longer be charged with an additional P0.2536/kWh which is supposed to be added to their electricity bills had the Murang Kuryente Act not been passed into law,” the official added.

The Murang Kuryente law, which was signed by President Rodrigo R. Duterte on Aug. 8, 2019, allotted P208 billion of the net proceeds of the government’s share from the Malampaya Natural Gas Project to subsidize the two portions of the universal charges, as well as the anticipated shortfall or deficit incurred from paying these obligations.

Last month, PSALM President Irene B. Garcia told legislators the government subsidy has yet to take into effect as it was not included in this year’s General Appropriations Act. Once it is included in the 2021 national budget, PSALM will no longer apply with the ERC for universal charge collections.

The Murang Kuryente law indicates that no new universal charges for SCC and SD shall be collected from all electricity end-users. The provision is also in the implementing rules and regulations (IRR) which became effective on May 5.

Ms. Garcia said PSALM is still receiving the P0.0428/kWh SD charges from customers, as the period for the collection is still in effect based on the agency’s previously approved applications with the ERC.

Meanwhile, it halted the collection of the SCC charges after the IRR became effective.

Stranded contract costs are “the excess of the contracted cost of electricity under eligible IPP (independent power producer) contracts over the actual selling price of the contracted energy output of such contracts,” according to the IRR.

Stranded debts are unpaid financial obligations of Napocor which have not been liquidated by the proceeds from the sales and privatization of its assets.

Meanwhile, the regulator said it came up with the P0.25 cut after considering pending cases on the collection of universal charges for SCC and SD.

“Our 25 cents calculation was arrived at after considering what cases are still pending with us for resolution on the UC SCC and SD,” ERC Spokesperson Floresinda B. Digal said in a Viber message.

“Had the ERC been hasty in approving those eight PSALM petitions, consumers may have suffered another rate increase,” Ms. Devanadera claimed.

After the government would complete the payment for these costs, the law states that any remainder from the fund must be used to finance energy resource development and exploitation programs of the Energy Development Board.